According to this morning's New York Times these are very good times for military contractors. Few in the military industry are worried by the recent Democratic Congress victory: The Pentagon's 2007 budget is expected to exceed $560b, and in the spring, President Bush has indicated he will ask for another $100b for Iraq and Afghanistan. No one expects Democrats to make major changes in the last two years of the Bush administration, especially with the war continuing; Democrats are sensitive to being seen as “soft” on defense, and are more likely to use the term to establish their military qualifications in advance of the 2008 presidential elections. Lockheed Martin Corp., Boeing Co., Raytheon Co., and General Dynamics Corp. shares are all up around 33% over the year, and according to LMT spokesman Thomas Jurkowsky, they "certainly don't foresee any change."
• Sources: New York Times
• Related commentary: What Does a Democratic Victory Mean for the Defense Sector?, Barron's Post-Election Sector Analysis, Time To Get Defensive
• Potentially impacted stocks and ETFs: Lockheed Martin (LMT), Boeing (BA), General Dynamics (GD), Raytheon (RTN), Northrop Grumman (NOC), Armor Holdings (AH), SAIC (SAI). ETFs: iShares Dow Jones US Aerospace & Defense ETF (ITA), PowerShares Aerospace & Defense ETF (PPA)
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