Funding for foreign policy priorities remains stuck on Capitol Hill as dire warnings abound over what it might mean for national security. Back in October, President Biden had requested $106B in supplemental funding, including $61.4B for Ukraine, $14.3B for Israel, $7.4B for Taiwan and the Indo-Pacific, and $13.6B for the U.S.-Mexico border, urging Congress to pass the measure as a comprehensive, bipartisan agreement. However, tensions continue to brew over aid for Kyiv, and immigration and asylum procedures, as well as what priorities should be tied to what bills to get things over the finish line.

Quote: "I want to be clear: without congressional action, by the end of the year we will run out of resources to procure more weapons and equipment for Ukraine and to provide equipment from U.S. military stocks," White House Budget Director Shalanda Young wrote in a letter to Congressional leaders. "There is no magical pot of funding available to meet this moment. We are out of money and nearly out of time. If Ukraine's economy collapses, they will not be able to keep fighting, full stop. Putin understands this well, which is why Russia has made destroying Ukraine's economy central to its strategy - which you can see in its attacks against Ukraine's grain exports and energy infrastructure."

The U.S. came close to a government shutdown at the end of September, with some last-minute dealmaking that kicked the fight into the new year and left out key foreign aid initiatives. Young further said the new round of national security funding and contracts would bring benefits to the U.S. economy, "for example, air defense systems built in Alabama, Texas and Georgia and vital subcomponents sourced from nearly all 50 states." On the other hand, a failure to pass the measure would "kneecap Ukraine on the battlefield, not only putting at risk the gains Ukraine has made, but increasing the likelihood of Russian military victories."

Market movement: While Lockheed Martin (NYSE:LMT), Raytheon (NYSE:RTX) and Northrop Grumman (NYSE:NOC) all saw outsized gains in 2022 following Russia's invasion of Ukraine, the three biggest defense giants deflated this year, recording share losses ranging from 6% to 18% - despite an influx of new orders. Existing backlogs and difficulties in ramping up production capacity will likely result in new order revenue only being reflected in company accounts in two to three years time, while overall U.S. arms sales even saw a decline last year. "Despite the global surge in military conflicts, [Lockheed Martin] hasn't quite expanded its top and bottom lines as much as I would have anticipated," added SA analyst Millennial Dividends in Not Worth Your Money At Today's Price.

Related: Boeing (NYSE:BA), General Dynamics (NYSE:GD), L3Harris Technologies (NYSE:LHX), Huntington Ingalls Industries (NYSE:HII), Leidos (NYSE:LDOS), CACI International (NYSE:CACI), Honeywell (NASDAQ:HON), General Electric (NYSE:GE), KBR (NYSE:KBR), SAIC (NYSE:SAIC), Textron (NYSE:TXT), TransDigm (NYSE:TDG), Parker-Hannifin (NYSE:PH), ManTech International (NASDAQ:CG), Oshkosh (NYSE:OSK), Jacobs Solutions (NYSE:J), Teledyne (NYSE:TDY), BWX Technologies (NYSE:BWXT), Parsons (NYSE:PSN), Eaton (NYSE:ETN), Curtiss-Wright (NYSE:CW), Amphenol (NYSE:APH), Mercury Systems (NASDAQ:MRCY), Ball Corp (NYSE:BALL), Howmet Aerospace (NYSE:HWM), TTM Technologies (NASDAQ:TTMI) and HEICO (NYSE:HEI).

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