Syria Strike Underscores Global Risks, Need for Strong Defense

Late Thursday night, U.S. military forces launched 59 cruise missiles at a Syrian airfield. The strike came in response to a chemical weapons attack that Syrian President Bashar al-Assad unleashed a few days prior, killing more than 80 civilians.

U.S. intelligence indicated that the chemical attack originated from the Al Shayrat field. So Trump’s broader goal in striking that particular location seemed to be to put al-Assad on notice. His message: The further use of banned weapons will bring about a swift response – not just from the U.S., but perhaps other allied nations.

At the same time, the U.S. move creates several risks. Will Syria lash out at our regional ally Israel in response (since it can’t directly strike the U.S.)? Will Syria’s long-standing backer Russia react harshly, perhaps by increasing its support of al-Assad? What will other Syrian supporters, like Iran and the Hezbollah organization in neighboring Lebanon, do next?

I don’t have the answers to those questions. But it’s clear that geopolitical risks in the Middle East are ratcheting higher once again.

Now, let me reiterate something very important: My job here isn’t the same as other commentators. I’m not a retired general or political pundit, like the guests who are now flooding the airwaves on CNN or Fox News. So I can’t comment about each and every potential military or diplomatic step that may be coming.

Nor is it my role to opine about the world I wish we had. I have to deal with the reality of the situation on the ground, and help you sort out the investment implications. Unfortunately, that includes events as tragic and unsettling as the Syrian civil war and the latest U.S. response.

So with that in mind, it’s worth noting that shares of defense contractor Raytheon (RTN, Rated “A-”) jumped in the early going Friday. The company makes the Tomahawk cruise missile, which has been used more than 2,000 times in combat over the past several years. The missiles have been updated several times over their lifetime, and can be launched either from surface ships or submarines.

Other key defense contractors like Lockheed Martin (LMT, Rated “B”) and Northrop Grumman (NOC, Rated “A-”) also gained ground. Northrop makes products like the Global Hawk drone and parts for the F-35 fighter jet, while Lockheed is the largest defense company in the U.S. It sells a wide suite of products that the president may call upon if the latest Middle East conflict intensifies.

So if you’re looking for ways to position your portfolio, consider playing defense – with “safety” investments like gold and shares of defense contractors. Trump has already vowed to ramp up defense spending at the fastest rate since Ronald Reagan was president, and that spending could increase even further depending on what happens next. You can find more specific guidance in the special report I just complied on the defense sector, which is available here.

Until next time,

Mike