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Peter Schiff: Washington Goes Full Orwellian

Peter Schiff: Washington Goes Full Orwellian


An audacious communications campaign from Democrats in Washington is currently…



Peter Schiff: Washington Goes Full Orwellian


An audacious communications campaign from Democrats in Washington is currently underway that is attempting to convince the public that:

As strange as these claims sound to anyone with even the most casual grasp of reality, it is a testament to the post-factual world we now occupy that the Biden Administration is able to attempt, let alone succeed in, putting out such monumental fantasies.

The campaign began late in July when the Biden team attempted to redefine the word “recession.” While the left has always tried to redefine words (think “racism” or “gender”), it has never attempted it so spontaneously with such a technical definition. Typically, they let new definitions germinate in academia or policy think tanks before trotting them out for public consumption. That was the playbook that helped change the meaning of the word “inflation” (from its original understanding as an expansion of the money supply, to its current definition tied solely to rising prices). But the inflation campaign unfolded over decades and did not require the public to completely surrender its critical capacities.

I’ve been publicly commenting and writing about the economy for almost 30 years (and talking about it for essentially my entire six decades on the planet). Over that time, the technical definition of “recession” has never been in dispute. Of course, I’ve had many arguments over what caused any given recession, why recessions may be necessary to purge an economy from excesses and malinvestments caused by artificially low interest rates, what government responses should be to recessions, or why things were better or worse than a particular political party claimed them to be. But in that time, I never encountered anyone who quibbled with the accepted technical definition of “recession” as two consecutive quarters of negative GDP growth. What would be the point? Recessions affected both political parties. Why change a definition when the original definition may suit you down the road?

But that’s what the Biden Administration did when they claimed that the Second Quarter GDP Report, which showed a .9% annualized decline in GDP, following a 1.6% annualized decline in the First Quarter (Bureau of Economic Analysis), did not mean we were in a recession.

What? That’s been the textbook definition for…like forever. If Biden wanted to put a happy spin on the data, which is what sitting Presidents do, he could have said, “while technically it’s a recession, the current period shows many signs of strength that are not typical in recessions, leading us to believe we are in much better shape than the GDP headlines suggest, and that the recession will be shallow and over quickly.” I would have disagreed with that, but it’s fair game. But his approach wasn’t just to move the goalposts, it was to take them down entirely.

What’s even worse is that the very next day after the Biden Administration first floated its idea that “two negative quarters are not a recession,” the point was repeated by Fed Chairman Jerome Powell at his FOMC press conference on July 27. If nothing else, this proves just how ridiculous claims of “Fed independence” have been over the years. Economists like to claim that the Fed acts independent of political control.  Would they have us believe the Fed spontaneously changed its definition of recession precisely after the administration did? Clearly, the Fed is taking its marching orders from the White House.

The sad part is that outside the typical sources of right-of-center news, the media just ran with the new definition. My favorite was the Associated Press headline that ran after the GDP numbers were announced, “U.S. Economy Shrinks for a Second Quarter, Raising Recession Fear.” (7/28/22) Up until two seconds ago that would have been reported as the official start of a recession, not something that would simply “raise fears,” of a future eventuality. This redefinition of terms would have been impossible when journalistic standards were higher and institutional memory more entrenched.

In George Orwell’s 1984, the totalitarian State of Oceania, where the action takes place, is always at war with another empire. Sometimes against Eurasia, and sometimes against Eastasia. But when the antagonists switched positions, as they often did, it served the government’s interest that the public forget that any other enemy ever existed. It required citizens to say, “We have always been at war with Eurasia,” even if that war just started yesterday. In the same vein, a recession has never been defined as two consecutive quarters of negative growth!

Following up on this easy rhetorical victory, the Biden team decided to keep the ball rolling by claiming that there was “zero inflation in America in July.” That may come as a surprise to a select group of Americans, say those who have shopped at stores in the past month, but the claim went largely uncriticized in the press.

To tell this whopper, Biden had to talk only about month-over-month inflation, and ignore the year-over-year data, which still shows a hefty 8.5% inflation rate in July (down slightly from the prior month). (U.S. Bureau of Labor Statistics) In all my years following economic news, I can say with extreme certainty that I never saw anyone hold up a month-over-month number as proof of anything. So yes, gas prices came down in July, possibly as a result of the release of millions of barrels of oil in the U.S. Strategic Reserve (though food, rent, and service prices continued their relentless rise). But oil prices could very well be up in September. Should we expect Biden to place great weight on that eventuality as well?  Don’t hold your breath. In reality, after so many months of blistering price increases, a cooler month should be expected. The trend lines remain unbroken.

This “zero inflation” claim, repeated by Administration spokespeople dozens of times, is the kind of huge lie that would have elicited waves of head-smacking coverage during the Trump Administration. But Biden is getting a pass, he’s even being congratulated for his rhetorical boldness and courage in standing up to the “right-wing spin machine.”

But the best piece of doublethink comes with the Democratic Party’s passage of the 2022 “Inflation Reduction Act.” In the long history of misnamed pieces of legislation, this title might be the most egregious. Nothing in the gargantuan Bill was conceived with the aim of reducing inflation and nothing in the Bill will actually accomplish that goal. In truth, many of the plan’s provisions will make inflation even worse.

On some level, you must admire the audacity. The Democrats took a bunch of terrible ideas that they couldn’t pass in the Build Back Better Bill (either in the original $3 trillion version or the slimmed down $1.3 trillion version) and jammed it into a new package which they rebranded the Inflation Reduction Act. It didn’t bother them that all the elements of the Bill were conceived before inflation was considered a major national priority and were not designed with inflation reduction in mind. They know that inflation is a high priority to voters, so they want to look like they are doing something about it.

The Bill, which will pass both Congressional houses without a single Republican vote, proposes $764 billion of new revenue (including new taxes and greater enforcement of existing tax law, and savings resulting from lower prescription drug prices paid by Medicare) and $517 billion in new spending, with the difference going toward Federal deficit reduction.  Unfortunately, the variety of healthcare, environmental and social welfare spending, combined with new taxes and beefed-up IRS enforcement, will hamstring the country’s economic vitality, and tend to increase both budget deficits and inflation. And as a result, the plan will do far more harm than good. Let’s look at the contents:

The Bill looks to raise revenue by:

$265 Billion – Allowing Medicare more leverage in negotiating lower drug prices paid to pharmaceutical companies. This is the government’s primary example of the Bill’s anti-inflationary bona fides as it intends to lower costs for consumers. But this type of price control has a very poor track record in fighting inflation. The government will mandate lower prices, which may limit supply of current drugs and discourage the research and development of new drugs. The savings will likely be far smaller than the government expects.

$222 Billion – Minimum 15% corporate tax for companies with more than $1 billion in annual income. As with all such provisions, this policy does not take into account how corporations will alter their structures and practices to avoid the tax. As a result, the take will be lower than the government expects. Also, companies will deal with higher tax and accounting burdens by reducing output, raising prices, and cutting salaries. This is not anti-inflationary. Worse, money that is paid in taxes is not available to finance capital investment. The result will be a reduction in supply, putting greater upward pressure on prices.

$204 Billion – Increased tax revenue through greater enforcement. – This is the most controversial aspect of the Bill. This nightmarish provision more than doubles the size of the Internal Revenue Service and adds 87,000 new agents specifically to increase the number of taxpayer audits. While the Biden administration is pretending that the agents will only go after the ultra-wealthy and the large corporations (who are limited in number and who can afford to hire accountants and lawyers), in truth the typical target will likely be small businesses and members of the burgeoning “gig” economy. The added fear of IRS scrutiny will cause these business owners to spend more time and money on accounting and legal fees, devote less time and money into growing their businesses, and invest less in increasing capacity.  All of this will cut into output and profits, thereby putting upward pressure on prices and downward pressure on wages. This will not help curb inflation.

$74 billion – Imposition of a 1% excise tax on stock share buybacks. This provision is likely the least destructive of the revenue provisions, but it will do nothing to lower inflation. However, any money a corporation pays in taxes is money it no longer has for capital investment. So, this reduces supply, the opposite of what is needed to fight inflation.

The Bill will spend new money on:

$369 Billion – Energy Security and Climate Change – This is the boondoggle portion of the Bill where the government will shower funding on a variety of Democrats’ Climate Change pet projects. My feeling is that most of these investments will be on inefficient energy sources that the public doesn’t want, and which are unable to meet our energy needs. While the Bill does have a few provisions that will encourage domestic fossil fuel production, most of these programs will mandate the use of more expensive and less efficient energy. Misallocation of resources will make inflation worse by limiting the supply of energy and increasing its cost.

$64 Billion – A three-year extension on subsidies for Affordable Care Act health insurance premiums. Originally offered through the 2021 Covid-inspired American Rescue Plan, this extension is just another step backwards toward a permanent entitlement of subsidized health care. This will do nothing to actually lower the cost of health care, but simply change who gets the bill. It is not anti-inflationary. If anything, it will have the opposite effect, as the more involved government gets into any industry, the less efficient it becomes, and increasing the cost of its goods or services.

$80 billion on IRS Funding – This is the spending that will supposedly enable the government to collect $200 billion in revenue, so the net benefit to the Treasury is $120 billion. But the government will be spending real money to go after hoped-for money. The resulting numbers may be far less equitable for the government and provide massive anxiety to taxpayers.

So, there you have it, the government apparently takes inflation head-on. Except that it doesn’t. The best way to fight inflation is to reduce government spending, thereby leaving more investment capital in the private sector, and to reduce regulations, allowing businesses to increase the supply of goods and services so that prices can fall.

Instead, we are currently in an environment where government policies are artificially suppressing labor force participation and piling new taxes and regulation on businesses, all the while keeping the floodgates of fiscal stimulus wide open. This is a recipe for higher, not lower, prices.

It is not accidental that earlier this month the Labor Department reported that worker productivity fell 2.5% from a year earlier, the largest yearly decline since 1948. At the same time, despite deceptively low rates of unemployment, the actual number of people in the labor force continues to shrink. These trends come as a direct result of misguided government policies and regulations that disincentivize work and increase the burdens on business. A shrinking and less productive labor force does not lead to the expansion of the supply of goods and services needed to bring down inflation. The provisions in the Bill will add to these inflationary problems.

Also, the continuation of deficit spending far more than pre-pandemic levels means the Fed will come under increased political pressure to monetize the shortfall. That pressure will become particularly intense once the recession we are pretending does not exist gets much worse. Since quantitative easing is just a euphemism for inflation, a bill to increase deficit spending is a bill to increase inflation.

Given the drift of the data and of government messages, I wouldn’t be surprised if we are soon told that any “quantitative” attempt to measure inflation is misguided, and that the phenomenon can only be understood in qualitative subjective terms. How we feel about the products and services we are buying means far more than what we are actually paying. Just wait, it’s going to happen.

*  *  *

To order your copy of Peter Schiff’s latest book, The Real Crash (Fully Revised and Updated): America’s Coming Bankruptcy – How to Save Yourself and Your Country, click here. For an in-depth analysis of this and other investment topics, subscribe to Peter Schiff’s Global Investor newsletter. CLICK HERE for your free subscription.

Tyler Durden Thu, 08/25/2022 - 16:20

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MIPIM 2024 Reflects Mixed Feelings on CRE Recovery

Reportedly, concerns at the forefront include the plunging commercial real estate market (CRE). During the pandemic, many offices were vacated by staff,…



Reportedly, concerns at the forefront include the plunging commercial real estate market (CRE). During the pandemic, many offices were vacated by staff, and businesses established remote work practices. Since then, the market never fully recovered.

Based on Reuters information, the 20,000 attendees include property giants such as LaSalle, Greystar, AEW, Patrizia and Federated Hermes (FHI.N). Some representatives were cautiously optimistic and said there are tentative indications of CRE recovery.

Others, such as the head of Europe at LaSalle Investment Management, Philip La Pierre, could have been more positive. He reportedly said:

There’s a lot of hot air being pushed through the Croisette. So you’ve got to navigate that quite carefully.

Rising borrowing costs and post-pandemic open offices cast a shadow on property investments. Reuters reported that year-on-year European commercial capital values dropped by 13.9% in the last quarter of 2023. La Pierre opined that about 30% of European office space is a waste.

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The US commercial property sector mirrored the European situation. An 11 March 2024 MSCI report indicated that deteriorating office prices placed a yoke on the performance of the entire property market. This report did, however, note the uptick in the European hotel market.

The post MIPIM 2024 Reflects Mixed Feelings on CRE Recovery appeared first on LeapRate.

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Net Zero, The Digital Panopticon, & The Future Of Food

Net Zero, The Digital Panopticon, & The Future Of Food

Authored by Colin Todhunter via,

The food transition, the energy…



Net Zero, The Digital Panopticon, & The Future Of Food

Authored by Colin Todhunter via,

The food transition, the energy transition, net-zero ideology, programmable central bank digital currencies, the censorship of free speech and clampdowns on protest. What’s it all about? To understand these processes, we need to first locate what is essentially a social and economic reset within the context of a collapsing financial system.

Writer Ted Reece notes that the general rate of profit has trended downwards from an estimated 43% in the 1870s to 17% in the 2000s. By late 2019, many companies could not generate enough profit. Falling turnover, squeezed margins, limited cashflows and highly leveraged balance sheets were prevalent.

Professor Fabio Vighi of Cardiff University has described how closing down the global economy in early 2020 under the guise of fighting a supposedly new and novel pathogen allowed the US Federal Reserve to flood collapsing financial markets (COVID relief) with freshly printed money without causing hyperinflation. Lockdowns curtailed economic activity, thereby removing demand for the newly printed money (credit) in the physical economy and preventing ‘contagion’.

According to investigative journalist Michael Byrant, €1.5 trillion was needed to deal with the crisis in Europe alone. The financial collapse staring European central bankers in the face came to a head in 2019. The appearance of a ‘novel virus’ provided a convenient cover story.

The European Central Bank agreed to a €1.31 trillion bailout of banks followed by the EU agreeing to a €750 billion recovery fund for European states and corporations. This package of long-term, ultra-cheap credit to hundreds of banks was sold to the public as a necessary programme to cushion the impact of the pandemic on businesses and workers.

In response to a collapsing neoliberalism, we are now seeing the rollout of an authoritarian great reset — an agenda that intends to reshape the economy and change how we live.


The new economy is to be dominated by a handful of tech giants, global conglomerates and e-commerce platforms, and new markets will also be created through the financialisation of nature, which is to be colonised, commodified and traded under the notion of protecting the environment.

In recent years, we have witnessed an overaccumulation of capital, and the creation of such markets will provide fresh investment opportunities (including dodgy carbon offsetting Ponzi schemes)  for the super-rich to park their wealth and prosper.

This great reset envisages a transformation of Western societies, resulting in permanent restrictions on fundamental liberties and mass surveillance. Being rolled out under the benign term of a ‘Fourth Industrial Revolution’, the World Economic Forum (WEF) says the public will eventually ‘rent’ everything they require (remember the WEF video ‘you will own nothing and be happy’?): stripping the right of ownership under the guise of a ‘green economy’ and underpinned by the rhetoric of ‘sustainable consumption’ and ‘climate emergency’.

Climate alarmism and the mantra of sustainability are about promoting money-making schemes. But they also serve another purpose: social control.

Neoliberalism has run its course, resulting in the impoverishment of large sections of the population. But to dampen dissent and lower expectations, the levels of personal freedom we have been used to will not be tolerated. This means that the wider population will be subjected to the discipline of an emerging surveillance state.

To push back against any dissent, ordinary people are being told that they must sacrifice personal liberty in order to protect public health, societal security (those terrible Russians, Islamic extremists or that Sunak-designated bogeyman George Galloway) or the climate. Unlike in the old normal of neoliberalism, an ideological shift is occurring whereby personal freedoms are increasingly depicted as being dangerous because they run counter to the collective good.

The real reason for this ideological shift is to ensure that the masses get used to lower living standards and accept them. Consider, for instance, the Bank of England’s chief economist Huw Pill saying that people should ‘accept’ being poorer. And then there is Rob Kapito of the world’s biggest asset management firm BlackRock, who says that a “very entitled” generation must deal with scarcity for the first time in their lives.

At the same time, to muddy the waters, the message is that lower living standards are the result of the conflict in Ukraine and supply shocks that both the war and ‘the virus’ have caused.

The net-zero carbon emissions agenda will help legitimise lower living standards (reducing your carbon footprint) while reinforcing the notion that our rights must be sacrificed for the greater good. You will own nothing, not because the rich and their neoliberal agenda made you poor but because you will be instructed to stop being irresponsible and must act to protect the planet.


But what of this shift towards net-zero greenhouse gas emissions and the plan to slash our carbon footprints? Is it even feasible or necessary?

Gordon Hughes, a former World Bank economist and current professor of economics at the University of Edinburgh, says in a new report that current UK and European net-zero policies will likely lead to further economic ruin.

Apparently, the only viable way to raise the cash for sufficient new capital expenditure (on wind and solar infrastructure) would be a two decades-long reduction in private consumption of up to 10 per cent. Such a shock has never occurred in the last century outside war; even then, never for more than a decade.

But this agenda will also cause serious environmental degradation. So says Andrew Nikiforuk in the article The Rising Chorus of Renewable Energy Skeptics, which outlines how the green techno-dream is vastly destructive.

He lists the devastating environmental impacts of an even more mineral-intensive system based on renewables and warns:

“The whole process of replacing a declining system with a more complex mining-based enterprise is now supposed to take place with a fragile banking system, dysfunctional democracies, broken supply chains, critical mineral shortages and hostile geopolitics.”

All of this assumes that global warming is real and anthropogenic. Not everyone agrees. In the article Global warming and the confrontation between the West and the rest of the world, journalist Thierry Meyssan argues that net zero is based on political ideology rather than science. But to state such things has become heresy in the Western countries and shouted down with accusations of ‘climate science denial’.

Regardless of such concerns, the march towards net zero continues, and key to this is the United Nations Agenda 2030 for Sustainable Development Goals.

Today, almost every business or corporate report, website or brochure includes a multitude of references to ‘carbon footprints’, ‘sustainability’, ‘net zero’ or ‘climate neutrality’ and how a company or organisation intends to achieve its sustainability targets. Green profiling, green bonds and green investments go hand in hand with displaying ‘green’ credentials and ambitions wherever and whenever possible.

It seems anyone and everyone in business is planting their corporate flag on the summit of sustainability. Take Sainsbury’s, for instance. It is one of the ‘big six’ food retail supermarkets in the UK and has a vision for the future of food that it published in 2019.

Here’s a quote from it:

“Personalised Optimisation is a trend that could see people chipped and connected like never before. A significant step on from wearable tech used today, the advent of personal microchips and neural laces has the potential to see all of our genetic, health and situational data recorded, stored and analysed by algorithms which could work out exactly what we need to support us at a particular time in our life. Retailers, such as Sainsbury’s could play a critical role to support this, arranging delivery of the needed food within thirty minutes — perhaps by drone.”

Tracked, traced and chipped — for your own benefit. Corporations accessing all of our personal data, right down to our DNA. The report is littered with references to sustainability and the climate or environment, and it is difficult not to get the impression that it is written so as to leave the reader awestruck by the technological possibilities.

However, the promotion of a brave new world of technological innovation that has nothing to say about power — who determines policies that have led to massive inequalities, poverty, malnutrition, food insecurity and hunger and who is responsible for the degradation of the environment in the first place — is nothing new.

The essence of power is conveniently glossed over, not least because those behind the prevailing food regime are also shaping the techno-utopian fairytale where everyone lives happily ever after eating bugs and synthetic food while living in a digital panopticon.


The type of ‘green’ agenda being pushed is a multi-trillion market opportunity for lining the pockets of rich investors and subsidy-sucking green infrastructure firms and also part of a strategy required to secure compliance required for the ‘new normal’.

It is, furthermore, a type of green that plans to cover much of the countryside with wind farms and solar panels with most farmers no longer farming. A recipe for food insecurity.

Those investing in the ‘green’ agenda care first and foremost about profit. The supremely influential BlackRock invests in the current food system that is responsible for polluted waterways, degraded soils, the displacement of smallholder farmers, a spiralling public health crisis, malnutrition and much more.

It also invests in healthcare — an industry that thrives on the illnesses and conditions created by eating the substandard food that the current system produces. Did Larry Fink, the top man at BlackRock, suddenly develop a conscience and become an environmentalist who cares about the planet and ordinary people? Of course not.

Any serious deliberations on the future of food would surely consider issues like food sovereignty, the role of agroecology and the strengthening of family farms — the backbone of current global food production.

The aforementioned article by Andrew Nikiforuk concludes that, if we are really serious about our impacts on the environment, we must scale back our needs and simplify society.

In terms of food, the solution rests on a low-input approach that strengthens rural communities and local markets and prioritises smallholder farms and small independent enterprises and retailers, localised democratic food systems and a concept of food sovereignty based on self-sufficiency, agroecological principles and regenerative agriculture.

It would involve facilitating the right to culturally appropriate food that is nutritionally dense due to diverse cropping patterns and free from toxic chemicals while ensuring local ownership and stewardship of common resources like land, water, soil and seeds.

That’s where genuine environmentalism and the future of food begins.

Tyler Durden Thu, 03/14/2024 - 02:00

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Five Aerospace Investments to Buy as Wars Worsen Copy

Five aerospace investments to buy as wars worsen give investors a chance to acquire shares of companies focused on fortifying national defense. The five…



Five aerospace investments to buy as wars worsen give investors a chance to acquire shares of companies focused on fortifying national defense.

The five aerospace investments to buy provide military products to help protect freedom amid Russia’s ongoing onslaught against Ukraine that began in February 2022, as well as supply arms in the Middle East used after Hamas militants attacked and murdered civilians in Israel on Oct. 7. Even though the S&P 500 recently reached all-time highs, these five aerospace investments have remained reasonably priced and rated as recommendations by seasoned analysts and a pension fund chairman.

State television broadcasts in Russia show the country’s soldiers advancing further into Ukrainian territory, but protests have occurred involving family members of those serving in perilous conditions in the invasion of their neighboring nation to be brought home. Even though hundreds of thousands of Russians also have fled to other countries to avoid compulsory military service, the aggressor’s President Vladimir Putin has vowed to continue to send additional soldiers into the fierce fighting.

While Russia’s land-grab of Crimea and other parts of Ukraine show no end in sight, Israel’s war with Hamas likely will last for at least additional months, according to the latest reports. United Nations’ leaders expressed alarm on Dec. 26 about intensifying Israeli attacks that killed more than 100 Palestinians over two days in part of the Gaza Strip, when 15 members of the Israel Defense Force (IDF) also lost their lives.

Five Aerospace Investments to Buy as Wars Worsen: General Dynamics

One of the five aerospace investments to buy as wars worsen is General Dynamics (NYSE: GD), a Reston, Virginia-based aerospace company with more than 100,000 employees in 70-plus countries. A key business unit of General Dynamics is Gulfstream Aerospace Corporation, a manufacturer of business aircraft. Other segments of General Dynamics focus on making military products such as Abrams tanks, Stryker fighting vehicles, ASCOD fighting vehicles like the Spanish PIZARRO and British AJAX, LAV-25 Light Armored Vehicles and Flyer-60 lightweight tactical vehicles.

For the U.S. Navy and other allied armed forces, General Dynamics builds Virginia-class attack submarines, Columbia-class ballistic missile submarines, Arleigh Burke-class guided missile destroyers, Expeditionary Sea Base ships, fleet logistics ships, commercial cargo ships, aircraft and naval gun systems, Hydra-70 rockets, military radios and command and control systems. In addition, the company provides radio and optical telescopes, secure mobile phones, PIRANHA and PANDUR wheeled armored vehicles and mobile bridge systems.

Chicago-based investment firm William Blair & Co. is among those recommending General Dynamics. The Chicago firm gave an “outperform” rating to General Dynamics in a Dec. 21 research note.

Gulfstream is seeking G700 FAA certification by the end of 2023, suggesting potentially positive news in the next 10 days, William Blair wrote in its recent research note. The investment firm projected that General Dynamics would trade upward upward upon the G700’s certification.

“General Dynamics’ 2023 aircraft delivery guidance of approximately 134 planes assumes that 19 G700s are delivered in the fourth quarter,” wrote William Blair’s aerospace and defense analyst Louie DiPalma. “Even if deliveries fall short of this target, we believe investors will take a glass-half-full approach upon receipt of the certification.”

Chart courtesy of

Five Aerospace Investments to Buy as Wars Worsen: GD Outlook

The G700 is a major focus area for investors because it is Gulfstream’s most significant aircraft introduction since the iconic G650 in 2012, DiPalma wrote. Gulfstream has the highest market share in the long-range jet segment of the private aircraft market, the highest profit margin of aircraft peers and the most premium business aviation brand, he added.

“The aircraft remains immensely popular today with corporations and high-net-worth individuals,” Di Palma wrote. “Elon Musk has reportedly placed an order for a G700 to go along with his existing G650. Qatar Airways announced at the Paris Air Show that 10 G700 aircraft will become part of its fleet.”

G700 deliveries and subsequent G800 deliveries are expected to be the cornerstone of Gulfstream’s growth and margin expansion for the next decade, DiPalma wrote. This should lead to a rebound in the stock price as the margins for the G700 and G800 are very attractive, he added.

Management’s guidance is for the aerospace operating margin to increase from about 13.2% in 2022 to roughly 14.0% in 2023 and 15.8% in 2024. Longer term, a high-teens profit margin appears within reach, DiPalma projected.

In other General Dynamics business segments, William Blair expects several yet-unannounced large contract awards for General Dynamics IT, to go along with C$1.7 billion, or US$1.29 billion, in General Dynamics Mission Systems contracts announced on Dec. 20 for the Canadian Army. General Dynamics shares are poised to have a strong 2024, William Blair wrote.

Five Aerospace Investments to Buy as Wars Worsen: VSE Corporation

Alexandria, Virginia-based VSE Corporation’s (NASDAQ: VSEC) price-to-earnings (P/E) valuation multiple of 22 received support when AAR Corp. (NYSE: AIR), a Wood Dale, Illinois, provider of aviation services, announced on Dec. 21 that it would acquire the product support business of Triumph Group (NYSE: TGI), a Berwyn, Pennsylvania, supplier of aerospace services, structures and systems. AAR’s purchase price of $725 million reflects confidence in a continued post-pandemic aerospace rebound.

VSE, a provider of aftermarket distribution and repair services for land, sea and air transportation assets used by government and commercial markets, is rated “outperform” by William Blair. The company’s core services include maintenance, repair and operations (MRO), parts distribution, supply chain management and logistics, engineering support, as well as consulting and training for global commercial, federal, military and defense customers.

“Robust consumer travel demand and aging aircraft fleets have driven elevated maintenance visits,” William Blair’s DiPalma wrote in a Dec. 21 research note. “The AAR–Triumph deal is valued at a premium 13-times 2024 EBITDA multiple, which was in line with the valuation multiple that Heico (NYSE: HEI) paid for Wencor over the summer.”

VSE currently trades at a discounted 9.5 times consensus 2024 earnings before interest, taxes, depreciation and amortization (EBITDA) estimates, as well as 11.6 times consensus 2023 EBITDA.

Five Aerospace Investments to Buy as Wars Worsen: VSE Undervalued?

“We expect that VSE shares will trend higher as investors process this deal,” DiPalma wrote. “VSE shares trade at 9.5 times consensus 2024 adjusted EBITDA, compared with peers and M&A comps in the 10-to-14-times range. We think that VSE’s multiple will expand as it closes the divestiture of its federal and defense business and makes strategic acquisitions. We see consistent 15% annual upside for shares as VSE continues to take share in the $110 billion aviation aftermarket industry.”

William Blair reaffirmed its “outperform” rating for VSE on Dec. 21. The main risk to VSE shares is lumpiness associated with its aviation services margins, Di Palma wrote. However, he raised 2024 estimates to further reflect commentary from VSE’s analysts’ day in November.

Chart courtesy of

Five Aerospace Investments to Buy as Wars Worsen: HEICO Corporation

HEICO Corporation (NYSEL: HEI), is a Hollywood, Florida-based technology-driven aerospace, industrial, defense and electronics company that also is ranked as an “outperform” investment by William Blair’s DiPalma. The aerospace aftermarket parts provider recently reported fourth-quarter financials above consensus analysts’ estimates, driven by 20% organic growth in HEICO’s flight support group.

HEICO’s management indicated that the performance of recently acquired Wencor is exceeding expectations. However, HEICO leaders offered color on 2024 organic growth and margin expectations that forecast reduced gains. Even though consensus estimates already assumed slowing growth, it is still not a positive for HEICO, DiPalma wrote.

William Blair forecasts 15% annual upside to HEICO’s shares, based on EBITDA growth. HEICO’s management cited a host of reasons for its quarterly outperformance, highlighted by the continued commercial air travel recovery. The company also referenced new product introductions and efficiency initiatives.

HEICO’s defense product sales increased by 26% sequentially, marking the third consecutive sequential increase in defense product revenue. The company’s leaders conveyed that defense in general is moving in the right direction to enhance financial performance.

Chart courtesy of

Five Dividend-paying Defense and Aerospace Investments to Purchase: XAR

A fourth way to obtain exposure to defense and aerospace investments is through SPDR S&P Aerospace and Defense ETF (XAR). That exchange-traded fund  tracks the S&P Aerospace & Defense Select Industry Index. The fund is overweight in industrials and underweight in technology and consumer cyclicals, said Bob Carlson, a pension fund chairman who heads the Retirement Watch investment newsletter.

Bob Carlson, who heads Retirement Watch, answers questions from Paul Dykewicz.

XAR has 34 securities, and 44.2% of the fund is in the 10 largest positions. The fund is up 25.82% in the last 12 months, 22.03% in the past three months and 7.92% for the last month. Its dividend yield recently measured 0.38%.

The largest positions in the fund recently were Axon Enterprise (NASDAQ: AXON), Boeing (NYSE: BA), L3Harris Technologies (NYSE: LHX), Spirit Aerosystems (NYSE: SPR) and Virgin Galactic (NYSE: SPCE).

Chart courtesy of

Five Dividend-paying Defense and Aerospace Investments to Purchase: PPA

The second fund recommended by Carlson is Invesco Aerospace & Defense ETF (PPA), which tracks the SPADE Defense Index. It has the same underweighting and overweighting as XAR, he said.

PPA recently held 52 securities and 53.2% of the fund was in its 10 largest positions. With so many holdings, the fund offers much reduced risk compared to buying individual stocks. The largest positions in the fund recently were Boeing (NYSE: BA), RTX Corp. (NYSE: RTX), Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC) and General Electric (NYSE:GE).

The fund is up 19.07% for the past year, 50.34% in the last three months and 5.30% during the past month. The dividend yield recently touched 0.69%.

Chart courtesy of

Other Fans of Aerospace

Two fans of aerospace stocks are Mark Skousen, PhD, and seasoned stock picker Jim Woods. The pair team up to head the Fast Money Alert advisory service They already are profitable in their recent recommendation of Lockheed Martin (NYSE: LMT) in Fast Money Alert.

Mark Skousen, a scion of Ben Franklin, meets with Paul Dykewicz.

Jim Woods, a former U.S. Army paratrooper, co-heads Fast Money Alert.

Bryan Perry, who heads the Cash Machine investment newsletter and the Micro-Cap Stock Trader advisory service, recommends satellite services provider Globalstar (NYSE American: GSAT), of Covington, Louisiana, that has jumped 50.00% since he advised buying it two months ago. Perry is averaging a dividend yield of 11.14% in his Cash Machine newsletter but is breaking out with the red-hot recommendation of Globalstar in his Micro-Cap Stock Trader advisory service.

Bryan Perry heads Cash Machine, averaging an 11.14% dividend yield.

Military Equipment Demand Soars amid Multiple Wars

The U.S. military faces an acute need to adopt innovation, to expedite implementation of technological gains, to tap into the talents of people in various industries and to step-up collaboration with private industry and international partners to enhance effectiveness, U.S. Joint Chiefs of Staff Gen. Charles Q. Brown Jr. told attendees on Nov 16 at a national security conference. Prime examples of the need are showed by multiple raging wars, including the Middle East and Ukraine. A cold war involves China and its increasingly strained relationships with Taiwan and other Asian nations.

The shocking Oct. 7 attack by Hamas on Israel touched off an ongoing war in the Middle East, coupled with Russia’s February 2022 invasion and continuing assault of neighboring Ukraine. Those brutal military conflicts show the fragility of peace when determined aggressors are willing to use any means necessary to achieve their goals. To fend off such attacks, rapid and effective response is required.

“The Department of Defense is doing more than ever before to deter, defend, and, if necessary, defeat aggression,” Gen. Brown said at the National Security Innovation Forum at the Johns Hopkins University Bloomberg Center in Washington, D.C.

One of Russia’s war ships, the 360-foot-long Novocherkassk, was damaged on Dec. 26 by a Ukrainian attack on the Black Sea port of Feodosia in Crimea. This video of an explosion at the port that reportedly shows a section of the ship hit by aircraft-guided missiles.

Chairman Joint Chiefs of Staff Gen. Charles Q. Brown, Jr.
Photo By: Benjamin Applebaum

National security threats can compel immediate action, Gen. Brown said he quickly learned since taking his post on Oct. 1.


“We may not have much warning when the next fight begins,” Gen. Brown said. “We need to be ready.”


In a pre-recorded speech at the national security conference, Michael R. Bloomberg, founder of Bloomberg LP, told the John Hopkins national security conference attendees about the critical need for collaboration between government and industry.


“Building enduring technological advances for the U.S. military will help our service members and allies defend freedom across the globe,” Bloomberg said.


The “horrific terrorist attacks” against Israel and civilians living there on Oct. 7 underscore the importance of that mission, Bloomberg added.

Paul Dykewicz,, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Attention Holiday Gift Buyers! Consider purchasing Paul’s inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is great gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many othersCall 202-677-4457 for special pricing on multiple-book purchases or autographed copies! Follow Paul on Twitter @PaulDykewicz. He is the editor of and, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper, after writing for the Baltimore Business Journal and Crain Communications.

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