Increasing exports are driving US defense sector growth, helping it to survive the impact of budget cuts.
All government spending was cut, including US defense expenditures, which now face annual cuts of $50 billion until 2023.
US defense spending accounts for almost 39% of the global total. That’s approximately equal to the combined military spending of the next 15 countries.
The faster the global economy grows, the higher the defense spending. Defense spending growth has shifted from developed countries to emerging ones.
For investors looking for an introduction to the defense industry, Lockheed Martin is part of the Industrial Select Sector SPDR Fund (XLI).
We’ve discussed rig count activity in US onshore and offshore fields. Now, we’ll review the major oilfield service companies’ outlook on the US market.
For the week ending November 26, 2014, the number of horizontal rigs decreased by one from the previous week’s count. Currently, there are 1,371 horizontal rigs.
Offshore rigs increased by one to 54, up from 53 the previous week. This continues the offshore rig count’s trend since reaching a high of 66 in August.
During the week ending November 26, the US onshore rig count decreased by 13 from the previous week’s count. There were 1,863 land-based rigs.
According to the U.S. Energy Information Administration (or EIA), the Permian Basin is the largest crude oil–producing region in the US.
Natural gas rig counts have been on a downward trend for about three years. However, the gas-targeted rig count seems to be stabilizing.
Baker Hughes’ major basin oil rig count decreased by two—from 1,574 to 1,572. The main reductions were in “Other” basins, where oil rigs fell by 14 counts.
According to Baker Hughes, an oilfield service company, the rig count totaled 1,917 active oil and gas rigs in the US during the week ending November 26.
The ten-year bond had a big rally, with yields decreasing from 2.31% to 2.16%. Ginnie Mae TBAs rallied as well, rising from 104 17/32 to 104 31/32.
As a general rule, a lack of volatility is good for mortgage REITs, which hedge some interest rate risk. Increasing volatility in interest rates increases the cost of hedging.
Last week was a short one, with the Thanksgiving Day holiday on Thursday and a half day on Friday. Most of the week’s data was front-loaded into Monday through Wednesday.
The ten-year bond yield is the basis for long-term interest rates The ten-year bond influences everything from mortgage rates to corporate debt. It’s now the benchmark for long-term US interest…
We seem to be at a bit of an inflection point in the labor market. The leading indicators (initial jobless claims and job openings) are registering boom-type readings.
If the economy improves and wages remain suppressed, corporate profits will also improve. This would be positive for US stocks (SPY)(IVV).
With high interest rates, a portfolio exposed to both bonds and the utilities sector could see negative returns. This could make you face a risk twice.