Gearing up for a Defense Rally

It looks as if that the world is busting apart at the seams.

Unless you live under a rock you know that in the past two and a half weeks the world has experienced three vicious terrorist attacks.

First it was the London bombings. Followed by the bombing attempts last week.

Then over the weekend Egypt was attacked in what turned out to be the bloodiest Islamic insurgency attacks ever, killing at least 88 people.

Counter-terrorism experts agreed that the back-to-back nature of these terrorist attacks in Egypt and London, as well as similarities in the methods used, suggests that the Al-Qaeda leadership may have ordered both operations.

This is a clear sign that Osama bin Laden and his deputies remain in control of the terrorist network.

I do not believe that the ultimate targets of these attacks were human beings.

Rather, the attacks were set against government policies. The terrorists hope to separate political leaders from the support of their fearful citizens.

This is psychological warfare 101. Lose support, lose the war.

But the fact is people are scared. And in time like these investors will look to security stocks.

Including our very own DHB, which just last Thursday received a $10.1 million in new orders from the United States Army for various components of its Interceptor Outer Tactical Vests Systems.

In fact, since the first London bombings on July 7 this stock has been up almost 10%.

This won’t be the first (or last) time terrorist strikes have ignited frenzied buying in security stocks.

In fact, since Sept. 11, 2001, just about every explosion and elevated threat level has been greeted with a short-lived run-up in makers of everything from bomb detectors to surveillance systems.

The world is on edge. And we’ll continue to see a push in security stock

What are we in for?
Oil prices dipped today after this year’s seventh major storm, Gert, made landfall over the weekend.

Gert was weaker than expected only receiving the classification of tropical storm.

But these are nerve-racking times for the oil markets.

Right now demand is testing the limits of supply and even the tiniest of threatening news causes prices to bounce.

And we’re not out of the hurricane woods just yet. The season doesn’t end until November.

A single storm could easily knock out several oil ports causing a massive spike in oil and gasoline prices.

So what would that do?

If it’s anything like the movie Oil Storm, it ain’t pretty.

Around the world we’re starting to see the kind of chaos that high oil prices are delivering to society.

Last Wednesday thousands of people flooded the streets of the capital city of Yemen to protest against the price hike implemented by the government on oil derivatives.

36 people were killed and hundreds were injured when the demonstrations turned riotous.

The government decided to lift the subsidy on oil derivatives on Tuesday leaving a price increase up to 200%.

A 200% percent increase in gasoline prices in the US would put the price of a gallon of gas well over $7.

One has to wonder what effect that would have on US citizens.

Would we protest? Would we riot?

I hope that we are able to control such a matter. But only time will tell.

– Luke Burgess