After
two years of winding down the U.S. military’s presence in Iraq and Afghanistan,
the rumblings of war are being felt in Syria.
Calls for American intervention in Syria’s civil war have been
increasing lately, especially after reports indicate that Syria’s government
used chemical weapons on civilians.
According
to a Reuters /Ipsos poll, 60 percent of Americans surveyed said they don’t
favor the U.S. intervening in Syria, even if it’s confirmed that chemical
warfare is being used in that country.
Only 9 percent believe President Obama should act now.
Regardless
of what Americans want, it may well be war that they get. A prescient barometer for gauging the
likelihood of military conflicts in the near future suggests war is on the
horizon. The Dow Jones U.S. Defense
Index (DJUSDN), a composite measure of defense stocks, has been one of the
stock market’s top performers this year.
Defense stocks are conspicuously outperforming the S&P 500 (see
graph below), just as they did in 2001 in the months leading up to and
following the 9/11 terrorist episode. During
this same period the broad market as measured by the S&P 500 was suffering
a bear market.
In
2001 the defense stocks clearly saw war on the horizon and proved to be an
accurate barometer for the launching of Operation Enduring Freedom in Afghanistan
in late 2001. This time around it’s
Syria that is the potential catalyst to another military escapade. Americans have clearly become weary of war,
yet with the Federal Reserve’s proposed strictures on monetary policy another
war would act as a surrogate financial market and economic stimulus. This could provide the excuse needed to
launch a military initiative in the near future, especially if the bond market
continues to sag.
Also
worth mentioning is that the 24-year cycle of war, a component of the 120-year
Kress cycle series, is due to bottom late next year. Historically wars have been fought around
this critical cycle bottom.
