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Downed US Drone to Impact Military Spending Allocations?

On Friday traders were wondering if the future of military spending had been called into question after Iran said it brought down an American surveillance drone.

According to published reports Iran's electronic warfare unit managed to take control of an unmanned RQ-170 Sentinel aircraft and land it.
Made by Lockheed Martin, the drone has been used in Afghanistan for years. It gained notoriety earlier this year when officials disclosed that one was used to keep watch Osama bin Laden's compound in Pakistan as the raid that killed him was taking place.

As lawmakers cut defense spending in an effort to trim the budget deficit, will they now look unfavorably at drones?

Trader Steve Grasso doesn’t think so. In fact he expects just the opposite. “Two areas where I expect to see increased spending are drones and cybersecurity,” he says.

”Absolutely right,” concurs Zach Karabell. “New generation war fare – that’s not where cuts are coming.”

They both think drones are the future of the military and are skeptical that the device Iran capture is of any significance.

“The drone that Iran captured looked like a VW Beetle,” Grasso says. “Now drones are 5 pounds that fit in a trunk and can be operated with a laptop.” In other words it's size suggests it was relatively old technology.

And Grasso suggests playing the space long AeroVironment. “It’s the only direct drone play. I own it personally.”

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Trader disclosure: On Dec 9, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders;
Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; Karabell is long AAPL; Karabell is long IBM

For Steve Grasso
Stuart Frankel & Co and it’s partners own CSCO
Stuart Frankel & Co and it’s partners own CUBA
Stuart Frankel & Co and it’s partners own GERN
Stuart Frankel & Co and it’s partners own HPQ
Stuart Frankel & Co and it’s partners own HSP
Stuart Frankel & Co and it’s partners own HSPO
Stuart Frankel & Co and it’s partners own MET
Stuart Frankel & Co and it’s partners own MSFT
Stuart Frankel & Co and it’s partners own MU
Stuart Frankel & Co and it’s partners own NYX
Stuart Frankel & Co and it’s partners own PRST
Stuart Frankel & Co and it’s partners own UAL
Stuart Frankel & Co and it’s partners own XRX

For Zach Karabell
Rivertwice is short XLF
Rivertwice is short Smh
Rivertwice is long DD

For Patty Edwards
Trutina Financial is long APPLE (AAPL)
Trutina Financial is long SPDR GOLD TRUST (GLD)
Trutina Financial is long MICROSOFT (MSFT)
Trutina Financial is long INTEL (INTC)
Trutina Financial is long TEXAS INSTRUMENTS (TXN)
Trutina Financial is long DUPONT (DD)
Trutina Financial is long BERKSHIRE HATHAWAY (BRK)
Trutina Financial is long COSTCO (COST)

For Willie Williams
No disclosures

For Jeff Kilburg
No disclosures

For Greg Zuckerman
No disclosures

For Meyer Shields
No disclosures




CNBC.com with wires.

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