We know that President Obama and his Russian counterpart Vladimir Putin will be meeting late this afternoon in New York.
After that, things get a bit fuzzy.
The White House says the meeting will focus on Russia's moves in Ukraine and upholding the peace in that region. Putin's camp says Syria and the war against ISIS will be the main topic and everything else is "time permitting." But whether they talk about Syria or not, Russia's ever-growing involvement in Syria and the entire Middle East is definitely getting Washington's attention. And it should also grab investor attention too.
That's because the Pentagon wants to make sure U.S. air power remains superior in the face of what could be at least very close contact with Russian bombers and jets in the coming years over Syria or elsewhere. So the Air Force wants to speed up its key projects in development, and the top priority project right now is the move to replace the B-1 and B-52 bombers. Those bombers were made by Boeing, (the B-1 was actually made by now-Boeing subsidiary Rockwell), but the contract to replace them is up for grabs between a Boeing-Lockheed Martin joint team and Northrop Grumman. The prize is the estimated $55 billion the Defense Department will shell out for about 100 of the new bombers.
But the new element here is an added sense of urgency. Defense News reported this weekend that Air Force Secretary Deborah Lee James is implementing an incentive program for defense contractors to get projects done ahead of schedule. The plan will reportedly start with small cash awards, but eventually could become more substantial. It's just the latest example of what could be a perfect storm of sorts for the defense aerospace industry, which is already seeing much increased demand thanks to the Iran nuclear deal and the Obama administration's distaste for troops on the ground in favor of airstrikes. Of course. when it comes to speed, the Pentagon may want to start practicing what's it's preaching. The decision on who gets this coveted bomber contract was first expected to be announced this summer. Then it was pushed back to September. Now it looks like we won't hear the official news until next month.
Obviously, Boeing, Northrop Grumman, and Lockheed Martin will be closely following that announcement. But the entire defense stock sector continues to see one new bullish sign after another from global developments. The defense sector overall has had a decent year, with most of the top five U.S. contractors clearly outperforming the overall market. President Obama has already made a promise during his U.N. General Assembly speech today that he will not hesitate to use force if the U.S. or its allies are threatened. But today's Obama-Putin meeting could provide more positive news for defense stocks.