you see countries like Russia and China strengthening their positions and they really only have one goal and that is to challenge us and the Western order that has basically dictated to them and everybody else the rules of the game internationally speaking for the past 70 years okay everybody welcome to the angel research podcast my name is Jason stutman and as usual we are here today to discuss the Market's hottest stock stories investment opportunities and money making strategies for you the retail investor today we're specifically going to be talking about opportunities in Aerospace and defense that market is red hot right now as nations are ramping up spending during a period of uh High geopolitical uncertainty and instability and that means uh a lot of money funding into the sector and we brought special guest Jason Simpkins with us today to walk us through this topic and Jason is a specialist in the Aerospace and defense industry specifically as it pertains to investing um Jason is otherwise known as J Money uh that's how much Jason likes making uh making money he actually even has a tattoo with a dollar bill on it I don't know if it's appropriate for you to break it out it's it's it's just the nickname oh it's just oh it doesn't have a dollar bill sign it just says so Jason's going to walk us through the uh you know Aerospace and defense Market some new technologies that are coming around but first a really quick disclaimer nothing that we say here today is personal uh investment advice we can give you the tools the insights and the strategies that will help you make your next breakout trade but we can't make these trades for you also please uh like the video subscribe and comment show us some love uh we do this for free all you got to do is take two seconds to you know just click the like button it ain't hard give us a like show us some love come on guys uh and with all that said with all that out of the way welcome Jace to the show it is great to have you here how are you doing I'm doing terrific I'm excited to be here this is my first podcast experience it couldn't couldn't be better okay uh so look there's a lot of gurus out there uh some of them worth their uh worth their weight in gold some of them not um a lot of them have different um different you know areas of focus but uh you know we have options guys we have guys who are into resources guys who are into Tech but uh one thing is for certain is that you have a very unique focus in this uh inter in this in the investment newsletter space um as far as what you're focused on and that is Aerospace and defense I don't know of anybody else who really focuses on that space uh so you know it is uh it's exciting to have you on here today and maybe we could start off with you giving us a little bit of background about yourself and then maybe give us the elevator pitch on why investors uh retail investors specifically should be involved in and interested in the Aerospace and defense industry right now okay so I've been doing this for about 15 years now I've been a financial analyst and researcher and you know I started at 23 uh so it's it's been a journey uh and you know I guess I decided to launch trading Services focused on this specific sector Aerospace and defense about five years ago the reason was effectively twofold there was a short-term investing kind of Horizon and a long-term one the short-term one was Donald Trump winning the presidency and I felt like that made for a tremendous catalyst for military investing because you know the bra the Barack Obama basically started kind of cutting defense spending around that time our wars in Afghanistan and Iraq were winding down they weren't necessarily concluded but they were starting to to come to a close uh there was a shift in the way that we were preparing our military that you know there was an idea of doing more with less uh focusing on you know certain more lethal projects certain like you know very specific highly concentrated areas of investment rather than just splashing the pot with money which had been you know pretty much the way things had gone for for a few decades with the election of uh president like Donald Trump who you know was very strong with his America First agenda very big into projecting American power uh it was pretty clear to me that defense contractors and the defense space was going to accelerate that that defense spending was going to come back up uh that it was going to be resurgent and it was uh now a lot of people didn't expect that to carry over into the Biden Administration I I did even before what we saw with Russia and the reason for that and something I always tell people and this is kind of an important thing when it comes to investing in this sector you talk about the government money military projects are bipartisan there are Boeing plants that make Munitions in Washington in Democratic strongholds across the country there are factories and plants all over the country they're in Virginia you look at the DC area here in in Maryland how many jobs are supported by defense contractors the industry itself employs millions of people and when you build something like an aircraft carrier it's almost like you have like with the with the Auto industry you have a supply chain you have this knock-on effect it's the same thing it's it's an investment it's almost like an infrastructure investment it's like it's putting people to work so when you put the money into defense you're putting it into jobs you're putting it into something that is very sellable for politicians which is a strong American Military and you know being able to to secure our country and basically really if you're super idealistic about it promote democracy overseas uh all that the short-term Catalyst in terms of why I would get into this space the long-term Catalyst the more cynical person that I am now I view America and the Western order as a power in Decline I I see waning influence okay and you see countries like Russia and China strengthening their positions and they really only have one goal and that is to challenge us and the Western order that has basically dictated to them and everybody else the rules of the game internationally speaking for the past 70 years they don't want to play by those rules so the only thing they can do is keep funding their own military machine keep putting money into their own offensive and defensive capabilities until the point where they are capable of asserting their own Sovereign will on the world sure and breaking out of that Western order that's the longer term catalyst and that's what we started to see really this year when you see the aggression when you see Russia it had already I mean around the time you could look at it I I in the first Annex Crimea back in 2014 2015. uh so that you know that obviously played into into the you know potential for the industry as well but now with the full-on invasion and you see with China reabsorbing Hong Kong and we all kind of know Taiwan is next right so it's just a matter of them challenging the order and us you know the West the United States and Europe are going to have to rise to the occasion to defend it how do you see that whole situation playing out as far as Ukraine goes and then maybe just expanding on that like is you know you said you think taiwan's next do you think that that's do you may have a timeline for that happening uh do you think that's a maybe you know is that a certainty you think it's a likelihood I think it's an overwhelming certainty I mean China has said as much they have the one China policy so the one China policy says this is ours I mean there's there's no other it's called The One China policy reason the the objective is singular uh and so that that's just gonna happen whether it happens peacefully whether they're able to reabsorb it through political pressure uh which right now Taiwan is obviously not willing to do that they don't want to be a part of of China um so it seems like the only way they're going to be able to achieve that is through military intervention and so for them everything that they do is about basically mitigating or negotiating or negating any kind of U.S or Western defense of Taiwan um you know that's that's the principal goal it's and it's it's not even just Taiwan too A lot of times people talk about the South China Sea they've been very active there trying to like there's this ocean the South China say it borders about a dozen Nations like Malaysia Indonesia uh Vietnam now internationally every country gets 10 miles off their Coast it's it's their it's their water that's that's your coastline China does not agree with that they they think that the South China Sea is called the South China Sea because it belongs to them and not only is it ripe with resources even like it's a great fishing area there's a lot of fish for commercial fishing there's oil and gas reserves underneath it's got resources but it's also a major shipping channel it's a lot you know so there's a lot of control there and that for them is very much in their kind of sphere of influence and they they want that they want all of that and they want to be able to say this is our border and they again they want the ability to say what is and what is not within their borders they don't want the United States or Europe or the UN or anybody else telling them what is and or is not China they're gonna tell you and so that's that's where we're at with it and that's where we've been everything they've done for the past few decades is about achieving this goal and they're not going to stop until they do it so you know that's that's a certainty but again how when it happens to put a timetable on it I would think sooner rather than later A lot of people thought it was going to happen at numerous times a lot of people thought that the pandemic would give them cover that that the world was so chaotic and that our military somewhat hobbled because we even had like whole aircraft carriers being basically taken out of commission because the entire Crews had come down with covet it was a kind of a wild time a lot of people also speculated that once Russia invaded Ukraine well now here's another great opportunity because the West now is so preoccupied over here trying to fund UK Ukraine's war and and resistance to the Russian invasion that they can't necessarily go and divert too much attention in resources to Taiwan should it be so you know it's it's interesting I don't know what time exactly but I I it's going to be in our lifetimes that's for sure I'll tell you that are there any specific options or strategies that we have if China were to just you know tomorrow move in on Taiwan or how do you think that we would actually respond is there yeah the way that would play out is probably a lot like it did in Ukraine it would be a question one of how long can Taiwan hold out with the with the weapons that they have how long can they withstand and basically the Pentagon is going to tell you they've got 24 hours yeah um you know it's they're just they don't really stand much of a chance in that respect if they can put up more of a fight obviously the better I mean you saw it with Ukraine the longer you can hold out and you know once the countries and the world sees you fighting for yourself and see that there's a window they they will act um but that's I would I would imagine if especially if China is better prepared than Russia was which I suspect they would be I think they're probably inherently better at planning than Russia was uh I think their system of governments I think they've you know probably frankly have smarter people in charge uh I think they're a little bit more ready and know what they're doing but even though I think Ukraine might give them a little bit of policy might have been like oh well maybe it's not as easy as all of that you know uh but overall they're not gonna have much time and then you're gonna get the same kind of sanctions you're gonna get economic and diplomatic pressure from the Western world that's probably not going to change their minds that's going to be something that they're again prepared for they'll look at this whole thing they'll look at what rush is doing is more of a trial run and they'll say okay well they they were sanctioned in this way they were cut off from the banking system they were cut off from Swift let's be prepared for that let's be prepared let's know you know where what we got to do what we've got to have ready what kind of stockpiles we need whether it's food or energy resources technology where might we be cut off where might our choke points be where are our vulnerabilities uh economically speaking um and you know and I think China obviously would have way more uh economic weight to throw around uh you know I feel like it would be more difficult for us to to Levy sanctions on them because we rely on them so much you think that's true yeah China is without question a bigger part of the global economy yeah uh you know just each period I mean outside of its energy resources Russia you know really has very little to offer um and then you've even seen with with this Invasion how willing the world's kind of been do at least for the for the in the short term to stomach higher energy prices or at least try to pursue them from other sources uh you know no matter where it is uh so that's that's that's all that's kind of like they're they're one ace in the whole China has far more than that I mean China has you know stockpiles of U.S debt it is over two trillion
dollars of U.S debt that it's holding it has you know basically a a not a Stranglehold but you know a considerable amount of the world's manufacturing capacity like you talk about supply chain issues today like sanction China in a wartime effort and see what happens it would get ugly for sure think of everything that says made in China on it and then you know quadruple the price of it yeah uh so I see a lot of this as a lot I see a lot of what's going on right now is kind of posturing um there's a lot of like chest people you know the countries are puffing their chests out and uh you know one of the ways that you know countries do that is through spending and uh in 2023 the dod is going to spend 773 billion dollars uh which is up four percent from 2022. four percent doesn't sound like that much but when you have a massive budget that's uh that's an additional 30 billion dollars into this already massive industry that you were kind of talking about earlier is really is too big to fail so maybe you could give us a quick uh just run down of maybe three to five key areas in the Aerospace and defense industry or Technologies anything specific that you think uh investors should be looking at right now all right first um for just for the headline number it's actually bigger it's actually 858 billion that's the figure that came out of the Senate uh armed services committee earlier this week okay because that's what like the the president makes his budget request and then this is what actually has happened over you know basically the past several years the Congress comes back and gives them more than what they asked for um so actually the 850 billion dollars that the Pentagon is getting the Department of Defense is getting this year is a 10 increase it's 80 billion dollars more wow than what it was in the fiscal year 2022. so now we're about specific investing there are so many ways to play and that's one of the things I I genuinely love about the space because you look at it and it's it's exciting it's there's a lot of fun technology so you there's basic stuff one I like I I would always start with the basics and I mean these companies are in my portfolio but I don't mind mentioning them because they're they're pretty I'm going to interrupt you for a second just speaking of your portfolio I was looking at it earlier um we're in a period right now uh year to date S P 500 is down 21 uh and I took your portfolio average you're up 6.74 so I'm hanging in there uh that's I mean that is beyond impressive on a normal year it's like you know if you compound that over time it's actually really good return but you know it's not something that like we would be super impressed with here but in this environment I mean I think that's incredible so I think that's kind of a testament to you know you you know knowing what you're talking about with these stocks but also just being in the right place at the right time well right and that is an important thing to remember too when you talk about defense stocks you're talking about government spending that isn't going anywhere right so this isn't Consumer discretionary spending you know I'm reading about you know like I was just reading about like the CEO of Target and he's like we got a problem uh you know because people are cutting back on their spending that's what's going to happen in a recession you've got to worry about these things the reality is you know the there's there's no rainy day really for defense spending in America and so that government money is going to come it's not just going to come from the U.S government as you said it's going to come from
other now European countries that are scrambling up their defense budgets as well in light of of uh Russia's Invasion so I recommended Northrop Grumman uh sometime in I don't know earlier this year I think it was February February yeah that's I think I'm up about like 20 or so percent on that that was well timed but it was also like you could you could kind of see that coming you could kind of see the storm clouds and I looked at it as as much of a safety stock as one with growth potential it ended up having more growth potential given Russia's Invasion and the momentum that defense sector picked up after that but at first it was a safety play I've had Lockheed Martin the portfolio for years for the same thing and that's I think that one's up to I had to re-buy it when I when I changed uh services but like I've I've had I've basically been telling people to invest in that since 2017. I know we're up on that uh those stocks are never going to go out of style uh they just won't and neither will stocks like I always like Raytheon too raytheon's not in my portfolio but like it I used to own it and uh they make a lot of they make a lot of the missiles uh that are used in combat uh including like Patriot missiles and that kind of stuff and and that like they're like bullets missiles are like bullets you cannot have enough okay like you're going to war like that's the one thing Ukraine has to keep asking for too it's like we've burned through all these Munitions we need more okay because it the the offensive weapons from us are just going to keep calming the tenant columns just keep coming to most of these defense Giants do they pay dividends they do okay that seems like a really safe that makes it more important 100 yeah you can get like two or three usually around two or three percent yeah nothing crazy but it's enough you know quarterly and for a long time that's more than you were getting out of you know savings accounts at the bank it still kind of is I I feel like uh savings accounts are still probably about one percent or so uh so if you're getting that from a from a dividend you're doing okay every time I see my interest coming into my savings account I just left now it's going up now with the rate hikes but you know it's still it's not going to be the the two or three percent for I don't know depending on that the rate at Jay files going sure maybe maybe it will be higher but okay so you gave us a specific company are there any specific technologies that you're eyeing right now or okay yeah uh multiple uh first cyber security is always a good one uh because that's that's another you talk about like 21st century Warfare and weapons uh another one hypersonics I've been talking a lot about Hypersonic uh weapons and it's funny because I've actually been Fielding a lot more questions about Hypersonic weapons since uh top gun Maverick came out because and I have not seen this movie it took me a while they're hypersonics in that yeah someone told me he sees he like he like takes a Joyride on on like a Hypersonic plane in the opening scene he pops Dark Star yes Dark Star exactly and he flies off so I started getting all these questions about hypersonics which I've been talking about for five years no one really seemed to care and then all of a sudden this movie comes out and everyone's got questions about it so so there's a lot of stuff going on right now too with hypersonic so maybe we could focus a little bit on that um so some numbers that I pulled earlier on hypersonics here uh in terms of the increase in spending uh so I had 4.7 billion in 2023 versus 3.8 billion in 2022 which represents a 24 increase and you compare that to we kind of talked about the the four to ten percent increase in overall spending so I think it kind of puts things into perspective in terms of like how much the U.S military is prioritizing the growth of this particular technology over the the broader military industry as a whole yeah it's significant I can tell you right there too because you nailed the number it is 4.7 billion in the upcoming fiscal 23 year in fiscal 2017 you know what it
was 250 million wow so it's more than a 10-fold increase it's about a 15-fold increase since yeah uh maybe you could give us some information on Hypersonic missiles I know there's a lot of like kind of like I feel like sometimes people overuse the term what specifically is a Hypersonic missile who's developing them um who's leading this race uh should we be concerned about them just let's you know yeah Hypersonic technology has been around uh for a while uh for actually for really about almost 50 years I think uh it's basically you know hypersonics it needs to go five times faster than the speed of sound it means you go multiple times faster so at least mach five the speed of yeah the speed of sound uh and so that's kind of how fast they go now they you can do this in any kind of number of of ways uh in in Top Gun they had a manned vehicle which is not yeah you can do it and it has been done in the past the original uh I guess Hypersonic plane I think of the the SR-71 Blackbird that was a reconnaissance plane that was manned but now especially when you start getting up to the speeds the you know we're really looking at now you're talking about like mach 10 even like mach 20 like these incredibly High rates of speed uh there's really no sense in putting a person in that it's dangerous and you don't really need them to fight at that point sure and in terms of reconnaissance you I don't I don't think you're going to get too much more out of that than you would just with modern satellite technology um but the the big thing is the missiles right okay so there's it could be there's also different types of missiles one would be a standard kind of cruise missile that shoots in a straight line right uh a Hypersonic missile would just be an incredibly fast missile uh that would that alone is kind of dangerous enough they can be unloaded from any kind of platform uh you know standard kind of rocket launcher they can be shot from Planes they can be shot from ships uh that's that's the kind of thing and to to say like who who has them and he's developing basically Russia and China have them and Russia just became the first country to use one on the battlefield they blew up an arms Depot in Ukraine with one um I don't know that there are Hypersonic weapons have performed I think to the as much as we feared they they might I think they've been a little bit uh less consistent than than Russia probably projected which is typical in terms of what like their ability to Target their accuracy their actors yeah yeah so it's one it's one thing to make something go really fast it's another thing to hit your target with it correct uh again China's probably a lot further along China's uh Hypersonic weapons pretty much winning service in 2019. uh and again the United States doesn't have any in service right now uh so it shows you how far behind we are uh but like the the big ones they have that kind of tend to really scare people now you're talking about uh not the cruise missiles you're talking about like intercontinental ballistic missiles right so a standard ICBM like if Russia or China was going to attempt like say a nuclear attack on the United States they would shoot uh ICBM up in the in like a parabola in an arc and it would go up out of the atmosphere and it would come down in a relatively predictable trajectory you know you could kind of see it would be difficult to stop because even with modern Warheads that just do that they tend to break off into about a half a distance a dozen different smaller Warheads so you can't hit them all and I can tell you that on its best day the U.S missile Shield uh and there's there's numerous ways there's numerous layer star missile Shield most people refer to the Triad which is air Land and Sea power the sea being Seabourn missiles from submarines and Aegis Cruisers uh land-based missiles the big ones that come up out of the silos uh and then bombers which are kind of a proactive uh attempt to neutralize those set the missile Shield is on its best day about 80 percent effective okay so if Russia or anybody else shot half a dozen nuclear missiles at the United States in a best case scenario we'd knock five of them down but one would still hit okay uh that's that's a traditional ICBM now with hypersonic missiles they do something different they have what China's developed and what we're kind of working on it's something called boost Glide technology they shoot out into the atmosphere on this Glide vehicle the Warhead releases and it goes on an unpredictable path basically it doesn't just shoot up in a parabola and come back down it goes up travels horizontally more or less on a kind of an like an up and down kind of crooked pattern only kind of chaotically and then it fires directly down onto its intended target and it does this again at an extremely high rate of speed we really don't have the technology to stop that okay so that's what's got most like defense experts concerned and it's what's been concerning for the Pentagon and for politicians for you know like I said for the past several years that it became evident this happened even last year last year China conducted a test in which they shot a Hypersonic missile or I don't know if the missile Hypersonic vehicle at least around the world twice it circled the planet twice and then came back down and you know the U.S scientists depending
on they said we don't know how to do that we don't know how they did it and we sure as hell don't know how to do it okay and you're talking about two trips around the world and a hyper side going to Mach 5 that's 3 300 miles per hour that means those two trips around the planet probably took less than about a half hour okay so you can Circle The Globe twice in the time it basically takes you to order a pizza like that's that's kind of how fast the technology goes it's it's a three to four minute Journey from Beijing to Washington DC or from London to to Moscow so because we're so far behind in this or you know presumably I'm assuming that we're kind of just dumping money into the space right now what are or if any uh are the specific investment opportunities surrounding Hypersonic missiles right now there are at least 70 Hypersonic programs in development wow um and most every major contractor the big ones are working on a principally Lockheed Martin they are the most advanced uh you know Hypersonic company in the U.S they like they're pretty much all of our Hypersonic technology has been coming out of Lockheed Martin it comes out of out of their Department uh but Northrop Grumman Raytheon they're also collaborating on several projects so all that's happening I just recommended a company that builds rocket engines for all those companies because you know that's I think that's the better play it's a smaller company it's not as big and regardless of who's building the end product whether it's a Hypersonic missile or Glide vehicle or whatever they're going to buy this propulsion system and so that I think is probably the best way to play it but you know that you know a close second would probably be a company like Lockheed Martin okay um and do you uh give this information to your uh to your readers uh can you maybe maybe it's a good time to actually kind of tell people about like you know your newsletter service um and then like where they could get that that information on that particular company and and maybe some other companies that you're recommending sure all those stocks are in right now my wall Street's Proving Ground portfolio uh Lockheed Martin Northrop Grumman and then the the rocket engine manufacturer um you know they're all doing pretty well but that's where one would find them sorry what's the other question oh no I was just you know what uh you know that information is in reports or how yeah I have several reports on that I've been yeah I've been writing reports on that for years I'll probably write more I'll probably do a fresh one because it's it is so kind of timely and because now I am kind of getting these questions it's not something you know I really do have to update because things are kind of moving so fast and developments are coming out uh about four Hypersonic tests in the United States were conducted over the past couple months there was uh one in March that failed one in April that succeeded those are part of the uh hawc program that's uh Hypersonic air breathing weapons concept uh and then there's the arrow program that Lockheed Martin's working on that's air launch rapid response weapon and that's that was tested in May successfully and there's another test coming up in July so the advances are are you know happening very quickly we are in this massive race to catch up people understand the urgency I even just saw like Congress even demanded to be briefed on this uh because they're kind of just now learning uh the size of the gap of and the disconnect and like I said we talk about China and its intentions they have this window to act right now where they've kind of got one over on us you know and they can they can hold us at you know hostage in a way because they have a technology that they know we can't defend and you know I think it's unlikely that China would bomb the United States I think what's likely is they would fire a Hypersonic weapon at uh our bases in like Guam or our aircraft carrier groups in the Pacific the Pacific Fleet and the U.S presence in the Pacific so they can have their way there okay um one more question before we wrap up um are there any adjacent opportunities to uh to hypersonics like I saw that you had some reports on us on a satellite firm I was wondering if maybe they do like tracking of the of the Hypersonic missiles and then you had one on uh kind of laser laser guided weapons which I know that they've kind of been Fielding on some some uh some boats in terms of like the basically they're heating up a missile to explode is that realistic or what's the in the defense industry everything kind of overlaps okay you know a lot of times your offensive weapons are your defensive weapons as well okay so like you know more or less you're going to use a missile to shoot down an incoming missile right you know where you're going to use you know uh cyber warfare to to fight cyber warfare uh they're the laser weapons are also common like uh they're called direct energy weapons directed energy because a lot sometimes this laser can be microwave or something like that where you basically fry the components and this is be this would be very helpful against drone swarms so like you've got this you know swarm of drones come at you if you can shoot like a microwave pulse that fries their circuits that neutralizes the problem and you know a lot of those things are specifically with respect to China China's never going to build as many aircraft carriers the United States has the United States has something like a dozen or more aircraft carriers I think China has one or two they're not going to go and build a bunch they're not going to try to compete on that front sure what they want to do is build up you know swarms a smaller Expendable drones that they can use to take down a 13 billion dollar aircraft carrier on a with you know with a hundred million dollars what's the company Lucky Palmer I know it's not publicly traded but a private private company they're they're working on drone swarms and things like that a lot of people are working on it yeah I mean or do you have any drone companies in your in your portfolio I have a I have a drone company in my secret stock files portfolio Okay um okay speaking of uh we'll wrap up what we'll do is we'll leave a link in the description of this video uh with so that people can get access to your reports um and that has what like you know ticker symbols um sure a full explanation of all of you know basically the market uh the company uh its products it's management everything everything that you could pretty much want to know about if there's something in there that you want to know that's not in there I would say send an email to customer service at outsiderclub.com and I will answer your question okay awesome but we can link we can link that one as well uh Jason thanks for coming on uh for everyone else uh please comment let us know what you uh want us to cover next uh like And subscribe to the video and uh thanks again for coming on the show Jason and we'll see everybody
2022-07-01