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January 2, 2013November 12, 2013Loren B. Thompson, Ph.D

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Sequestration Threat To Defense Sector Begins To Recede (From Forbes)

January 2, 2013November 12, 2013Loren B. Thompson, Ph.D

This week’s fiscal compromise in Washington includes a two-month delay in implementing the sequestration provisions of the Budget Control Act. That’s even better news for the defense sector than it sounds, because the outcome of negotiations this week strongly suggests that sequestration as currently defined in the budget law is never going to happen. The stock market has been signaling that possibility, bidding up the price of defense shares despite a constant drumbeat of impending doom in the news media. The fiscal issues on which the two parties have now compromised consisted mainly of items that one party favored and the other opposed, so it is highly probable they will compromise again in March on sequestration — a mechanism which both of them deeply dislike. Bottom line: the draconian cuts to defense that shareholders and stakeholders have been fearing aren’t going to happen, at least not to anywhere near the extent currently mandated in law. I have written a commentary for ForbesĀ here.

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