What Does This Syrian Missile Strike Mean For Stocks?

In the last few days, we have had a set of players make moves inside the new U.S. administration. And that is playing out in the arena of foreign affairs today.

Last week, the U.S. Secretary of State, a former oil company CEO, stated that Syria’s fate was going “to be decided by the Syrian people.” Unfortunately, that was diplomatic language interpreted by the dictator Assad as a green light. He went ahead and issued the order for an egregious chemical weapons air strike on his own people.

At the same time this was happening, the new head of the National Security Council, H.R. McMaster, won an important battle to staff that critical function with its standard role players. This took that internal White House function up in importance -- and immediately restored a more traditional tone to this nation’s foreign policymaking.

Today, we woke to the good news of a targeted strike on the Syrian air base that had sent the planes to do the chemical weapons strike.

This is a measured, immediate military response that will now undergird a fresh round of behind the scenes diplomacy, both by the U.S. and its allies.

All of this is, in fact, good news.

Which is why the U.S. and global stock markets sold off in a knee jerk reaction at first. But by early morning, had recovered to trading flat. That says traders are comfortable with the approach taken by the U.S., which is clearly being directed by the newly reconstituted National Security Council; and the former Marine at the head of the Defense Department, James Mattis.

Today, we also got a muddle-through print on the U.S. nonfarm jobs reports. A +98K monthly number sounds low. But it came tied to a 4.5% unemployment rate. While a lagging indicator, this was showing more underlying progress is being made by the U.S. economy. All in all, a mixed bag of data is no “new” news on the macro front. Again, we see no response from the broader stock market.

In sum, I think traders and equity investors generally -- and frankly U.S. citizens and citizens of the world -- should breathe a big sigh of relief. The new inexperienced President has taken the right steps here. He has been guided by the experienced hands, who are now fully empowered, and being listened to.

That is all good news, coming from this economist.

My more specific stock picks for looking into trading activity, on this moment of foreign affairs—

Note first: In this Syrian air strike, two U.S. warships located in the eastern Mediterranean launched 59 Tomahawk cruise missiles. So these 3 stocks are worth looking into:

(1) Raytheon (NYSE:RTN) currently makes these missiles. There will be a need for re-supply of the missiles shot. The stock was up about +1% intraday.

(2) Take a look at Rolls Royce Holdings (OTC:RYCEY) , which is a higher Zacks #2 Ranked (BUY) competitor, based in the U.K. It is also a sound long-term play, with a Zacks VGM score of A. The U.K. typically follows the U.S. in on these types of missions. The stock was up +0.8% intraday.

(3) A final stop may be Huntington Ingalls (NYSE:HII) . They are the primary building of U.S. warships, like the ones that shot the Tomahawk missile. This stock was up +2.0% intraday.

That says it all. The U.S. Navy may be the biggest winner here.

John Blank