For the “Seventy Twelfth” Time… But This Sector

hypersonic missiles

My first job out of college was on Capitol Hill. I’ll admit that interning for a Congressional representative in D.C. is boring. When I wasn’t looking at my fantasy football lineup, I responded to handwritten letters from constituents. Some of the letters were crazy. I remember one demanding all evidence that the Moon Landing was real. Others – were just unusual. A letter asked the Congressman if they could get a VIP tour of the U.S. Embassy… in Turkmenistan.

At the time, the Congressman for whom I worked was a key member of the U.S. Select Intelligence Committee. This leadership team goes into a steel bunker, hands over their phone, and receives information on the covert U.S. operations around the globe – and the military and terrorist threats that should keep people up at night. 

Back in 2005, when the job ended, I had an opportunity to speak with the Congressman about my future. Typically, interns will ask a few dozen questions if they get that opportunity. I only asked two. First: What should I study in graduate school. Second: Could I receive a law school recommendation letter. I skipped law school (and never actually followed up on the recommendation). He went into deep detail on why I should study cybersecurity – something I ultimately did as a consultant and graduate student. 

Cybersecurity was the thing that kept this Congressman up at night for a long time. But three years ago, when I joined him for dinner in Baltimore – something else had supplanted that place in his mind. It was 2019, and he was more concerned about another threat… One that just hit the headlines over the weekend. 

Russia Goes Hypersonic

While I joined the Congressman at dinner at the Prime Rib in Baltimore, I asked him that question that I do every time I see him (every two or three years). “What are you worried about?” D.C. is a weird place. The people who care about their constituents are most concerned about the headline issue impacting Americans. Right now, it would be commodity inflation, housing costs, and social security. 

The people who pretend to care about their constituents are more concerned about their careers and climbing the social ladder in that town (Read the book – This Town: Two Parties and a Funeral-Plus, Plenty of Valet Parking!-in America’s Gilded Capital by Mark Leibovich to understand my point). I assure you, this Congressman cares deeply… which is why he’s hyper worried about hypersonic missiles. 

During that dinner, he asked me what I knew about them. I went into pretty deep detail – explaining this to my father who joined us – about them, having relied on my military security courses. 

This is advanced military technology – missiles that can travel about one mile per second (or five times the speed of sound at more than 3,800 miles per hour). On the other hand, the Tomahawk cruise missile – a standard U.S. weapon – travels at just 550 mph.

These missiles reach a target thanks to a jet engine and can effectively bypass any missile defense system that is supposed to intercept any incoming warhead. These missiles can also fly at very low trajectories, making them nearly impossible to detect on radar systems. 

To put into perspective what I’m talking about consider this elementary lesson that I learned that evening. Traditional missile defense systems – designed to intercept an incoming attack – require about eight seconds (EIGHT SECONDS!) to react to an attack. A missile will have traveled eight miles in those eight seconds (EIGHT SECONDS!). And there are reports that the Russian Zircon missile could travel 12 miles in that time. 

The Hypersonic Race

I had also learned that the U.S. was about three years behind both Russia and China on the development of these weapons back in 2019. That wasn’t just coming from my source, but also from defense contractor Raytheon in an article dated 2021.

According to news reports, Russia claims that it fired a hypersonic missile at a Ukrainian target over the weekend. The United States can’t confirm or deny whether or not this happened. 

There are a few things to point out. First, according to The Hill, military experts are confused why Russia would deploy such a missile to hit the type of target that it did (it reportedly hit a munitions building). However, it would be hard even to confirm, given the speed of the missile and the lack of radar. 

The Threat

The real issue is the threat of these missiles to U.S. aircraft carriers. For example, if an American ship detected that a Russian Zircon missile was inbound from 100 miles away, this ship would only have about 60 seconds to react. That’s not exactly enough time to maneuver a ship, which means that the military would need to intercept it with a similar, high-speed missile. 

On the other side, the United States also has to contend with China in the Pacific Ocean. Unfortunately, one of the stories that slipped under the radar last year was China’s latest test of hypersonic space nuclear weapons that – according to various experts – defied the laws of physics. 

“One person said government scientists were struggling to understand the capability, which the US does not currently possess, adding that China’s achievement appeared ‘to defy the laws of physics’,” the Financial Times said.

Today’s news out of Russia has sparked a rally in any U.S. company linked to hypersonic development. However, even news of this hypersonic event overshadowed news that a Boeing plane crashed in China . This helped BA shares recover from lows on Monday. 

In Conclusion

That served as a reminder that the defense sector is a very safe place to park capital. Annual spending in this sector is approaching $1 trillion per year in the decade ahead. My favorite defense stock remains Lockheed Martin (LMT), which has surged on the back of the Russia-Ukraine crisis. 

But you can also find comfort in Boeing (BA) and Raytheon Technologies (RTX). This threat isn’t going away, the U.S. government will continue to throw money at this problem. That is, until one winner cracks the code and delivers America a great leap forward in hypersonic missile technology.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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