Fade "defense". [NOC]

For the last 60 years, the US military industrial complex has been on a hyper growth path.  The great enabler for spending so much societal resource on "defense" is of course debt.  The US has never been at any real threat of being invaded.  Our massive "defense" efforts are, as Smedley Butler so eloquently stated, "a racket" designed to protect the interests of the monied elite, US corporations and US banks.

The major defense contractors have gotten fat on the spoils of debt based spending but those day are rapidly ending as deflation destroys the larger than global average US middle class.  Many people who were living middle class lifestyles in the US were actually just labor class people who had no special skills or insight or productivity or vision or innovation or anything.  They were just nice people who had been taught over time that they were somehow worth a great lifestyle even though their counterparts in other countries did not enjoy anything even close.

While the defense contractors don't sell anything to the middle class, their fates are closely linked nonetheless because whereas a content middle class would not care what ridiculous debt was taken on in its name in order to pour into the pie hole of a greedy and mostly unnecessary defense industry, ex-middle classers do.  Nobody in the herd wants to go off a cliff alone.  And so the middle class is not going down quietly.  It will take the elitists with it.

We are seeing the beginning of it in things like the ousting of defense contractor UTX's CEO.  Lockheed is in trouble with the massively expensive F-35.  Not just because it "can't turn, can't climb, can't run" but also because the US has to begin worrying about deficits lest the interest rates begin to climb.  IF rates climb (and they will) then housing prices will fall and banks will have to admit that they are insolvent.  Who needs pricey planes when the real economy is stagnating with record numbers of unemployed sucking from the national teat?

Because of these things, I am now predicting that we have reached "peak defense".   We will be able to measure the accuracy of this model view using charts like that of defense contractor Northrup Grumman below.   The wave model shown below suggests that the shares are in the latter stages of an expanding wedge which is a topping formation.  The 5th wave or e wave is made up of a 3 wave sub wave (a-b-c).  The shares currently trade at $141.45.  I think they have peaked or will peak in the $150 range before beginning a rapid fall back to a lower low as defense spending is hacked by the new, more conservative (i.e. more a representative of the people than paid shills for big corporations) congress.  Again, the thinking here is that politicians are politicians because they tend to read the tea leaves well and they pander to it.  The people are not happy and they are suddenly showing up at the polls and it is sending shock waves through the good old boy system.  Too much of the wealth stolen from the world via the control of the global money supply has gotten stuck in the upper echelons; it has not "trickled down".

In any case, a break below the top rail in the $110-$115 range will be the first confirmation that this model is correct.