An Innovative Economy That Also Protects Us

Inspiration can strike unexpectedly, so I am going to break from my usual practice of avoiding the first person. In the past, I have assumed it helps me connect better with you the reader. This month I want to make an exception because I want to share a recent experience that reminded me of how exceptional our economy is.

 

 

As an avid pilot, I love to take advantage of a beautiful sunny day and enjoy the blue sky. Sunday the 21^st was one of those days in Denver. Centennial Airport is already one of the busiest airports in the country, so the nice weather resulted in even more traffic. As I waited in a long line of planes preparing to depart, I found myself in the company of two F-15 fighter jets. Fortunately for me, the controller had placed me in line directly in front of the F-15s. When I reached the end of the taxiway and turned 90 degrees to enter the runway, still waiting to be cleared for take-off, there in full view were the F-15s. Even if you are not particularly interested in aircraft, these flying machines are a tremendous show of strength and technology. After such an inspiring experience, I decided to look up what kind of performance an F-15 has.

 

 

While you may not be a fan of the military, these aircraft are one of the main reasons we do not worry about being attacked. There is unbelievable technology incorporated in them, which is why Russia tries so desperately to keep Ukraine from gaining access to them. The advanced model of the F-15 is still manufactured by Boeing, and it is not even our best fighter. Although Lockheed Martin’s F-35 is more advanced, the F-15 can reach speeds of 1,875 miles per hour. That means they can reach a target 30 miles away in one minute if deployed. Their missiles can be fired up to 200 miles away, so now we are talking about engaging an enemy 230 miles away in one minute. Put another way, if an enemy target was approaching Washington D.C., an F-15 could intercept the target 350 miles offshore within five minutes. These planes have an onboard computer that can compute 87 billion instructions per second, allowing their radar to support multiple missiles fired at the same target simultaneously. Each F-15 carries up to 12 missiles. This is the short list of why no foreign adversary wants to face them and why we seldom lose one. Now you may be wondering: What does this have to do with the markets?

 

 

I just finished reading the book I mentioned last month, “Americana, A 400-Year History of American Capitalism,” by Bhu Srinivasan. Each chapter covers a segment of the economy, and he tells some great stories about how each segment was developed. In the automobile chapter, Henry Ford built the Model N before the Model A and T, which I never knew. What becomes obvious after reading the book is that the American economy is constantly evolving and innovating. Some of the chapters included electricity, oil, newspapers, radio, banking, flight, finance, computing, and shoes, among many others. All these sectors created change and new opportunities. It is common knowledge that the space program of the ‘60s led to many developments that were eventually incorporated into everyday life (Tang, the orange drink, was originally created for the space program). The development of these fighter jets has the same effect, there are many residual uses of their technology.

 

 

You may at times wonder why the stock market isn’t reacting the way it seems it should, based on the current news headlines. It might be because parts of the economy are not dependent on the current environment. Think about all the suppliers and technology companies that are tied to our defense program. Their business does not rely on how many houses are sold or everyday products are purchased. The economy is extremely dynamic. Is the F-15 too expensive? Maybe. However, I am glad we have them and am more than willing to pay taxes to support them. Maybe that is why the market has shown little reaction to the current war in the Middle East. The world understands they don’t want to face a F-15 or F-35.

 

 

When the airport is busy, the controllers want brief and concise communications. After I was cleared to take off, I added to my readback (you must repeat what they tell you) that I wanted to thank the guys behind me for flying those planes. After a moment of silence and wondering whether I should have said anything, the response came back: “It is a pleasure to fly them.” Even with all our problems, we are very fortunate to have such an innovative economy that also protects us.

Observations On The Market No.394