You could see the fear in the soldier's eyes... He thought he was about to die.
War Is Evolving... And the Defense Sector Will, Too
By Marc Chaikin, founder, Chaikin Analytics
You could see the fear in the soldier's eyes...
He thought he was about to die.
The Russian soldier had spent hours running from Ukrainian drones. They zoomed along a series of trenches – dropping grenades on Russian troops.
Video footage from one of the drones showed the soldier's desperate struggle. His entire unit had already been killed. And now, he was tired, dirty, and unarmed.
As the soldier ran along a trench, the video footage also showed the bodies of his fallen comrades laying in the dirt.
Then, something amazing happened...
The soldier stopped and looked up at the drone. He put his hands together, pleading for his life.
Then he crossed his arms, making an "X" motion to tell the drone to stop dropping grenades...
In a later interview, the Ukrainian drone pilot said...
I felt pity. Despite that he is an enemy, even though he has killed our boys, I still felt sorry for him.
So the pilot wrote him a note. A second drone dropped it off. It said, "Surrender follow the drone."
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The soldier agreed. He slowly made his way across the battlefield. He walked past bodies and wrecked vehicles. At one point, an artillery shell landed a few feet away, almost killing him.
Finally, the soldier made it to the Ukrainian lines. He took off his body armor and surrendered – relieved to be alive. When asked about the potential to go back to Russia in a prisoner swap, he said...
I'd like to return home to my family and never experience the sorts of things that I have seen here. This scene happened in May 2023 in eastern Ukraine. The drone footage was released a few weeks later.
(You can watch the roughly seven-minute video here on the Wall Street Journal's YouTube channel. You've already gotten the sense of how graphic it is... But it's different to see it for yourself.)
It's an incredible, up-close look at modern warfare. And it's one of hundreds of fascinating videos that reveal what happens on today's battlefields.
In short, this is a new kind of firsthand access to war. The current conflicts in Ukraine and the Middle East generate a ton of footage. And much of it ends up online.
Some of the videos are brutally violent. Some are more lighthearted.
Altogether, they reveal a simple fact...
Drones have completely changed warfare.
For example, these machines have made tanks take a back seat in the Ukraine conflict.
Early on, both sides realized that drones could easily spot tanks as they approached the front lines. Drones can also attack the weakest spots on a tank. That means they can quickly immobilize these vehicles.
By many estimates, Russia's military has lost more than 3,000 tanks since invading Ukraine in 2022. In other words, it lost roughly all the tanks it had at the start of the war.
Similarly, Ukraine has lost an estimated 700 tanks so far. That's nearly its entire supply before the war began.
Both sides have replenished their tank inventories. But the threat from drones has forced them into a smaller role than expected before the war started.
Meanwhile, the role of drones is also changing over time...
Two years ago, expensive military drones like the Turkish-made Bayraktar TB2 helped Ukraine match Russia's military power. News media like the New Yorker said the drone had "changed the nature of warfare."
Since then, the Bayraktar has taken a back seat to smaller, cheaper "quadcopter" drones. Also called first-person-view drones, they were designed for recreational use. But they've become the backbone of military operations in Ukraine.
Keep in mind that the tactics are constantly changing. In recent months, Russia has used basic solutions like nets to stop smaller drones.
The U.S. isn't at war in Eastern Europe or in the Middle East. But our military officials are watching closely. And they're likely shocked by how much the tactics have evolved.
The situation will create major concerns about whether the U.S. is prepared for future wars.
And our government will respond by doing the one thing it's good at...
Throwing billions of dollars at the problem.
Today, the Power Gauge rates the SPDR S&P Aerospace & Defense Fund (XAR) as "neutral+." XAR is up 20% this year, but it's slightly lagging the S&P 500 Index's 25% gain.
That could change in the coming months, though.
After all, this week's election has transformed the political landscape once again. And we could soon see a comprehensive defense package from the government.
With the new threat of drones, Uncle Sam will likely spend big to solve this problem.
Good investing,
Marc Chaikin
Industry Focus
Homebuilders Services
7
24
4
Over the past 6 months, the Homebuilders subsector (XHB) has underperformed the S&P 500 by -3.22%. However, its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #12 of 21 subsectors and has moved up 1 slot over the past week.
Top Stocks
OC
Owens Corning
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Toll Brothers, Inc.
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Earnings Report
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PARA
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ATO, EOG, FICO, TTWO
BAX
IDXX
No earnings reporting today.
Earnings Surprises
Z Zillow Group, Inc.
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CTVA Corteva, Inc.
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ANSS ANSYS, Inc.
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$2.58
Beat by $0.85
TTWO Take-Two Interactive Software, Inc.
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$0.57
Beat by $0.16
GILD Gilead Sciences, Inc.
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$2.02
Beat by $0.47
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