The Financial Flash

At-a-glance News for Advisors

Almost $100 billion wiped from major military stocks capitalization in 2023 In the stock market, military stocks have long been considered a reliable investment, often thriving amidst global instability and military conflicts. However, 2023 has defied this conventional wisdom with a remarkable decline in the capitalization of major military companies, even as various parts of the world remain embroiled in war.
In particular, data acquired and calculated by Finbold indicates that between January 1, 2023, and October 11, 2023, major military stocks recorded a cumulative outflow of $98.08 billion in market capitalization. In January 2023, these ten major stocks boasted a cumulative market cap of $665.48 billion, which dwindled to $567.40 billion as of October 2023. Raytheon Technologies emerged as the biggest loser, shedding $41.60 billion in market capitalization after beginning the year with a market cap of $148.36 billion. Following closely, Lockheed Martin saw the second-largest decline in market cap, losing $17.93 billion. Northrop Grumman recorded the third-highest losses, totaling $13.61 billion in market cap. Boeing, which started the year with a market cap of $126.94 billion, lost $10.21 billion in capitalization. Other notable losers are BAE Systems ($6.44 billion), L3Harris Technologies ($6.06 billion), General Dynamics ($3.50 billion), Leidos ($1.43 billion), and Huntington Ingalls Industries ($0.46 billion). Rheinmetall was the only exception among the top 10 major military stocks, gaining $3.16 billion, with its market cap increasing from $9.20 billion to $12.36 billion.

Federal Budget Deficit
The U.S. federal budget deficit for fiscal year 2023 was officially tallied at $1.7 trillion last week, yet when adjusting for the student loan vagaries on a cash basis, the total surged to $2 trillion. To be sure, the budget was pressured by waning pandemic stimulus, falling tax receipts and rising interest rates. Support for Ukraine also played a role, while the war between Israel and Hamas suggests the likelihood for increased outlays in fiscal 2024. See chart: U.S. Federal Budget Deficit as a Percentage of GDP.

Small Business Loan Approvals Dropped at Big Banks, Rose at Small Banks and Alternative Lenders in October 2023: Biz2Credit Small Business Lending Index™ Small business loan approval percentages at big banks ($10 billion+ in assets) decreased again from 13.1% in September to 13% in October, according to the latest Biz2Credit Small Business Lending Index™ released today. “Small business lending has been on a downward slope in 2023. As expected, acquiring a small business loan from a big bank has become increasingly more difficult with every passing month,” said Rohit Arora, CEO of Biz2Credit and one of the nation’s leading experts in small business finance. “Small business owners are having better success with smaller banks and/or alternative lenders.” After a slow start in 2023, small banks approval percentages rose from 19.3% in September to 19.5% in October, marking an increase every month since June 2023. “Small banks have proven to be quite dependable for borrowers in today’s economic climate,” said Arora. “They’re more focused on SBA lending than the larger banks are, and they are closing more loans.” The approval rates of Institutional investors also rose from 27.5% in September to 27.6% in October, while alternative lenders increased from 29.7% in September to 29.9% in October. “With the two highest loan approval percentages among the five categories of lenders monitored in the Biz2Credit Small Business Lending Index, institutional investors and alternative lenders have steadily increased in approval rates for well over two years now,” Arora added. “These non-bank lenders have become reliable financing options for small businesses. I do not see that changing anytime soon.”


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