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In late March, as the GOP nomination was in doubt, the ITA defense sector ETF was up 12.3% from the February lows, while the S&P 500 SPY was 15.5% higher.  That’s 320bps (3.2%) of underperformance for the defense sector.

Today, the S&P is 17.8% above the lows, while defense stocks have surged 20.3%.  Bottom line, defense related equities have substantially outperformed the S&P 500 over the last 45 days.

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From the moment Ted Cruz and John Kasich dropped out of the race, defense stocks have outperformed the broad stock market.  Someone is pricing in a Trump Presidency.

Even more telling, volume found in the ITA ETF above:

Pre-Trump Nomination Secured: 26k shares a day

Post Trump Nomination Secured: 103k shares a day

“I’m gonna build a military that’s gonna be much stronger than it is right now, It’s gonna be so strong, nobody’s gonna mess with us. “

Donald Trump, said on Meet the Press, in March

The Defense Department budget for 2016 is $575 billion. President Barack Obama’s 2017 proposal increased it to $583 billion. By comparison, China spent around $145 billion and Russia around $40 billion in 2015…..

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