Trump Gives Defense Department a New Name. Why It Matters.

China hosted a military parade on Sept. 3 in Beijing that was attended by Russian President Vladimir Putin and North Korea’s Kim Jong Un. (Photo by Kevin Frayer/Getty Images)

The U.S. military establishment has a new name, and investors should take note of it.

President Donald Trump will sign an executive order that “authorizes the Secretary of Defense, the Department of Defense, and subordinate officials to use secondary titles such as ‘Secretary of War,’ ‘Department of War,’ and ‘Deputy Secretary of War’ in official correspondence, public communications, ceremonial contexts, and non-statutory documents within the executive branch,” according to a draft of the order reviewed by Barron’s.

The U.S. military establishment has been referred to as the Department of Defense since the 1940s. An official name change would require an act of Congress, but using secondary titles gets around that issue.

The president believes the new name projects “strength and resolve.” The order adds: “The United States military is the strongest and most lethal fighting force in the world [and] should have a name that reflects its unmatched power and readiness.”

It probably is an afterthought for defense investors, though. “It’s an aberration compared to the way the rest of the world names their ministries,” says Capital Alpha Partners analyst Byron Callan. “It’s not going to deter anybody.”

Defense stocks have performed relatively well early in Trump’s second term. His focus on unmanned technology, missile defense, and increased spending by allies has helped. Coming into Friday trading, the iShares U.S. Aerospace and Defense exchange-traded fund was up 36% since the November election, about 23 percentage points ahead of the S&P 500. Among major defense contractors, only Lockheed Martin shares are down over that span, with the company facing some headwinds for its F-35 fighter jet program.

The ETF dropped 0.2% on Friday, while the S&P 500 and Dow Jones Industrial Average fell 0.3% and 0.5%, respectively. Lockheed stock rose 1.6%, closing at $463.90.

The name changes come after China hosted a military parade on Sept. 3 in Beijing as a show of strength and resolve. The event was attended by Russia’s Vladimir Putin and North Korea’s Kim Jong Un.

China unveiled some of its new military technology, including advanced tanks, drones, antidrone lasers, stealth fighter jets, and autonomous naval vessels, among other systems.

The U.S. has similar systems and leading military technology. “One [parade] nuance is that China is focused more on multi-domain, joint operations,” added Callan. That’s an approach pioneered by the U.S. that integrates land, sea, air, and cyber assets. “They have learned well.”

Write to Al Root at allen.root@dowjones.com