Geopolitical Rifts Drive Defense Theme

Summary

• The geopolitical fragmentation mega force is evolving, with a big focus now on rising defense spending. We refine our preferences across regions and sectors.
• Oil prices steadied after their surge on the Israel-Iran conflict. U.S. bond yields were little changed after the Fed signaled it was eyeing the impact of tariffs.
• We watch the U.S. PCE data for signs of tariff impacts, so far limited in major data. Solid wage growth is keeping core inflation above the Fed’s 2% target.

anilakkus

Transcript

Changing geopolitical dynamics and rapid innovation in AI are transforming defense investment. We get granular across sectors and regions.

1) Changing geopolitical dynamics
We see geopolitical fragmentation evolving across three fronts.

First: geopolitical blocs are emerging. We see this in