Episode summary
Dylan Jovine | 3 Ways to Play This War Stock Market
Summary
Dylan Jovine argues that the Iran conflict is changing the market backdrop because the key issue is not only war risk but whether the U.S. and its allies can keep up with interceptor demand. He says the Defense Department began pressuring suppliers in late 2025 and points to Lockheed Martin, RTX, and Boeing as the main beneficiaries of the push to increase missile production. He highlights Patriot interceptors, THAAD interceptors, and RTX’s SM-3 missiles as the critical systems in focus.
He says the setup is different from past Middle East conflicts because markets were not given a long runway to price in the risk. Jovine believes a short conflict could still leave markets stable, but if the war drags on or escalates, risk assets could come under pressure. His bias is to the downside, and he recommends a risk-off posture: trim speculative names, focus on real earnings and cash flow, and be selective.
Within defense, he is most constructive on Boeing as the cheapest and most compelling turnaround idea among the three names he discusses. He also says missile production is a tailwind for the broader defense complex, though he warns that unexpected developments can hit markets quickly once war is underway.
Key takeaways
- Jovine says the Defense Department has been pressuring Lockheed Martin, RTX, and Boeing to increase missile production since late 2025.
- He thinks the key war trade is whether Iran or U.S. and allied interceptors run out first.
- Jovine’s market bias is risk-off, with a preference to cut speculative holdings and favor cash flow and earnings.
- Among Lockheed, RTX, and Boeing, he says Boeing is the best value and the clearest turnaround.
- He says a conflict lasting 30 days or less could be market-friendly, but a longer escalation could pressure risk assets.
Notable quotes
“we need more missiles. So I'm going to talk about three companies. Loheed Martin, RTX, and Boeing”
“Does Iran run out of missiles first that it's firing or do we and our allies run out of interceptors first”
“Usually a stock market rises 25 to 30% in the 12 months following the Middle East war”
“my bias right now is to the downside”
“of those stocks, Boeing is basically the best value for the money in my view”
How the episode opens
Good morning. This is Dylan Joan with Behind the Markets. Happy Wednesday.
Today's Wednesday, March 4th. We are in the sixth day of this conflict with Iran in the Middle East. We've heard a lot of talk about missiles basically.
Are we running out of missiles? What's going on there? Are we running out of interceptors?
There seems to be a lot of concern about that. And in late 2025, the Defense Department really started putting pressure on our suppliers, Loheed Martin, RTX, Boeing, etc. down the line to increase production.
And when that started happening, I started asking myself, one of three things is going to happen. Number one, it's going to be something with Iran. Number two, we're going to double down on supporting Ukraine to put pressure on Russia.
Number three, some China is going to have. Those are the three real hot spots that you have to worry about. Everybody needs to worry about.
I sat down with a couple of congressmen yesterday and we talked about this very same thing. And the same thing that keeps me up at night is the same thing, thankfully, that keeps them up at night. And we'll talk about this in the coming days, but today I wanted to talk about basically what does that mean for our producers when they say we need more missiles.
So I'm going to talk about three companies. Loheed Martin, RTX, and Boeing. Loheed Martin makes Patriot interceptors.
Capacity is rising from 600 a year to 2,000 plus. In January, the defense department really started and locked actually announced a plan to quadruple the number of THAAD interceptors to 400 a year from 96. These are the thermal high alitude area defense systems.
So these are interceptors very very cutting edge. So cutting edge that when we moved the THAD system to South Korea, China protested.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- iran conflict
- missile and interceptor production
- patriot thaad sm-3
- defense stock positioning
- risk-off portfolio strategy
Companies and tickers mentioned
- LMT
- RTX
- BA
- Lockheed Martin
- RTX
- Boeing
Watch the episode
Watch “Dylan Jovine | 3 Ways to Play This War Stock Market” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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