Episode summary
Dylan Jovine | 5 Big Winners From Trump’s Historic $1.5 Trillion Defense Budget
Summary
Dylan Jovine argues that President Trump’s 2027 defense budget request is historically large, rising from about $900 billion before Trump took office to $1.5 trillion, and that the increase reflects a return to Cold War-era defense spending relative to GDP. He frames the shift as a response to China’s rise and says the goal is to signal that the U.S. has the strongest military capability without having to fight a war.
He says the biggest investment implications are in shipbuilding and space. The Navy’s shipbuilding budget is projected to double to about $65 billion from $27 billion, which he calls crucial because China’s navy now outnumbers the U.S. fleet and is building ships at a far faster rate. He also highlights the Space Force request of $71 billion, a 77% year-over-year increase, and says the next war will begin in space, where satellites and the moon are strategic assets.
On the stock side, Jovine points to General Dynamics, Huntington Ingalls, Lockheed Martin, and BAE Systems as likely beneficiaries. He also suggests the iShares U.S. Aerospace and Defense ETF, ITA, for broader exposure rather than picking individual names.
Key takeaways
- Jovine says Trump’s 2027 defense request of $1.5 trillion would mark a roughly 50% jump and a return to about 5% of GDP in defense spending.
- He says shipbuilding is the clearest winner, with the Navy budget rising to about $65 billion from $27 billion.
- Jovine argues the Space Force’s $71 billion request, up 77% year over year, signals that space is becoming a central military battleground.
- He names General Dynamics, Huntington Ingalls, Lockheed Martin, and BAE Systems as companies positioned to benefit from the budget shift.
- For broader exposure, he recommends the iShares U.S. Aerospace and Defense ETF, ITA.
Notable quotes
“His first year, it was a trillion dollar, first time in history that a US military budget went over a trillion dollars”
“And now he's actually asking for 2027 for that to jump basically almost 50% here to $1.5 trillion”
“Basically, I guess the two big takeaways here are navy is huge. Finally, we're getting serious about shipbuilding”
“the first move of the next war isn't going to be on ground. It's going to happen in space”
“if you just want to say, "You know what? I want to get involved in aerospace generally." That's a good ETF to pick up”
How the episode opens
Good morning. This is Bill and Giovanni behind the markets. Happy Thursday.
Today is Thursday, April 9th. And I'd like to talk today a little bit about President Trump's 2027 budget request for the defense industry, basically for the Pentagon, for the military. And what you're really looking at here is historic.
We've touched on this before. The budget was before he got in office, it was about $900 billion. His first year, it was a trillion dollar, first time in history that a US military budget went over a trillion dollars.
And now he's actually asking for 2027 for that to jump basically almost 50% here to $1.5 trillion. That is a shocking headline number, but the truth is it brings us back to Cold War era levels of spending, of defense spending in relation to GDP, which is about 5%. Remember, after the Berlin Wall collapsed, defense spending went from 5% to 4% to 3% of GDP as we didn't have to contest the Soviet Union everywhere.
And Bill Clinton in the '90s were the great beneficiary of that. I always tell people the '90s were a great decade cuz the Berlin Wall falls, we're not worried about nuclear Armageddon all the time. We used to worry about that growing up.
And all of a sudden all that extra budget money went right into paying down debt, getting our house in order, which was great. Here we are, China has risen, the US has to actually prepare for that. And the best way to not fight a war with China is to show them that we are serious, that we have the biggest, baddest stick on the block.
So, how is that going to benefit investors? We've been talking about this, predicting this for years because we understand that in a rising China is going to affect a bunch of things, and military budgets will go up as a result.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- trump defense budget
- us military spending
- naval shipbuilding
- space force and satellites
- aerospace and defense stocks
Companies and tickers mentioned
- GD
- HII
- LMT
- BAESY
- General Dynamics
- Huntington Ingalls Industries
- Lockheed Martin
- BAE Systems
Watch the episode
Watch “Dylan Jovine | 5 Big Winners From Trump’s Historic $1.5 Trillion Defense Budget” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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