The Supreme Court didn’t rule on challenges to President Trump’s tariffs on Wednesday. The court did not say when it will issue its next opinions but could schedule more decisions for next Tuesday and Wednesday, when the justices are again in session.President Trump told Reuters that he "has no plans" to fire Fed Chair Powell despite a Justice Department probe into the central bank's renovation.Atlanta Fed President Raphael Bostic said the Fed needs to stay restrictive because he expects inflation pressures ...

The $1 billion agreement between the U.S. Department of Defense and L3Harris Technologies, Inc. ( LHX ) represents one of the fundamental drivers that are changing the positive outlook for this company and forI’m a Portfolio manager (flexible equity funds and private clients), fundamental equity research, macro and geopolitical strategy.Over 10 years across global markets, managing multi-asset strategies and equity portfolios at a European asset manager.I combine top-down macro, bottom-up stock selection an ...

Group 1 - President Trump proposes increasing the Pentagon's budget for 2027 to $1.5 trillion, up from the originally proposed $1 trillion, which could positively impact defense stocks like Lockheed Martin (LMT) [1] - The defense budget for 2026 is set at $901 billion, indicating a significant investment in national defense [1] - Following the budget proposal, LMT stock has risen nearly 7% in the last five days, including a 5% increase on January 9 [2] Group 2 - Lockheed Martin is the largest defense contractor globally, with a market capitalization of $127 billion, producing military aircraft and missile systems [4] - Over the past year, LMT stock has increased almost 16%, lagging behind the S&P 500's 19% gain and other defense companies like RTX (up 65%) and Northrop Grumman (up 32%) [5] - A challenging second quarter in 2025 resulted in $1.6 billion in charges for Lockheed Martin, but the stock has since recovered, rising around 30% since August 2025 [6] Group 3 - Lockheed Martin's current forward price-to-earnings (P/E) ratio is 18.4, which is favorable compared to its competitors [7] - The company offers a quarterly dividend yield of 2.54%, translating to approximately $250 annually for a $10,000 investment [7]

Core Insights - Lockheed Martin (LMT) stands to benefit from the proposed increase in U.S. defense spending, which aims for annual military expenditures of approximately $1.5 trillion by 2027, a significant rise from the nearly $901 billion defense budget approved for fiscal 2026 [1][4] Group 1: Company Positioning - As a leading U.S. defense contractor, Lockheed Martin has substantial exposure to critical defense sectors, with an expanded defense budget likely leading to increased contract volumes for the company [2] - LMT primarily generates revenue from U.S. government contracts for platforms such as F-35 fighter jets, missiles, helicopters, and naval systems, positioning it favorably to capture a significant share of any increase in Pentagon spending [2][8] Group 2: Financial Implications - The anticipated increase in defense budgets would allow Lockheed Martin to expand its manufacturing capacity, secure longer-term contracts, and enhance supply-chain efficiency, thereby improving operational planning and reducing revenue unpredictability [3] - The Zacks Consensus Estimate for LMT's earnings per share in 2026 indicates a year-over-year increase of 33.95% [7] Group 3: Market Performance - LMT's stock has risen 10.5% over the past three months, outperforming the industry growth of 5.8% [12] - The company's forward price-to-sales (P/S) ratio is 1.66X, which is a discount compared to the industry's average of 2.76X, indicating potential value [10]

Core Insights - Investors with significant capital have adopted a bearish stance on General Dynamics (NYSE:GD), indicating potential insider knowledge of upcoming events [1] - The overall sentiment among large traders is mixed, with 40% bullish and 50% bearish positions observed [2] Options Trading Activity - A total of 10 options trades were identified for General Dynamics, including 1 put option valued at $45,750 and 9 call options totaling $361,574 [2] - The major market movers are focusing on a price range between $270.0 and $370.0 for General Dynamics over the past three months [3] Volume & Open Interest Trends - An analysis of the volume and open interest for General Dynamics options reveals significant trading activity, particularly within the $270.0 to $370.0 strike price range over the last 30 days [4] - Call options have shown a higher volume compared to put options, indicating a stronger interest in bullish positions [5][6] Company Overview - General Dynamics operates as a defense contractor and business jet manufacturer, with segments including aerospace, marine, combat systems, and technologies [10] - The aerospace segment is known for manufacturing Gulfstream business jets, while the combat systems segment produces land-based military vehicles [10] Market Performance - The current trading volume for General Dynamics is 557,607, with the stock price up by 0.99% to $364.5 [14] - Analysts have set an average target price of $396.5, with JP Morgan maintaining an Overweight rating and a target of $385, while Morgan Stanley has upgraded their rating to Overweight with a target of $408 [12][14]

Market Overview - U.S. stock markets are experiencing a mixed session with major indexes showing slight pullbacks as investors assess inflation data and fourth-quarter earnings reports [1][2] - The S&P 500 Index is down less than 0.1%, the Nasdaq Composite Index has slipped 0.2%, and the Dow Jones Industrial Average has fallen 0.6% [2] Economic Indicators - The December Consumer Price Index (CPI) data shows a 2.7% year-over-year rise in headline inflation, matching expectations, while core inflation is at 2.6%, slightly below the projected 2.8% [4] - The 10-year Treasury yield has decreased to below 4.18% from 4.20% following the CPI data release, indicating potential room for Federal Reserve interest rate cuts [4] Earnings Reports - JPMorgan Chase (JPM) reported adjusted profits exceeding expectations but with slightly lower revenue, leading to a 2.5% decline in shares [7] - Delta Air Lines (DAL) shares fell nearly 6% pre-bell and 1.5% in recent trading after forecasting lower-than-expected profit growth for fiscal 2026, despite reporting operating revenue of $16.00 billion [7] - L3Harris Technologies (LHX) shares surged 3% to an all-time high following plans to spin off its Missile Solutions business, supported by a $1 billion government investment [8] Sector Movements - A sector rotation trend has been observed since late December 2025, with the Dow Jones and small-cap Russell 2000 outperforming AI-heavy mega-cap technology stocks [3] Corporate Developments - Sun Country Airlines Holdings Inc. (SNCY) shares jumped 10.6% after announcing an acquisition agreement with Allegiant Travel (ALGT) valued at $18.89 per share [10] - Posco Holdings Inc. (PKX) shares rose 12% after raising $700 million in global bond markets and providing a positive earnings outlook for 2026 [11] Political Impact - President Trump's proposal to cap credit card interest rates at 10% has negatively impacted financial stocks, with Visa (V) and Mastercard (MA) down 5%, and American Express Company (AXP) down 4.3% [9]

Core Viewpoint - L3Harris Technologies' shares have reached record highs following the U.S. government's acquisition of an ownership stake in the defense contractor [1] Group 1 - The U.S. government has taken an ownership stake in L3Harris Technologies, marking it as the latest defense contractor to receive such investment [1] - The stock performance of L3Harris Technologies has shown significant upward movement, indicating strong market confidence [1]

Core Insights - L3Harris (LHX) shares are experiencing a rise, reaching new highs due to support from the U.S. government [1] - The U.S. government will invest $1 billion in L3Harris' missile solutions business, which will convert to equity upon its public market debut [2] - L3Harris plans to spin off its missile solutions division into a separate public company in the second half of this year [5] Financial Impact - Shares of L3Harris increased by approximately 3% to $350, positioning them to surpass the previous record close [1] - The investment from the U.S. government is seen as a positive signal for L3Harris' missile solutions division, which is a significant revenue source for the company [3] - L3Harris has invested significantly in enhancing the production capacity of its missile solutions division since acquiring Aerojet Rocketdyne [4] Market Context - The missile solutions segment includes the production of solid rocket boosters for weapons like the Tomahawk missile program [4] - L3Harris shares have surged nearly 20% in January, reflecting a broader rally in defense stocks following calls for increased military spending [5]

Economic Indicators - The December consumer price index (CPI) report showed core CPI rose 0.2% month-over-month and 2.6% year-over-year, both below pre-market estimates of 0.3% and 2.8% respectively [1] - The monthly headline CPI increased by 0.3% in December, resulting in an annual rate of 2.7%, which was in line with economists' forecasts [1][2] Federal Reserve Outlook - The steady inflation and a stable jobs market are likely to lead the Federal Reserve to maintain interest rates during their first meeting of the year on January 28-29 [2] - Fed funds futures are currently pricing in two quarter-point cuts starting in June 2024 [2] Earnings Season - The earnings season commenced with JPMorgan Chase reporting better-than-expected results for the December quarter, although the stock did not show significant movement [3] - Delta Airlines experienced a 4% decline in premarket trading due to mixed earnings results [3][4] Sector Performance - Defense stocks, particularly L3Harris Technologies, surged 13% after announcing plans for an IPO of its missile solutions business in partnership with the U.S. Defense Department [5] - Chip manufacturers Intel and AMD saw stock increases following an upgrade to overweight by KeyBanc, citing a potential upside of over 30% due to a memory supercycle and strong data center demand [5] - Health sciences company Revvity reported better-than-expected preliminary results, contributing to its stock strength early in the session [5]

Core Insights - RTX Corporation (RTX) is gaining attention due to improving expectations around U.S. defense spending, with President Trump proposing a defense budget increase to approximately $1.5 trillion by 2027, up from the $901 billion budget approved for 2026 [1][8] Group 1: Defense Budget Implications - The proposed funding increase could facilitate sustained investments in weapons replenishment, modernization programs, and advanced defense technologies, enhancing funding visibility for large, multiyear defense programs and long-term contracts [2] - A larger defense budget may expand funding for both existing and new programs where RTX serves as a prime or key contractor, including integrated air and missile defense systems and next-generation guided weapons [4] Group 2: RTX's Position and Performance - RTX is a major supplier to the U.S. Department of Defense and allied nations, providing systems such as Patriot air and missile defense solutions and AIM-9X Block II missiles, which are typically backed by long-term contracts [3] - RTX shares have surged 62.3% over the past year, outperforming the industry growth of 33.9% [7] - The company's shares are currently trading at a relative discount, with a forward 12-month Price/Earnings ratio of 28.73X compared to the industry's average of 32.00X [9] Group 3: Earnings Estimates - The Zacks Consensus Estimate for RTX's 2026 earnings has seen a downward trend over the past 60 days, with revisions indicating slight increases and decreases across different quarters [10][13]