Core Insights - Intensifying geopolitical tensions have led to a significant increase in global defense budgets, benefiting Defense ETFs which have outperformed the broader market [1][4] Drivers Behind the Outperformance - Global defense spending is surging due to geopolitical fragmentation, with NATO members targeting 5% of GDP for defense by 2035, up from 2% in 2014 [2] - Non-NATO countries like India and China are also increasing their defense budgets, with India seeing a 9.5% year-over-year increase and China a 7.2% rise [3] Market Dynamics - Major defense contractors are securing long-term government contracts across various defense technologies, providing stable revenue streams that are less affected by economic downturns [4] - The upcoming third-quarter earnings cycle is expected to show strong performance for Defense ETFs, driven by these favorable conditions [5] Earnings Expectations - The Aerospace sector, which includes defense stocks, is projected to report earnings growth of 249%, compared to a 5.2% increase for the S&P 500 [6] Notable Defense ETFs - **Global X Defense Tech ETF (SHLD)**: Year-to-date gain of 82.3%, top holdings include Palantir and Lockheed Martin [7][8] - **SPDR S&P Aerospace & Defense ETF (XAR)**: Year-to-date gain of 38.9%, top holdings include Kratos Defense and AeroVironment [9] - **iShares U.S. Aerospace & Defense ETF (ITA)**: Year-to-date gain of 41.5%, top holdings include GE Aerospace and Boeing [10][11] - **Invesco Aerospace & Defense ETF (PPA)**: Year-to-date gain of 33%, top holdings include RTX Corp. and Lockheed Martin [12] - **Themes Transatlantic Defense ETF (NATO)**: Year-to-date gain of 51.6%, top holdings include GE Aerospace and Airbus Group [13]

Core Points - Boeing defense workers in Missouri voted against the company's modified contract offer, leading to the continuation of a strike involving over 3,000 workers, marking the first walkout in nearly three decades [1][2] - The union criticized Boeing's offer for lacking a sufficient signing bonus and an increase in 401(k) benefits, emphasizing the determination of approximately 3,200 IAM Union members to stand united until their demands are met [2] - The rejected deal proposed a 45% average wage growth, raising the average salary from $75,000 to $109,000, but was deemed insufficient by the workers [3] - The striking workers primarily assemble and maintain F-15 fighter jets and missile systems, and had previously rejected an offer that included a 20% general wage increase and a $5,000 signing bonus [3] - In response to the strike, Boeing is hiring additional workers to replace those on strike to meet increasing demand [4]

Apple Inc. - Apple shares are up despite two downgrades, with DA Davidson downgrading to neutral from buy, maintaining a price target of $250, citing Apple's significant role in AI and an iPhone upgrade cycle [2][5] - Analysts express concerns about Apple's lack of significant AI innovation and product redefinition, leading to constrained growth under the current status quo [3][4] - Philip Securities downgraded Apple to reduce from neutral with an unchanged price target of $200, citing near-term headwinds from tariffs and elevated spending [5][6] - Analysts believe Apple needs to address AI seriously and improve its product innovation to maintain investor confidence [8][9] - The market is questioning whether Apple can create a "super cycle" with new products, with some analysts suggesting this may not happen until 2026 [10][11] Advanced Micro Devices (AMD) - AMD has been downgraded to hold by Earth group analysts due to concerns about operating margins, which are lower than the sector average, and a slightly negative EBIT margin in the last quarter [12][14] - Analysts highlight that AMD's current PE ratio is high given its below-average return on equity, despite a 30% increase in stock price year-to-date [13][14] - Seapport also downgraded AMD to neutral, citing slow progress in the AI accelerator business and struggles to grow orders from previously announced customers [16] Boeing - Boeing reached a tentative agreement with the union representing defense workers after a five-week strike, which is the first in nearly 30 years [18][21] - The agreement includes a five-year contract with a 24% general wage increase and a $4,000 ratification bonus, although it does not significantly exceed previous offers [19][20] - The strike has impacted production of defense products, but analysts believe the worst challenges may be behind Boeing, with potential for upside momentum in the stock [23][24][26]

Group 1 - The union representing Boeing defense workers has reached a tentative agreement with the company, pending final voting [1][2] - The new agreement is set for five years and includes better wages and a restored signing bonus [2] - More than 3,000 union members have been on strike since early August, rejecting a previous contract offer that included a 20% wage increase and a $5,000 signing bonus [3][4] Group 2 - The current strike is the first in nearly 30 years for Boeing defense workers, who primarily assemble and maintain F-15 fighter jets and missile systems [2][3] - Boeing's CEO previously stated that the impact of the strike would be manageable and not significant [4] - The strike follows a previous strike involving over 32,000 unionized machinists in the commercial aircraft sector, which lasted seven weeks [4]