Defense Spending Projected To Increase By 6% Under Trump, Indicating More War Ahead
Defense contractors’ stocks are primed to go higher this year as forecasts predict defense spending to increase under President Donald Trump.
According to a recent report by CNBC, originally titled “Defense Stocks. Trump’s Big Military Spending Plans,”
As part of Trump’s America First policy, the U.S. military and cybersecurity sectors could experience sweeping changes, creating opportunities for investors who recognize the long-term growth potential in defense.
Defense spending under Trump is expected to increase to 6% of GDP. Currently the U.S. is spending 3.4% of GDP on defense, which already makes the U.S. the world’s largest defense spender.
Therefore, U.S. defense contractors such as Lockheed Martin, RTX Corporation, Northrop Grumman, Boeing and many others are poised to see their stock values increase, CNBC pointed out,
It should also be noted that tech company and defense contractor Palantir - which has heavy investment and involvement from the CIA, FBI, DHS, CDC, and other departments - Vice President J.D. Vance has ties to Palantir founder Peter Thiel and the firm itself. Thus, with Vance’s connections, Palantir could likely be seen called upon more during this current administration.
In December, NATO Secretary-General Mark Rutte hinted that Trump would seek to push NATO funding every further similar to his presidency. Rutte said at the time:
What he wants is to make sure that that the U.S. is not overspending and we are not doing enough. And he’s totally right. I mean, I remember when he became President in 2016, 2017 that he continued to push us. And since he became president, we spent 641 billion more than before he came on. That’s an advocate of what we are spending more since, since then and since 2014 it was very sluggish. The uptake of moving to the 2% since he became president, we accelerated, of course, the full onslaught, the full-scale onslaught of Russia and Ukraine, has also ramped up defence spending, but he was very successful in ramping it up. He will again push us.
But my point is this, I don’t want to spend more because he wants, we have to spend more because our deterrence is at stake. Our security is at stake. Our collective defence is not what it should be, and we are in real difficulty in four or five years. That is why we need to spend more, not because of Donald Trump, but he is right. We need to do more.
And by the way, what we need from him. I have a big ask from Donald Trump, and this is about the US industrial defence capacity. I know as Prime Minister of the Netherlands how difficult it is to buy anything in the US, be it Patriots or missiles, whatever you have to go through Congress and the Senate. No, sorry, the Congress, the Pentagon and the White House, they all have to agree. And as I said, we have our 184 billion we are spending since 2022, European Allies in the US, that can be even more. I’m absolutely convinced if he would make it easier for European Allies to buy in the US. So, this is something he can help with, and it helps also his own economy. But I know, I think he was spot on on forcing us to spend more. But again, let’s not do it now because he wants it. We do it because we need to do it. It’s our collective defence which is at stake.
The WinePress has covered Trump’s previous acts of vastly increasing the defense budget, more than his predecessors. has detailed Trump’s support for NATO while he was in office.
By the numbers, defense contractors in Europe and the United States have profited handsomely from the war in Ukraine. Rheinmetall, for example, reported record profits and expectations for continued growth, citing a 91% operating profit in its financial report for the first half of 2024. To close out 2021, the company’s market cap sat at around a little over $4 billion; but since the war in Ukraine, Rheinmetall’s market cap rocketed to roughly $26.8 billion in August. Clearly investors see the potential for great returns on investment.
Armin Papperger, CEO of Rheinmetall AG, said of the company’s performance, “We have never seen such growth. We also expect annual sales growth of around two billion euros in the coming years. This very positive development is only possible because we invested early and have been following a strategic plan since 2014 – when Crimea was invaded.”
Also in August, The WinePress reported that the top 15 leading defense contractors were primed to net record profits, and are projecting even more investment because of more war.
However, on the same day CNBC published its report, the Financial Times reported Trump and Musk are seeking to cut billions from the Pentagon budget via the Department of Government Efficiency (DOGE).
“Let’s check the military. We’re going to find billions, hundreds of billions of dollars of fraud and abuse. You know, the people elected me on that,” Trump said during an interview.
The FT noted, ‘Musk’s potential role in scouring the Pentagon for savings has already raised concerns about potential conflicts of interest, given that his companies SpaceX and its subsidiary Starlink have contracts with the government.’
Reuters reports that SpaceX's CEO Gwynne Shotwell has said the company has about $22 billion in government contracts, $15 billion coming from NASA, (Starlink falls under the umbrella of SpaceX). The outlet added:
“The total value of Musk's companies' contracts with the DoD is estimated to be in the billions of dollars, but the true figure cannot be determined since many of them are classified. The contracts demonstrate the growing importance of private sector technology companies in supporting U.S. military operations and national security initiatives.”
AUTHOR COMMENTARY
Ecclesiastes 10:19 A feast is made for laughter, and wine maketh merry: but money answereth all things.
Trump is going to try to make sure gross domestic product does not fall. Most Americans do not realize that our GDP calculates government and military spending. Remove those two massive spenders from the equation, and real GDP is going to be well into the red. While I am very much in favor of having limited government overreach and oversight, the reality is that most substantial government cuts will harm our GDP, and a lot of Americans are employed and dependent on government salaries and programs. A lot of what DOGE is cutting is simply not a lot in the grand scheme. It sounds good to the general masses, cutting collections of tens of millions here and there, until you realize the federal government spends hundreds of billions and trillions like it is nothing.
The reality is DOGE is really just consolidating rather than cutting. The Trump administration is simply reorganizing and shuffling assets and money into different accounts and departments.
Now, at the time I'm writing this, Trump announced today that he apparently talked to Russian President Vladimir Putin and they are supposedly trying to come up with some sort of negotiations for peace.
So we’ll see what comes of this theater. I don’t expect too much to change for a while because Russia is not going to cede the land they now occupy - land that stores a great deal of those rare earth minerals Trump says he wants Zelensky to pay him back with.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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Trump? See Evidence That Demands A Verdict, The Birth of Antichrist. and The Oath at watchman33.com