What’s going on here? European defense stocks darted ahead on Monday, after the region’s leaders met for an emergency summit over the weekend to work on their self-reliance skills. What does this mean? Europe can no longer count on the States to furnish its front line, so the region’s governments seem set to lift their defense budgets. So much so, in fact, that policymakers are scoping out entirely new funding options – one of which could be to form a European rearmament bank: a centralized fund for military spending. Consider the message received by investors, who have been buying up related stocks – including Rheinmetall, BAE Systems, and Thales – all year. And they went in for seconds, thirds, and the rest on Monday, sending all of the stocks up by at least 10%. Why should I care? Zooming out: The price was right. Investors haven’t stopped at defense: they’ve found Europe’s stocks hard to resist in general lately, drawn in by share prices that are far cheaper than US counterparts. Those bargain prices seem to have more than balanced out the threat of trade-penalizing tariffs – which could compromise the European economy – from the States. That’s what investors’ behavior suggests, anyway: the region’s stock markets have been some of the world’s best performers this year. The bigger picture: The US might need to pay the price of tariffs, too. The US president’s tariff tirade has unsettled investors, business leaders, and central bankers. They’re worried that the increase in costs will trickle into retail prices, risking a resurgence of economy-bruising inflation. Even Warren Buffett added his two cents, calling tariffs punitive measures that can hurt everyday consumers. That said, there is another side to the story: businesses may be tempted to move operations onto stateside soil to limit their levies. Carmaker Honda, for one, now plans to build its new plant in the US instead of Mexico, which should bring more money and jobs to the States. | 
