| You are receiving this email because you are subscribed to Behind the Markets. If you no longer wish to receive these emails, please unsubscribe here. Dear Reader, Today I want to talk about, what else this week, but Iran and nukes and war in the Middle East, which I believe has a better than average shot of getting more serious.
I’m glad the market’s pricing that in a little more. It’s a big deal. I’ll be looking at open positions I have, and looking for opportunities here - because the market might give us a few. Hopefully things won’t get worse. One of the debates happening on the right, among my friend group, is President Trump vs. Tucker Carlson… Or the more “realist” wing of the Republican party (which I’m part of), vs. the real “isolationist” wing. Tucker Carlson has been famously saying, why are we involved in this? Why are we trying to stop Iran from getting nukes? And President Trump responded on Truth Social, somebody please explain to kooky Tucker Carlson that Iran cannot have a nuclear weapon. Now, I agree with the President 1,000% on this. Not because I think it’s in our business and we should be the world’s policemen. That’s ridiculous. And I think most people think that’s crazy. But I look at this as a historian who understands game theory. I’m not sure Tucker Carlson understands history in a way that lets him see around corners. He’s certainly a great commentator, and he understands where a lot of people’s heads are, and is a great storyteller. But history - that’s a little bit different. History tells us that if Iran gets a nuclear weapon - it looks like this: Let’s play the tape here… First of all, Iran is the state sponsor of terrorists. If they have a nuclear weapon, they can give a “dirty bomb” to the Houthis, and the Houthis could hold hostage the Strait of Hormuz, which is crazy. You just can’t let that happen. To play the tape even further… If Iran has a nuclear weapon, what does history tell us? History tells us that what would happen is that the other powers in the region would seek balance against that - game theory, okay? So then, all of a sudden, Saudi Arabia would get a nuclear weapon. Egypt would want a nuclear weapon. And before you know it, all these real tin pot dictators would get nuclear weapons. Iran is really a domino here. I hate to even say domino theory, but when it comes to nuclear weapons we just can’t let that happen. We cannot. That’s why Europe, and even the Arab countries absolutely support what Israel is doing, period. You cannot have a situation where a revisionist regime, a terrorist regime, a regime that exports, supports and finances terror organizations, that seek to mess things up for the powers that run things - Let’s be blunt about what’s going on here - You cannot have that regime have nuclear weapons. Because, how long before their terrorist sponsors get them? Even if you think the Iranian regime would be responsible with them, do you want an enemy that chants, “death to America” every day to have nuclear weapons? Come on. What are we? Stupid? Do we have to learn this lesson again? Hello!!! History tells us what happens. Again, my biggest concern is even if Iran was a responsible nuclear power, I don’t want to see all the other Middle Eastern democracies all of a sudden get nuclear weapons. The world would be much more dangerous. Our security position would be much more unstable. How long before one of those Theocratic regimes got toppled and all of a sudden an Osama bin Laden-type has a finger on a nuclear button? I mean, come on. It’s not logical, okay? This is why the world supports this. Even China supports this. They came out and said, eh, this is not good… We support Iran’s sovereignty. But we don’t want to see a Middle East that’s nuked. To them, the Middle East is their gas station. Europe doesn’t want to see the Middle East get nuclear weapons, especially attached to long-range ballistic missiles. That means their security profile goes down. There’s not any thinking person who understands national security, history and geopolitics and power politics who really says, “nah, leave it to the Iranians.” Come on. That’s not a real thing, okay? So I agree wholeheartedly with the President. But I’ll tell you something - Several countries have come out and really ramped up defense spending in the face of this. It’s so important. And what’s cool right now is that a bunch of other people who think about this, for the past 10, 15 years, have been writing and speaking about the fact that U.S. innovation has atrophied because our defense giants - the Lockheed Martins, the Boeings, etc…. Since the Soviet Union fell and we lowered defense spending as a percentage of GDP… All of a sudden these giants started to consolidate, absorb smaller companies and achieve economies of scale to save money because they were chasing fewer dollars. But now, since we were worried these giants weren’t innovating fast enough, and Elon Musk’s SpaceX proves that, vis-a-vis Boeing and any satellite company… America is starting to wake up. Churchill famously said democracies sleep a lot, but when they wake up, they WAKE UP. And you can see us waking up. We can see defense-focused companies starting to go public, which is great. And of course we’re very hot on one that recently went public. We put it in this month’s issue of Breakthrough Wealth we just put out. America’s awakening to our defense needs is fabulous because we can finally start to get our hands on these pure play defense contractors that are very important. If I wanted a pure play defense contractor like the one I just put out in this month’s issue of Breakthrough Wealth, to play say, air power, I’d have to buy like a Lockheed Martin. Air power might be one of 50 divisions at Lockheed Martin. So even if their air power business grew 1,000% in a year, it’s a blip on Lockheed’s radar screen. Now we can play the increase in defense spending with some of these small companies going public. I’m very happy about that. I’m very happy American innovation is starting to wake up for the defense sector in this country, because we are going to need our best and brightest minds in this country to face the China challenge. These are found in the companies building the future of defense. Make sure to position yourself for what’s coming. | 