“Have you tried turning it on and off again?” — Roy Trenneman, The IT Crowd
Chart of the Day
Good morning!
“There is no kill switch.”
That’s what Pentagon officials have recently been telling U.S. allies who had purchased (and helped fund the development of) Lockheed Martin’s F-35 fighter jets.
There have long been whispers that such a U.S.-controlled kill switch exists – a means by which the fighter jets can be remotely disabled, effectively acting as a U.S. veto on any airstrikes that allies might decide to carry out. Those whispers have gotten louder since President Donald Trump began displaying more affinity toward Russia and Vladimir Putin in his remarks about the Russia-Ukraine war.
Top Gun’s Maverick might feel “the need for speed“, but what top fighter pilots really need is the bleeding-edge software that is continually updated to ensure that the F-35 remains as formidable a weapon as it was conceived. The plane’s avionics depend on the latest software to provide pilots with (among other things) optimal situational awareness, advanced targeting capabilities, and the ability to effectively respond to enemy countermeasures. Without those updates, the F-35 can still fly and shoot, but not nearly as well.
As it turns out, many of the weapons and military systems sold by U.S. defense contractors are dependent on manufacturer-supplied parts and software updates, without which their usefulness degrades over time. This hadn’t previously been viewed by our European allies as a major issue, but our Asian allies began quietly ramping up domestic support for homegrown arms manufacturers years ago for this very reason.
It appears that EU members are now also rethinking their reliance on U.S. suppliers like General Dynamics. Although they are looking to develop their own systems, even for major, complex projects like fighter-jet platforms, some weapons manufacturers in Japan and South Korea see opportunity to expand even more by venturing outside their home regions.
Trump has long wanted U.S. allies to spend more on defense. It appears he might soon be able to claim a victory on this front, though American arms manufacturers might not reap quite the windfall they’d hoped for if he does.
Catch Up With FS Insight
There were positive developments over the weekend, and we now see the increased probability of a sharp rally starting possibly this week.
TECHNICAL
Markets have begun the process of bottoming out and have carved out the first meaningful move off the lows since late last week on above-average breadth data.
CRYPTO
In today’s video we speak more to our view that the market is discounting the potential for information emerging around budget neutral strategies for the SBR to acquire BTC and discuss today’s pricing of MSTR’s new perpetual preferred shares.
News We’re Following
Breaking News
- 23andMe Files for Bankruptcy, Announces Resignation of CEO Anne Wojcicki WSJ
- South Korean Prime Minister Han Duck-soo reinstated as acting president after impeachment overturned AP
Markets and economy
Business
- Crypto’s long battle with SEC comes to a close with Ripple victory CNBC
- South Korea’s Hyundai to announce $20 billion U.S. investment CNBC
- BYD sales surge 29% on strong Chinese demand for hybrid cars FT
Politics
- Tax revenue collected by the IRS set to plummet, report says CNBC
- Trump officials to take ‘private visit’ to US space base in Greenland FT
Overseas
- Taking on Erdoğan: protesters rise up against Turkey’s president FT
- Japan has not yet conquered deflation, finance minister warns FT
- Indonesia names billionaire investor Ray Dalio as sovereign wealth fund adviser FT
- A War Within the War: Ukraine’s Ill Children NYT
Of Interest
- These People Found Fame and Money—on LinkedIn WSJ
- Why it suddenly feels like every fast-food restaurant has fun, flavored drinks CNBC
- Tiger Woods confirms his relationship with Vanessa Trump in a social media post AP
| Overnight |
| S&P Futures +63
point(s) (+1.1%
) overnight range: +21 to +64 point(s) |
| APAC |
| Nikkei -0.18%
Topix -0.47% China SHCOMP +0.15% Hang Seng +0.91% Korea -0.42% Singapore +0.25% Australia +0.07% India +1.32% Taiwan -0.46% |
| Europe |
| Stoxx 50 +0.40%
Stoxx 600 +0.24% FTSE 100 +0.20% DAX +0.59% CAC 40 +0.33% Italy +0.44% IBEX +0.62% |
| FX |
| Dollar Index (DXY) -0.17%
to 103.91 EUR/USD +0.29% to 1.0849 GBP/USD +0.34% to 1.2963 USD/JPY -0.23% to 149.66 USD/CNY -0.01% to 7.2526 USD/CNH +0.01% to 7.2562 USD/CHF +0.22% to 0.8809 USD/CAD +0.22% to 1.4318 AUD/USD +0.45% to 0.6301 |
| UST Term Structure |
| 2Y-3
M Spread widened 2.8bps to -31.6bps
10Y-2 Y Spread widened 0.6bps to 30.0bps 30Y-10 Y Spread narrowed -0.3bps to 33.6bps |
| Yesterday's Recap |
| SPX +0.08%
SPX Eq Wt -0.46% NASDAQ 100 +0.39% NASDAQ Comp +0.52% Russell Midcap -0.27% R2k -0.56% R1k Value -0.43% R1k Growth +0.53% R2k Value -0.78% R2k Growth -0.35% FANG+ +0.54% Semis -1.00% Software +0.58% Biotech +0.61% Regional Banks -0.05% SPX GICS1 Sorted: REITs -1.03% Materials -1.00% Utes -0.66% Energy -0.62% Indu -0.54% Fin -0.39% Healthcare -0.30% Cons Staples -0.09% SPX +0.08% Tech +0.49% Cons Disc +0.63% Comm Srvcs +1.00% |
| USD HY OaS |
| All Sectors +4.3bps
to 362bps All Sectors ex-Energy +4.1bps 329bps Cons Disc +6.1bps 353bps Indu +4.7bps 270bps Tech +7.4bps 369bps Comm Srvcs +2.6bps 554bps Materials +4.7bps 326bps Energy +3.7bps 356bps Fin Snr +2.9bps 307bps Fin Sub +2.7bps 231bps Cons Staples +2.3bps 234bps Healthcare +4.3bps 375bps Utes +3.9bps 249bps * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 3/24 | 9:45 AM | Mar P S&P Manu PMI | 51.8 | 52.7 |
| 3/24 | 9:45 AM | Mar P S&P Srvcs PMI | 51 | 51 |
| 3/25 | 9:00 AM | Jan Case Shiller 20-City m/m | 0.4 | 0.52 |
| 3/25 | 10:00 AM | Mar Conf Board Sentiment | 93.55 | 98.3 |
| 3/25 | 10:00 AM | Feb New Home Sales | 680 | 657 |
| 3/25 | 10:00 AM | Feb New Home Sales m/m | 3.5 | -10.5 |
| 3/26 | 8:30 AM | Feb P Durable Gds Orders | -1 | 3.2 |
| 3/27 | 8:30 AM | 4Q T GDP QoQ | 2.3 | 2.3 |
| 3/28 | 8:30 AM | Feb PCE m/m | 0.3 | 0.3 |
| 3/28 | 8:30 AM | Feb Core PCE m/m | 0.3 | 0.28 |
| 3/28 | 8:30 AM | Feb PCE y/y | 2.5 | 2.5 |
| 3/28 | 8:30 AM | Feb Core PCE y/y | 2.7 | 2.64679 |
| 3/28 | 10:00 AM | Mar F UMich 1yr Inf Exp | n/a | 4.9 |
| 3/28 | 10:00 AM | Mar F UMich Sentiment | 57.9 | 57.9 |
