FICC Focus Macro Matters: Who Benefits From Defense Burden-Sharing?
Aug 28, 2025
George Ferguson is a senior aerospace/defense & airline analyst at Bloomberg Intelligence, and he joins the discussion on global defense spending shifts. They explore the implications of President Trump's defense burden-sharing strategies, particularly in light of Ukraine. Ferguson details how technological advancements in warfare transform military approaches and contract dynamics. He also highlights key players like Lockheed Martin who stand to gain from these defense expenditures while discussing the logistical challenges of modern air defense systems.
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Europe Steps Up Defense Spending
- European countries closer to Russia are rapidly increasing defense spending as they feel an elevated threat from the invasion of Ukraine.
- The U.S. cannot fully backstop Europe while also prioritizing the Pacific, so Europeans must shoulder more defense responsibility.
Air Defense Outweighs Drone Hype
- Drones add complexity but have not eliminated the need for traditional tanks and armored vehicles in Ukraine's conflict.
- The major shift is investment in layered air defense to counter missiles, hypersonics, and swarms of drones.
Scaling, Not Just Interruptions, Is The Bottleneck
- The bigger supply problem is scaling productive capacity and finding skilled manufacturing labor, not just interruptions.
- Even basic munitions production like 155mm shells struggles due to workforce and capacity shortfalls.