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Chapter 1: What is the Pentagon's $1.5 trillion defense budget proposal?
The Pentagon comes out and asks for a 42% year-over-year hike in their budget with a $1.5 trillion defense budget that they're asking for 2026. And this is a barren story. Let me read this to you, and then... We can go there, Rob. So eight big winners from Trump's historic $1.5 trillion defense request. And Tom, I'm going to come to you. Rob, is that about this or no?
Yes, it's Kevin Hassett.
All right. So on Friday, Trump unveiled the fiscal's 2027 budget of $1.5 trillion. The $1.5 trillion number will be at 42%. And it's a historic increase not seen since the Korean War when the annual defense budget jumped from $14 billion in 1950 to $33 billion in 1951, almost $48 billion in 1952. The Navy is projected to see its ship budget more than double
65.8 billion versus 27.2, wrote vertical research partner analyst Bob Stellar, also seen a big jump in the Space Force. Its request of 71.2 billion represents 77% year-over-year increase.
That is relatively good news for shipbuilders, general dynamics, and Huntington Ingalls Industries, and for space startups, including Rocket Lab, Firefly, Aerospace, and, of course, privately held SpaceX companies. Huntington stock gains 2.8% on Monday.
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Chapter 2: How do defense contractors benefit from increased military spending?
General Dynamics stock rose 0.7%. Rocket Lab stock went up 0.1%. And Firefly shares went up 5.8%. The Defense Department is also asking for 85 F-35 jets from Lockheed Martin up from 47 in fiscal year 2026. The Army gets an increase in the Armored Multipurpose Vehicle, or AMPV, made by Britain's BAE. And last but not least, both of those stocks,
L3 Harris Technologies and RTX have gained more than 65% over the last 12 months, leaving them trading for about 26 estimated 2026 earnings. Tom, your thoughts on this.
So there's two things going on in here. One is forward and the other is replenish.
Chapter 3: What historical context is provided for the defense budget increase?
On the forward side, they're taking the things that have worked. The F-35 is working. We've just seen it work. And so they're like, we need more of what works. And some of those F-35s are going to find their way to Saudis. Some of them are going to find their way to Israel. There's a variety of places where we are going to have those and use them. And that's almost doubling the 47s.
That from the previous. Then there's replenish. We have been every year that the defense budget, you know, you buy bombs, you buy missiles, you don't use them. You buy surface to air, SAM, surface to air missiles. You buy air to air combat, you know, all of the. the things that are out there. And now guess what? We've been using them up.
So there is a big, big, we got to, you know, we just had everybody over to grandma's house. We stayed there a week and we had Thanksgiving. And as we leave, we need to make a Costco trip because we got to refill grandma's pantry.
because we've eaten everything in our pantry so we got to replenish all the bombs and stock and missiles and things that we've used up number one number two uh they're we're buying a bunch of stuff that that works and number three we're discovering just how valuable space force is and so we are radically increasing what's been spent on that and lastly
War is really good for business if you're a defense contractor. The sad thing about war is the soulless, faceless defense contractors see it as a testbed, and they see it—they want war. They want border skirmishes.
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Chapter 4: Which military branches are seeing significant budget increases?
They want aircraft engagement with North Korea and China to just kind of test each other a little bit up there in the skies over the— Sea of Japan. They want that. And this gives them an ability to test things. And so this is the price tag. This is the price tag of forward armament. This is a price tag of adding space force.
This is also the price tag of refilling the pantry because we just used up all of our bombs.
Colin.
Yeah, I mean... It seems like a big number. I mean, in totality.
Do you support it? Do you think this is a good thing we're doing to get tighter and get more fighters? I don't know.
I mean, I'm not privy to, you know, the crazy thing to me, these numbers are so big. I mean, where does $1.5 trillion even go? I do. I like a lot of the aspects. I mean, here's one thing. In terms of long-term innovation, the U.S. military has actually had an incredible multiplier effect on the U.S. economy in the long run.
So out of all of the places where we spend a lot of money, the military is one of these things where, you know, whether it's the Internet or, you know, things like just the knock-on effect of all of the different technologies that go into a lot of this. I mean, you look at people like Palmer Luckey and people who are, you know, incredible innovators.
I mean, going to the whole Space Force thing, you know, people mocked that a few years ago, but now, you know, controlling space and, you know, who's got the most satellites, who's got the ability to see the rest of the world, that all of a sudden looks like the arguably the most important strategic, you know, economic and military viewpoint of anything. So I don't know.
There's definitely, there's a lot to like in here. I think the problem with these humongous numbers is you go back to things like, you know, these audits of like the Pentagon where they're like, you know, whoopsies, we lost a few hundred billion dollars and we just don't know where it went. And it's like, how the hell does that happen?
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Chapter 5: How does the F-35 program impact defense spending?
We've had wars that they've lobbied for, that they've fought hard for to get into, whether it's the Korean War, whether it's the Cold War, whether it's the war against terror, whether it's the... NATO against Russia, when Russia wanted to be part of NATO, all of those weren't necessary. They were necessary for the beast that was created during World War II, the military-industrial complex.
Now, when it comes to this, I would cut it down to $500 billion, not increase to $1.5 trillion. You know, make them get the most out of what they're using right now, because they're not even spending the full $800 billion of it. $300 billion of it's going to waste. So, what, we're just going to make the number bigger so that the number that's wasted gets bigger? No, I'm not...
a fan of lighting money on fire, especially when it's taxpayer money. And we're running a deficit every year and we're already at 40 trillion. We're just at 35 trillion.
Like that's where affordability, a lot of people day to day, regular people would side with you. And they would say, that makes sense. Why are we doing it, right? But I think the better question to ask, Brandon, to be honest with you, is the following. I was in the military, and I would order parts for Humvees. And I would go to my Sergeant Braxton.
If he's around, I haven't spoken to the guy for 20-some years. I love Sergeant Braxton. I would say, Sergeant Braxton, why is this lug nut, why is this ball joint, whatever, for the Hummer, $2,800. This is really a $400 product while it's the government. We always overpay. That doesn't make any sense to me. So this is why I was excited about Doge.
Yeah.
Because we were going to get to the bottom of this. If you're running a business, you hire a new CEO, first thing they're going to look at and say, let me renegotiate all the contracts. Why are we spending so much money with this? I'll never forget one of the things we did is we had a guy that would keep buying memberships. Because he controlled the company credit card.
You would remember this guy. He bought 900. We were like, how many reoccurring things are we paying for? 900 things. I said, what? Yeah. So this guy comes in and audits. It's like, we don't need to pay 900 different things of memberships that we have. So one by one by one, we don't need this. We don't need this. We need this. We need that. Okay. I think the bigger question here to ask is,
You have two case studies. You have Russia and Ukraine, US, Israel, and Iran. And we both, all of us around the world saw what became a very powerful tool? Drones. So I want to know what we're doing to change the strategy of the future wars Whether it's going to be, if we go back and keep buying weapons the way we bought for decades, okay, fine. How much of it is going into the new warfare?
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Chapter 6: What is the relationship between war and the defense industry?
And one tweet that's going viral is this tweet by Gunter... Eagleman. He's got some interesting tweets that he puts out. NASA Artemis II, $4 billion. The California bullet train, $126 billion. NASA Artemis II started planning in 2017. The other one started in 96. Passengers for... Passengers in California, zero. Miles traveled, 695,000 miles traveled.
Miles traveled for the bullet train in California, zero. And by the way, you know what's crazy? As crazy as this is that people are making this comparison of how much it costs for NASA to do it versus the bullet train, do you know what the numbers are if you look at what Elon does when he's got his launches? We've done this before. Yeah, compared to NASA and SpaceX. Yeah, the Falcon 9.
is $67 million per launch. The space shuttle for NASA is $450 to $1.5 billion. The Falcon Heavy that Musk does, $97 million per launch. The one that they do is $4 billion. And as crazy as this sounds, guess who was in Newsom's backyard for a couple decades? Musk. Guess who he could have gone to and said, hey, Musk, can I talk to you? What's that?
Hey, man, we're spending $120-some billion on this. It's like I got the money. How the hell do we do this to make it cheaper instead of spend all the money that's not working? Can you help me out? No. Instead, what does he do? During COVID doesn't allow Tesla people to do their thing. And he's like, screw you. I'm going to. Yeah. Austin.
It's these types of things that the American people see and they see waste. And so I don't want to give you a single penny for something like this. I don't want to give you a single penny for this. So I get the argument.
But if they do it right. It's like they don't have an ownership mentality. They have like a pillaging mentality. You know, if everybody had a collective ownership mentality of America, then they wouldn't pillage the country.
Many times when people think about Valuetainment, all they think about is a podcast, but it's a lot more than that. It's nine companies working together on an 11-acre campus. If I was to give you a virtual tour here, you'll see the HR department hiring, talent acquisition. We have full-stack developers that are working on Manect and Hiremetrics.
We have a full-fledged events team that puts together events with thousands of people. We have a merch department designing the latest product. We just launched the FLB shoes made in Italy. We have a marketing department designing And if you go to the complete opposite side of the building, 50, 60 people making calls, working for David Consulting, sales, setters.
And then on the complete opposite side of the campus, there's a full-on production company with editors, shooters, creating content, doing podcasts. Then you can drive down a couple miles and go to our private boardroom, Cigar Lounge, with members only. Regardless of what it is, working at Valuetainment every day is a surprise.
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