Dear Reader,
Happy Wednesday.
Today is Wednesday, January 21st, and yes — I’m wearing a jacket for the second day in a row because it’s absolutely freezing down here.
A brutal 50 degrees…
I know my friends in Buffalo are laughing at me right now. One of them is literally snowed into his house right now… But once you get used to Florida weather, your tolerance for cold disappears fast.
Now today I want to talk a bit more about defense spending, Greenland, and NATO.
Not to repeat what I said yesterday, but to focus on the knock-on effects of what we’re witnessing right now.
Because make no mistake: we are living through history together.
We are watching the end of the post–World War II international order unfold in real time. And that has enormous second- and third-order consequences.
Anyone who’s followed Behind the Markets for years has heard me say this before: the world was entering a new cycle of war.
I’ll update that now.
The world has entered a new cycle of geopolitical conflict.
This cycle is being driven primarily by China’s attempt to flip the global order — to knock the United States out of the center and put itself there instead. And historically, this isn’t new.
It looks a lot like Germany under Kaiser Wilhelm before World War I. Germany wanted its “place in the sun.” It looked enviously at Britain’s empire and believed it deserved the same. Russia was weak. Alliances were fragile. Power was shifting.
We know how that story ended.
What we’re seeing now is similar.
No matter how the Greenland situation ultimately resolves — and I don’t think that’s hyperbole — the consequences are already locked in.
Defense spending in the United States is going higher.
Defense spending in Europe is going higher.
And Europe is going to become more militarily independent, whether it wants to or not.
That won’t happen overnight. But it will happen. European governments don’t have a choice. If they don’t rearm, they risk being carved up in a far more dangerous world.
The shock that’s moved through European capitals over the past week will have lasting effects.
Now, what does this mean for us?
Aside from living in a very different world, it’s still too early to say whether it’s better or worse. But I’ll tell you this — it’ll be a very familiar world to anyone who studies history.
The post–World War II order was the exception, not the rule.
The rule, as Thucydides famously said, is simple: the strong do what they can, and the weak suffer what they must.
That’s power politics. That’s reality.
Now let’s talk numbers.
President Trump’s proposed $1.5 trillion defense budget brings U.S. military spending to roughly 5% of GDP — right in line with Cold War levels during the Soviet competition.
This ramp-up is directly tied to China’s stated goal of being ready to take Taiwan by 2027.
Greenland fits into this picture because it plays a critical role in missile defense — specifically the Golden Dome, which is a major component of that expanded budget.
To be clear, I’m not questioning whether Greenland matters strategically. It does. I understand the logic.
The only question I’m asking is whether this is the right way to go about it, given the alliance structure we currently have.
Regardless of how that debate plays out, the investment implications are clear.
Defense spending in the U.S. is going higher.
Defense spending in Europe is going higher.
And importantly, the stocks do not fully reflect that yet.
Markets have priced in roughly a trillion dollars of defense spending — not $1.5 trillion.
That difference matters.
Many of the companies we follow stand to see massive new inflows if this budget passes. And European defense firms will benefit simply because their governments now have no choice but to spend more.
We just updated a report we first published last year that lays out a basket of U.S. companies tied to the Golden Dome, along with select European defense names positioned to benefit from this shift.
Defense isn’t AI — AI will touch everything — but defense spending touches every country. And it will pull a lot of technology companies higher along the way.
Remember, all of this has unfolded in just the last seven days.
A $1.5 trillion defense proposal.
Greenland.
Alliance stress.
This is happening in real time.
And as investors, our job is to recognize when the pitch comes across the strike zone — and act.
That’s all I have for today.
Have a wonderful day.
I’ll see you tomorrow.
“The Buck Stops Here,”
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Written by Dylan Jovine