Sondre Flateraaker @Flaten: "Market Recap – Thursday, December..."

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Market Recap – Thursday, December 4th We had another eventful day on the geopolitical and defense front, with several developments that directly reinforce our long-term thesis. President Trump has now signed legislation requiring the State Department to regularly review and update all official guidelines on U.S. interaction with Taiwan. The wording of the act matters: it “affirms the value of U.S.–Taiwan interaction and stands as a firm symbol of our shared values of democracy and freedom.” This is another strong signal that Washington is tightening strategic ties with Taipei. That alone strengthens our core thesis around defense, autonomy, AI, cyber, and the entire Indo-Pacific security build-out. At the same time, Kremlin officials confirmed this morning that the United States and Russia failed to make any progress on a potential Ukraine peace deal after a five-hour meeting. This shouldn’t come as a surprise. Russia continues to increase troop mobilization and systematically degrade Ukrainian infrastructure heading into winter. When you combine this with the EU’s new agreement to permanently halt all Russian gas imports by November 2027 and to phase out Russian oil you can see clearly that the geopolitical cycle is nowhere near stabilizing. Europe is preparing for a long conflict, not a short one. All of this is why our sector continues to get the right kind of news flow. $ONDS (Ondas Inc) continues to quietly build momentum. Over the past month the company has secured two separate €8M-equivalent orders to harden and surveil European airports. On top of that, this morning they announced they beat out major primes for a significant U.S. government contract to develop drone systems for surveillance on the southern border. The amount hasn’t been disclosed yet, but management said the first major purchase order should come in January 2026. This could be a material upside surprise in Q1. Across the drone and autonomous systems space, we received one of the biggest confirmations yet. On December 2nd the Department of War posted its Drone Dominance Program request for information, outlining a two-year procurement cycle of roughly $1B and 340k drones. The structure is aggressive: tests, “Gauntlet” trials, and multiple tranches at sharply increasing volumes. This is exactly the type of program that rewards companies with domestic, low-cost, high-reliability supply chains. Needham expects Unusual Machines to be a major beneficiary, and inside our portfolio we are positioned across the entire chain: $KTOS (Kratos Defense & Security Solutions Inc) on the manufacturing side, $AVAV (AeroVironment Inc.) through $ITA (iShares US Aerospace & Defense ETF) $RTX (Raytheon-Technologies) for interceptors, $AMPX (Amprius Technologies Inc) for high-density batteries, $PLTR (Palantir Technologies Inc.) for swarm-AI and mission software, $LHX (L3Harris) for the comms layer, $DRS (Leonardo Drs Inc) for thermal sensors, $CACI (CACI International Inc) for EW and jamming, $TTMI (TTM Technologies Inc) for boards, and $PKE (Park Aerospace Corp) for composite structures. This is a complete value-chain capture. We also received confirmation of another foundational program: the Missile Defense Agency has now awarded the first phase of the SHIELD contract, part of a massive $151B vehicle running through 2035. It’s designed to move fast, emphasize AI/ML embedded applications, digital engineering, and rapid prototyping. The MDA received 2,463 proposals and selected 1,014 vendors in this first round. This contract is built to scale in every direction, and our positions are well aligned $RTX $PLTR $PSN.US (Parsons Corporation) $LHX $KTOS and $CACI all sit in the exact parts of the stack SHIELD is funding. We also learned that the Trump administration is preparing an executive order on robotics next year. Commerce Secretary Lutnick has been meeting with robotics CEOs and is pushing aggressively to accelerate domestic automation. This will be a major tailwind for industrial tech and autonomy. It directly benefits names like $GXO (GXO Logistics Inc.) $KTOS $MP (MP Materials Corp.) $PLTR $QXO (QXO Inc) $ETN (Eaton Corp PLC) $TTMI $RTX. This is the industrial backbone of the new re-shoring cycle. This all ties back to why our portfolio is built the way it is. Every major development Taiwan policy, Ukraine stalemate, China–Japan tensions, border security, missile defense, robotics, industrial automation—funnels capital into the same sectors: defense, autonomy, energy security, logistics, and AI-enabled manufacturing. These are the exact segments we positioned ourselves in. I am seeing strong bid rotation into our core themes. The news flow is lining up precisely with what we’ve been preparing for. Once I resolve some technical issues with the Option flow tools, I’ll post the updated option-flow breakdown in today’s Daily Market News. As always, stay calm, stay focused, and stay long-term. The thesis continues to strengthen. Thank you for the read and see you when The Market Opens!