Capital Flows

Capital Flows

Share this post

Capital Flows
Capital Flows
Alpha Report: Drones and a flight to "safety"
Copy link
Facebook
Email
Notes
More
Alpha Reports

Alpha Report: Drones and a flight to "safety"

The new defense contractors

Capital Flows's avatar
Capital Flows
Apr 21, 2025
∙ Paid
22

Share this post

Capital Flows
Capital Flows
Alpha Report: Drones and a flight to "safety"
Copy link
Facebook
Email
Notes
More
3
2
Share

A shift in geopolitical risk premia:

Historically, when geopolitical risk rises due to military conflict, government contractors rally along with gold and crude. These have been consistent characteristics ever since the military-industrial complex took a larger role in US government spending.

The new geopolitical context we are moving into is changing how these “flights to safety” function due to the merging of AI technology with drones. If you have followed the war in Ukraine at all, then you are well aware of how drones have played an unprecedented role in shifting the balance of power. As we move into the next 5 years, any geopolitical risk premia is likely to cause a bid for companies manufacturing drones. This will be important to monitor in the context I laid out in the macro report:

Macro Reports

Comprehensive Macro Report: Geopolitical Trades With Tariffs

Capital Flows
·
Apr 20
Comprehensive Macro Report: Geopolitical Trades With Tariffs

The Global Context:

Read full story

Drones and Trade Wars:

What the war in Ukraine has shown is that military conflict is becoming synonymous with drone warfare, thereby increasing spending on both the software and hardware of drones. The developments around these drones are highly intertwined with the interdependencies of trade. In other words, the drones are becoming essential for a competitive advantage on the battlefield, which means the trade tensions we are seeing are going to be intertwined with drones.

We already know trade wars and tariffs are top of mind for companies in the S&P500 and broad media:

The flight to “safety”:

Keep reading with a 7-day free trial

Subscribe to Capital Flows to keep reading this post and get 7 days of free access to the full post archives.

Already a paid subscriber? Sign in
© 2025 Capital Flows
Privacy ∙ Terms ∙ Collection notice
Start writingGet the app
Substack is the home for great culture

Share

Copy link
Facebook
Email
Notes
More