As Ukraine and its allies prepare for a potential escalation in fighting in the spring, the debate over sending battle tanks to back Kyiv’s military and potentially retake territory has become a flashpoint among NATO allies. US and European officials have bridled at Scholz’s slow decision-making, saying the German leader should be more assertive, following through his promised “Zeitenwende,” or historic turning point on security. 

Scholz has insisted that Germany should not act alone in sending new categories of heavy weapons that could provoke an escalation with Moscow. He’s placed a premium on moving in lockstep with the US and NATO. 

“We never go alone,” Scholz said in an interview last week with Bloomberg. 

Eoin Treacy's view

There are estimates Rheinmetall could send as many as 139 Leopard Type 1 and 2 tanks to Ukraine via various swap agreements over the next several months. By that time, there is a risk available inventory will be fully exhausted.

Incoming orders surprised on the downside in Q3 even as the backlog of existing orders grew. The slow pace of production does not appear sustainable. There is a reality check coming for regional governments. The front is in Ukraine but national priorities will require re-armament and that will only become more urgent as inventory declines.
The share has recovered to revisit its peaks and closed at a new high.
Raytheon was subject to extraordinary volatility today but closed well off the intraday low. That was on the back of higher profits but lower sales.

The Republican Party is talking about cuts to defense spending even as support for the war in Ukraine is stepped up. There is a strong likelihood that talk is more about bluster than intention but it is has weighted on the sector’s performance.
Meanwhile Lockheed Martin is firming from the region of the 200-day MA.