The defense actions of Europe staggered at the beginning of the week, since investors lost the details, which still lack some areas, of the framework commercial agreement achieved by the union of the United States and Europe on Sunday. An initial concern was that an EU commitment to increase their purchases of American goods, in particular military teams, could have a cost of European defense companies that have organized a mass demonstration this year about the expectations of a wave of regional expenses. Those include the Thales of France, which fell 4.3% on Monday; Renk and Rheinmetall of Germany, which fell 5.1%and 3.3%, respectively, and the Leonardo of Italy, which immersed 0.74%. The analysts told CNBC that such fears were unfounded, and that European defense companies remained the main beneficiary of the largest national budgets in the coming years, particularly since they lack the production capacity to meet all the needs of the region. According to a summary of the White House Agreement, the EU would earn $ 600 billion in new investments in the United States at the end of President Donald Trump in 2028, in addition to the $ 100 billion that EU companies currently invest annually. He adds that the block “agreed to buy significant amounts of American military teams,” and Trump tells journalists that he would “hundreds of billions of dollars” of arms purchases. In its own reading, the EU said only that companies in the block “have expressed interest in investing at least $ 600 million” in “several sectors” in the US. The president of the European Commission, Ursula von der Leyen, did not mention US military purchases in her own statement on the agreement, which occurs two weeks after she presented a proposed budget of 2 billion euros, seven years, including a five -time increase of the current expenditure in defense and space. In general, the EU has outlined plans to mobilize around 800 million euros in new defense expenses as part of an important thrust of rearme, including loans and relaxation of fiscal expenses limitations. Lack of capacity The numbers mentioned in the commercial agreement are a source of uncertainty, Peter Schafffrik, RBC Markets Capital Macro Capitista, told CNBC. “For defense in particular, this is relevant, since we know that not all European expenses can be done with European companies. Therefore, it is not clear if the aforementioned sums are additional to what was planned, and if the expense takes place in a short or long period of time (that is, 10 years) is also very uncertain.” It was already expected that US military suppliers such as Lockheed Martin, Northrop Grumman and Raytheon would benefit significantly from a higher EU expense as existing contracts extend and win new ones, despite the calls of European chiefs and leaders to maintain as much funds as possible in the region. Dmitrii Ponomarev, Product Manager of the Totado Fund in Exchange of the Vaneck Investment Management firm, said that Europe represented approximately 35% of all weapons exports of the United States between 2020 and 2024, and that the United States supplied around 64% of the arms imported by the European states of NATO. The International Peace Research Institute of Stockholm “has generated concerns about EU ambitions for national defense manufacturers, citing historical difficulties to expand production, inflation of costs of protectionist policies and a persistent mismatch between supply and demand within the block,” said Ponomarev. “It is likely that US defense contractors are the main beneficiaries of this agreement. Although European defense companies initially reacted negatively to the news, they could still benefit in the long term, assuming that the general size of the European defense market is faster than local companies can absorb.” The impulse to spend local capital will flow from private sector companies where it seeks the highest performance if the United States makes its economy, markets and regulation more attractive than Europe, said Dean Turner, Chief Euro Zone and economist in the United Kingdom in the UBS Investment Office of UBS Global Wealth Management. But from the current announcement, it is still difficult to know what is new and additional or it was going to happen anyway, he said. “In my opinion, the moment is the problem. If countries wish to invest in defense equipment, their acquisition options at this stage are somewhat limited. In Europe we have many defense manufacturers, but probably not enough with the capacity to offer that type of impulse to production,” he said. “Of course, some money will flow to the US. [French President Emmanuel] Macron and Others Have Been Clear About, That Much More of This Spending You have to be done locally. “” So Just Because of A Trade Agreement – ID Hesitate to Even Call It a Deal at This Point – It Won’t Be Transformational In Terms of Us Defense. Geopolitics and Strategy at Ixd Business School and Co-Chair of the World Economic Forum’s Global Future Council on Trade and Investment, Said the Word “Investment” is used “Very Loosely in All of Trump’s commercial agreements,” including the recent announcement of a US investment commitment of $ 600 billion by $ 600 billion by $ 600 billion by $ 600 billion Saudi Arabia. ” You uncover it and involve spending in defense, investments of the private sector, implies a wide range of things. What does this mean in the context of the EU-EE agreement. Uu.? At this stage, who knows, “said Evenett. The European Commission has indicated that $ 600 billion refer to private sector investment, which implies that there are no additional expenses of European governments beyond energy purchases, he said.” In summary, this agreement implies a lot of smoke and mirrors … This agreement only buys time for them to articulate more specific. “
