Lisa Abramowicz 3.5 6 ideas

Taking a look at defense, RTX and Northrop Grumman up in the premarket. The unprecedented escalation involving Iran, Israel, and potentially US ground forces guarantees a massive influx of defense spending and weapons replenishment. Defense contractors will see their order backlogs swell as global military budgets expand to address the rising threat environment. LONG Political gridlock in Washington preventing the passage of emergency supplemental defense spending packages.

Lisa identifies a "worst case scenario of stagflationary shocks" where oil prices are rising rapidly (WTI at $86) while the underlying employment market is crumbling (-92k jobs). In a stagflationary environment (slow growth + high inflation), equities usually suffer, but commodities—specifically energy—act as the primary hedge. The market is pricing in supply constraints or geopolitical risk despite the demand destruction implied by job losses. LONG. Oil is decoupling from the slowing economy, acting as a stagflation hedge. A severe recession (hard landing) could eventually kill oil demand, causing prices to collapse regardless of supply issues.

TJX reported an earnings beat and is on an 18-year winning run. The consumer is becoming "choosier" and hunting for value. TJX benefits from the trade-down effect where consumers seek discounts rather than full-price retail. LONG TJX. Supply chain disruptions from new tariffs increase costs.

"FedEx is another one that lined up... sue the government to be in line to get part of that 70 billion of tariffs that were paid." Following the Supreme Court ruling, companies that paid IEEPA tariffs are filing for refunds. While the process is "messy" and "slow," a successful clawback of billions would be a massive one-time injection of cash for FedEx, potentially used for buybacks or capex. WATCH Litigation takes years; Congress passes retroactive legislation to validate the collected tariffs.

Lisa Abramowicz: "It sounds a lot like what Brian Moynihan [Bank of America CEO] said. The size of the employees may not change but the ability to capture a larger share of the market does increase." This validates a sector-wide thesis for "Large Financials." Both Schwab and Bank of America are signaling that headcount will remain flat while revenue/assets scale up via AI. This creates a "Jaws" effect (revenue growing faster than expenses) for the largest players who can afford the AI infrastructure. LONG. Betting on large-cap financials utilizing AI for operating leverage. Regulatory caps on AI in financial advice or data privacy failures.