Something different for Morning Porridge Readers this morning, a guest post from my chum David Murrin.

Ukraine has demonstrated massive changes in how future wars will be fought. Yet, the military bureaucracies of Western Nations are mired in the procurement-treacle of 80 years of peacetime spending. It’s time for radical overhaul, and an explosion of private-funding to build a stronger Western economy through aggressive deterrence. 

2026 Outlooks contain rosy predictions for stock market upside, calmer bond markets, the triumph of AI, and even a few who still say Bitcoin will rule us all. But the major Macro risk will be global trade – what happens as China and the USA face off? Trump has fractured the Western Alliances even as China’s trade and military strength give it all the options. What will Emperor Xi choose to do?

The new US National Security Strategy (NSS) revealed last week confirms just how much the world has changed. It was a kick in the teeth for Europe and leaves the door ajar on Taiwan. It’s unlikely to foster stability. It increases the pressure on Europe to swiftly rearm, and unify its defence and deterrence capabilities. For America – it raises fundamental questions about its declining power, strength, might and economic outlook.

The supreme art of war is to subdue the enemy without fighting. As Europe wakes up to the threat, the war in Ukraine shows how quickly the battlespace is evolving. Rearming the West requires a focus on decisive, scalable, deployable technologies to deter further aggression. Let me introduce Spitfire Strategic Capital – a new fund focused on War-Winning Defence Platforms.  

King Charles played a blinder in Windsor last night, making Trump feel regal. But the reality is Europe and the UK have difficult decisions to make. Do they remain aligned with a post-hegemonic USA slipping into autocratic polarisation, or do they seek closer Asian connections, including China? There are massive Economic and Geopolitical risks ahead.

Yesterday tremblors rocked global markets again after Israel bombed Qatar and Trump demanded Europe enact 100% tariffs on China and India. As America lashes out, It feels the world is tumbling towards chronic trade conflict and disruption – yet, yesterday the US stock market made yet another record high.

The amount of nonsense being written about the imminent collapse of the UK Gilts Market defies logic and experience. The numbers show demand for Gilts remains solid – but the growing, and often invented negativity over rising Lond-End yields threatens confidence in the UK’s bond market. Yield curves are steepening around the globe!  

You might think China planned it this way. As it challenges the USA as global hegemon, there is panic across the West as Western Long Bond Yields hit record levels. It smells like crisis – In Bond Yields there is Truth – but you have to know how to read the market. Long bonds are weak because of inflation. Be concerned, but not fearful. Buy the short-end – cuts are coming!

The Israeli strike on Iran has roiled markets. Not unexpected, but the consequences could have been much worse if the Israelis had used low-yield Tactical Nuclear Bunker Busters.