Bloomberg Businessweek Weekend – March 27th, 2026
Hosts: Carol Massar & Tom Keene
Guests: Sheila Khayalu (Jefferies), Ray Takeyh (Council on Foreign Relations), Wilbur Ross (Former US Secretary of Commerce), Max Chafkin (Bloomberg Businessweek)

Episode Overview

This episode of Bloomberg Businessweek explores the immense and rising cost of the US-Israeli war in Iran, its implications for defense spending, the evolving landscape of global security, and the societal reckoning with elite trust and accountability in the wake of the Epstein files. Insightful interviews with top analysts examine both the economic realities shaping today’s geopolitics and the public’s shifting attitudes toward business and political leaders.

Key Segments & Discussion Points

1. The Soaring Price Tag of War and Surge in Defense Spending

(Segment starts: 02:04)

Theme:
The show opens by setting the week’s geopolitical backdrop: ongoing hostilities in the US-Israeli war in Iran and the market’s whipsaw reactions to fragile ceasefire hopes. Hosts Carol Massar and Tom Keene focus on the enormous price of these conflicts and how it’s driving historically high US defense spending.

Key Points:

• The financial toll of the Iran conflict has surpassed $25 billion five weeks in.
• US Secretary of Defense requesting an additional $200 billion—a record sum since Covid relief budgets.
• The anticipated fiscal 2027 defense budget request: $1.5 trillion (a 50% boost).
• Growing consensus in government that $1 trillion annual defense budgets may become the new normal.
• Rising production guarantees on key missile systems (e.g., Raytheon's PAC-3 scaling from 600 to 2,000 units/year over 7 years).

Notable Quote:

"The bottom line is we're talking about lots of money, big increases… the idea of $1 trillion budgets annually for defense is maybe something that we could be seeing for years to come." – Tom Keene (04:15)

2. Interview: Sheila Khayalu (Jefferies) – Defense Industry Outlook

(Segment starts: 04:55 – 14:38)

Insights:

• Missile Production & Supply Chain:
  • Government is guaranteeing large, multi-year procurement frameworks.
  • Major primes like Raytheon and Lockheed Martin boosting capacity and capex.
  • Supply chain primarily domestic, with government pushing for dual sourcing to ensure against bottlenecks.
  • Not just about well-known defense brands; suppliers and component makers stand to benefit (e.g., Woodward, Heiko).
  • Growth opportunities across dozens of missile types—"missiles is the best part of the market in terms of growth." (05:36)
• Pricing & Margins:
  • Guaranteed revenues don’t yet mean guaranteed profit margins.
  • Primes must fund significant capex, often at the expense of share buybacks.
  • Investor upside is uncertain absent more margin clarity.
• Drones & New Warfare:
  • The US seeks more advanced drones—maneuverable, scalable, equipped for electronic warfare.
  • "Readiness, scalability, and affordability" (11:55) are emerging themes; can’t keep spending $5 million to shoot down $50,000 threats.
  • Rise of defense tech startups supported by government (e.g., Anduril, Voyager).
• Programs at Risk:
  • If budgets aren’t approved, legacy programs like the F-35 or helicopters might be targeted for cuts.
  • Ironically, use in current engagements like Iran is reviving investor interest in these platforms.
• Aviation Side Effects:
  • Middle East airline capacity slashed by 80%; repercussions for global air traffic, aftermarket demand, and traveler costs.

Notable Quotes:

"What the Department of War has done... is to put forward frameworks on missile production, saying over the next seven years, we'll guarantee you production increases... from 600 units a year to 2,000 units a year. That's a big revenue bump."
– Sheila Khayalu (05:49)

"There isn't unlimited supply. And what we do manufacture from a missile perspective is quite expensive. We're doing it in low quantities, so we have to do it in larger quantities and also find ways of manufacturing cheaper munitions and missiles."
– Sheila Khayalu (06:17)

"We can't manufacture shoot down objects with $5 million missiles when they have $50,000 missiles."
– Sheila Khayalu (11:55)

3. Iran Post-War: Geopolitics, Regime Change & Nuclear Ambitions

(Segment with Ray Takeyh: 18:21 – 22:58)

Insights:

• Diplomatic Endgame:
  • Both the US and Iran may be seeking an "off-ramp" but posturing continues.
  • Previous negotiations have often been precursors to renewed hostilities.
• Regional Response:
  • Gulf Arab states likely didn’t plan for war; now trying to balance alliances with the US and avoid antagonizing Iran in the aftermath.
  • Expect a return to cautious balancing, rather than dramatic regional realignment.
• Iran’s Internal Transformation:
  • The regime will fundamentally change post-war, not least due to the loss of senior leadership ("large scale decapitation").
  • Power is shifting to a new, less experienced generation—"their formative experience was not the 1979 revolution" but the Syrian Civil War.
  • Emerging elite likely to be "more militant but also more brittle… less competent in statecraft."

Notable Quote:

"The Islamic Republic that survives this war is going to be very different than the one that went in before... more militant but also more brittle in a sense that the elite that's coming to power are less competent in statecraft and management."
– Ray Takeyh (21:22)

4. Interview: Wilbur Ross – The US ‘Waking Dragon’ & Global Power Dynamics

(Segment: 23:07 – 32:02)

Insights:

• US Military Power as Deterrent:
  • The Iran war signals US willingness to use its force—reversing perceptions of previous "paper tiger" administrations.
  • Belief that "the best way to avoid a war is if everybody knows you’re fully prepared not only to pursue it, but to win." (24:03)
• Impact on Other Powers:
  • Russia and China are now "on notice."
  • US support for Taiwan and repatriation of semiconductor production add to deterrence.
• Rapid Success in Iran:
  • Surprise at speed and effectiveness, including air superiority and crippling of Iran’s defenses.
  • Minimal US casualties kept domestic opposition at bay.
  • The destruction of Russian-made defense systems in Venezuela and Iran sends a warning to Moscow.
• Economy & National Security:
  • Restoring manufacturing, especially in tech and AI, is critical for future defense.
  • Education must keep pace with a more technical and innovation-driven economy.
  • "A very, very key component of defense strategy is economic power." (30:31)

Notable Quotes:

"This war will make less likely armed conflict elsewhere because people have now seen that at least under President Trump, U.S. is willing to use its enormous military strength to deal with threats."
– Wilbur Ross (24:03)

"The most remarkable and fortunate part is that there have been so few American casualties in the war. Now, even one casualty is a horrible thing... But when you consider everything, it’s been very, very small."
– Wilbur Ross (27:52)

"Any future war is going to be fought in space and in cyber... a very, very key component of defense strategy is economic power."
– Wilbur Ross (30:31)

5. Max Chafkin on the Epstein Files Crisis and the Elite’s Trust Reckoning

(Segment: 35:21 – 46:20)

Insights:

• Erosion of Public Trust:
  • Broad, bipartisan hostility toward “elites” (business, universities, media, government) at new highs.
• The ‘Bomb’ of Epstein Files:
  • New data dump exposes embarrassing, venal behavior among top business and political leaders.
  • Public trust further battered by perception of a hermetically sealed, unaccountable “Epstein class.”
• Consequences and Lack of Accountability:
  • Unlike in some countries, US elites rarely face full social or financial consequences ("a lack of accountability").
  • A few resignations (e.g., Larry Summers at Harvard, Kathy Ruemmler at Goldman Sachs), but many remain untouched.
• Broader Social Impact:
  • Fallout is affecting companies with even tangential connections (e.g., Apollo’s subsidiary facing boycotts).
  • Will likely reverberate into politics, elections, and evolving consumer attitudes.
• Why Did People Stick With Epstein?
  • Access and money, but also a failure in moral compass and judgment.
  • Private communications reveal a self-serving, insulated culture ("a little private club").
• Reckoning Ahead:
  • Those who confront past associations head-on may recover; evasive responses only fuel cynicism.
  • Lasting reforms require more than PR fixes—public wants amends and real accountability.

Notable Quotes:

"This is like a bomb going off in the relationship that Americans and people all around the world have with their business leaders. And it's going to take a long time... to rebuild trust."
– Max Chafkin (36:13)

"There is a sense of... a lack of accountability. Right. A bunch of the people... have resigned... but there are still people who are in their jobs. What I would just say is I think we're at the very early stages of this process."
– Max Chafkin (38:16)

"What's so damaging about these files is... this little private club and people who seem only interested in maneuvering within that clique in ways that are just embarrassing."
– Max Chafkin (40:11)

"At some point, people are gonna have to confront it head on rather than trying to get around it with these kind of evasive statements."
– Max Chafkin (43:57)

Noteworthy Quotes (with Timestamps)

• "Missiles is the best part of the market in terms of growth to invest in for investors." (Sheila Khayalu, 05:36)
• "We can't manufacture shoot down objects with $5 million missiles when they have $50,000 missiles." (Sheila Khayalu, 11:55)
• "The Islamic Republic that comes out of this war... is likely to be more militant but also more brittle." (Ray Takeyh, 21:22)
• "The best way to avoid a war is if everybody knows you're fully prepared not only to pursue it, but to win." (Wilbur Ross, 24:03)
• "This is like a bomb going off in the relationship that Americans... have with their business leaders." (Max Chafkin, 36:13)
• "These files... show an incredible lack of judgment. And we're talking about people who are supposed to be professional judges of... capital." (Max Chafkin, 41:35)

Key Timestamps

• 02:04 — War in Iran and market reactions; defense spending headlines
• 04:55 — Sheila Khayalu details defense sector outlook; missile ramp-up
• 11:44 — Cost of war; military readiness & new tech priorities
• 18:21 — Ray Takeyh on Iran’s regime, Gulf reactions, and future scenarios
• 23:07 — Wilbur Ross on US global strategy, Iran war’s lessons, China & Russia deterrence
• 35:21 — Max Chafkin on Epstein files, crumbling elite trust, and the public’s sense of accountability

Conclusion

This episode delivers an in-depth look at the intersection of war, economics, and society in 2026—from the Federal budget battles driving the next era of US defense procurement, to the future of Iran’s regime, to the trust crisis confronting global elites. The hosts, joined by top experts, connect the dots between battlefield tactics, Wall Street investments, and the broader fabric of public trust and accountability.

For more Businessweek analysis, watch and listen to Bloomberg Businessweek LIVE weekdays from 2–5 PM ET on YouTube, or subscribe to the Bloomberg Businessweek Daily Podcast.