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Many employees can't afford a hefty medical bill that pops up out of the blue. But it happens. And employees who are financially stressed are understandably more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, Aflac plans help with out of pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more@aflac.com Frumarkets that's aflac.com Frumarkets Buzzfeed with a new CEO and a new strategy, we take a look at its plan to compete with YouTube from the Marine Corps to the trading floor, My conversation with one money mover who thinks the United States is still underspending on defense and Archer Aviation Air taxis are on a path for commercial launch, but are investors on board? What we learned from the latest earnings and the market reaction for Tuesday, May 12, it's Brew Markets Daily and I'm Ann Berry. More market details to come. But first, Archer Aviation well last night delivering an earnings report that, depending on your perspective, either showed meaningful operational progress or underscored just how expensive the future of urban air mobility is becoming. Well, we've been watching this one closely because we were lucky enough to welcome onto the show CEO Adam Goldstein. Just last four and there he talked about his vision for what would happen both in the commercials part of the business and in the defense focused part of the business. Well, for this first quarter of 2026, the company reported revenue of $1.6 million alongside, wait for it, an adjusted EBITDA loss of about 170 million. And that's as the maker of electric air taxis continues to fire on all cylinders in preparation for commercial launch. But you see the cash burn reflecting that because operating cash burn for the quarter was just under $150 million and then capital expenditures tied to production, infrastructure and fertilities expansion gap too, leaving Archer nevertheless with approximately $1.8 billion in liquidity at the end of the quarter, a pretty healthy number and one that immediately became the focal point for investors trying to figure out how long the company can fund its path to commercialization. That's really the key shift happening around Archer and frankly the rest of this industry right now. And just to set the stage, for years companies in the EVTOL sector traded primarily on vision, the idea of electric air taxis transforming urban transportation. But investors now are moving beyond the concept phase and focusing on real execution metrics, certification progress, manufacturing readiness, infrastructure deployment, and ultimately whether these businesses can reach commercial scale before requiring significantly more capital infusions. Well Archer is trying to distinguish itself in the market by showing measurable progress on all these fronts. In April, the company reached a key milestone on its path to something called FAA type certification for its Midnight aircraft. While Midnight is a piloted four passenger electric vertical takeoff and landing aircraft designed to fly at speeds up to 150 miles per hour and within a 60 mile range. And the aim is to replace our long commutes with short flights. So instead of that car ride, you just get up in the air. Well, in a major step on the way, Archer has become the first evtol company to close phase three of that four phase type certification process. CEO Adam Goldstein pointed to that success and also emphasized the company's operational positioning internationally, particularly in the United Arab Emirates where Archer continues to work with regulators and infrastructure partners in Abu Dhabi and Dubai, where timelines have typically moved a bit faster than those in the United States, making the region a key one for market watchers looking for early commercial proof points. And then over of course, in the realm of government contracts, Archer reported continued, though secretive and frankly light on details, work with defense startup Anduril on its dual use hybrid autonomous aircraft. As part of this program, Archer anticipates beginning to win phased government awards this year, something that Goldstein alluded to in that conversation with us at the fall. Well, despite the motion and the forward motion, the market reaction to all of this has been somewhat cautious. Shares initially moved higher in Archer after hours. Again those earnings out last night before moderating an early trading today in a sign that investors certainly appreciated the company's liquidity position and its progress report, but does remain focused on what remains a long road to profitability. But here's the piece of the battle for the skies that is really catching our attention around just these single point in time earnings and that is the fact that Archer is currently locked in an escalating legal fight with rival Joby aviation. Joby alleged trade secret theft and Archer has countersued, claiming that Joby used a Chinese subsidiary to source critical components. Alleged allegedly misclassifying those as consumer goods to avoid tariffs and again to avoid undermining Joby's, quote, american made branding. Well, things are heating up because last month a judge warned Archer that it had to produce more evidence to support its claims. And Delta Airlines, meanwhile, has warned that the U. S International trade Commission's investigation into Joby, a direct result of Archer's allegations, threatens Delta's partnership with Joby. Look, while that's all gaining some heat, Archer shares down around 4% today. Joby down 3%. We're going to keep watching both those share prices and how those legal issues progress. We're coming up in a moment, a spin through the headlines that are moving the markets today, including Under Armour's disappointing earnings and ebay's response to GameStop's somewhat bizarre takeover bid. But first, this episode is brought to you by Charles Schwab. TIMING the market, fighting inflation, balancing risk. No one says financial decisions are easy. In fact, they can be tricky. And often the forest in your head can lead you sideways. Financial Decoder, an original podcast from Charles
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Schwab can help join host Mark Reape, head of Schwab center for Financial Research, as he offers modern strategies to help combat the wait. What in your head, like overconfidence, loss aversion and recency bias that may be clouding your investing decisions? Listen@schwab.com financialdecoder or wherever you get your podcasts.
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Well, a quick look at today's markets, with the major indexes trading lower after this morning's hotter than expected April inflation report. Now, this one was hotly anticipated because everyone wants to know what the impact of commodity prices has been on the consumer price index. So there it came in the CPI showing consumer prices up 3.8% over the past 12 months, the highest inflation read in nearly three years. Now among the standouts from the report, gas prices up 28%, sort of as feared, and airline fares in particular under scrutiny because those have risen more than 20%. Well, the debate going forward will center on how inflation will influence the Federal Reserve's next interest rate decision. And this is especially following last Friday's stronger than expected April jobs report. Also, let's remember a new Fed chair in town. So how Kevin Walsh is going to handle it as something the market is looking at right out of the gate on his new tenure. Well, let's take a spin through some of today's other market headlines, including a look at Wendy's ticker WPN shares rallying over 15% today. And that's following a report that the Burger chain could be taken private by Trian Fund Management, which is run by billionaire activists, and one we follow closely, the investor, Nelson Peltz.
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And Peltz is no stranger to the Burger chain. He served as the company's chairman for over a decade and a half before stepping down in 2024 and still holds about 16% of Wendy's shares. In a regulatory filing in February, Peltz indicated that he was evaluating ways to unlock value from Wendy's, which has seen softer traff and a 70% drop in its stock price over the past five years. Moving over to the apparel space, where Under Armour continues to underperform. Shares in the Sportswear retailer ticker UAA tanked nearly 20% today after the company reported a third consecutive fiscal year of decreasing sales. It's been quite a decline. And I remember 10 years ago when my nieces and nephews all wanted Under Armour for Christmas. It was the big thing.
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Big thing.
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And at the time, the company hit its peak valuation of $22 billion, while today it sits at a tenth of that amount, about 2 billion.
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And not for lack of trying, it has pretty big contracts, the likes of Steph Curry, you may remember, particularly going to the Chinese market. But like competitor Nike, Under Armour is in the thick of it actively now trying to turn the business around. And does expect to spend over $300 million in restructuring costs this year, something the street typically adds back in its analysis. But it's still cash consumption at a time when things are looking very tricky for the athletic apparel retailer. Now, an update on a story that we covered last week and has continued to be all over the news, and that is GameStop's unsolicited $56 billion bid for eBay. In a letter to GameStop, eBay's board of directors chair, Paul Pressler wrote, we have concluded that your proposal is neither credible nor attractive.
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Of course, the coverage of the surprising offer focused on the disparate market caps of the two companies. GameStop at $11 billion, seeking to buy eBay, a company five times its size. And in its response, eBay's board also added that the online marketplace is, quote, well positioned to continue to drive sustainable growth under its current management. Shares in eBay ticker eBay were up nearly 1 1/2% today, while GameStop shares ticker GME drifted 1 1/2% low and
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just John, some famous investors have been ditching that GME stock. Michael Burry very famously of the Big short, having publicly said that he had sold out of his GameStop position as a result of this offer for ebay. Finally, to an offer that has been accepted, though in a different kind of news, and that's shares in Buzzfeed Ticker BZ FD gaining over 100% in the last 24 hours on a report that media mogul Byron Allen will invest $120 million in the company in conjunction with taking control of BuzzFeed. Alan will also become CEO, taking over the role from BuzzFeed's founder, Jonah Peretti. Who will stay with the company in a new role. That's president of buzzfeed. AI and it's been a buzzy few
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weeks for Byron Allen, who owns several television properties, including the Weather Channel. One of the syndicated shows he hosts, Comics Unleashed, has been slated to fill the 11:35 late night time slot on CBS once Stephen Colbert exits later this month. And for its part, BuzzFeed Media, which has been losing advertisers, was primed for a shakeup after missing a $5 million debt payment last month and cautioning investors it could run out of money before the end of the year.
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Let's take a quick break and then when we come back, some questions. Palantir Anduril Are these the next generation defense primes taking over from the hardware manufacturers? While today's money mover Tony Bancroft shares his take, this episode is brought to you by Charles Schwab Overconfidence, Loss Aversion? Recency Bias could attribution bias be messing with your retirement plan? Financial Decoder, an original podcast from Charles Schwab, explains how these pesky biases can affect the decisions you make about your financial life. Host Mark Reape, head of the Schwab center for Financial Research, and his guests offer practical strategies on what you can do to help beat back these decision making biases. Download the latest episode and follow@schwab.com financialdecoder orever you listen Hablas Espanol Spries du Deutsch? If you used Babbel, you would Babble's Conversation Based Techniques teaches you useful words and phrases to get you speaking quickly about the things you actually talk about in the real world. With lessons handcrafted by over 200 language experts and voiced by real native speakers, Babbel is like having a private tutor in your pocket. Start speaking with Babbel today. Get up to 55% off your Babbel subscription right now at babbel.com Spotify spelled B A B-E-L.com Spotify rules and restrictions may apply. It's Tuesday, so it's Money Mover day, and today's conversation is with someone who's lived aerospace and defense in both the cockpit and in the markets. That's Tony Bancroft, a former Marine Corps F18 pilot who now manages the Gabelli Commercial Aerospace and Defense etf. That's ticker gcad. Well, I invited Tony onto Brew Markets for his unique perspective on the state of military spending amid ongoing conflicts in Ukraine and the Middle east and why those geopolitical tensions haven't necessarily translated into bigger moves in defense shock, something that folks had really anticipated. We explore how defense tech names like Palantir and Anduril fit alongside the traditional primes like Boeing and Lockheed. Anduril of course being private so depends on being able to get access versus these public ones. We also talk about the Patriot missile supply crunch and why Bancroft believes the US may still be underspending on defense. So here's my Money Movers conversation with Tony Bancroft. Tony Bancroft, you are here in the hot seat because I was so excited to find someone who could talk with unique authority on aerospace and defense stocks. So before we dig in to the fun stuff on the markets, would you mind just giving us your background?
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See, I'm from a small little town in upstate New York. I got an appointment to the Naval Academy and then I was fortunate enough to get a commission in the Marine Corps as an aviator and then did my Marine sort of Marine training in Quantico, Virginia and then went down to Pensacola, Florida to flight school. I spent about two years there in ground school and primary training and then got a slot go into fly jets and went to jet training up in Meridian, Mississippi. Graduated from there and was fortunate enough to get the F18. I flew out of Miramar and did that for about a decade and deployed out of there three times. I was in VMFA 314 the Black Knights and we deployed on the Carl Vinson my first cruise one on another deployment to the Middle east to Iraq and was in Baghdad for about seven months non flying. I was on the ground. In the Marine Corps you have to get out of the cockpit. They want you to get out and sort of be with the Marines and then deployed back with my same squadron and a thing called a udp. I was in Yokuni, Japan which is a old zero base and the Marine Corps is now Marine Corps Air Station and flew out of there for about six and a half months, deployed down to Kadena and Okinawa and Alaska and did a bunch of operations there. So and I came back and did a twilight tour as an instructor. I flew the F18 and taught students how to fly the F18 and then got out and was fortunate enough to meet Mario Gabelli, the founder of Camco Investors and he hired me as an analyst, said you got to go back to business school and I went back to Columbia Business School, got my MBA and then about three years ago he had me start an Aerospace and Defense ETF ticker GCAD Gabelli Commercial Aerospace and Defense etf.
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You're in a Sort of unique position of having flown a lot of the equipment made by a lot of the companies in the fund. And just to paint the picture for folks I've got up in front of me the top 10 holdings. This is as of May 1, that is in GCAD. That's the ticker for the ETF that you manage, you've got here. And I'm just going to run through them real quick. The top 10, you've got Boeing, Albion, Albany International, Moog Inc. Hexel, Textron, Lockheed Martin, Northrop, Grumman, Duco, ducomin, Honeywell International, L3, Harris. So a lot of these are names you'd expect to see in this kind of etf. Can we just touch really quickly on one name that you don't have in here, which is Palantir?
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Yes.
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Why is that?
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Actually I do own Palantir. I actually owned it as a very small position initially and it did so well. It became a material position, not a top 10. But it's actually quite material relative to how I view companies like Palantir to the defense techs, which I take, if I find it interesting, I'll take a pretty small position. And it grew so much it became somewhat of a material position. Project Maven, I think it's a pretty lethal piece of gear. The technology they have. You know, my view on, I'd say on the defense techs in general is it just makes the war fighter more lethal. That's the view. And I say they're going to do a lot of good work, like Palantir already has done and like Anduril already has done and they'll continue to do and they'll partner with the Defense Primes and they're going to make the weapon systems just better and the targeting better, intelligence better, the ISR better. All the space based systems are going to be better because of it. But I think there's going to be a lot of joint venture with that. I think the primes, they've already built the physics, right? Like they already know how to go Mach 5. They already know how to have thermal protection, they already have ring laser gyros that can operate in austere environments and not need, you know, a lot of GPS updates. You're not going to go and try to compete against that, right? So and Rel still needs all those physics. All these defense techs need these physics and they're going to go and joint venture with companies that have already done this.
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And just to clarify for folks listening, Project Maven is the program that was started by the United States government in the sort of 2017ish area which was to infuse more artificial intelligence into, into modern warfare and to arms planning. Let's talk a little bit about where we are at this, at this moment in terms of defence spending frame for us, if you don't mind Tony, the number of dollars that we're talking about now sitting in government budgets both in the United States but also in other NATO countries.
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Let's start globally. Globally. You know, I think if you put it all together, it's about 2.8 to 2.9 trillion of global defense spending. Of that NATO is about two to two and a half trillion. Of that the United States is a trillion to trillion and a half depending upon if you're using our 26 budget or our 27 proposal.
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So let's talk about within that why Boeing, why Lockheed Martin, why Northrop Grumman? And if you take a look at the beginning of last year, Tony, these were the names that folks myself included bought into the Trump administration took office. It was the classic Trump trade, right. But it actually took a while before you saw these names took off. Took off. So we're at a different moment. Could you talk if you don't mind, about how the depletion in munitions that has occurred over the last several years, both as a result of conflict in Ukraine now in the Middle east has led to a new cycle of production for lots of these kinds of hardware names.
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02-28-2026. In those first five days was estimated about 1,000 Patriot missile systems were launched in those first five days and then over the conflict of the entirety of the until April 7, until the ceasefire it was about 2000 was the estimate. The US alone that was amongst all the Gulf states. So Gulf states, US and Israel. US alone is speculated that there's about 5,000 in our inventory of Patriot weapons system. Remember there's a bunch of different Patriots but, but that's what is estimated. Obviously the US doesn't disclose that publicly for obvious reasons. Right now our current production rate is for the US for the Patriot is about 600 a year. Now we've just gotten contract, the US just has made agreements term sheets with L3 Harris and Lockheed Martin which all make the material components of that system to quadruple the production of that. So that's say 2,000, 2,400 a year. In the first five days of the conflict 1,000 were expended. So half of the annual, the forecasted annual production against a non peer threat, Iran Right. Which is not, you know, it's not China, it's not Russia. So when everyone's talking about this Capex, this growth cycle in missiles, what's been disclosed by the US Government, I don't think the entirety of what we need is baked in. We're going to probably need like a 10x, not 4x, 10x, maybe 20x if we were going to deal with a country like China, which, you know, they've got modern Category 4 aircraft, modern weapon systems, modern missiles and a lot more of them. And remember, they have just of output capacity, national output capacity, they're 4x the United States.
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So this all sort of begs the question, why are the defense stocks not up more than they have been? And just to go back to sort of the original, it's taken a while for the sector really to have the rise that we've seen. And look, one of the issues, Tony, at the start was while there was again just a purely markets perspective, folks who said change in administration, more defense spending expected as a result, publicly traded defense stocks expected to go up, it didn't quite happen. It wasn't quite so linear. And one of the reasons was there was with Doge. Let's go back to that. There was the counter concern that whether it be through Doge or through some other part of the government, that there'd be increased focus on the pricing of these contracts with folks in the White House saying why are we paying the kinds of margins we're paying to these kinds of companies? And you may remember at one point the President took aim as executive compensation.
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Now the question about why the stocks haven't performed this year, I think there's probably three theories out there. You know, one is the peak defense theory. You know, this 1.5 trillion deposits, if you break it down, there's a lot that's in it this year. There's, there's a lot of ship build.
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This is for the 25th year, 2027 budget.
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I'm sorry, you know, there's no question. I think ship an undersea build is definitely one of our key, you know, the key initiatives that need to be dealt with. We're the best in the world at undersea, you know, a nuclear undersea threat, nobody else can do it. And it truly is, it puts us in a category with nobody else when what we can do there, I think the missile, the missile replenishment is a big issue and I think that's going to probably be a multi year issue. And that's probably under. There's a lot of underestimates there. And then the third one obviously is a golden dome which the missile is a part of it but just the build out in space, space based systems there you've got sort of that one time build out you're seeing in 2027. If you want to look at it historically on a World War II through Cold War basis, on a percent of GDP basis, we spended about 6 to 7% of our GDP was spent on defense from post World War II until the essentially end of the Cold War. Now we spend about a little over 3% on a federal budget basis. Historically it was about 25% of our federal budget was defense spending. Now we're at about 13 to 15%. So if you were to normalize those numbers to what we historically spent, we'd be spending almost 2 trillion, about 1.9 trillion on defense annually. If you look at it, we actually still are underspending. So I think that's issue number one, I think is the peak defense. The second issue is people. I think there's a discussion that hey, Iran conflict's eventually going to end. There's a thought that this gets cold. Are we going to need all these weapons systems eventually? There's probably going to be some, some end. There's going to be some kind of resolution to Ukraine at some point and people are expecting that. But again, I would go back to what I said earlier with the pacing threat. How the US sort of looks at our national defense strategy is off of China. It's not off of, it's not off of Ukraine. It's not off of Russia and the Ukrainian conflict and Iran. We got to deal with our peer threat which is China. I'd say the last issue is is this whole what's going on with our NATO partners? Right. So there's obviously a lot of friction right now. I mean you saw. But we're pulling some troops out of NATO in European countries.
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Out of Germany?
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Yeah, out of Germany. I just don't know where Germany. I don't know where any NATO country is going to be able to agree upon to build weapon systems that are going to compete with U.S. systems. First of all, they're almost mostly U.S. systems. Right. I just think there's going to be a lot more. It's going to be a lot harder than Europe thinks or people. I think Europe realizes it. I think it's harder than people think for Europe to build by building by Europe is my point.
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Lots going on. Well, Tony Bancroft, thank you so much for joining today. Definitely a sector that we'll be watching. There it is, the closing bell, 4pm on the east coast and the markets wrapping up for the day. We don't have a ticker tape, so let's throw it over instead to our human Ticker out producer, John the markets
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pulled away from their record highs we saw earlier in the week with the S&P 500 finishing down a tenth of a percent, the NASDAQ down 7.10of a percent, and the Dow ending the day up up about a tenth of a percent.
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So lots going on. We continue to watch those earnings roll on in and we've got another big interview coming up for this Friday's show. I'm going to tease that and nothing more for the moment, but come back tomorrow to figure out. Perhaps we'll share a name with you then. That's it for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Barry and produced by John Crateau, Tarka Delatif, Aveni Laroya and Emily Millern. Our technical director is Uchenawa Ogu, audio engineering by Jim Orso and the president of Morning Brew Inc. Is Devin Emery.
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Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. See you back here tomorrow, same time, same place.
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Ryan Reynolds here from Mint Mobile with a message for everyone paying Big Wireless way too much. Please, for the love of everything good in this world, stop with Mint. You can get premium wireless for just $15 a month, of course, if you enjoy overpaying. No judgments. But that's weird. Okay, one judgment anyway. Give it a try. @mintmobile.com Switch upfront payment of $45 for
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