What's going on?

Data out over the weekend showed that global military spending hit a record high last year, so� war, huh. That�s what it�s good for.

What does this mean?

Military spending has been on the rise ever since Russia invaded Crimea in 2014, pushing countries � European countries in particular � to start amping up their militaries. And data from the Stockholm International Peace Research Institute (SIPRI) just revealed that this spending reached a new high last year, when the world spent an inflation-adjusted 0.7% more on defense than the year before. That brought the yearly total global spend to $2.1 trillion � a number the SIPRI expects to accelerate following the Ukrainian invasion. Certainly looks like it: a host of European countries have already pledged to spend more on their militaries, with Germany already launching a $110 billion fund earlier this year to do just that.

Why should I care?

For markets: Make war, not love.�
All that extra military spending is ideal for defense companies, which are signing new contracts left, right, and center. Take MBDA: the European missile-maker posted record results in 2021, and said last week that this year�s orders are off to a strong start. Investors� missiles are showing too: a global index tracking aerospace and defense stocks has outperformed an index of global stocks by 17% this year � the most in almost a decade (tweet this).

The bigger picture: Realism versus pacificism.
Conscientious investors have been shunning the defense sector for a while now, for obvious reasons. But some analysts think the Ukrainian war � which has laid bare the occasional need to swap pacifist ideals for military intervention � could change the way they think about it. And we�re starting to see signs of exactly that, with Sweden�s SEB Investment Management abandoning its weapons-snubbing principles and allowing some of its funds to invest in the sector this month.