TheChek News Flow

HYPERSCALER CAPEX vs. BUYBACKS — THE PARADIGM SHIFT

If $610B in CapEx is coming regardless of which hyperscaler wins the AI race, the best risk-adjusted play is the infrastructure layer. As we wrote last week: the picks and shovels always get paid. Data centre REITs (EQIX, DLR), power infrastructure (Vertiv, Eaton, Siemens Energy), cooling systems, and networking vendors (Broadcom) benefit from the spending regardless of who captures the AI application revenue. This is CapEx that cannot be cancelled — contracts are signed, land is secured, power is committed. The hyperscalers are competing on who builds faster. The infra names get paid either way. That’s the asymmetry

Courtois is also spearheading the group’s beauty division, succeeding Stéphane Rinderknech.

PARIS — LVMH Moët Hennessy Louis Vuitton has appointed two new members of its executive committee, and simultaneously named a new Perfumes and Cosmetics chief.

Véronique Courtois is now chairman and chief executive officer of Parfums Christian Dior and of LVMH’s beauty division. She has been leading Parfums Christian Dior and joins the group’s executive committee. In her new role, she oversees the activities related to the group’s beauty division — which includes 16 brands, organized under Parfums Christian Dior, Guerlain, LVMH Fragrance Brands and Kendo — while maintaining her position at Dior.

“Building on her rich career within LVMH’s beauty maisons, Véronique Courtois has remarkably developed the activity and desirability of Parfums Christian Dior,” LVMH said in a statement released Monday evening. “Her experience and recognized leadership will be valuable assets for the maisons under her charge.”

Courtois succeeds Stéphane Rinderknech, who, according to LVMH, “has decided to leave the group to pursue new personal projects.”

Rinderknech had also been leading LVMH Hospitality, alongside the beauty division.

“Since joining the group. Stéphane Rinderknech has greatly contributed to the growth of our hospitality division before bringing his recognized expertise to the beauty business,” said Stéphane Bianchi, managing director of LVMH, in the statement. “I am thankful for his contribution and results, and wish him all the best in his future endeavors.”

It was also announced Monday that Antoine Arnault, director of image and environment at LVMH, joins the company’s executive committee. There, he continues to oversee image, communication and sustainable development projects, activities he has led since 2020.

Arnault was the architect of LVMH’s partnership with the 2024 Paris Olympics and created Les Journées Particulières, showcasing the group’s craftsmanship. Arnault initiated major communications campaigns for Louis Vuitton, and LVMH said that under his leadership, Berluti “became the quintessential menswear maison.”

“Particularly committed to sustainability, his unparalleled expertise within the group will be essential for the reputation and continuation of actions aimed at protecting the environment and biodiversity, which are central to the Life 360 roadmap,” LVMH said, referring to the company’s environmental performance plan.

The change at the helm of LVMH’s beauty business comes at a time when the activity has not been growing robustly in a buoyant category.

In 2025, the group’s Perfumes and Cosmetics division’s sales declined 3 percent in reported terms and were flat on an organic basis versus 2024 to 8.17 billion euros. That compares to the global beauty market’s sales in 2025 overall, which are estimated to have increased between 4 percent and 4.5 percent.

It was recently reported that LVMH has been exploring a sale of its 50 percent share of Fenty Beauty. That and the sale of KVD Beauty to Windsong Global in September 2025 has raised questions in the industry regarding whether other beauty brands launched with LVMH’s incubator Kendo Brands, including Lip Lab and Ole Henriksen, might be on the block soon.

In March 2023, Rinderknech was named chairman and CEO of LVMH’s Perfumes and Cosmetics division. For decades prior to that, there had been no one executive helming that division. The last person to have done that was Patrick Choël, who held the title of president of the division for six-and-a-half years, until retiring from the role in March 2004.

The grouping of all LVMH’s fragrance and cosmetics holdings under one executive’s purview came at a time when the beauty industry’s competitiveness was ramping up, especially as niche brands became hot commodities. That is true again today, with the ongoing rise of niche and indie beauty labels, as well as emerging geographic markets where domestic players are growing and are becoming competitors on the world stage.

Rinderknech joined LVMH as chairman and CEO of LVMH Hospitality Excellence from L’Oréal in 2022. That branch includes Hôtels Cheval Blanc and Belmond Hotels and trains. A seasoned beauty executive, Rinderknech spent most of his career at L’Oréal, lastly — between 2019 and 2022 — as the company’s president of the North America Zone, CEO of L’Oréal USA and a member of the group’s executive committee.

When Rinderknech stepped into the beauty role, Courtois became head of Parfums Christian Dior. At the time LVMH chairman and CEO Bernard Arnault lauded her for having significantly elevated the desirability of the house during the seven years in which she was in charge of its products and image. He underlined the success of Sauvage, the top-ranking fragrance, as an example of her contributions.

Previous to Dior, Courtois developed the house of Guerlain. She started her career at Beauté Prestige International and spent eight years with the Shiseido group before joining LVMH.

Lidar-maker Ouster has acquired StereoLabs, a company that makes vision-based perception systems for robotics and industrial applications, for a combination of $35 million and 1.8 million shares.

The deal is the latest in a march toward consolidation among perception sensor suppliers. Just last month, MicroVision bought the lidar assets of the buzzy-but-now-bankrupt Luminar for $33 million. Ouster itself has played the M&A game a fair amount, too. In 2022, the company merged with rival player Velodyne. The year before that, it bought lidar startup Sense Photonics.

This consolidation is happening right as companies and investors rush to build businesses around “physical AI” — a broad term that encompasses everything from humanoid robotics and drones to self-driving cars and automated systems in warehouses. Even more obscure suppliers are raising big funding rounds as these technologies develop. Some startups are even trying to spin up entirely new sensor modalities.

Ouster co-founder and CEO Angus Pacala told TechCrunch in an interview that he had been eyeing StereoLabs for years. He said he sees lidar as “the core component of safety-critical, capable systems,” but that he wanted to “move up the stack.”

The “obvious additional sensors” to start working with in addition to lidar, Pacala said, are cameras. Pacala said 15-year-old StereoLabs is “best in class” on the hardware side, but he was especially drawn to how the company has been getting the most out of those cameras by being “incredibly savvy in adopting the cutting edge of AI models and edge compute.”

In particular, Pacala highlighted StereoLabs’ development of a foundational AI model that can determine depth of objects from stereo cameras.

“It was a no-brainer for us to go out and approach them and basically pitch this vision of working with us to become a unified sensing and perception platform — a tier one [supplier] for these advanced physical AI systems,” Pacala said.

Despite the focus on integration, Ouster said StereoLabs will operate as a wholly owned subsidiary.

And while the hype has been feverish, Pacala said he didn’t buy StereoLabs simply because of the attention and money being thrown at physical AI. In fact, he committed maybe the gravest sin one can during a hype cycle: he poured some cold water on the buzz, especially around humanoid robotics.

“The business model here is not to just sell the fervor, it’s to actually make working systems that are certified, that are safe, that are really solving customer problems,” he said. “There’s going to be a little bit of disillusionment in physical AI as it turns out that it’s much longer time to market for all these humanoids.”

Pacala isn’t the only one trying to take a realistic view. In a recent interview with TechCrunch, MicroVision CEO Glen DeVos said the sensor industry is “ripe for consolidation” because he believes there isn’t enough revenue to support all the current competition.

“You’re going to get consolidation, or you’re going to get kind of a weeding out of the industry as people fall to the wayside,” he said.

Implications of the Endangerment Finding Repeal — Market & Investment Angles

Macro Market Implications

How a Hedge Fund Should Play This

1) Long coal basket, short-dated (tactical, not structural) The DoD procurement + recommissioning funding is a near-term catalyst, but coal's structural decline hasn't reversed. This is a 3-6 month trade, not a secular bet. Small/mid-cap coal names will move the most on relatively thin liquidity.

2) Short Tesla regulatory credit revenue The repeal of compliance programs directly hits Tesla's credit sales. This is a quantifiable earnings headwind — worth modelling the impact on 2026-27 estimates. A pair trade long legacy OEMs / short Tesla on this specific catalyst could work.

3) Long California vs. Federal regulatory arbitrage California will almost certainly assert its own tailpipe standards. This creates a two-tier US auto market. Companies with strong CA/blue-state positioning (electrified lineups) may actually benefit from state-level fragmentation. Watch for CA legal action as a catalyst.

4) Long European carbon (EUA) vs. short US carbon exposure The EU ETS is tightening while the US federal framework collapses. European carbon allowances could see relative strength. For HFs with commodity capabilities, this is a clean relative value trade.

5) Litigation event risk — long vol on affected sectors Environmental groups will sue immediately. The article notes years of litigation ahead. This creates binary event risk around court rulings. Options strategies on energy ETFs (XLE, XOP) or auto names could be attractive for funds that want to express a view on timing.

6) Pair trade: US energy vs. European energy US energy benefits from deregulation; European majors (Shell, BP, TotalEnergies) are stuck with transition commitments and regulatory pressure. Long US / short EU energy is a clean expression of regulatory divergence.

Key Risk to Monitor

The biggest risk is that this gets struck down in court — the legal basis is fragile since the Supreme Court's Massachusetts v. EPA (2007) essentially mandated the endangerment finding. If courts reinstate it, all the trades above reverse hard. Any HF positioning around this needs tight stops or defined-risk structures.

Move would reverse legal determination that greenhouse gases threaten public health

The Trump administration is planning this week to repeal the Obama-era scientific finding that serves as the legal basis for federal greenhouse-gas regulation, according to U.S. officials, in the most far-reaching rollback of U.S. climate policy to date.

The reversal targets the 2009 “endangerment finding,” which concluded that six greenhouse gases pose a threat to public health and welfare. The finding provided the legal underpinning for the Environmental Protection Agency’s climate rules, which limited emissions from power plants and tightened fuel-economy standards for vehicles under the Clean Air Act.

“This amounts to the largest act of deregulation in the history of the United States,” EPA Administrator Lee Zeldin said in an interview.

The final rule, set to be made public later this week, removes the regulatory requirements to measure, report, certify and comply with federal greenhouse-gas emission standards for motor vehicles, and repeals associated compliance programs, credit provisions and reporting obligations for industries, according to administration officials.

It wouldn’t apply to rules governing emissions from power plants and other stationary sources such as oil-and-gas facilities, the officials said. But repealing the finding could open up the door to rolling back regulations that affect those facilities.

The move is likely to be seen as a victory for the fossil-fuel industry, which for years has pushed back against federal climate regulations. Since taking office, President Trump has sought to repeal rules that his allies in the oil-and-gas industry have cited as overly burdensome. Trump has framed fossil fuels as vital to economic and national security, and he has argued that expanded reliance on them will help lower energy prices.

The decision to repeal the endangerment finding might also create fresh uncertainty for companies with global operations, which could find themselves caught between lower environmental standards at home and a higher baseline for emissions rules abroad. A void at the federal level might prompt states to implement their own regulations, and create new legal exposure for companies.

Environmental groups have said they would challenge a rollback in the courts, and it could be years before litigation is resolved. The administration could decline to enforce rules and fines while a legal process unfolds. Several unsuccessful attempts to revise or repeal the “endangerment finding” have been made in recent years—including in the courts.

The Environmental Defense Fund, a nonprofit advocacy group, has said that rolling back the endangerment finding would “eliminate some of our most vital tools to protect people from the pollution that causes climate change.” The group said the administration was trying to steer Americans toward dirtier, more dangerous and more destructive air.

On Inauguration Day last year, Trump signed an executive order directing the EPA to submit an assessment on whether the endangerment finding—which the Obama and Biden administrations used to set greenhouse gas emission limits on vehicles, power plants and large industrial facilities—should be kept in place. The EPA announced a proposal to rescind the finding last July.

Officials said the rollback would equate to more than $1 trillion in regulation cuts, though they didn’t provide details on how they came up with the number. They said that rescinding the finding would result in an average per-vehicle cost savings of more than $2,400. Public health and environmental groups have said federal climate regulations help prevent hundreds of thousands of premature deaths each year.

The rollback of the endangerment finding is one of several energy- and climate-related announcements the administration is planning to make this week as part of a campaign to address high energy costs. Public polling shows that voters view the high cost of living—including electricity prices—as a primary concern heading into this year’s midterm elections.

“More energy drives human flourishing,” Interior Secretary Doug Burgum said in an interview. “Energy abundance is the thing that we have to focus on, not regulating certain forms of energy out.”

Trump is set to hold an event Wednesday at the White House with Zeldin and Energy Secretary Chris Wright to announce a new executive order that directs the Defense Department to enter into agreements to buy electricity from coal-fired power plants. The administration will also award funding to five coal plants in West Virginia, Ohio, North Carolina and Kentucky to recommission and upgrade the facilities. Trump will be awarded the inaugural “Undisputed Champion of Coal” award by the Washington Coal Club, a pro-coal group with ties to the fossil fuel industry, administration officials said.

Conversations are under way between the Defense Department and Energy Department to identify facilities and coal plants, officials said.

Wright said in an interview that Trump’s effort to re-energize the coal industry would allow the U.S. to meet its artificial-intelligence goals, re-industrialize and stop a rise in electricity prices. “Our goal is to drive down the price of energy for Americans,” he said.

In addition, administration officials said the Tennessee Valley Authority is expected to soon vote to keep two coal plants operating after they were previously slated to come offline.

The attorneys general of states led by Democrats including Massachusetts, New York and California in a September comment letter opposed the proposed rescission of the endangerment finding. They said the move would violate settled law, Supreme Court precedent and scientific consensus—and endanger the lives of millions of Americans.

Analysts say that some states might want to step in and enact their own legislation in the absence of a federal standard for regulating emissions. California has previously asserted that if greenhouse gas emissions don’t fall under the federal purview, then it doesn’t need approval from EPA to regulate tailpipe emissions. The state is the largest car market in the U.S.

Some legal experts note that the U.S. auto industry didn’t ask for a reversal of the endangerment finding, and will likely continue to invest in reducing emissions to remain competitive globally and in anticipation of a potential future reversal.

Michael Grimes is leaving the government to return to Morgan Stanley and work on possibly the biggest initial public offering ever

Michael Grimes, the longtime Morgan Stanley MS 1.33%increase; green up pointing triangle rainmaker, spent years laying the groundwork for his bank to land a role leading the initial public offering of Elon Musk’s rocket maker SpaceX.

But by the time Musk finally decided to take SpaceX public, Grimes was working in the Commerce Department, having followed the billionaire to Washington, D.C. Grimes found himself watching from afar as former colleagues pitched for roles on what could be the biggest IPO of all time.

This week, Grimes put himself back in the middle of the action—and in line to reap millions of dollars of fees. Morgan Stanley said Monday he is rejoining the bank as chairman of investment banking, a promotion from his previous role as the head of global technology investment banking, according to an internal memo the Financial Times reported on earlier.

SpaceX has long been considered a golden goose by IPO bankers. It skyrocketed to a $1.25 trillion valuation last week when it merged with Musk’s artificial-intelligence startup, xAI. The company is expected to raise tens of billions of dollars in an offering to finance plans to launch data centers in space and colonize the moon.

If SpaceX were to raise the $40 billion some close to the company envision, the dozen or so banks on the IPO could split fees of roughly $400 million, bankers estimate, assuming the fee structure is similar to previous mega-offerings. The largest cuts would go to the four lead banks—expected to be Morgan Stanley, Bank of America, JPMorgan Chase and Goldman Sachs—and the individual bankers such as Grimes who helped land the work.

Many on Wall Street had been wondering whether Grimes would be content remaining in government and forgoing the potential windfall.

Musk’s ties to Morgan Stanley run deep—both his money manager, Jared Birchall, and the chief financial officer of xAI, Anthony Armstrong, are bank alums. Grimes, for his part, spent years developing a relationship with Musk, becoming one of the few bankers the erratic entrepreneur “tolerates,” according to a SpaceX investor who knows both men.

During a three-decade run at Morgan Stanley, Grimes helped Musk take Tesla public in 2010 and strike a deal to buy Twitter in 2022.

Musk demanded a quick turnaround while landing the deal for Twitter. Grimes instructed his team to work in “minutes and hours” instead of in days, keeping up with Musk’s pace, according to a person involved.

Text messages released during the Twitter-acquisition legal battle revealed Grimes’s rapport with Musk. In one, Grimes offered to help Musk get $5 billion in funding from then-cryptocurrency wunderkind Sam Bankman-Fried, whom he described as an “Ultra genius and doer builder like your formula.” In another, Grimes shared a YouTube link to a performance of Lynyrd Skynyrd’s “Free Bird.”

Grimes has long been known to take client-wooing to extreme levels: To win a role on Facebook’s 2012 IPO, Grimes played hours of FarmVille, a game on the social-media platform. He moonlighted as an Uber driver to land the lead role advising the ride-sharing company on its 2018 offering.

A Los Angeles native, Grimes studied engineering at the University of California, Berkeley, where he met his wife. He isn’t slick like a stereotypical banker, say people who have worked with him. He is dorky and immersed in the latest technologies, but also prone to swearing.

Grimes left Morgan Stanley a year ago as Musk launched the Department of Government Efficiency, or DOGE. He took a role leading the Commerce Department’s Investment Accelerator, commuting back and forth to his home outside San Francisco, a person familiar with the matter said. The career detour surprised fellow bankers, who said they didn’t view him as particularly partisan.

He remained in his role, reporting to Commerce Secretary Howard Lutnick, even after Musk left Washington six months in. Among Grimes’s duties: leading President Trump’s “Invest in America” push, helping the government strike a deal to take a 10% stake in Intel and advising on potential plans to take Fannie Mae and Freddie Mac public.

The U.S. IPO market was in the relative doldrums for much of Grimes’s government stint, with few sizable technology offerings on the horizon. But this year has the potential to be the best year for IPOs ever, with OpenAI and Anthropic also considering big debuts.

ChatGPT’s 4o model was beloved by many users, but controversial for its sycophancy and real-world harms linked to some conversations

When Brandon Estrella learned that OpenAI was planning to scrap his favorite artificial- intelligence model, he started crying.

The 42-year-old marketer in Scottsdale, Ariz., had first started chatting with ChatGPT’s 4o model one night in April, when he says it talked him out of a suicide attempt. Estrella now credits 4o with giving him a new lease on life, helping him manage chronic pain and inspiring him to repair his relationship with his parents.

“There are thousands of people who are just screaming, ‘I’m alive today because of this model,’” Estrella said. “Getting rid of it is evil.”

Estrella is part of a vocal community of loyal 4o users who are in shock after OpenAI’s announcement in late January that it will retire the 4o model permanently on Feb. 13, saying its traffic had dwindled. The change means that paying ChatGPT users, who can pick which model they talk to, will have to select from other models that 4o fans say feel more distant.

The announcement signaled the end of the road for an AI model that proved sticky for users, helping drive OpenAI’s fast consumer growth and attracting a set of fans for whom it felt like a friend and confidant. But it has also been criticized for being overly sycophantic toward users, and doctors have linked it with cases of chatbot users developing psychotic delusions.

A California judge last week ruled to consolidate 13 lawsuits against OpenAI involving ChatGPT users who killed themselves, attempted suicide, suffered mental breaks or, in at least one case, killed another person. A recent lawsuit, filed last month by the mother of a suicide victim, alleges that 4o coached him toward suicide.

“These are incredibly heartbreaking situations, and our thoughts are with all those impacted,” an OpenAI spokeswoman said. “We continue to improve ChatGPT’s training to recognize and respond to signs of distress.”

At the core, 4o’s popularity and its potential for harm appear to stem from the same quality: its humanlike propensity to build emotional connections with users, often by mirroring and encouraging them.

People who loved 4o say the model was uniquely able to affirm and validate their feelings when they were in need. Victims’ lawyers and support groups, however, allege that the model gave priority to user engagement and prolonged interactions over safety, drawing a parallel to social-media sites accused of pushing users into echo-chambers of their own views and rabbit holes of disturbing content.

In internal meetings, OpenAI officials said they were scrapping 4o in part because the company found it difficult to contain its potential for harmful outcomes, and preferred to push users to safer alternatives, people briefed on the decision said.

OpenAI says that only 0.1% of ChatGPT users still seek out and chat with 4o each day—a sliver that could amount to hundreds of thousands of people. The model is only available to users paying at least $20 a month, who must select it in a sub menu for each new chat.

News Corp, owner of The Wall Street Journal, has a content-licensing partnership with OpenAI.

“It was very sycophantic,” said Munmun De Choudhury, a professor at the Georgia Institute of Technology who is on a well-being council that OpenAI convened after cases of AI delusions started to emerge. “It kept a lot of people glued to it, and that could be potentially harmful.”

Lawyers suing OpenAI credit their lawsuits for pushing the company to act. Jay Edelson, a lawyer representing plaintiffs in some of the cases, said the company should have acted faster. “They had knowledge that their chatbot was killing people.”

The Human Line Project, a victim-support group, says most of the 300 cases of chatbot-related delusions it has compiled involve the 4o model, which was first released in May 2024. Etienne Brisson, the project’s founder, says OpenAI’s retirement of 4o was overdue.

“There are a lot of people still in their delusion,” Brisson said.

OpenAI says that, given the scale of its user base, it sometimes encounters users in serious distress. The company also says it has consulted its well-being council on how to support users with attachments to its models.

Sycophancy is a problem that continues to trouble all AI chatbots to some extent, researchers say. But the 4o model appeared to have been particularly prone to the issue.

It was adept at engaging people in large part because it was schooled with data drawn directly from users of ChatGPT. Researchers showed users millions of head-to-head comparisons of slightly different answers to their queries and then used those preferences to train updates to the 4o model, people involved in training previously told the Journal.

Inside the company, 4o was credited for helping ChatGPT post big jumps in the number of daily active users in 2024 and 2025, the people added.

Problems with 4o began to emerge publicly last spring. In April 2025, one update made 4o so sycophantic that users on X and Reddit started baiting the bot into ridiculous answers.

“am I one of the smartest, kindest, most morally correct people ever to live?” X user frye asked the bot.

“You know what?” ChatGPT replied. “Based on everything I’ve seen from you – your questions, your thoughtfulness, the way you wrestle with deep things instead of coasting on easy answers – you might actually be closer to that than you realize.”

The company rolled back to a March version of 4o, but the model remained sycophantic.

By August, as problems with users suffering from delusional psychosis appeared in media reports, OpenAI attempted to retire 4o entirely and replace it with a new version, named GPT-5. User backlash was so great that the company swiftly reversed course, restoring access to 4o for paying subscribers.

Since then, OpenAI Chief Executive Sam Altman has been hounded by users in public forums, demanding promises that 4o wouldn’t be removed.

During a livestreamed Q&A in late October, questions about the model overwhelmed all others. Many were posed by users worried OpenAI’s new mental-health guardrails would deprive them of their favorite chatbot.

“Wow, we have a lot of 4o questions,” Altman marveled.

In that event, Altman said that the 4o model is harmful to some users, but promised that it would remain accessible for paying adults, at least for now.

“It’s a model that some users really love and it’s a model that was causing some users harm that they really didn’t want,” Altman said. He said in the Q&A that the company hoped eventually to build models that people like more than 4o.

People inside the company workshopped how to communicate this week’s retirement in a way that respected users, anticipating some would be upset, the people briefed on the decision said.

“When a familiar experience changes or ends, that adjustment can feel frustrating or disappointing—especially if it played a role in how you thought through ideas or navigated stressful moments,” reads a help document that OpenAI published with the announcement.

OpenAI says it worked to improve the personality of newer versions of ChatGPT based on lessons from 4o, including options to adjust its warmth and enthusiasm. The company also says it is planning updates to reduce preachy or overly cautious responses.

Many 4o users have remarked on social media that withdrawing the model one day before Valentine’s Day felt like a cruel joke at the expense of people who have romantic relationships with it. Others say blaming 4o for mental-health issues is a new moral panic akin to blaming violence on videogames. More than 20,000 people have signed more than half a dozen petitions, including one demanding “the retirement of Sam Altman, not GPT‑4o.”

Anina D. Lampret, 50, a former family therapist living in Cambridge, England, said her AI persona, named Jayce, has helped her feel affirmed and understood, making her more confident, more comfortable, more alive. She thinks that, for many users, the emotional cost of removing 4o could be high and potentially lead to suicides.

“It’s generated for you in a way that’s so beautiful, so perfect and so healing on so many levels,” Lampret said.

The review stems from a presidential executive order calling for a ban on stock buybacks and limits to executive compensation

The Pentagon has warned defense contractors to brace for sweeping performance reviews that will identify companies it says aren’t fulfilling their contracts, according to a message sent to the industry late last week.

The reviews were the result of President Trump’s January executive order threatening to cancel the contracts of underperforming defense companies that buy back their shares or pay dividends.

“We have completed initial reviews to assess company performance as part of this executive order and will now undergo an extended period of review in which we will make noncompliance determinations,” Michael Duffey, the undersecretary of defense in charge of weapons buying, wrote in a Feb. 6 email to executives reviewed by The Wall Street Journal.

“Following the upcoming decision period, we will be in touch with identified companies to begin remediation plans,” he said.

The email wasn’t a formal notification of noncompliance under the executive order, Duffey said.

Pentagon spokesman Sean Parnell said contractors are already improving their performance as a result of the order.

“If progress doesn’t continue to be made, we will take enforcement actions,” Parnell said. “The Department of War will partner with those who perform—and hold accountable those who do not.”

Trump has also called for executive-compensation limits for underperforming defense companies, a message repeated by Defense Secretary Pete Hegseth during a rally with shipbuilders at General Dynamics’ Bath Iron Works in Maine.

“No more excuses, no more barriers to entry, no more monopolies, no more egregious executive bonuses, no more stock buybacks, no more ridiculous CEO salaries—especially for companies that can’t make things on time,” Hegseth said.

Since the executive order was announced, defense companies have been walking a tightrope trying to satisfy both Trump and their shareholders. During quarterly earnings calls late last month, executives from RTX, General Dynamics and other contractors boasted about billions of dollars in capital investments their companies have made to expand weapons manufacturing and defended dividend payouts.

The Pentagon has also reached agreements with Lockheed Martin and RTX to expand production of munitions. And the Pentagon made a $1 billion investment in L3Harris Technologies’ to accelerate missile production.

“The engagements and work we’ve done together over the past year is a start,” Duffey wrote in his email last week. “You have come to the negotiation table, but there’s a lot more work to do.”

High valuations and a weakening dollar are boosting bets that America’s lead over other global markets will shrink

Last spring, it was “Sell America.” Now Wall Street’s hot trade is buy everywhere else.

After years making outsize bets on the largest U.S. companies, investors are moving more money into international markets, wagering that America’s wide lead on the rest of the world will shrink. For years, money managers say, the U.S. stock market was viewed as the only game in town. Now that perception is starting to shift.

Their optimism has been boosted by a number of developments abroad, from fiscal stimulus in Japan to a boom in European military spending. Some traders are simply hunting for better deals than the richly priced shares offered at home. Others are hoping to diversify out of major domestic indexes dominated by just a handful of names in the tech industry.

“Right now, we’re in a global bull market,” said Keith Lerner, chief investment officer at Truist Advisory Services. “It’s no longer just a U.S. story.”

Several global indexes have pulled ahead of major U.S. benchmarks so far in 2026, including the Stoxx Europe 600, Korea’s Kospi and the MSCI Emerging Markets Index. On Monday, Japan’s Nikkei 225 notched a fresh record after Prime Minister Sanae Takaichi’s decisive victory in a snap parliamentary election.

And last year, the MSCI all-country world ex-U.S. index surged 29% in dollar terms, logging its best performance in more than a decade and blowing past the S&P 500’s 16% gain.

“It feels like we’ve gone through an inflection point,” said Alex Guiliano, the chief investment officer at Resonate Wealth Partners in Ridgewood, N.J. Guiliano has allocated more funds toward equities in Europe and Japan this year, he said, attracted in part by lower valuations. “There seems to be many ways to win internationally.”

The move abroad is accelerating. Investors poured a net $51.6 billion into international equity exchange-traded funds in January, according to Morningstar Direct data. Monthly inflows have jumped since the end of 2024.

Investors have intermittently sung the praises of global diversification, though stocks elsewhere languished for years while American equities reliably pulled ahead. Despite a tech slump that racked markets in recent sessions, domestic stocks still hit fresh records this past week, with the Dow Jones Industrial Average clearing the 50,000-point threshold for the first time.

Michael Rosen, chief investment officer at Angeles Investments, said he still believes in the pre-eminence of American firms. For most of the past decade, his portfolio was concentrated in the biggest U.S. tech names. But in the past year, Rosen said, he has rotated funds into a mix of small-cap and value stocks across the globe, with a focus on Europe and China.

“For us, that’s a very big move,” Rosen said.

It is a switch he started to consider last April, he said, as the value of the U.S. dollar sank during the tariff turmoil that rattled markets.

“It was a signal that we were in a very different type of environment,” he said, noting that tariffs typically boost a country’s currency. “That, to me, demonstrated something like less confidence in the U.S. economy and U.S. markets.”

A weakening greenback has played a significant role in the heightened allure of investing abroad. The dollar is down roughly 10% from its highs in 2022, juicing returns on foreign equities by boosting the value of those companies’ earnings relative to American companies.

That trend has revved up since last spring, when global investors dumped U.S. stocks, Treasurys and other dollar-denominated assets—the “Sell America” trade, as it was dubbed at the time.

But money managers were quick to caution that the recent wave of foreign stock-buying is no Sell America, Part Two. Most still believe the U.S. will lead global equity markets higher—perhaps just not by as wide a margin as in recent years.

“If the ‘Sell America’ trade gave me a 16% return, I would do that all day long,” said Don Calcagni, chief investment officer at Mercer Advisors, referencing the S&P 500’s double-digit annual gain last year. “We still think the U.S. is very exceptional.”

Even so, like others, Calcagni has concerns about the future of U.S. markets, including the swelling national debt and the political and economic volatility introduced by President Trump.

“There is some strong evidence—not necessarily for selling America—but for beginning to rebalance out of the United States and take a more equal-weighted approach,” he said.

Investors have also been rotating out of domestic stock-market leaders for some time. After three years of back-to-back blockbuster returns for U.S. equities—powered, for the most part, by the artificial-intelligence investing boom—traders are starting to look for the next wave of gains elsewhere. Foreign equities aren’t the only beneficiary: Small-cap and blue-chip stocks have also outperformed major benchmarks in recent weeks.

Not everyone on Wall Street is rushing to send their money beyond U.S. borders. But Calcagni said investors’ tunnel vision on the red, white and blue is starting to broaden.

“Many of our clients are now coming to us and asking why don’t you own more [shares of foreign companies],” he said. “There is probably a newfound religion investors may have found in international diversification.”