War and inflation are back — defense stocks and rate-hike fears point to a quiet
Thesis
Three forces are converging at once. First, the US-Iran ceasefire collapse has sent defense stocks like Northrop Grumman and Lockheed Martin sharply higher as war fears escalate. Second, Ed Yardeni — one of Wall Street's most followed strategists — is warning that the Iran crisis could reignite inflation and even force the Federal Reserve to RAISE rates, a dramatic shift from the rate-cut hopes markets had been pricing in. Third, the new Fed Chair Kevin Warsh plans to stop telegraphing policy moves in advance, meaning any surprise rate decision could blindside markets. When you combine hot war, resurgent inflation risk, and Fed unpredictability, gold becomes the ultimate hedge — it rises with geopolitical fear, protects against inflation, and benefits when markets lose confidence in central bank guidance. Defense stocks rising confirms that institutions are already positioning for prolonged conflict, and gold typically follows defense stock breakouts within weeks.
Strategy approach
Build a rule-based strategy that enters long GLD on D1 when LMT or NOC makes a new 20-day high AND the 10-year Treasury yield (US10Y) rises more than 10 basis points in a single session. This captures the combination of defense momentum and inflation fear. Exit after 30 days or if GLD drops below its 50-day moving average, whichever comes first. Use a 5% trailing stop.