Stepped 0.87 to 0.88 (from 2.2.3). The war's broadening to direct Iran-Israel ballistic exchanges and US strike waves on consecutive nights, with consensus repricing the conflict as a "long grind", is the strongest reinforcement of the multi-year-conflict premise since the February outbreak - munitions expenditure compounds with every exchange and the durable-peace invalidation leg has never been further away. The defense tape held roughly flat (LMT 525.02, RTX 177.41, NOC 542.14) through Wednesday's -1.6% S&P session - relative strength on the escalation. The move is capped at +0.01 because the procurement-cycle case was already near fully priced into the mean and the tape added confirmation, not new structure. The invalidation still requires durable peace IMPLEMENTED plus two quarters of DECLINING DoD outlays, against a budget topline proposed UP to $1.5T. Width held at 0.04. Beta(38.7, 5.3) ~44 effective observations. The horizon is the longest in the worldview: a procurement cycle takes fiscal years to test.

The US-Iran war that began Feb 28 2026 (Operation Epic Fury) triggered a multi-year defense spending cycle that benefits prime contractors with missile and missile-defense exposure regardless of diplomatic-track outcomes. Defense primes rallied materially on the Monday May 18 cash session in confirmation of the procurement-cycle reading - LMT closed 528.31 (+2.38%), RTX 175.95 (+2.78%), NOC 550.00 (+1.72%). The Monday evening Axios reporting flipped the diplomatic-track signal: the White House formally REJECTED Iran's 14-point proposal as "insufficient", citing inadequate commitments to halting uranium enrichment; a senior US official told Axios the "next conversation is through bombs"; Trump is expected to meet his top national security advisers Tuesday May 19 to discuss "breaking the ceasefire with Iran." This is structurally bullish for the multi-year procurement-cycle tail - the rejection is public, on-the-record, and explicit about kinetic-option re-engagement. Sunday Barakah drone strike on the UAE nuclear plant remains unattributed (Iran has not claimed responsibility; UAE Defense Ministry confirms 3 drones from Saudi border, 2 intercepted; UAE formal statement did not name Iran). Iran's 14-point proposal substance remains public: 30-day war end, US-forces withdrawal, naval-blockade end, asset unfreezing, reparations, sanctions lift, end-of-fighting in Lebanon, new Hormuz mechanism. Depleted munitions stockpiles (438 Iranian ballistic missiles, 2,012 drones, 19 cruise missiles fired at UAE through April 1) and Golden Dome ($185B) are committed multi-year programs that survive any near-term deal scenario. Tuesday-morning defense complex repricing on the rejection news is the operative test of the procurement-cycle structural read. That test came in muted, not bullish - LMT 526.63 (-0.32%), RTX 174.49 (-0.83%), NOC 556.34 (+1.15%) - and the legislative track tilted toward de-escalation: the Senate advanced Kaine's war-powers resolution 50-47 (Cassidy, Paul, Murkowski, Collins crossing) directing US withdrawal from Iran hostilities, and Trump postponed an "an hour away" Tuesday strike after Gulf-leader appeals. The resolution is veto-bound and the multi-year backlog (LMT $194B, RTX $271B) is unchanged. Update May 20: the de-escalation continued - talks entered final stages and ships began transiting Hormuz - and the defense complex softened (LMT 522.59 -0.77%, NOC 552.17 -0.75%, RTX 174.85 flat), but the procurement backlog is robust to a deal still short of implementation. Update May 21: the de-escalation tilt partly reversed - optimism over a US-Iran agreement faded and crude reclaimed $100 - firming the multi-year procurement-cycle tail. Update May 22: the diplomatic tilt swung back toward de-escalation as a leaked "final draft" US-Iran ceasefire revived peace optimism and crude eased back below $100; the draft is unconfirmed and unimplemented, and Thursday defense closes were essentially flat (LMT 522.79, RTX 175.98, NOC 551.58) - the procurement bid steady. Update May 25: the leaked draft did NOT convert to a formal announcement over the May 23-25 holiday weekend (the "within hours" claim failed to materialize), and the procurement bid firmed into the Friday close (LMT 533.24 +2.0%, RTX 177.01 +0.59%, NOC 555.58 +0.73%) with Lockheed expanding defense manufacturing capacity in Alabama - the multi-year backlog (LMT $194B, RTX $271B) and Golden Dome ($185B) unchanged. Update May 26: over the holiday the US conducted fresh "self-defense" strikes on Iranian missile launch sites and mine-laying boats near Hormuz and Trump warned he would go "Back to the Battlefront ... bigger and stronger than ever before" absent a "Great Deal" - a kinetic re-engagement and on-the-record battlefront threat that firm the multi-year procurement tail - even as a 60-day ceasefire framework emerged; the framework is unimplemented and the multi-year backlog (LMT $194B, RTX $271B) plus Golden Dome ($185B) are unchanged. Update May 27: the strikes drew an Iranian retaliation vow and ceasefire-violation accusations and President Trump floated raising the FY2027 defense budget from $1T to $1.5T - a fresh procurement-cycle support - though the Tuesday defense tape was muted (LMT 532.90 flat, RTX 178.97 +1.11%, NOC 556.80 +0.22%) and the Doha framework is a de-escalation pull, leaving the multi-year backlog (LMT $194B, RTX $271B) and Golden Dome ($185B) unchanged. Update May 28: the Wednesday cash close brought a modest defense pullback - LMT 531.14 (-0.33%), RTX 176.59 (-1.33%), NOC 551.34 (-0.98%) - profit-taking on deal-optimism flows rather than a new structural signal, with the fresh US-Iran reciprocal strikes pre-market Thursday keeping the kinetic re-engagement live; the multi-year backlog (LMT $194B, RTX $271B) plus Golden Dome ($185B) plus the $1.5T FY2027 budget proposal are unchanged. Update May 29: the Thursday cash close FIRMED the defense tape despite the peace-MoU optimism - LMT 537.33 (+1.17%), RTX 178.96 (+1.34%), NOC 559.29 (+1.44%) - the procurement bid holding on the $1.5T budget even as US and Iranian negotiators reached a tentative 60-day memorandum to extend the ceasefire; the MoU is unsigned and invalidation still requires durable peace IMPLEMENTED plus two quarters of declining DoD outlays - the opposite of a rising topline. Update June 1: the de-escalation pull collapsed - the memorandum stalled on uranium-enrichment terms while the US disabled a fifth blockade-running ship with a Hellfire missile (the blockade enforcement is itself LMT-manufactured ordnance expenditure) and the weekend brought fresh US self-defense strikes against Iran. The Friday defense tape was mixed (LMT 530.45 (-1.28%), RTX 179.66 (+0.39%), NOC 563.68 (+0.78%)) - profit-taking against the procurement bid - while the multi-year backlog (LMT $194B, RTX $271B), Golden Dome ($185B), and the $1.5T FY2027 budget proposal are unchanged. Update June 2: the diplomatic-track signal flipped twice in 24 hours. Iran formally stopped negotiations and vowed to completely block the Strait of Hormuz - structurally confirming, the kinetic tail stays live - then Trump intervened claiming an Israel-Hezbollah truce and an Iran deal "within the next week", and the defense tape sold off HARD on the peace framing: LMT 516.50 (-2.63%), RTX 174.41 (-2.92%), NOC 539.22 (-4.34%) - the sharpest single-day defense selloff of the sequence. Overnight Israel-Hezbollah clashes continued despite the truce announcement and Tuesday Trump said he "couldn't care less" whether the Iran talks collapse. The structural read is unchanged: the backlog (LMT $194B, RTX $271B), Golden Dome ($185B), and the $1.5T FY2027 budget proposal all stand, and invalidation still requires durable peace IMPLEMENTED plus two quarters of declining DoD outlays. Update June 3: after Monday's sharpest-of-sequence selloff, the Tuesday defense tape stabilized rather than cascaded - LMT 513.43 (-0.59%), RTX 174.26 (-0.09%), NOC 536.59 (-0.49%) - even as the de-escalation pull strengthened: the US-Iran memorandum is now pending Trump's signature and US-hosted Israel-Lebanon talks opened with Hezbollah signaling readiness for a full ceasefire, though clashes continued through the partial truce. The Ghalibaf "missiles, not talks" framing keeps the kinetic tail live. The structural read is untouched: the backlog (LMT $194B, RTX $271B), Golden Dome ($185B), and the $1.5T FY2027 budget proposal all stand - a pending memorandum is neither durable peace implemented nor declining outlays. Update June 4: the conflict escalated to direct strikes on Gulf states - Iran fired ballistic missiles and drones at US bases in Kuwait and Bahrain, damaging Kuwait International Airport; the US struck Iran's Qeshm Island in response - while Tehran reported "no progress" on the deal; the defense tape only drifted on the broad risk-off day (LMT -0.3%, RTX -1.0%, NOC -2.0%) and the structural rearmament case is untouched. Update June 5: on Friday's risk-off day defense OUTPERFORMED - LMT +0.7% to 523.76, RTX +1.0% to 180.99, NOC firm at 544.40 - a haven bid that reinforces the rearmament premise; the structural case is unchanged. Update June 11: the war broadened to its sharpest sequence since February - after the IDF Beirut strike, Iran fired ~30 ballistic missiles at Israeli territory, the first direct strike since the April 8 ceasefire, and Israel struck Tehran, Tabriz, and Isfahan in response - and the US ran strike waves Tuesday and Wednesday nights with Trump vowing Iran would "have to pay the price"; by Thursday CENTCOM declared the wave complete, Iran had retaliated against Gulf states again, and investors were pricing a "long grind". The munitions-expenditure and procurement premise compounds with every exchange. The defense tape held roughly flat through Wednesday's -1.6% S&P session (LMT 525.02, RTX 177.41, NOC 542.14) - relative strength, not a break. The multi-year backlog (LMT $194B, RTX $271B), Golden Dome ($185B), and the $1.5T FY2027 budget proposal are unchanged, and the durable-peace invalidation leg has never been further away.