Most important take away

The US is rapidly depleting its missile stockpiles — both offensive and defensive — in the Iran conflict, and replacement production is years away from ramping up. This creates a dangerous window where diminished arsenals may embolden China or North Korea, particularly as Patriot and THAAD systems are being physically relocated from the Pacific to the Middle East. The Pentagon’s planned seven-year munitions ramp was already $28.8 billion short on funding before the war even started.

Summary

The US war in Iran (beginning early March 2026) is consuming missile inventories at an alarming rate. Guest Tom Karako, director of the Missile Defense Project at CSIS, explains that hundreds to likely thousands of missiles — both offensive (Tomahawks, JASSMs, LRASMs) and defensive (Patriot PAC-3, Standard Missiles) — have been expended in roughly two weeks. Joint Chiefs Chairman General Cain stated the US has “enough for this conflict” but notably did not say there is enough for other global commitments, particularly deterring China.

Key actionable insights and investment-relevant points:

• Defense primes are set to ramp production significantly. Raytheon is ramping five munitions lines. Lockheed Martin plans to quadruple Patriot PAC-3 production from 600/year to 2,000/year and quadruple THAAD production. Tomahawk production targets are moving from 57/year to 1,000/year. These companies stand to benefit from massive new orders.
• A munitions supplemental from Congress is likely imminent. The current appropriations bill was already $28.8 billion short of what the Pentagon requested just for munitions before the war started. The conflict will force Congress to pass emergency spending.
• Deputy Secretary Steve Feinberg (from private capital) is pushing defense companies to invest their own capital — double-digit billions — to pre-invest in production facilities on spec before contracts are fully in place. This is unusual and signals urgency.
• Solid rocket motor (SRM) production is a critical bottleneck. Only two major producers exist: L3Harris (Aerojet subsidiary, which received a $1 billion Pentagon equity investment) and Northrop Grumman. New startup SRM companies are emerging but are not yet at scale.
• The “munitions transition” is a positive signal. The US has degraded Iran’s air defenses enough to shift from expensive standoff missiles to cheaper gravity bombs (JDAMs), which are plentiful. This slows the rate of expensive missile consumption.
• Private capital in defense supply chains is a growing theme. The Office of Strategic Capital and related initiatives are channeling private investment into defense-critical supply chains, creating opportunities beyond the traditional prime contractors.
• The cost-per-shot asymmetry narrative is overstated. While Iran’s Shahed drones cost $25,000-$80,000 versus millions for interceptors, the real costs include platforms, fuel, personnel, and facility repair. A thousand cheap drones cannot replicate the capability of a single Tomahawk with a 500-pound warhead.

Stocks/investments to watch: Raytheon (RTX), Lockheed Martin (LMT), Northrop Grumman (NOC), L3Harris (LHX) — all are central to the munitions ramp. Smaller solid rocket motor startups and defense supply chain companies attracting private capital may also benefit. The broader defense sector faces a multi-year demand tailwind as inventories must be rebuilt regardless of how the Iran conflict ends.

Chapter Summaries

Introduction: The Missile Supply Chain Question Joe and Tracy frame the Iran conflict (recording March 12, 2026, ~2 weeks in) through the lens of supply chains and arsenals. They note the extraordinary economic impact on commodity markets and introduce the asymmetric warfare cost question — cheap drones vs. expensive missile defense.

Guest Introduction: Tom Karako and CSIS Tom Karako explains his role running the Missile Defense Project at CSIS, Washington’s main defense think tank. Tracy asks why defense think tanks exist; Karako explains the Pentagon is too large a bureaucracy for internal idea generation, so think tanks serve as external research and reflection bodies.

The Missile Landscape and Types Karako provides a taxonomy of modern missiles: ballistic missiles (gravity-powered arcs), cruise missiles (aerodynamic, jet-powered), and newer hypersonic gliders that blend characteristics. Since the 1970s precision-guidance revolution, missiles have become the “weapons of choice” — used early and often in conflicts. This technology is no longer a US monopoly.

The Scary Depletion of Stockpiles Karako explains why the rate of missile expenditure is alarming. Missile defense kept Ukraine sovereign and protected Israel during the 12-day war last summer (650 projectiles at once). The specter of “going Winchester” (running out of interceptors) is real. The US is moving Patriot and THAAD systems from South Korea and Japan to the Middle East, undermining Pacific deterrence during the so-called “Davidson window” (concern China could act by 2027).

Procurement and the Munitions Ramp After Ukraine revealed estimates were “dramatically too low,” the Army quadrupled its Patriot PAC-3 acquisition target from ~3,000 to ~13,000. Deputy Secretary Feinberg began pushing defense CEOs to maximize production starting mid-2025. Raytheon, Lockheed, and others announced ramp-up plans. However, the planned seven-year munitions ramp had not yet begun when the Iran war started, and the FY26 appropriations were already $28.8 billion short.

Physical Constraints on Production Bottlenecks include facilities (e.g., one Tomahawk factory in Tucson, AZ), workforce, sole-source components, and long lead items. The Pentagon has been mapping supply chain vulnerabilities. Experiments include the Office of Strategic Capital to attract private investment, new solid rocket motor startups, and asking prime contractors to invest their own capital upfront.

The Asymmetric Cost Debate Karako pushes back on the “$20K drone vs. $4M interceptor” narrative as oversimplified. Total operational costs (fuel, platforms, personnel, facility repair) dwarf munitions costs. A ship captain facing an incoming missile does not do cost-benefit analysis — mission success drives decisions. Cheap drones cannot replicate the range and destructive power of precision missiles.

Allies, Interoperability, and Global Demand Eighteen countries operate Patriot systems globally. The Biden administration had to suspend Patriot deliveries to allies to prioritize Ukraine. The US simultaneously tells allies to buy American while struggling to fulfill existing orders. Denmark chose a French air defense system over Patriot purely because of faster delivery schedules.

Signs of Progress and the Endgame The rate of Iranian launches is flattening — a positive sign that US strikes are degrading launchers and command structures. The “munitions transition” to gravity bombs means the US no longer needs expensive standoff missiles. However, air power alone cannot provide military certainty; a political resolution will ultimately be needed to end the conflict.

Hosts’ Closing Reflections Joe and Tracy discuss the extraordinary difficulty of defense procurement: monopsony buyers facing monopoly sellers, cyclical spending, buy-American requirements, and the challenge of planning for hypothetical conflicts. Photos of the US packing up THAAD systems from South Korea underscore how stretched thin the military is across multiple theaters.