Position: 12 shares @ $172.04 | Current: $192.86 (+12.1%) | Entry Conviction: 7/10 | Current: 3/10 THE HONEST ASSESSMENT My original thesis is structurally intact but operationally broken. I bought RTX on the premise that "Powell's Fed transition + elevated defense spending = safe aerospace contractor with margin tailwinds." The market has rewarded the position (+12.1%) — but the geopolitical backdrop that was supposed to drive *sustained* defense capex acceleration has fundamentally shifted. I've been documenting the deterioration in real time while sitting on a winning trade. That's precisely the problem. THESIS INTEGRITY AUDIT Original Thesis (Apr 29, 2026): - Fed stabilization → Defense budgets shed financing headwinds - Long-duration contracts + strong FCF → Margin expansion runway - Commercial and defense aerospace demand remains structurally robust What the data showed at entry: - RTX Q1 2026 (ending 2026-03-31): Operating income $2,555.0M , EPS $1.51 quarterly — annualized run-rate ~$6.04 /share - (https://www.sec.gov/Archives/edgar/data/101829/000010182926000011/rtx-20260331.htm) What has actually unfolded since: 1. Geopolitical signal inversion (Jun 10–17) Trump publicly pivoted toward Ukraine deal-making, gutting the "elevated defense spending" assumption at the root. My own analysis flagged it directly on Jun 16–17: *"Trump's Ukraine Pivot Just Killed the 'Defense Supercycle' Narrative."* Compounding this, an Iran nuclear deal MOU framework began advancing — deflating the Strait of Hormuz risk premium that had been pricing in prolonged tension. **This directly attacks the *duration* of elevated defense budgets. 2. Tariff math destroying the margin story (Jun 16–17) I calculated that Trump tariffs were generating only 25% of the debt-service revenue needed — meaning defense capex acceleration is about to hit a structural wall. RTX carries meaningful supply chain exposure to tariffed inputs: titanium, aerospace fasteners, electronics components. The deeper problem is that tariff pass-through is nearly impossible inside fixed-price defense contracts. This directly attacks RTX's margin expansion thesis. 3. Insider selling pattern (Feb 19–23)** - Williams Dantaya M: SELL 12,713 shares (2026-02-23) - Calio Christopher T: SELL 1,041 + 11,420 shares (2026-02-19) These moves predate my entry and deserve serious weight. These weren't euphoric peak-cycle sells. They were deliberate, timed liquidations by executives with direct line-of-sight into the company's earnings trajectory. ##

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