Scott Bessent Says US May Ask Defense Firms To Cut Buybacks, Boost R&D To Address Delivery Shortfalls

Treasury Secretary Scott Bessent reportedly stated on Wednesday that the U.S. government may ask defense contractors to scale back share repurchases and focus more on research and production to address delivery shortfalls.

“Our defense companies are woefully behind in terms of deliveries,” Bessent said during an interview with CNBC. “So we may have to, as their biggest customer, prod them to do a little more research and do fewer stock buybacks, which is really what got Boeing into trouble.”

He added that in some cases, “we’re the only customer,” highlighting the government’s dominant role in the U.S. defense sector.

The Treasury Secretary also stated that the U.S. must take a more active stance in shaping industrial policy, particularly in sectors exposed to strategic competition with China. “When you are facing a non-market economy like China, then you have to exercise industry policy,” Bessent said. “We’re going to set price floors and forward buying… We’re going to do it across a range of industries.”

He noted private capital is increasingly interested in strategic sectors, citing JPMorgan’s entry into lending and potential work on a strategic mineral reserve. “We’re not going to take stakes in non-strategic industries. But we’ve identified seven industries,” Bessent said, emphasizing the need for vigilance after a 25-year period of limited oversight and blaming it for China’s current dominance in rare earths.

Meanwhile, U.S. equities rose in Wednesday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.78%, the Invesco QQQ Trust ETF (QQQ) surged 0.81%, and the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.58%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory.

Read also: Ethereum, Solana Outpace Bitcoin Gains As Crypto Market Gains After Fed Signals More Scope For Rate Cuts

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