Trump expected to tell Turkey he is ready to restore access to F-35 jets, NYT reports

The New York Times reports Trump may tell Erdogan he’s prepared to allow Turkey to rejoin the F-35 program, potentially via an exchange of letters to work around congressional/legal restrictions. The shift would address the core block created by Turkey’s S-400 acquisition and subsequent U.S. sanctions and removal from F-35, where a congressional law bars F-35 sales while S-400s remain in Turkey. The development also follows Trump’s prior notification to Congress of plans to sell dozens of jet engines worth more than $700 million.

Analysis

The equity impact is likely more about option value than near-term earnings. Any path back into the F-35 ecosystem would take months of legal, congressional, and procurement gating, so the first-order revenue lift for LMT is negligible today; the more immediate read-through is that Washington is signaling a willingness to relax parts of the sanctions stack, which could reopen adjacent FMS and sustainment channels for RTX. In other words, the asset most likely to monetize first is not the fighter itself, but engine, avionics, and aftermarket work where timing is less binary.

The second-order winner is the broader U.S. defense export complex: if Turkey becomes a template for selective carve-outs, that lowers perceived political friction for future deals with other NATO buyers. That said, the market may be overpricing the pace of normalization, because the hard constraint is still statute and the S-400 issue is not a cosmetic detail; if compliance language does not change, this can stall quickly and leave only a headline-driven pop. For Turkish assets the signal is modestly better risk appetite, but the real monetization likely shows up in industrial suppliers and banks only if this turns into repeated concrete actions.

Contrarian view: this is probably better framed as a months-long policy process than a one-day catalysts trade. If the stock reaction in defense primes is sharp, I would fade the move unless we get a formal congressional notification or an explicit waiver path, because absent that the probability-weighted earnings impact remains small. The cleanest falsifier is simple: if by 1-3 months there is no legislative movement or if the administration walks back the permissive language, the trade should unwind.

Key Decisions for Investors

• Buy RTX on weakness for a 3-6 month policy-option trade; the engine/sustainment exposure is the most direct monetization path. Use a tight stop if Congress publicly signals no-waiver support, as that would cap the upside.
• Hold LMT as a lower-conviction beneficiary only; prefer not to chase the first headline rally because the prime contractor upside is more deferred and easily diluted by legal friction.
• If defense baskets sell off on no-follow-through, buy ITA/XAR on a 2-4 month horizon as a cleaner way to express renewed NATO export normalization without taking single-name execution risk.
• Avoid shorting NYT/DJT on this alone; the signal is geopolitical, not a durable fundamental shift in media economics. Any trade here is event-volatility, not thesis-driven.