It's Worse Than You Think
"An Inflection Point In The History Of Warfare"
That's how ZeroHedge described the Ukrainian drone attack on Russian airfields in a post yesterday. I think there's a reason to be optimistic here though: most countries will likely eschew these sorts of "perfidious" attacks, because the knock-on effects of their enemies retaliating in kind (every civilian and commercial vehicle being suspect) are simply too costly. The Ukrainians may be outliers here in their willingness to court suicidal risk.
But if I'm wrong, it's worse than you think, because it turns out there's an off-the-shelf version of the Ukrainian drown attack.
Ironically, it was developed by the Russians, as Clint Ehrlich details in the thread below.
Russia's Club-K System
The year is 2009.
— Clint Ehrlich (@ClintEhrlich) June 2, 2025
Russian defense contractor AGAT announces a new weapons system.
From the outside, it looks like a shipping container.
On the inside, each container has four cruise missiles, which can be used to strike enemy airfields. pic.twitter.com/i8k5SxrLdA
Russia was criticized for even developing the weapon.
— Clint Ehrlich (@ClintEhrlich) June 2, 2025
It was accused of "perfidy" – a serious violation of international law.
Housing a strike system inside a civilian shipping container was viewed as unethical. pic.twitter.com/6B4iOxk9kK
This isn't a thread about hypocrisy though.
— Clint Ehrlich (@ClintEhrlich) June 2, 2025
War makes everyone bend their ethical principles in the pursuit of victory.
Club-K matters because it was a preview of today's attack... but also of new attacks that are coming soon. pic.twitter.com/OQwkWNnxWE
Nor should it have been a surprise that the shipping containers can conceal helicopter drones.
— Clint Ehrlich (@ClintEhrlich) June 2, 2025
Club-K was also marketed with that feature.
The Ukrainian drones were smaller suicide models, but the basic principle is identical.
(AGAT actually also promoted a mockup where the… pic.twitter.com/msCkmbqrBd
Second, the shipping container weapons don't have to be moved by truck.
— Clint Ehrlich (@ClintEhrlich) June 2, 2025
They can go anywhere shipping containers go.
Expect to see future attacks launched from containers on trains and ships.
That versatility was a major Club-K selling point. pic.twitter.com/uA1JpqCksu
Third, the real target of these systems isn't airfields.
— Clint Ehrlich (@ClintEhrlich) June 2, 2025
It's ships. Shipping containers can be used to ambush surface vessels like carriers with close-range attacks.
That won't be a major part of this war, but China is taking notes if things kick off in the Pacific. pic.twitter.com/OURbiA77Ey
Hopefully, President Trump soon realizes he's had the power to end this war all along, by cutting off aid to Ukraine, like the Democrats did to South Vietnam fifty years ago. Otherwise, the risks will multiply. Maybe Russia decides to give this Club-K system to the Iranians, or the Houthis, or Mexican cartels (who knows). Our maybe Lindsay Graham managers to push his 500% secondary sanctions bill through the Senate and House with a veto-proof majority.
In the meantime, the futures are red. Let's try to make some money.
Another Top Names Trade
In yesterday's trade alert, I mentioned that Portfolio Armor's top names have been generating alpha:
Our weekly top ten names from six months ago crushed the market.
We have 6-month returns for 101 weekly top names cohorts since December of 2022, and on average, they have outperformed SPY -0.28%↓ significantly over the next six months: 16.75% versus 9.77% for SPY.
We've got another top names trade teed up for today. This is on our #1 name from Monday, which happens to be releasing earnings this week. Earnings trades are basically coinflips, but with this one, if we're right, we'll make about 200% about 400%, and if we're wrong we could lose 100%. So it's a heads we win 2x 4x, tails we lose 1x bet.
If you want a heads up when we place it, you can subscribe to the Portfolio Armor trading Substack below. And if you don't want to wait for that, you can see our top names via our website or iPhone app.
Tuesday Afternoon Update
We just placed the trade, and it has a 4x potential upside instead of a 2x potential upside. Max loss is still 100%.
If you'd like to stay in touch
You can scan for optimal hedges for individual securities, find our current top ten names, and create hedged portfolios on our website. You can also follow Portfolio Armor on X here, or become a free subscriber to our trading Substack using the link below (we're using that for our occasional emails now).