Coalition Capital: A Strategic Investment Framework, January 22, 2026

Positioning US Equity Portfolios for the Post-Davos Geopolitical Realignment

Processing Note

For Cara Playbook Subscribers:

This special report expands on themes introduced in “The Carney Doctrine: Investment Implications for the Post-Davos Era” and provides detailed sector analysis, company-level investment considerations, and portfolio construction frameworks for navigating coalition formation.

Important clarification regarding portfolio implementation:

The analysis that follows is not specifically linked to the five managed portfolios available to paid subscribers at caraportfolio.substack.com. Those portfolios are constructed using proprietary INSTAT technical signals combined with Ziggma.com fundamental scoring (via API integration currently in development), and position sizing is determined by systematic risk management rules specific to each portfolio’s mandate.

This report instead provides a strategic framework and investment universe for understanding how coalition geopolitics may influence sector leadership, company valuations, and long-term returns across US-listed equities. It serves as educational context and thematic research to inform independent investment decisions.

Relationship to the Cara Playbook:

This is a special report published as part of the daily Cara Playbook series, which will commence regular publication once our hybrid Power Query + AI system is operational and meets quality standards. The Playbook will integrate:

• Daily market technical analysis (INSTAT signals, sector rotation, breadth metrics)

• Strategic themes (like coalition formation, energy security, defense spending)

• Company-level research (fundamental + technical integration)

• Risk management frameworks

Subscribers to the Playbook will receive these special reports as they are published, alongside daily market commentary and periodic deep dives into specific sectors, companies, and investment themes.

For Managed Portfolio Subscribers:

If you subscribe to the managed portfolios at caraportfolio.substack.com, those positions are determined systematically and disclosed with full transparency, including entry/exit signals, position sizing, and performance attribution. This report may inform the strategic themes underlying those portfolios but does not constitute specific buy/sell recommendations for the managed portfolios themselves.

Executive Summary

Following the geopolitical framework established in “The Carney Doctrine,” this report provides actionable investment analysis across five core themes positioned to benefit from coalition formation among middle-power democracies.

Key Findings:

Market Confirmation Is Already Visible
US equity sector rotation in January 2026 shows institutional capital flowing into coalition-aligned themes—energy, materials, industrials, defense—while distributing from US mega-cap technology platforms and financials. This technical confirmation suggests markets are beginning to price coalition formation as a structural shift, not a political narrative.

Five Investment Themes with Multi-Year Tailwinds

1. Energy Security and AI Infrastructure Power: Convergence of AI’s exponential electricity demands with coalition countries’ need for reliable energy supply creates structural tailwinds for North American natural gas, nuclear/uranium, and energy infrastructure. Canadian producers (US-listed) trade at commodity multiples but provide strategic assets commanding premium valuations.

2. Defense and Strategic Sovereignty: Coalition defense spending transitions from promise to appropriation in 2025-26 fiscal budgets. Canada doubling defense to $80B+, Germany’s €100B increase, Nordic Arctic investments, and Japan’s largest defense expansion since WWII create multi-year order backlogs for aerospace/defense contractors.

3. Critical Minerals and Supply Chain Resilience: G7 buyer’s clubs and coalition supply chain diversification drive demand for North American steel, aluminum, copper, and fertilizers beyond normal commodity cycles. Strategic premium emerging for producers in friendly jurisdictions.

4. Technology Sector Bifurcation: US software platforms face distribution as coalition countries build sovereign cloud alternatives, while semiconductor equipment makers (ASML, Applied Materials, Lam Research) benefit from coalition chip production subsidies and capacity expansion.

5. Defensive Positioning with Quality Bias: Healthcare, consumer staples, and utilities provide portfolio ballast while maintaining relevance to coalition themes (aging demographics universal, food security priority, data center power infrastructure).

Portfolio Construction Guidance

Recommended allocation tilts for US equity portfolios:

• Energy: 12-15% (vs. 5% MSCI World) - Massive overweight

• Technology: 8-10% (vs. 22% MSCI World) - Major underweight, semiconductor equipment focus

• Industrials: 8-10% (vs. 11% MSCI World) - Defense/aerospace emphasis

• Defensives: 18-23% combined (Healthcare + Staples + Utilities)

• Cash: 5-8% - Tactical flexibility buffer

This creates 35-40% exposure to coalition themes (energy, defense, strategic materials) vs. ~10% in balanced portfolios—a high-conviction, high-concentration positioning requiring client communication and risk management discipline.

Implementation Framework

Three-phase deployment over six months:

• Phase 1 (30 days): Core positions in names with confirmed INSTAT bullish signals (Cameco, CNQ, Lockheed, ASML)

• Phase 2 (60-90 days): Complete sector allocations, establish defensive core

• Phase 3 (4-6 months): Final positioning, rebalancing systems operational

Success requires balancing strategic conviction with technical discipline—INSTAT system provides timing signals to avoid buying extended leaders while maintaining exposure to structural themes.

Risk Management

Primary risks include coalition fragmentation (15% probability), energy price collapse (20%), technology disruption (5%), and geopolitical shocks (15%). Base case coalition success (45% probability) drives expected portfolio returns of +15-25% annually (2025-2027) vs. +8-12% for balanced benchmarks.

Position-level controls include 5% single-stock maximum, sector caps, INSTAT override rules (50% reduction on technical breakdown), and quarterly rebalancing with performance attribution.

Bottom Line

Market technicals confirm the Carney Doctrine strategic thesis. Energy sector INSTAT ~100, defense high-90s, materials cyclical reflation—all validate coalition formation pricing. Conversely, US mega-cap tech and financials show distribution consistent with reduced reliance on US platform dominance.

For long-horizon fiduciary investors, the opportunity is positioning before consensus recognition. LNG Canada ships Q2 2025, defense budgets appropriate Q1-Q2, coalition energy contracts likely Q2-Q4. Technical leadership intact. The question is execution speed, not thesis validity.

This report provides the detailed sector analysis, company-level considerations, and portfolio construction frameworks to implement coalition-aligned positioning within US equity portfolios.

Five Core Investment Themes

Theme 1: Energy Security and AI Infrastructure Power

Strategic Rationale:

The convergence of two massive trends—AI’s exponential power demands and coalition energy security imperatives—creates a multi-year structural tailwind for North American energy infrastructure.

AI Power Bottleneck:
Current estimates suggest global data center power demand will grow from 200 TWh (2023) to 1,000+ TWh by 2030. This requires adding the equivalent of Japan’s entire electricity consumption in seven years. Utilities in Northern Virginia, Dublin, Amsterdam, and Singapore are already telling hyperscalers: “We cannot deliver the power you need for 5-7 years.”

Coalition Energy Security:
European nations have structurally lost Russian gas supply. Asian coalition members (Japan, Korea, Taiwan) face both immediate data center power needs and long-term energy diversification requirements away from Middle East and Chinese supply chains. US energy policy under Trump is perceived as transactional and unreliable for long-term contracts.

Result: Canada and US producers with export capacity, stable jurisdictions, and coalition alignment become strategic assets, not commodity suppliers.

Technical Confirmation:

From our Daily Pulse analysis:

• Energy sector leadership is broad-based (XLE INSTAT ~100) with strong participation across integrated majors, pipelines, and North American producers

• Canadian producers specifically showing “INSTAT 96-100, extended energy complex leadership”

• Uranium sector showing exceptional strength: Cameco (CCJ) with “high INSTAT, strong 1-month performance, and triple-digit 1-year gains”

Investment Universe (US-Listed):

Natural Gas & LNG Infrastructure:

• Pipeline networks: Energy Transfer (ET), Enterprise Products (EPD), Williams Companies (WMB), Kinder Morgan (KMI)

• Integrated producers: Chevron (CVX), ExxonMobil (XOM), ConocoPhillips (COP)

Nuclear & Uranium:

• Cameco (CCJ): Dominant pure-play uranium producer, Saskatchewan (Tier-1 jurisdiction), acquiring reactor services through Westinghouse

• Utilities with nuclear exposure: Constellation Energy (CEG), NextEra Energy (NEE)

Canadian Energy Complex (US-Listed):

• Canadian Natural Resources (CNQ): Largest Canadian producer, fortress balance sheet, ~60% oil/40% gas mix

• Suncor (SU): Integrated oil sands + refining, benefits from heavy oil discount narrowing

• Cenovus (CVE): Major oil sands producer, debt reduction complete, shareholder return mode

• Imperial Oil (IMO): 70% Exxon-owned, premium assets, conservative management

Rationale for Overweight:
These companies trade at commodity multiples (5-7x EV/EBITDA) but provide strategic assets to coalition partners. As long-term supply contracts with European and Asian buyers are announced (expected Q2-Q4 2025), a re-rating toward infrastructure multiples (8-12x) becomes probable.

Near-Term Catalysts:

• LNG Canada first cargo shipment (Q2 2025)

• European long-term gas supply contract announcements

• Japan/Korea reactor restart decisions and uranium supply agreements

• Hyperscaler nuclear power partnerships (Microsoft, Amazon, Google)

Theme 2: Defense and Strategic Sovereignty

Strategic Rationale:

Defense spending by coalition countries is transitioning from “promise” to “appropriation.” This is not speculative—these are line items in 2025-2026 fiscal budgets.

Specific Commitments:

• Canada: Doubling defense spending to $80B+ CAD by 2030 (from ~$40B)

• Germany: €100B special defense fund passed

• Poland: Targeting 4%+ of GDP on defense (highest in NATO)

• Nordic countries: Major Arctic security investments following Greenland tensions

• Japan: Largest defense budget increase since WWII, abandoning post-war constraints

Why This Time Is Different:

Previous defense spending pledges (2014 NATO Wales Summit, various EU initiatives) were aspirational and politically optional. Current spending is driven by:

1. Demonstrated Russian aggression (Ukraine ongoing)

2. Demonstrated Chinese assertiveness (Taiwan, South China Sea)

3. Demonstrated US unreliability (Trump questioning Article 5, transactional alliance approach)

Coalition countries can no longer free-ride on assumed US security guarantees. Sovereignty requires indigenous defense capability.

Technical Confirmation:

Industrials sector showing “INSTAT high-90s with broad pro-risk cyclical leadership.” Defense names specifically:

• Lockheed Martin (LMT): “Very high INSTAT and strong 1M, infrastructure/defense super-trend”

• Northrop Grumman (NOC): Similar technical profile

• GE Aerospace (GE): Strong INSTAT, benefits from fighter engine programs

• TransDigm (TDG): Aerospace components, high margins, persistent strength

Investment Universe (US-Listed):

Prime Contractors:

• Lockheed Martin (LMT): F-35 production (coalition air forces primary customer), missile defense, space systems

• Northrop Grumman (NOC): B-21 bomber, space systems, autonomous platforms, cyber

• RTX (formerly Raytheon): Missiles (Patriot, NASAMS), engines (F-35, commercial), broad NATO footprint

• General Dynamics (GD): Naval systems (submarines for AUKUS), Gulfstream (strategic airlift)

• L3Harris (LHX): Communications, electronics, space

Aerospace:

• GE Aerospace (GE): Fighter engines, commercial aviation recovery

• TransDigm (TDG): Proprietary aerospace components, high aftermarket content

• Howmet Aerospace (HWM): Engineered structures, fasteners

Supporting Infrastructure:

• Quanta Services (PWR): Power grid infrastructure for defense installations, radar systems

• Amentum (private): Base operations, logistics support

Portfolio Consideration:
Unlike energy (where extended valuations suggest caution on entries), defense stocks are in early-to-mid stage of a multi-year cycle. Order backlogs are building, production rates are ramping, and coalition procurement frameworks (like EU SAFE program) create long-term revenue visibility.

Suggested weight: 5-7% combined defense/aerospace exposure (vs. ~2-3% in typical balanced portfolio)

Theme 3: Critical Minerals and Supply Chain Resilience

Strategic Rationale:

The Carney Doctrine explicitly identified “critical minerals” as a pillar of coalition cooperation. Supply chain de-risking is not just about semiconductors—it extends to every material required for energy transition, defense systems, and advanced manufacturing.

Current Concentration Risk:

• Rare earth processing: >85% in China

• Lithium refining: >60% in China

• Cobalt mining: >70% in DRC (unstable, Chinese-controlled supply chains)

• Graphite: >90% processed in China

Coalition Response:
G7 and EU initiatives to form “buyer’s clubs” and fund processing capacity in friendly jurisdictions. US Inflation Reduction Act and Canada’s Critical Minerals Strategy provide direct subsidies and tax incentives for domestic supply chain development.

Technical Confirmation:

Materials sector (XLB) showing “INSTAT high-90s with double-digit 1M gains and cyclical reflation leadership.” Specific strength in:

• Steel producers (NUE, STLD, CMC): All INSTAT ~100

• Aluminum (AA): INSTAT high-90s

• Fertilizers (CF, MOS): Strong performance

• Diversified miners (RIO, BHP): Constructive trends

Investment Universe (US-Listed):

Steel (Infrastructure Build-Out):

• Nucor (NUE): Largest US steel producer, electric arc furnace technology (lower carbon)

• Steel Dynamics (STLD): Low-cost producer, strong free cash flow

• Commercial Metals (CMC): Rebar and structural steel for construction

• Reliance Steel (RS): Metals service center, benefits from industrial activity

Aluminum (Electrification/Aerospace):

• Alcoa (AA): Integrated mining/refining, exposed to aluminum price but also premium products

• Century Aluminum (CENX): US smelting capacity (strategic for defense/aerospace)

Copper (Electrification):

• Freeport-McMoRan (FCX): Largest publicly-traded copper producer (Arizona, South America)

• Southern Copper (SCCO): Mexico/Peru operations, Grupo Mexico ownership

Fertilizers (Food Security):

• CF Industries (CF): Nitrogen fertilizers, natural gas cost advantage, export capacity

• Mosaic (MOS): Phosphate/potash, North American/South American assets

• Nutrien (NTR - TSX primary, but NYSE-listed): Largest potash producer globally

Diversified Miners (ADRs acceptable):

• Rio Tinto (RIO): Copper, iron ore, aluminum, lithium development

• BHP (BHP): Similar diversification, Tier-1 assets

Lithium (Battery Supply Chain):

• Limited pure-play US-listed options currently

• Albemarle (ALB): US-headquartered, global operations (Australia, Chile)

• Livent (LTHM): Smaller lithium pure-play

• Note: Most attractive lithium names are Australian-listed (Pilbara, Mineral Resources) or Canadian (Lithium Americas) and outside current portfolio scope

Portfolio Consideration:

Materials exposure serves dual purpose:

1. Cyclical exposure: Benefits if coalition infrastructure spending drives commodity demand

2. Strategic exposure: Supply chain diversification creates pricing power beyond normal commodity cycles

Avoid treating this as pure commodity speculation—focus on producers with:

• Assets in coalition jurisdictions (North America, Australia, friendly South America)

• Low-cost production (survive commodity downturns)

• Exposure to structural demand trends (electrification, defense, food security)

Suggested weight: 3-5% combined materials exposure (vs. ~4% in MSCI World)

Theme 4: Technology Sector Bifurcation

Strategic Rationale:

The technology sector is experiencing a philosophical split that has profound portfolio implications:

Legacy Dominance Model: US mega-cap platforms (Microsoft, Google, Meta, Amazon) that achieved scale through frictionless global data flows, weak antitrust enforcement, and network effects in a US-led digital order.

Coalition Technology Model: Sovereign cloud infrastructure, regional data localization, hardware independence, and AI systems not beholden to US hyperscaler control.

This doesn’t mean US tech giants disappear—they remain dominant franchises. But their growth trajectory moderates as coalition countries build alternatives, and their valuations compress as regulatory/geopolitical risks are repriced.

Technical Confirmation:

Technology sector (XLK) showing bifurcation:

Distribution (Negative INSTAT, Negative 1M):

• Microsoft (MSFT)

• Meta (META)

• Salesforce (CRM)

• Adobe (ADBE)

• Oracle (ORCL)

• Palantir (PLTR)

• Netflix (NFLX)

Interpretation: “De-crowding of high-multiple growth” after exceptional 2023-2024 runs. These are not broken businesses, but institutional money is trimming after achieving target weights.

Accumulation (Strongly Bullish INSTAT, Strong 1M):

• ASML Holding (ASML): Semiconductor equipment, EUV lithography monopoly

• Applied Materials (AMAT): Semiconductor equipment

• Lam Research (LRCX): Semiconductor equipment

• AMD: AI/data center chips

• Micron (MU): Memory chips for AI/data centers

• Texas Instruments (TXN): Analog chips

Interpretation: “AI hardware/capacity build-out leadership.” Coalition countries need chips regardless of cloud platform provider. Semiconductor equipment and production is strategic infrastructure.

Investment Framework:

Underweight (for now):

• US software platforms currently in distribution

• Wait for technical stabilization (INSTAT turning positive, 1M momentum improving) before re-entry

• These remain “own, don’t chase” positions—if already held, trimming to moderate weight is prudent, but don’t exit quality franchises entirely

Overweight:

• Semiconductor equipment: ASML (ASML), Applied Materials (AMAT), Lam Research (LRCX)

• Semiconductor production enabling coalition data centers: AMD, Micron (MU), Nvidia (NVDA - despite run, structural demand story intact)

• These benefit from coalition sovereignty requirements—Europe, Japan, Korea, Taiwan all subsidizing domestic chip capacity

Rationale:

ASML is particularly strategic: Dutch company (coalition-aligned), monopoly on extreme ultraviolet (EUV) lithography, required for cutting-edge chip production. Both US and coalition countries need ASML technology. Export controls to China increase strategic value to coalition customers.

AMD and Micron provide exposure to AI data center build-out without concentration in hyperscaler stocks. As coalition countries build sovereign cloud capacity, they buy the same chips but deploy in regional data centers.

Portfolio Construction:

• Technology: 8-10% total (vs. ~22% in MSCI World)

  • Semiconductor equipment/production: 4-5%

  • US platforms (MSFT, GOOGL, AMZN): 3-4% (reduced from typical 12-15%)

  • Other (payments, cybersecurity, etc.): 1-2%

This is a meaningful underweight to US mega-cap tech—a position that requires conviction and client communication, but aligns with coalition formation thesis and current technical distribution.

Theme 5: Defensive Positioning with Quality Bias

Strategic Rationale:

High-conviction thematic positioning (energy, defense, materials overweights) requires defensive ballast. Coalition formation is a multi-year theme, but the path is non-linear—Trump policy volatility, geopolitical shocks, and economic cycles will create drawdowns.

Defensive sectors serve dual purpose:

1. Portfolio stability: Lower volatility, reliable cash flows, recession resilience

2. Coalition relevance: Healthcare, food security, essential infrastructure are universal needs regardless of geopolitical alignment

Technical Confirmation:

Healthcare (XLV): INSTAT ~100, “Defensive growth leadership with stable accumulation”

Individual strength in:

• Johnson & Johnson (JNJ)

• Eli Lilly (LLY)

• Amgen (AMGN)

• Gilead (GILD)

• Thermo Fisher (TMO)

• Danaher (DHR)

• UnitedHealth (UNH)

Consumer Staples (XLP): INSTAT ~99, “Defensive yield leadership”

Leadership in:

• Costco (COST)

• Walmart (WMT)

• Coca-Cola (KO)

• PepsiCo (PEP)

• Philip Morris (PM)

• Procter & Gamble (PG)

Utilities (XLU): INSTAT mid-range, “Defensive unwind to stable accumulation”

Quality utilities showing strength:

• NextEra Energy (NEE)

• Duke Energy (DUK)

• Southern Company (SO)

• Dominion Energy (D)

Investment Framework:

Healthcare: 10-12%

• Aging demographics are universal (US, Europe, Japan, China all facing this)

• Medical innovation transcends geopolitics—coalition countries will buy from whoever solves diseases

• Focus on: Pharma with strong pipelines (LLY, AMGN, GILD), medical devices (TMO, DHR), managed care (UNH)

Consumer Staples: 5-7%

• Food security is coalition priority (fertilizer theme overlap)

• Brand value transcends borders (KO, PEP global franchises)

• Focus on: Global brands with pricing power (KO, PEP, PM), value retailers (COST, WMT)

Utilities: 3-4%

• Essential infrastructure for data center power theme

• Regulated returns provide yield in volatile markets

• Focus on: Renewable leaders (NEE), large diversified (DUK, SO)

Why Quality Bias Matters:

Within defensives, emphasize companies with:

• Fortress balance sheets (survive any economic environment)

• Pricing power (pass through inflation)

• Global franchises (benefit from coalition diversification, not just US market)

• Demonstrated execution (management quality matters in uncertain times)

Portfolio Construction:

Defensive sectors combined: 18-23% of portfolio

This provides ~20% in low-volatility, high-quality cash flow generators. Combined with 5-8% cash buffer, gives ~25-30% in defensive/liquid positions to rebalance during volatility while maintaining ~35-40% in thematic coalition exposures.

Portfolio Construction Framework Characteristics

Strategic Allocation for US Equity Portfolios

The following framework balances strategic overweights to coalition themes with defensive positioning and technical discipline:

1. Energy massively overweight (+10%): This is the highest-conviction thematic position

2. Technology major underweight (-12-14%): Structural position against US platform dominance

3. Financials underweight (-7-9%): Avoiding US banks in distribution phase

4. Defensive base (Healthcare + Staples + Utilities): ~20% provides stability

5. Cash buffer: 5-8% enables opportunistic buying during volatility

Risk Management and Scenario Planning

Primary Risks to Coalition Thesis

Risk 1: Coalition Fragmentation (Probability: 15%)

Scenario: Trump successfully intimidates European leaders, Asian countries return to bilateral US relationships, Carney’s vision collapses.

Portfolio Impact:

• Canadian energy loses strategic premium: -20-30%

• Defense spending delayed/cut: -15-25%

• US mega-cap tech rallies as “safe haven”: +15-25%

Mitigation:

• Portfolio already has 8-10% US tech (won’t miss entire rally)

• Defensive core (20%) provides stability

• Energy positions are in profitable, dividend-paying companies (not speculative)

Response if triggered:

• Reduce coalition exposure from 40% to 20% over 6 months

• Rotate into US tech when INSTAT confirms bottom

• Accept 8-12% drawdown as cost of strategic positioning

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Risk 2: Energy Price Collapse (Probability: 20%)

Scenario: Global recession, OPEC+ floods market with supply, oil to $50, gas to $2.

Portfolio Impact:

• Energy complex down 30-50%

• Materials down 20-30%

• Defensives flat to up (healthcare, staples)

• Gold/precious metals up (recession hedge)

Mitigation:

• Energy positions focused on low-cost producers with fortress balance sheets (CNQ, CVE, IMO can survive $40-50 oil)

• Dividend yields (4-7%) provide cushion

• 20% defensive allocation limits total portfolio drawdown

Response if triggered:

• Don’t panic sell—these are quality companies

• Reduce energy from 15% to 10% (trim highest-cost producers)

• Increase healthcare/staples from 17% to 22%

• Use cash buffer to add to extended positions that correct

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Risk 3: Technology Disruption (Probability: 5%)

Scenario: Major breakthrough in battery storage enables 100% renewable grids, fusion power commercialized, or AI efficiency reduces data center power needs by 80%.

Portfolio Impact:

• Gas/nuclear demand craters: -40-60%

• Oil accelerates decline: -30-50%

• Renewable/battery stocks soar: +100%+

Mitigation:

• Extremely low probability this decade

• Even in aggressive scenarios, transition takes 10-15 years

• Portfolio already has renewable exposure via NEE

Response if triggered:

• Emergency exit from gas/nuclear over 1-2 months

• Keep only highest-quality positions

• Rotate into renewable infrastructure

• Accept severe drawdown (20-25%) but this is tail risk

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Risk 4: Geopolitical Shock (Probability: 15%)

Scenario: China invades Taiwan, major Middle East war, Russia uses nuclear weapon.

Portfolio Impact:

• Unpredictable—could spike energy (+30%) or crater global growth (-40%)

• Defense up (+20-40%)

• Safe havens up (gold, utilities)

• High-beta assets crushed

Mitigation:

• Portfolio already has defense exposure (8-10%)

• Energy provides commodity spike hedge

• Defensive core provides recession hedge

• No perfect hedge for this scenario

Response:

• Don’t make major changes in immediate panic

• Wait 1-2 weeks for volatility to settle

• Rebalance based on which scenario playing out (war premium or recession)

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Risk 5: Base Case - Coalition Succeeds (Probability: 45%)

Scenario: Carney Doctrine gains momentum, coalition agreements multiply, Canadian energy gains strategic premium, defense spending sustained.

Portfolio Impact:

• Energy re-rates from 5-7x EBITDA to 8-10x: +40-60%

• Defense continues multi-year uptrend: +30-50%

• US tech underperforms but doesn’t collapse: +5-10%

• Portfolio significantly outperforms balanced benchmarks

Expected Returns:

• Coalition-positioned portfolio: +15-25% annually (2025-2027)

• Balanced 60/40 benchmark: +8-12% annually

• Alpha: +7-13% annually

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Position-Level Risk Controls

Rule 1: Single-Stock Maximum

• No position >5% of portfolio (regardless of conviction)

• If position appreciates to >6%, trim to 5%

Rule 2: Sector Maximum

• Energy: Maximum 18% (even if thesis working)

• Technology: Minimum 6% (maintain some exposure even if underweight)

• No other sector >12%

Rule 3: INSTAT Override

• If any holding’s INSTAT turns negative (breaks support, momentum deteriorates):

  • Reduce position by 50% immediately

  • Re-enter only when INSTAT turns positive again

• This is non-negotiable—technical discipline overrides fundamental thesis

Rule 4: Rebalancing Frequency

• Weekly: Monitor INSTAT signals, tactical adjustments <0.5%

• Monthly: Sector rebalancing if >5% drift from target

• Quarterly: Full portfolio review, performance attribution

Rule 5: Drawdown Trigger

• If portfolio down >15% from peak:

  • Review fundamental thesis (is something broken?)

  • Check INSTAT breadth (how many positions in downtrends?)

  • If thesis intact but volatility spike: Hold and rebalance

  • If thesis breaking: Reduce coalition exposure by 25-50%

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Implementation Timeline

Phase 1: Immediate (Next 30 Days)

Objective: Establish core coalition positions in names with confirmed INSTAT bullish signals

Actions:

1. Energy Complex (target 6-8% deployed):

   • Cameco (CCJ): 2-3% position (highest conviction uranium)

   • Canadian producers: CNQ 1.5%, SU 0.75%, IMO 0.75% (combined ~3%)

   • Pipeline infrastructure: ET 0.75%, EPD 0.75% (combined 1.5%)

2. Defense (target 3-4% deployed):

   • Lockheed Martin (LMT): 1.5%

   • Northrop Grumman (NOC): 1.0%

   • RTX: 0.75%

   • GE Aerospace (GE): 0.75%

3. Semiconductors (target 2-3% deployed):

   • ASML: 1.0-1.5%

   • AMD or Micron: 0.75-1.0%

Total Phase 1 Deployment: 11-15%

Execution: Only deploy if INSTAT confirms favorable entry points. If extended, wait for 5-10% pullback.

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Phase 2: Building (Days 31-90)

Objective: Reach 70-80% of target allocation

Actions:

1. Complete Energy Allocation (to 12-15% total):

   • Add remaining pipeline positions (WMB, KMI)

   • Add integrated majors if setups favorable (CVX, XOM)

   • Consider Cenovus (CVE) on weakness

2. Complete Defense Allocation (to 7-9% total):

   • Add General Dynamics (GD), L3Harris (LHX)

   • Add aerospace components (TDG, HWM)

   • Add infrastructure (PWR, CAT if constructive)

3. Build Materials Positions (to 4-5%):

   • Steel: NUE, STLD

   • Fertilizers: CF

   • Diversified miners: RIO, BHP

4. Establish Defensive Core (to 18-20%):

   • Healthcare: JNJ, LLY, AMGN, TMO, DHR, UNH

   • Staples: COST, WMT, KO, PEP, PM

   • Utilities: NEE, DUK

Phase 2 Total Deployment: 30-35% (cumulative with Phase 1: 41-50%)

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Phase 3: Completion (Months 4-6)

Objective: Reach full allocation, establish monitoring systems

Actions:

1. Final Positions:

   • Complete semiconductor equipment (AMAT, LRCX if not added)

   • Add selective materials as setups occur

   • Opportunistic adds to extended leaders if they correct 10-15%

2. Cash Management:

   • Establish 5-8% cash buffer

   • Set rules for when to deploy (INSTAT signals + fundamental catalysts)

3. Rebalancing Systems:

   • Weekly INSTAT monitoring for top 20 holdings

   • Monthly sector drift checks

   • Quarterly performance attribution

Phase 3 Target: 100% deployed per framework

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Phase 4: Ongoing Management (Months 7+)

Objective: Harvest alpha, manage risk dynamically, adapt to thesis evolution

Weekly Monitoring:

• INSTAT signals for all holdings

• Sector relative strength (is rotation continuing?)

• Catalyst tracking (LNG shipments, defense contracts, policy announcements)

Monthly Deep Dives:

• Rotate through themes: Energy markets, uranium, defense, materials, tech

• Update thesis conviction based on new evidence

• Adjust allocations if probability weights shift

Quarterly Reviews:

• Performance attribution: How much from sector allocation? Stock selection? Cash drag?

• Client reporting: Explain outperformance/underperformance vs. benchmark

• Strategic adjustments: If thesis strengthening, add. If weakening, reduce.

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Conclusion

Strategic Positioning for a Fragmenting Order

The Carney Doctrine is not a prediction—it’s a framework for understanding a geopolitical transition already underway. Whether coalition formation succeeds or fails, the attempt itself has investment implications.

What we know with high confidence:

1. Coalition countries are investing in strategic autonomy. Defense budgets are appropriated, energy diversification is funded, supply chain resilience is policy priority. This creates multi-year demand for specific sectors regardless of whether coalitions fully cohere.

2. US policy unpredictability is repriced as risk. Markets no longer assume frictionless access to US technology platforms, financial infrastructure, or security guarantees. This creates valuation pressure on assets dependent on US hegemony assumptions.

3. Energy scarcity is structural, not cyclical. AI power demands are real and growing exponentially. Coalition energy security requirements are driven by demonstrated Russian unreliability and Chinese supply chain concentration. These aren’t trading themes—they’re decade-long infrastructure build-outs.

4. Market technicals confirm strategic thesis. The sector rotation from growth/platforms into real assets/infrastructure is not random. It’s institutional capital repositioning for a world where tangible assets and strategic relationships matter more than scale and network effects.

What requires ongoing monitoring:

1. Execution risk: Will Canadian LNG projects deliver on schedule? Will coalition defense spending translate to contractor orders? Will critical mineral buyer’s clubs function or fragment?

2. Geopolitical volatility: Trump’s chaos creates headline risk. Coalition cohesion faces ongoing tests. Shocks (Taiwan, major wars) could override strategic trends with tactical panics.

3. Technology disruption: Breakthroughs in energy storage, efficiency, or production could invalidate structural scarcity assumptions. Low probability this decade, but tail risk exists.

4. Valuation risk: Energy and defense stocks are extended after strong runs. Timing entries matters—technical discipline (INSTAT system) is essential to avoid buying tops.

Portfolio construction balances conviction with prudence:

• 35-40% coalition themes (energy, defense, strategic materials): High-conviction positioning for structural trends

• 8-10% technology (semiconductor equipment, selective platforms): Underweight but not absent—maintains exposure to AI hardware build-out

• 18-23% defensives (healthcare, staples, utilities): Provides stability and downside protection

• 6-8% financials/discretionary/other: Minimal allocations to sectors facing headwinds

• 5-8% cash: Tactical flexibility for volatility and rebalancing

This is not a balanced portfolio—it’s a positioned portfolio. It will outperform significantly if coalition formation continues. It will underperform if the old order reasserts. The technical evidence suggests markets are beginning to price the former, not the latter.

For long-horizon fiduciary investors, the strategic choice is clear: Position for the world being built, not the world that’s fading. The Carney Doctrine provides the roadmap. Current market technicals confirm the journey has begun.

This paper represents the investment philosophy and strategic framework of Bill Cara. It is not personalized investment advice. All investors should consult with qualified financial advisors before making investment decisions.

APPENDICES

Appendix A: Key Terms and Definitions

INSTAT: Proprietary technical analysis system combining multiple momentum, trend, and breadth indicators to generate bullish/bearish signals and relative strength rankings.

Coalition Countries: In this context, refers to middle-power democracies building strategic partnerships outside traditional US-led frameworks: Canada, EU nations, Japan, South Korea, Australia, and pragmatic partners like Mexico and select ASEAN members.

Strategic Premium: Valuation multiple expansion beyond commodity pricing when assets are recognized as strategically essential to national security or economic sovereignty (e.g., re-rating from 5-7x EBITDA to 8-12x for energy infrastructure serving coalition partners).

Carney Doctrine: Framework articulated by Canadian PM Mark Carney at WEF 2026, arguing that middle powers must build coalitions based on shared values and interests rather than relying on US-led multilateral institutions or accepting transactional bilateral relationships.

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Appendix B: Data Sources and Methodology

This analysis integrates:

1. Geopolitical Framework: Public speeches from WEF 2026, policy announcements from coalition governments, budget appropriations

2. Market Technical Analysis: Proprietary INSTAT system analyzing US-listed equities, sector ETFs, and international ADRs

3. Fundamental Research: Corporate filings, industry reports, energy/defense market data

4. Integration: Ziggma.com corporate fundamental scoring system (pending API integration)

All specific stock mentions are for illustrative purposes within the strategic framework. Actual position sizing and timing determined by:

• INSTAT technical signals

• Ziggma fundamental scores (when available)

• Portfolio-level risk management rules

• Client-specific investment policy guidelines

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