The 5Side Newsletter / May 20, 2025

The Weekly Dual-Use Digest for Entrepreneurs, Investors, and Innovators

Author

Gregory Coleman
May 20, 2025

This week brought key geopolitical signals that can’t be ignored. From Trump’s Middle East tour, to ambitious fighter jet upgrade announcements (even if stated more for effect than planning) to U.S.-Iran nuclear overtures and renewed ceasefire discussions between Russia and Ukraine, global dynamics are shifting in ways that will influence procurement, alliances, and innovation priorities. The Pentagon’s confirmation of a space-focused Air Force Secretary and expanded initiatives like DIU’s Hybrid Space Architecture reinforce the importance of advanced space, aerospace, and AI systems in the future of warfare. Meanwhile, U.S. export pressure on Huawei and a $2 billion MQ-9 drone sale to Qatar illustrate the continued intersection of industrial policy and international defense.

On the economic front, markets are recalibrating. Treasury yields are climbing on long-term fiscal concerns, consumer sentiment fell sharply, and the Fed signaled it may revise its inflation targeting framework — all potentially contributing to a more cautious and costly capital environment for businesses. But opportunity remains: additive manufacturing deals, AI deployments in military targeting, and public-private hypersonic testing platforms show how defense-aligned technologies continue to attract resources, capital, and momentum. For founders, VCs, and public-sector innovation leaders, this was a week to absorb signals, recalibrate plans, and double down where the mission and the market align.

Here’s what caught our eye last week…

Geopolitics

  • Trump Delivers Middle East Policy Speech, Announces Investment Deals in Riyadh - Foreign Policy

    • What Happened: During last week’s Middle East trip, President Trump emphasized economic partnerships, announced a $600 billion Saudi investment in U.S. sectors like energy, defense, and health, and warned Iran of severe economic consequences if nuclear negotiations failed.

    • Why We Care: This development signals a substantial influx of capital into potential dual-use sectors. The $600 billion investment includes critical areas like energy and defense. Additionally, the emphasis on economic collaboration over immediate political agreements suggests a strategic shift that could open new avenues for international cooperation in dual-use technology development while also signaling engagement with the Middle East.

  • Trump says he will speak to Putin, Zelensky about Ukraine war on Monday - Washington Post

    • What Happened: President Trump intends to speak with Zelensky, Putin, and NATO leaders individually, in an effort to find a solution to the conflict. These discussions will follow recent, unproductive peace talks in Istanbul and a significant Russian drone assault on Ukraine. While Trump expressed optimism about brokering a ceasefire, concerns have been raised regarding the potential implications for Ukrainian sovereignty and the broader geopolitical landscape.

    • Why We Care: The West has learned a lot about modern warfare and its future through observation of the Ukraine-Russia conflict. But the outcome of these talks could redefine alliances and how the US works with and within NATO, dictating potential military posture for the next generation.

  • Pakistan wields Chinese weapons against India, and analysts take notes - Defense News

    • What Happened: In a recent escalation between India and Pakistan, Pakistan deployed Chinese-made J-10C fighter jets and PL-15E missiles, reportedly downing several Indian aircraft, including French-made Rafales. This marked the first combat use of these Chinese systems, drawing global attention to their performance. Analysts view this as a significant real-world test of China's military technology, potentially impacting global arms dynamics.

    • Why We Care: This is the first time it’s been reported that Chinese weapon systems have been employed against Western systems. If the reporting is accurate, it appears that the Chinese J-10C successfully defeated the French Rafale. While we don’t know the specifics of the engagement or skill levels of the pilots, we now know that the J-10C and PL-15E systems are combat-proven.

Finance

  • Treasury Yields Rise in Week Marked by Inflation Warning - Wall Street Journal

    • What Happened: BlueBay Asset Management anticipates that 30-year U.S. Treasury yields could breach 5%, citing reduced recession fears and growing investor concerns over U.S. fiscal policy. The firm sees 10-year yields at 4.5% as reasonable but warns of upward pressure. As of the latest trade, the 30-year yield is at 4.875% and the 10-year at 4.412%

    • Why this is important: Rising long-end Treasury yields signal that debt investors are increasingly uneasy about U.S. fiscal sustainability, not just inflation or growth. For entrepreneurs and investors, this could mean higher borrowing costs and downward pressure on valuations, especially for capital-intensive ventures. For the government, higher yields may eventually affect federal budgets and interest in public-private partnerships.

  • Consumer Sentiment Darkens Further With Inflation Worries Rising - Wall Street Journal

    • What Happened: Consumer sentiment dropped sharply in early May, reaching its second-lowest reading on record, according to the University of Michigan survey. Concerns about inflation and interest rates drove the pessimism, even as economic data showed continued growth and a strong labor market. Both short- and long-term inflation expectations rose.

    • Why this matters: This steep decline in consumer sentiment suggests a disconnect between macroeconomic indicators and public perception — a tension that can spill over into policy and markets. Also, this can indicate belt-tightening for consumers, which could lead to decreased business earnings and spending

  • Powell Suggests Fed Adjusting Its Strategy on Setting Interest Rates and Managing Inflation - Wall Street Journal

    • What Happened: Federal Reserve Chair Jerome Powell announced that the central bank is revising its monetary policy framework to reflect significant changes in inflation and interest rate dynamics following the 2020 pandemic. The review, initiated earlier this year, aims to address shortcomings in the 2020 framework, particularly the average inflation targeting strategy, which became ineffective as post-pandemic inflation surged beyond expectations. The updated framework is expected to be finalized by late summer, maintaining the 2% inflation target while emphasizing the importance of anchoring public inflation expectations.

    • Why this matters: The Federal Reserve's shift in its monetary policy framework may signal a move away from the era of persistently low interest rates, introducing a new operating environment. This shift is also timely. Many argue that supply chain disruptions on the horizon due to tariffs could also lead to inflation. So with a new approach, perhaps the Fed can more rapidly address supply-chain induced inflation in the future.

Defense & Policy

  • US gives initial approval for Qatar to purchase MQ-9 armed drones for nearly $2 billion - Associated Press

    • The U.S. has granted initial approval for Qatar to purchase eight armed MQ-9B Reaper drones in a deal valued at nearly $2 billion, marking a significant advancement in U.S.-Qatari defense relations. The sale includes drones, munitions, and supporting equipment, pending U.S. congressional approval.

    • This further signals a changing strategic landscape in the Middle East. For dual-use entrepreneurs and investors, the deal signals a large market opportunity created by growing demand for advanced technologies, while also highlighting the importance of aligning with U.S. defense export regulations.

  • Senate confirms Troy Meink as 27th secretary of the Air Force - Defense Scoop

    • The U.S. Senate confirmed Dr. Troy E. Meink as the 27th Secretary of the Air Force with a 74–25 vote. A veteran of the Gulf War and former KC-135 navigator, Meink brings nearly four decades of military and government experience, including leadership roles at the National Reconnaissance Office (NRO) overseeing satellite intelligence programs.

    • Dr. Meink's confirmation signals a strategic emphasis on space and advanced technology within the Air Force. Given the administration’s focus on acquiring both exquisite and attritable systems, it will be interesting to see how the Air Force approaches acquisition.

  • DIU expands 'Hybrid Space Architecture' vendor pool, plans 2026 pilot - Breaking Defense

    • The Pentagon’s Defense Innovation Unit (DIU) has expanded its Hybrid Space Architecture (HSA) initiative by adding 13 new companies, bringing the total to 25. This program aims to develop a resilient, multi-orbit satellite communications network that integrates commercial and government assets, with a pilot launch planned for 2026.

    • The space economy shows no signs of slowing down as the DoD continues to look for commercial solutions to enhance space capabilities. The program's focus on creating a "hack-proof" internet in space also highlights the demand for innovative solutions in cybersecurity and resilient data transport.

Technology

  • AI is helping the Pentagon go from finding targets to predicting threats - Defense One

    • The Pentagon is expanding its use of artificial intelligence to transition from merely identifying targets to proactively predicting threats. Initiatives like Project Maven are leveraging AI to analyze satellite and sensor data, enabling the detection of anomalies that may indicate emerging threats.

    • Processing and interpreting vast datasets in real-time is a top priority for the Pentagon. This trend opens opportunities in developing AI solutions that enhance situational awareness and threat anticipation. Companies specializing in machine learning, data fusion, and anomaly detection may find increased interest from defense sectors seeking to bolster their intelligence capabilities.

  • OpenAI Unveils Codex, a New Tool for Computer Programmers - New York Times

    • OpenAI's Codex is an AI model designed to translate natural language into code, powering tools like GitHub Copilot. Trained on vast amounts of public code, Codex excels at generating code snippets in response to user prompts, particularly in Python.

    • We are rapidly moving to a world where English (or whatever your native language is) is the only programming language you will need. We’re also moving to a world of smaller development teams where human programmers can work on the best and highest-leverage tasks. This is only the beginning.

  • Navy to host industry for talks about 'Future Unmanned Surface Vessel' program - Breaking Defense

    • The U.S. Navy has announced an industry day scheduled for June 17 in Washington, D.C., to discuss its forthcoming “Future Unmanned Surface Vessel” (Future USV) program. According to a public notice, the envisioned vessel will be a high-endurance, autonomous platform capable of speeds exceeding 25 knots. Designed to commercial standards, it will support two 40-foot containerized payloads, each weighing up to 80,000 pounds.

    • Autonomy is not just for airplanes. The Navy's move toward a unified Future USV platform continues to signal a maritime defense strategy that emphasizes autonomy, modularity, scalability, and cost-effectiveness.

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