Host:

A question I want to ask here, is this a cyclical response to a current conflicts or a longer term structural shift? And which regions and industries are best positioned for all of this? What do you think, Matt?

Matt Wagner:

Yeah, it's structural. I wouldn't say it's in response to this conflict or any other conflict. The shift in terms of defense spending is getting the most attention in Europe. We mentioned Germany increasing its defense spending from below 2% GDP to the NATO target is now 3.5%. You're also seeing Japan, a lot of other parts of Asia, Australia, Korea. Those are markets that we're really focused on in terms of increased defense spending as well. And the obvious positive benefits are just the defense companies within those countries, and those have certainly rallied over the past 12 months with the tier one effect that you're referring to.

But the, really, next layer that we're trying to focus on is, you look at defense super cycles in terms of spending in the past, that's where you had a lot of major technological and infrastructure developments. You had the advent of just cable and the internet itself coming from major defense initiatives from government-led funding. We're looking for the knock-on effects in other industries, industrials, materials, information technology across Europe and Asia Pacific as real beneficiaries to this. It starts with defense spending, but this spend doesn't just stay within defense, it goes across sectors, across industries.