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finding of the peace trade, but today maybe some stability here.
Uh, well, um, good morning. Yeah, I, I think investors, um, are naturally going to be unsettled because, uh, the US is having is having a conflict with an enemy that, of course, is trying to engulf more nations and is threatening other countries. Uh, but we also know that during that period in February through April, while the war was escalating and markets were tumbling, it ultimately proved to be a good buying opportunity for stocks. And I think, you know, for me, maybe that would be the bigger message for viewers that you may not really want the US to be at war. And it, it may actually make you very nervous about what you hold. But it, but it proved to be a time when actually the US economy actually not only did well, uh, war was probably somewhat good for the economy and ultimately it created a V-shaped bounce.
Yeah, I mean, it's such a good point, Tony, especially when you look at the, I mean, you even see it in the macroeconomic data. Not just AI infrastructure buildout that is booing the US economy right now. It's huge amounts of defense spending that's making its way out into this re-industrialization push right now, too. And yet, the defense contractor stocks, at least the so-called legacy primes, they're all lower. The stocks are lower since the start of this war.
It's counterintuitive. And I think it's the, it's the, the, um, you know, the peak, the, the peak defense trade. And people are saying, hey, you know, midterms are coming up. There's going to be, um, you know, there's going to be, there's going to be if, if the, if the house is split and there's not a majority, it's going to be difficult to get defense spending passed. But the reality is, is defense spending in general is bipartisan. There will be some brinksmanship either way, no matter what, likely. But all things being equal, you know, we're well still well below historic, um, uh, uh, defense spending on a GDP basis, on a federal budget basis. And I don't think, I don't think, uh, I don't think Europe is thinking they're going, that's peak defense. I don't think country allied countries in Asia think there's peak defense. I don't think the Middle East thinks there's peak defense. So, I think the reality is it's probably not, not the case.
Yeah. I mean, the other news that came out of the NATO summit yesterday also very significant here, Tony, um, was that the US is giving Ukraine the green light to manufacture Patriots, uh, and also it would seem that the president, uh, of the United States, uh, is okaying, you know, these strikes into Russia, as well as Ukraine seems to be winning the war here. Um, what does that mean in terms of the international picture for companies like RTX, like Lockheed Martin, and also some of the newer players? We had a lot of drone companies have gone public even just in the last couple months.
Right. As is in regards to the Patriot, you know, this, this, there has been a precedent before. We allow Japan to u to produce Patriot missiles and we allow other countries to produce other weapon systems that we have. It's a complex weapon system. The supply chain is huge. It's going to take time to, uh, for if we're Ukraine were to start building these today, it's just going to take a material amount of time to, to, uh, you know, get all the suppliers together. You know, you, you can't 3D print your way out of, uh, mass production. There, there's so many components in the radar secret heads and then you need all the support system for all the, the host radars and all the other components that go into the communication of the system. So, it's going to take time and it's going to benefit, it will benefit the suppliers. I mean, uh, you know, Raytheon makes a lot of the parts obviously for their own missiles. So does Lockheed and Europe is likely going to pay, you know, essentially going to give a loan to Ukraine to pay for these weapon systems.
Yeah, we talk about memory shortages, um, within tech, but it's something else that also affects systems like Patriot, as well. Um, which Tom brings me back to what we have seen, um, within, we talked about rotation in the market more broadly, and certainly that's happening. I do want to get your thoughts on small caps, for example, which have outperformed and you were, um, so early to that call. Um, but even just the rotation we're seeing under the hood in tech, are there buying opportunities there?