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The Business of Defence

Past performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.

In this episode of Global Infusions, Tom welcomes back Hong to explore the business of defence. From sanctions to drones, the consequences of war are legion. They also discuss why the US population has grown surprisingly quickly, behavioural biases and the most unexpected thing you will ever hear from a professional martial arts fighter.

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TH: Hello, I’m Tom Hosking. Welcome to Global Infusions, an investment podcast from the Liontrust Global Fundamental team that takes a long-term view of today's stories.  


Last episode we chatted about the business of nuclear energy from tokamaks to uranium. This episode we’re looking at Defence from sanctions to drones. If your taste buds are tickled or you have any questions for our next episode, please do send them in via your client contact or through the contact us link on the Liontrust website. 


So sit back, grab a cup of tea, and remember that when we talk about individual companies, we are not making a recommendation to buy or sell shares and that some of these companies may not be held across Liontrust’s global fund range. 


TH: Right, Hong and I are back.


HC: Hello!


TH: And we tackling one of the big topics in this episode: Defence. Sadly, human civilisations have frequently been blighted by war and, in the last two years especially, it‘s been a subject that’s dominated the headlines for obvious reasons. That has really changed the debate on defence, and the consequences are really quite far-reaching as I’m sure we will come onto.


HC: Yeah in recent years, the defence industry and defence spending in general had become increasingly controversial. From investors shunning investment in defence on the grounds of morality to liberal politicians favouring lower defence spending and giving up nuclear weapons. It certainly had become quite virtuous to be a pacifist.

TH: Yes, the business of killing is very grim and people really don’t like to be associated with it.

HC: But, of course having the capability to defend yourself is not just about killing people. It acts as a deterrent so that we never have to come to that in the first place.

TH: Yes, people often misunderstand and overlook this. Do you remember when Jeremy Corbyn famously said that he would instruct defence chiefs to never use nuclear weapons if he became prime minister?

HC: Yeah… I forgot he said that. It is an absolutely baffling statement isn’t it? It completely negates the effect it has as a deterrent. But then he did also describe Karl Marx as a “great economist”.

TH: Ok, let’s not get side tracked on Corbyn...

HC: Right, back to conflict and violence!

TH: I think for those of us who are lucky enough to live in developed countries where there is the rule of law, we often forget the important role that the threat of conflict and violence plays as a deterrent to malevolent actors.

HC: Yes, over time violence has been mostly outsourced to the government, so much so that we almost forget it exists. The government now has a monopoly on the use of legal force to enforce contracts.

TH: In the international arena, however, the institutions for conflict resolution are less developed. Here, the role of the deterrent to maintain order is much more important.

HC: You can see this by examining the tit-for-tat nature of conflicts, a good example would be what is happening between Iran and Israel right now.

TH: Yes so in that example why can’t one side take the high road and back down so that the conflict doesn’t continue to escalate?

HC: This problem has actually been widely studied by political scientists using game theory. It can be represented as a repeated prisoner’s dilemma game and it turns out the optimal strategy is to always retaliate.

TH: Why is that?

HC: Because if you don’t, then the opponent can always take advantage of your generosity and extract ever greater concessions, knowing you always want to avoid conflict.

TH: Like Neville Chamberlain in the 1930s.

HC: Yes, exactly. In fact, they’ve simulated this problem extensively using different strategies and it turns out the tit-for-tat strategy is optimal. That’s where you start off co-operating with each other and live in peace, but if the opponent deviates from that you have to retaliate on the next turn.

TH: But if everyone uses this strategy then any mistake will result in an endless spiral of retaliation.

HC: Yes, that is unfortunately the case. They also tried more forgiving strategies such as tit for two tats, where you allow two transgressions before retaliating. However, in simulations this ended up performing significantly worse than tit-for-tat as more aggressive strategies were able to take advantage of its highly forgiving nature.

TH: So, it sounds like the conclusion unfortunately is that often conflict is the natural equilibrium.

HC: And in such a world, the ability to effectively defend yourself and deter others from attacking you is vitally important.  

TH: Let’s also not forget the economic benefits of defence spending. It creates lots of skilled manufacturing jobs, which will never be offshored for strategic reasons. For example, the US shipbuilding industry has almost entirely been lost outside of the Navy.

HC: It also helps foster innovation. Many technologies were first harnessed for military purposes before commercial use. For example, the precursor to the internet, ARPANET, was invented by the Department of Defence in the 1960s. Canned food was invented in the 19th century for Napoleon’s army. The French government offered a reward of 12,000 francs for a method to preserve food for military rations. This was 50 years before Louis Pasteur, so they had no idea why it worked.

TH: We also got synthetic rubber and two-way radios during WW2. Microwave ovens came from the development of radars. And then more recently we got GPS and night vision in the 1970s. And of course, nuclear energy might have taken a lot longer if we didn’t have the major technological breakthroughs from the Manhattan Project.   

HC: Yes, and with the Russian invasion of Ukraine in 2022, the reality of how important defence.

TH: Yes, there’s growing consensus across Europe that there is urgent need for higher defence spending. Last year Denmark even cancelled a national holiday to create additional revenue for it!


HC: And also a realisation that it can’t free ride on the US, especially with an US election coming up.


TH: Indeed. Over the last few decades, European countries have increasingly decided to spend money on healthcare and education rather than their armed forces. In December, a report from the German IFO institute estimated that European countries have extracted a total peace dividend of EUR 1.8tn since 1991. This is the difference between what was spent on defence and what would have been spent if countries had met the NATO target of spending 2% of GDP on defence.


HC: So European military capability is greatly diminished from what it was?


TH: Yes Europe has 47% fewer submarines than in 1992, 57% fewer aircraft and 77% fewer tanks. European defence spending is going to have to go up a lot over the next decade.


HC: Wow I didn’t realise it had fallen that much. And it’s a real problem because if there is one thing that Ukraine has shown it’s that war is still physical.


TH: Yes it seems as though Boris Johnson was quite off the mark when he said the following in November 2021 as our PM no less: "We have to recognise that the old concepts of fighting big tank battles on the European landmass are over… There are other, better things we should be investing in [such us] cyber- this is how warfare in the future is going to be".


HC: Yikes. We can add that to the list of his blunders. As one British general put it last year "You can't cyber your way across a river"!


TH: Yes indeed, but Johnson wasn't completely wrong there was he. Technology has changed the nature of war, just not to the extent that there is no physical fighting at all!


HC: Yes military technology evolves over time, whether it be swords being replaced by guns, or cavalry by tanks. Each war you tend to get something new.


TH: And that's why European nations in the 19th century sent observers to the American civil war to study battles, to see what they could learn. And in a similar way, the whole world is watching the current wars and trying to learn lessons for future conflicts, because sadly there are always future conflicts.


HC: The war in Ukraine has seen plenty of advances in military hardware already, but I guess the most notable one is the use of drones.


TH: Yes that is the stand-out one. It is now a cheap and commercially available technology that, in most cases, civilians have assembling in their garages as part of the war effort.


HC: So these are the versions of those ordinary quadcopter drones that some listeners may own at home.


TH: Yes, the loud sort that a tourist will often use to ruin any attraction for everybody else there!


HC: Yes they can be extremely annoying in that context! But in Ukraine they were being used for surveillance and reconnaissance.


TH: Yes exactly. And the really interesting developments over the last year is the emergence of a different type called first person view drones or FPV drones for short. They are sort of halfway between a drone and a missile.


HC: I've read about these. They are essentially remote control bombs operated by pilots wearing goggles. These pilots get real-time video footage from the drone, which allows them to direct their bombs at very precise targets. They have been repurposed from the sport of drone racing.


TH: It’s not something I knew was a sport but that makes sense.


HC: That’s why they can fly at up to 100 miles per hour! They can manoeuvre into quite confined spaces, like flying through a window or into a trench. And, crucially, they can loiter and wait for the right moment to strike. (Potential Soundbite)


TH: That sounds terrifying!


HC: Yeah, it’s like something out of a Sci-Fi film.


TH: Well quite. And both sides are now scaling up production. President Zelensky has stated that they are aiming to produce 1m drones in 2024. In fact, as of December, state procured-FPV drones now outnumber volunteers-made ones for the first time.


HC: That suggests this is becoming more industrialised.


TH: And interestingly, if you compare the Ukrainians rate of artillery fire at the moment, about 3000 shells a day, annualise it, you get to about 1 million per year. So drone production will likely reach a level this year where it might actually overtake the level of shell production for an army.


HC: That would be a pretty big landmark. Could drones end up replacing artillery altogether?


TH: Probably not completely, there are still things that artillery is more effective at. For example, it can provide sustained barrages of fire power over very wide areas. But for many of cases yes.


HC: Presumably these FPV drones are cheaper than a shell of the equivalent precision?


TH: Yes a GPS guided shell costs around $100k each. These are the Excalibur shells the US has been sending to Ukraine that you may have heard of. In contrast, a FPV drone costs about $400.


HC: Wow that's quite a big price difference. No wonder using drones is growing so much. And if you use one of these drones to eliminate an expensive piece of enemy equipment like a tank that costs a million dollars – the relative cost advantage is huge.


TH: Yeah, it’s like in a game of chess using a pawn to take a queen.


HC: It’s a no-brainer. I suppose drones are the latest step in the so-called ‘transparent battlefield’ trend over the last 50 years. The idea has been to have three things: 1. sensors to spot targets 2. long-range precision weapons to hit them, and 3. secure networks to connect the two.


TH: And much of modern warfare is electronic for this reason. It’s an iterative struggle between your own military communications and the enemy trying to jam them.


HC: In that context it’s unsurprising that the electronic content of defense equipment has risen so much.


TH: Thales were saying just this. They are the number one company in Europe for defence electronics and one of the many examples they have given is of a type of an armoured vehicle called a Scorpion where the value of intelligent systems has risen to 20% of its cost and they reckon that it will rise to 35% in the coming years.


HC: And because it’s a network, the same trend is occurring across the entire fleet of defence equipment.


TH: Exactly. And on the topic of armoured vehicles, interestingly both Ukraine and Russia are now sometimes using motorcycles or quad bikes instead because they throw up smaller dust clouds.


HC: Is that so they are less easily detected?


TH: Yes. Both sides have saturated the battlefield with so many drones now that increasingly slower moving vehicles can’t get to the front line before they are seen and attacked. So you prioritize mobility over protection.


HC: It’s interesting that armies can now hardly maneuver at all without the opponent seeing it. And this has mostly been enabled by satellites, and more specifically the impact of one American company… SpaceX.


TH: Ah Elon Musk again!


HC: Yes the Tesla founder started this company to provide high speed internet access around the world, especially those in remote locations. But two days after the war started, one of Ukraine’s ministers tweeted Musk asking him to provide Ukraine with starlink stations because Russia had knocked out their internet communications. Within days small satellite dishes started arriving.


TH: And them being small is important isn’t it, they’re portable and can be rigged to anything.


HC: Yes previously only high command had access to satellites. Now every unit on the front line can. It means the time from identifying a target to shelling it is much, much shorter.


TH: And you can operate the drones fairly reliably. We should save the details for any future Business of Space episode but the crux of it is these new satellite constellations operate in a much lower orbit than old satellites.


HC: This means that the latency is much smaller, which enables real-time use in warfare in a way that wasn’t previously possible.


TH: A couple of years ago, when we met with BAE systems, the British defense company, they said that historically launching satellites into space was so expensive that only the largest nations like the US and Russia could do it. But with the advent of lower launch costs, more countries now can.


HC: And every major country will want to have control over their own constellation. If it’s so important for defence you are not going risk borrowing another country’s.


TH: Exactly. A good example of this is Taiwan: They are developing their own satellite system because of the threat from China. In aggregate, this could mean more business for defense companies with space divisions: so the likes of Leonardo, Thales and L3Harris to name a few.


HC: Space is the fastest growing major area of the US Department of Defense budget.


TH: That makes sense. So in summary, many aspects of electronic warfare are becoming much more important. But so is another type: economic warfare.


HC: Yes the west has launched a barrage of sanctions against Russia in order to weaken its economy and reduce its political and military power. They have banned the export of sensitive goods to the country and placed various, albeit limited, restrictions on imports from Russia.


TH: That was the problem at the beginning, oil and gas imports couldn’t be banned because the west was too reliant on it.


HC: Yeah, instead the west implemented a price cap where G7 countries were banned from importing Russian oil unless it traded for less than $60 a barrel. In the end the oil was simply transported to other countries.


TH: That doesn't sound very effective.


HC: No, the effect has been cheaper oil for countries like China and India. And the export bans have been leaky too because much of the world's populations lives in countries that decline to enforce Western sanctions, so you just get exports going to Russia via a third country.


TH: And that's why you get these strange changes in trade flows, like German exports of cars and their parts to Kyrgyzstan rising over 5000% in 2022.


HC: You were on holiday in Kyrgyzstan last year Tom, did you see any BMWs or Audis?


TH: Suspiciously no, perhaps because they were on their way somewhere else!  Hmm so despite trade warfare sounding like a pretty attractive policy, in reality it's quite leaky.


HC: Yes. trade warfare is nothing new. If you look at the history of sanctions, they tend to be very effective against small nations that are reliant on the global trade system. But with large countries like Russia, there is just more scope for defence. They can either produce these goods for themselves or rely on allies. So, often you end up with parallel supply chains being built up.


TH: And not just by countries threatened by sanctions either. You can see this most notably with the US subsidising the domestic production of key industries like semiconductors.


HC: Understandable given the threat of China invading Taiwan.


TH: Agreed. But economic warfare isn’t limited to trade is it? Russia has been cut off from the global financial system too.


HC: That system is dollars-based, which gives the US a lot of power, and it’s been actively using it.


TH: And what’s more interesting is that the west went a step further this time by freezing Russian FX reserves, which were large at roughly 40% of GDP. Putin believed he would be able to use them to defend the currency during war.


HC: So selling dollars and buying roubles to prevent a collapse.


TH: Exactly. Don’t forget that this step was unprecedented at the time. There are no international rules that clearly allow this, or indeed what is now being discussed: the expropriation of those assets so that they could be given as military aid to Ukraine.


HC: How ironic, Putin’s war chest being used against him!


TH: What seems most likely is that only the interest on these reserves can be legally seized, but that could still be upwards of $10bn a year being sent to Ukraine.


HC: It’s no surprise then that some countries are taking defensive measures by opting to buy assets like physical gold rather than US bonds. The amount of gold bought by central banks rose by 152% in 2022 to 1,136 tonnes. And purchases remained at these high levels in 2023 too. And this is despite gold not being a panacea. Rogue states still won’t be able to use the dollar based financial system to sell their reserves, they will have to transact in other currencies or barter in other ways.


TH: That’s true. Nevertheless these relative advantages of gold have been positive for gold demand recently and therefore the gold price. Which is helpful for investors in that asset or indeed gold mining companies. There’s much more to say here but let’s move onto ESG.


HC: Yes let’s, one of the hot topics for discussion recently is where the defence sector sits for investors with a focus on ESG.


TH: And to remind some of our listeners who don’t spend their time with investment acronyms: ESG stands for environmental, social and governance.


HC: Exactly. It’s a set of considerations investors use to help them invest more responsibly. The idea is investors shouldn’t just care about returns, but also whether your investments are contributing to something that is socially good.


TH: The problem is it’s often difficult to define what is socially good. When we made our case for defence spending earlier we discussed the importance of deterrence. You can argue that it is important that we can defend our democratic values. However, it is difficult to move away from the fact that conflicts also result in death and injuries.


HC: Right, prior to the Russian invasion of Ukraine, 21% of mutual fund AUM in Europe had policies that excluded the defence sector entirely, according to Morningstar. That’s even higher than Tobacco at 17%! However, the inclusion of defence is now very much up for debate. That’s why I thought it would be interesting to give a little insight into how investors who do invest in defence companies typically assess them from an ESG perspective.


TH: One of the great things about Liontrust is that there is no company mandated policy when it comes to ESG. Each investment team is free to think for themselves about what they think is important. That has given us the opportunity to really consider why certain things are seen as positive or negative. What is perception and what is reality.


HC: So, for the defence industry, the main way we think about ESG considerations is through the lens of controversial weapons.


TH: Of course, there are also more general considerations such as carbon emissions, diversity, corporate governance etc., but for brevity we’re just going to focus on those specific to the defence industry today.


HC: Yes, so broadly speaking, the main categories of controversial weapons are: cluster munitions, antipersonnel landmines, depleted uranium, chemical and biological weapons, white phosphorus, and nuclear weapons.


TH: So why exactly are these controversial and should they be excluded?


HC: So, some of these are very straight forward. There are international treaties limiting the use of certain weapons for humanitarian reasons. These include cluster munitions, landmines, chemical and biological weapons.


TH: Landmines are fairly well understood right? They kill indiscriminately because they are often left behind after a war and civilians tend to be the greatest casualties.


HC: Yes, that’s exactly right. Cluster munitions kind of fit into that category as well. They scatter in mid-air and the submunitions cover a large area. They are not very accurate and the unexploded bomblets also pose a threat to civilians after they are used. Chemical and biological weapon follow similar themes – they are indiscriminate, they are inhumane, and they continue to have a negative impact after being used. For example, defoliants, like Agent Orange, used in Vietnam have been linked to long term environmental and health issues.


TH: Ok, let's move on to some of those weapons on the list where it’s more grey when it comes to their level of controversy.


HC: Yup, depleted uranium is an interesting one. These are nothing to do with nuclear weapons. They are, in fact, used in armour piercing rounds because Uranium is an extremely dense metal – almost twice as dense as lead.


TH: But uranium is radioactive, isn’t that a problem?


HC: So depleted uranium is significantly less radioactive than naturally occurring uranium because they are depleted of the more radioactive isotopes. In fact, it’s what's left after enriched uranium is separated for use as nuclear fuel. Also, the type of radiation they emit are called alpha particles, which cannot penetrate skin. So, there are studies of Gulf War veterans who suffered shrapnel wounds involving uranium and so far there have not been any serious health effects.


TH: Ok, so a lot less controversial than the others. What about white phosphorus?


HC: This is one where it really depends on what you use it for. White phosphorus ignites on contact with oxygen and is really difficult to put out. It can stick to skin and cause deep burns. However, it also has lots of other uses such as generating smoke or for illumination in flares. So, it really depends on if you use it in an incendiary weapon or not.


TH: Interesting. And last, but not least, the big elephant in the room, what about nuclear weapons.


HC: I don’t have a great answer for that one I’m afraid. I think it comes down to deterrence, which we’ve already discussed. Whilst the world would be a better place without them, it’s probably not a great idea to disarm unilaterally if malevolent actors also have nuclear weapons.


TH: Quite right. And finally, one topic I thought we should mention briefly is data quality. One problem we come across quite often is out of date data from third party providers. We’ve been asked about certain companies being on external exclusion lists when they’ve actually already exited the production of certain controversial weapons. 


HC: Yup, I think it that illustrates the importance of human judgement in responsible investing, rather than treating it as a box ticking exercise.


TH:  Agreed. Ok, let’s move onto the news. Hong, what do you have for us this episode?


HC: A very interesting data point came up recently that got me quite excited. The latest estimate for US population growth has more than doubled compared to last year’s estimates.


TH: I think you might be the most exciting person I know!


HC: I know right? This could have big implications. So the Congressional Budget Office comes up with these estimates at the beginning of every year. It’s supposed to be non-partisan analysis for Congress. It looks like we’ve been massively underestimating the pace of US population growth after COVID. Last year, most estimates for population growth were around 0.5% growth – pretty unremarkable by developed country standards. This year that number has been revised up to 1.2% and that pace is expected to continue in 2024 as well.


TH: 1.2% is pretty impressive for a developed country. Looking down my table, that’s about as fast as Bangladesh. For comparison the UK is 0.5%, Germany is 0.4%, Italy is –0.1% and Japan is –0.2%. In fact, the last time the US population grew at this pace was in 2005, almost 20 years ago. How did this come about then?


HC: In a word – immigration. The latest estimates have incorporated the latest data from the Department of Homeland Security on the number of illegal immigrants encountered at the southern border.


TH: But why now? Did COVID change something?


HC: It’s hard to know for sure. There could be a number of reasons. Possibly pent up demand from COVID, when fewer people tried due to various travel restrictions. There’s also a lot of instability in the world right now. So, it’s not just South and Central Americans crossing at the southern border. Even if you’re from a different continent, it is still the easiest place to enter the US. So Ukrainians are crossing there, there’s people from the Middle East. There’s also a stat that the number of Chinese nationals detained at the southern border is up 50x.


TH: What about policy? Trump was seen as tough on immigration. Is the Biden administration different?


HC: Certainly, the perception is that he is much softer on immigration, and that might be all you need. It means many more people try if they think they can succeed. That's in contrast to seeing images of children locked in cages under Trump. The number of migrant encounters at the southern border has quadrupled compared to the Trump administration.


TH: So what’s the significance of all this population growth then?


HC: Well, there’s been some really confusing macro trends after COVID and this really helps explain some of them. One of them is that we’ve been seeing very strong payroll growth whilst the unemployment rate has also been rising. Higher labour supply helps explain that. The other is that housing demand has held up surprisingly well despite massive rate hikes. Again, higher demand from immigration would help explain some of that.


TH: Surely this is all quite positive for economic growth? And it should also help offset the aging population problem in the west.


HC: That is the conventional wisdom, but there’s been a couple of studies that suggest the picture is much more mixed. So, a study from the Danish Ministry of Finance shows that whilst immigrants from western countries contribute about the same per person as native Danish people to public finances, immigrants from developing countries are barely breaking even. A separate Dutch study also shows that immigrants from developing countries tend to be a net drain on public finances.


TH: So immigration is not a panacea for financing the increasing burden of an aging population.


HC: It’s hard to say. Those studies are for first generation immigrants. It’s very plausible that their children could go on to be net contributors. But I think it’s fair to say that immigration is not a quick fix.


TH: Interesting. In other news, it’s important we mention the recent passing of a totemic figure in the world of economics: Nobel prize Winner, Daniel Kahneman. The listeners may know him best from his 2011 bestselling book, ‘Thinking Fast and Slow’, which is excellent.


HC: It’s a good one. He basically invented and popularised the field of behavioural economics, along with his close friend, the late Amos Tversky.


TH: They pioneered Prospect Theory. The research was based on exposing hard-wired mental biases or heuristics that can influence human judgement, often with counterintuitive results. And that may sound like an obvious line of inquiry now, but at the time, academic economics was dominated by the idea that human beings were all perfectly rational.


HC: Another ridiculous assumption only economists could make. One of the most important biases that he uncovered is known as loss aversion. Participants in his experiments disliked losing say $100 way more than they liked winning $100. In other words, people hate losing more than they like winning.


TH: Which is really interesting and not immediately intuitive. It has big implications for investing. One result is that humans have a bias to being risk-seeking when dealing with losses and risk-averse when dealing with gains. So you double-down on losers to try and make it back and sell winners more than you should.


HC: Yes it’s important to be aware of that. And more generally it suggests that you shouldn’t check your investment portfolio too regularly because the volatility of day to day swings could lead to irrational decisions.


TH: Hong were you saying the other day that you did your undergraduate dissertation on Prospect Theory, by studying Deal or No Deal?


HC: Yes, it’s the perfect set up for studying how rational human decision making is. They basically choose between a small, but certain amount of money and the prospect of a larger amount over and over again. And surprise, surprise humans are not rational. So the result was prospect theory was a better fit for how contestants behaved compared to the assumption that humans are rational. Humans really like certainty and are willing to accept smaller certain prizes compared to the expected value of the uncertain prize.


TH: That is really interesting. I mean we could probably do an entire podcast on behavioural biases!


HC: Yes probably! Perhaps to finish the episode on a lighter piece of news: there is a different economist who has found fame this month in the most unexpected of places. Tom, do you follow the world of UFC?


TH: Can’t say that I do. That’s the mixed martial arts competition in Las Vegas isn’t it?


HC: Yes, UFC stands for Ultimate Fighting Championship. And this month, Brazilian fighter Renato Moicano made headlines by giving an unusual victory speech live on air. It was expletive laden and praised none other than the 1920s economist, Ludwig Von Mises.


TH: What? That’s an quite an obscure reference! He was a free-markets economist?


HC: That’s right, amongst many things he was also an inflation hawk and argued that state interventions lead to worse and worse outcomes over time. His ideas have seen a resurgence, especially in Latin America. For example, President Milei in Argentina is a fan.


TH: Perhaps unsurprising given the region’s history of inflationary crises.


HC: Indeed. But before I read out the polemic to the listeners, are we allowed to swear on Global infusions?


TH: You know that question has never come up. Hmm.. I’m going to say no, we should censor ourselves and then listeners can always seek out the original version on Youtube.


HC: That’s probably wise. OK, so Moicano has just won the fight and he gives the following speech:   “I love America. I love the Constitution, I love the First Amendment. I love private property. And let me tell you something, if you care about your own f-ing country, read Ludvig von Mises and the six lessons of the Austrian economic school, mother-lovers”.


TH: Wow- I wonder what the crowd made of that! What an unexpected thing to say!


HC: That’s economics in popular culture for you! Check it out on YouTube.


TH: Well after that splendid reading I won’t have to! And on that bombshell, we thank you for listening to Global Infusions – a podcast that believes that the best discussions are had over tea and cake. We hope you've enjoyed your cuppa and our thoughts on defence. It’s been a pleasure as always. Please do subscribe through Apple or Spotify and with that we wish you goodbye!


HC: Goodbye!

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Tom Hosking
Tom Hosking
Tom Hosking is a Co-Fund Manager of the International Equity, Global Balanced, Global Alpha and Global Smaller Companies funds. Tom joined Liontrust in April 2022 as part of the acquisition of Majedie Asset Management, where he was an Equity Analyst and Co-Fund Manager for eight years and is a member of the Liontrust Global Fundamental team.

Tom holds a Master of Arts degree in Economics from Corpus Christi College, Cambridge and is a CFA Charterholder.
Hong Yi Chen
Hong Yi Chen

Hong Yi Chen manages the US Equity Fund and US Opportunities Fund, and is Co-Fund Manager of the Global Balanced, Global Alpha and Global Smaller Companies funds. Hong joined Liontrust in April 2022 as part of the acquisition of Majedie Asset Management where he was an Equity Analyst and Co-Fund Manager for 12 years and is a member of the Global Fundamental team.

Hong holds a Bachelor of Arts degree in Economics from Gonville and Caius College, Cambridge and is a CFA Charterholder.

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Global Infusions Podcast
The Business of Defence
Listen on: Google Podcast
In this episode of Global Infusions, Tom welcomes back Hong to explore the business of defence. From sanctions to drones, the consequences of war are legion.
Global Infusions Podcast
The Business of Nuclear
Listen on: Google Podcast
In this episode, Tom is joined by James to explore the business of nuclear energy. From power plants to uranium mines, the whole industry has entered the limelight and for good reason.
Global Infusions Podcast
The Business of Weight Loss
Listen on: Google Podcast
In this episode, Tom and Hong explore the business of losing weight. From gym subscriptions to new wonder drugs, the industry is changing like never before.
Global Infusions Podcast
The Business of Champagne
Listen on: Google Podcast
In this special festive episode, Tom and Tinger explore the business of Champagne. From exploding bottles to illegal balloons, you will never look at this go-to celebratory drink the same way again.
Global Infusions Podcast
The Business of Housing
Listen on: Google Podcast
In this episode of Global Infusions, Tom is joined by his first guest co-host, Hong, to explore the business of Housing. From property bubbles to green belts, everyone needs somewhere to live.
Global Infusions Podcast
The Business of Fear
Listen on: Google Podcast
In this episode of Global Infusions, Tom and Tom explore the business of fear. From films to theme parks, the horror industry is huge. The emotion of fear shapes human behaviour in everything from advertising to investing FOMO.