Yesterday passed and saw the arrival of another new U.S. presidential administration and a new Congressional majority.
Our attention remains focused on the two trends mentioned above: the beneficiaries of the new administration’s policy priorities, and the technology trends which, beyond the troubled limelight of big tech, are riding the current wave of change and enabling a new swell of business, manufacturing, and logistical productivity growth. Business digitization and process automation software, cloud computing, manufacturing and logistics robotics, artificial intelligence, many semiconductors, sensors, remote monitoring and inventory management hardware, advanced medical diagnostics and devices, and cybersecurity are all of interest. We continue to like biotechnology, although it will be important to gauge the policy goals of the incoming administration.
In our view, modest inflation appears to be more likely than disinflation in coming months. Accordingly, we are putting more attention on copper, zinc, nickel, lithium, and other industrial metals. These base metals will be beneficiaries of the demand for battery storage and industrial automation, including robotics. Fertilizer and farm equipment companies will benefit from expected higher food prices.
Overseas, we continue to like emerging markets broadly, as well as India, and developed markets in Asia, including South Korea and Japan, and possibly Taiwan and Hong Kong. ETFs for all these markets are widely available.
A correction can occur at any time, and markets are exuberant. We remind investors to buy dips rather than chasing peaks. Longer-term, we remain bullish, but we are cognizant that rising interest rates will put an end to any bull market, and especially a bull market in growth stocks. We are closely watching the U.S. 10-year Treasury yield, which has risen from 0.65% to 1.10%. If inflation starts to appear, interest rates will rise further, and growth stocks will lose favor and be replaced by industrial and materials stocks.
And of course, given the communicated and anticipated policy direction of the Treasury and the Fed, we continue to like gold and bitcoin as longer-term assets or stores of value.
Thanks for listening; we welcome your calls and questions.
