Given the volatility in the United States and the uncertainty of the election outcome, we remain bullish on certain sectors in the U.S. – the beneficiaries of accelerated digitization and virtualization. These winners are participants in the “durable themes” we identified in our recent conference call which we believe can continue to prosper no matter what the final election outcome is. These are the “usual suspects” we’ve been mentioning for months: the cloud, the internet of things, software that enables and deepens business digitization, 5G, next-gen semis, telepresencing technologies and platforms, tech-focused healthcare, e-commerce, financial technology, electronic entertainment, and cybersecurity.
We also think that investors should be looking abroad for more opportunity; we favor foreign-market themes related to digital technology — especially consumer-facing digital technology in countries like India, China, Singapore, and regions such as Latin America.
The U.S. Federal government may well remain divided, and that division may bode better for investors than in the past. Why? Simply because, with fiscal discipline AWOL from both parties, and concern about mounting debt nowhere to be seen in Congress, divided government may mean that everyone sees their pet spending go through. In short, a divided Federal government may well be a goldilocks environment for investors willing to look for bull markets across regions and asset classes — and willing to tolerate the volatility that can accompany liquidity-driven markets.
A divided government may also prove beneficial for biopharma and healthcare stocks, as the status quo remains unperturbed by the threat of radical change.
Also notably, as long as Republicans maintain Senate control, large tax increases are off the table. With tax increases off the table, and robust spending likely to continue, perhaps the only constituency being thoroughly neglected is the future.
Thanks for listening; we welcome your calls and questions.
