The US is not a popular choice for travellers right now. Inbound visits to America are expected to be down 6.3% in 2025, according to the US Travel Board. The figures are particularly stark from their Canadian neighbours, where numbers popping next door are forecast to have slumped 22% year-on-year. Yet from an investment perspective, the US has continued to suck in money. The US is over a quarter of the global economy; has eight of the top 10 biggest companies; and the dollar remains the global reserve currency. As an investor, it’s never a bad time to go to the US. Whether you like the show or not, the US is the box office.
Slimline
Getting into the US these days can be an ordeal in itself. Thankfully my jet-setting wife reminded me about the ESTA requirements just in time. First hurdle done. But the stories were of ever tougher TSA agents – not just the mug shots and fingerprints, but interrogations akin to a social media Spanish Inquisition. While I had hoped this might all be a bit overblown, and with a limited Instagram presence (five posts in my seven-year presence), I nonetheless spent the flight searching WhatsApp in case a rogue Trump meme had me returning to the UK sooner than planned.
As it turned out, we waltzed through Boston Logan International with barely a cursory glance. In fact, never mind snaking queues of nervous influencers, the whole airport was deserted. Welcome to government shutdown. The US had been unable to agree a Budget for the coming year, and as a result the government was technically in shutdown (this has now been resolved).
Government shutdowns tend to have a very small economic effect and stock markets have largely shrugged them off in the past. But typically they were brief and fleeting. Oxford Economics estimates every week of furloughed non-essential Federal workers costs about 0.1% of annualised GDP growth. At the time of landing, the shutdown had lasted 39 days (it reopened, shortly before we left, after 43 days – the longest in US history). That suggests it would fully negate the forecast uplift to US growth from the tax cuts put through earlier in the year.
The shutdown was just another angle of uncertainty to add to an economy that was already wobbling from tariff mayhem and two years of restrictive interest rates. (In December, the US Fed Funds Rate dropped below 4% in December for the first time since October 2022.) As a result of the shutdown, lots of American economic data wasn’t published, putting a stocking over financial market heads in the run up to Christmas.
So what better time to get away from the desk and onto the ground to visit a solid mix of companies, from telecom tower operators to medtech innovators, as well as some of the stalwarts of the global financial system?
The first cut is the deepest
The new US administration has played havoc with economies and markets in its first year. Tariffs of course have been the poster child of this disruption, but in fact it goes well beyond this. Of course, no one sector has perhaps felt this more than healthcare, which is so intricately linked with government through drug prices, reimbursement rates and Medicare/Medicaid – the huge government-sponsored programmes for the old, infirm and poor.
Healthcare is of course well supported by aging demographics – nine out of 10 Americans over 65 rely on at least one long-term prescription drug. And an increasingly unhealthy population has driven orders for everything from heart valves to continuous glucose monitoring systems. COVID upended most healthcare systems and it’s taken much longer than expected for them to deal with backlogs and a general increase in lingering illness. Treatments and monitoring for heart disease and diabetes have also been threatened by the ‘miracle’ GLP-1 drugs that promise to solve or mitigate these problems at source. If that wasn’t enough, an early-2025 cost-cutting expedition led by government efficiency task force DOGE left many federal healthcare agencies in disarray for long periods, adding to the uncertainty.
Boston is home to laboratory supplier Thermo Fisher Scientific, a company directly dealing with the impact of the upheaval at federal health agencies. Thermo Fisher provides the tools and supplies to help scientists do their work. This includes things like high-end lab equipment and reagents (ingredients used to make reactions happen) down to ‘consumables’ such as pipettes.
Thermo Fisher was actually a big beneficiary from COVID as it delivered diagnostic kits all around the world, as well as supporting the research into therapies and vaccines. Then, as COVID receded, came the hangover. Testing revenues dried up, and COVID research plummeted, with other parts of its business not able to pick up the slack quickly enough. Its end markets started to pick up slowly but surely over 2024, yet just as things were getting better the aforementioned US administration spending cuts hit, hurting the research divisions of academia and government labs alike. While the direct impact of these cuts was limited, the uncertainty these policies brought to other end markets weighed on their recovery.
Throughout these tough years, we stuck with Thermo Fisher because we felt it was a strong company in an enviable position. In effect, that its poor results were not of its own making, but rather a reflection of the market it operates in. While in Boston, we dropped in to visit.
Start here, stay here
While managing the impact of these external shocks, Thermo Fisher focussed on what it could influence: cementing its position as a key partner for pharmaceutical companies, its biggest customers.
Pharma businesses themselves have also felt the pressure from tariffs, competition and drug pricing. Thermo has positioned itself as a one-stop shop for drugmakers – an end-to-end platform, supporting customers not just with drug-discovery equipment, but right through to performing clinical trials and manufacturing the final product. This business has a clear goal: becoming a key strategic partner with customers, which tends to mean taking as greater share of wallet.
This is a unique position. Thermo Fisher has embedded itself deep within its customers’ businesses, and it thinks it’s near impossible for competitors to replicate. We believe the continued challenges that pharma faces will only serve to push them further into Thermo Fisher’s arms. When it comes to trials and manufacturing, pharma is increasingly competing on speed and cost, so the trend to outsource those elements is likely to continue, as they race to be first to market with their blockbuster drugs.
For many years the pharma companies were fat and happy. Those days are over, and arguably Thermo Fisher is the GLP-1 of the pharmaceutical industry: helping them become leaner (and more profitable) businesses.
There has been a lot of change on the ground in just two years since my last trip – a new administration has brought a world of tariffs and increasing government intervention, while GLP-1 diet drugs are significantly changing the eating and spending habits of millions of Americans.
What hasn’t changed is that, despite interventional US policy, the US remains home to some of the highest-quality, innovating businesses in the world. And despite the widespread use of weight-loss drugs, American portion sizes remain vast and they still add cheese to eggs for breakfast. So while Thermo might be helping pharma get leaner, two fund managers came back from their trip fat and unhappy.
Look out for more insights from Multi-Asset Fund Manager Will McIntosh-Whyte and Rathbones Asset Management Head of Sustainability David Harrison’s research trip to the US in coming weeks.