Investment Insights Q3 2018
Our latest edition of Investment Insights explores how the US economy is still purring along, why we don’t think Italy’s recent troubles will spread to the rest of Europe, and what the future holds for big tech and big brands
Donald Trump promised to “make America great again” during his election campaign. His presidency has proved controversial and most recently trade hostilities have broken out after his administration pressed ahead with tariffs on steel and aluminium imports. Other countries have drawn up lists of US products targeted for retaliation.
On a recent trip to the US, our head of multi-asset investments David Coombs explored conditions in the world’s largest economy in person. He saw evidence of crumbling infrastructure, yet US companies remain busy and profitable and the
economy is purring, as our lead article explores.
Closer to home, many of Europe’s leading stock market indices have underperformed other global regions. Italy has undergone a period of political turmoil, exacerbating its long-term problems of an ageing workforce, woeful productivity and a banking system hobbled by bad debts. However, we believe the risk of contagion to other European countries is low for now.
We explore the relationship between tech companies, governments and consumers. Now is a time of intense scrutiny for the US technology giants as people begin to consider the level of power they now command. As the world becomes more reliant on technology, we consider when the regulators might step in, as they did by breaking up the huge oil and steel companies of the 19th century.
Meanwhile, Japan remains an unloved destination for many investors. We refute the cliché that it’s “just another false dawn in the Land of the Rising Sun”. Japanese businesses are enjoying strong profits growth, supported by a healthy underlying economy.
In our last article, we consider the relationship between millennials and big brands. Established companies have traditionally been successful investments, but are under threat from newer, more nimble brands, that appeal to shifting consumer tastes. Despite these challenges, some established brands are adapting to this changing consumer landscape, and we believe that talk of the ‘death of brands’ is greatly exaggerated.