It is hard to believe that mid-year 2020 is upon us. Many of us would love to forget the first half of this year in hopes of more positive news in the second half. Portfolios have made gains from their March low points, but more is needed to fully restore those high-water marks that were set in February. Our investment partner, Abbot Downing, held a second-half outlook call last week and I found it very informative. I want to share their five investment themes to watch as 2020 marches on and 2021 stares at us in the future …
1. Consumption patterns will change.
The market will favor companies that add value and bring convenience. You are seeing this play out in everything from fast food deliveries to increased sightings of Amazon trucks. Within this theme, you will also see Americans begin to spend less and save more. This happened briefly after the 2008 Financial Crisis and we are seeing it again. Americans are concerned about many things on many fronts, and may hold the purse strings a bit tighter.
2. Business impact matters.
How can companies add flexibility while maintaining efficiency? Companies large and small will be looking at this and our own foundation is thinking of doing our business in new ways. Corporate office space will shrink and business travel will decrease. A new phenomenon will also start to reveal itself – onshoring. This will be especially true of supply chain items and critical needs (like medicine).
3. The COVID-19 pandemic will intensify global stress.
Emerging market countries with less capital will really pay in the fallout of this virus. China and US tensions are not going away and income inequalities may show themselves more negatively.
4. The government influence on the economy will matter (positively or negatively).
We have the potential for lingering high unemployment. The skills gap for needed workers is also an issue. The US continuing to borrow money without ramifications can have a downstream impact. The more this theme rears its head the more we start to see a loss of FED independence too. Stay tuned on this one.
5. The question of healthcare.
Last, but not least, number five is all about healthcare. Will resources be added where our system falls short? We will see the government control more and mandate increased supply stockpiles. Will we see new money for research and development? Let’s all hope so.
I hope you’ll take time to review the entire report.
I pray that you have a safe, healthy, and restful Fourth of July and may your second half of 2020 be blessed …