I’m writing to you from New York following a week of meetings with companies, investment banks, analysts, strategists, fund managers and executives.
The timing of the trip coincided with a bout of heavy volatility breaking out on Wall Street, largely as a result of the trade dispute. It’s helpful to be on the ground to understand what is driving such volatility and whether it provides another buying opportunity in leading US equities or it’s something more serious.
The US has the largest, deepest and most important equity markets, supported by the incredible wealth that has been created over the past century. I was reminded that US investors have a clear home bias for where they allocate their capital. The pro-business Trump Administration and a market friendly Federal Reserve add to reasons why the outlook for US equities is constructively optimistic. These arguments are tough to dispute at the current juncture. By all accounts, the US economy is still expanding, with full employment, rising wages and increased capital spending by corporations. Very few experts I met with expected a recession in the near term and most subscribed to a form of “goldilocks “ view of moderate growth and sustained low inflation for the next 12 months.