Our team believes that within the next six months industries will start breaking the trend. A 3% reduction in numbers can result in a 30+% reduction in share prices.
The influence of politics on the market
Politics is a bit of a wild card when it comes to the markets, but it often has less influence than we might expect. One would expect the terrorist attacks, threats of nuclear war and extreme weather events experienced recently to have a negative effect on the markets. This would have happened in the past, but today’s markets seem to be more resilient. An initial knee-jerk reaction may occur, but it usually doesn’t last. We believe this is a temporary rotation.
Industries that look strong over a long period
Some industries look strong over a long period of time. Banks have rallied, and we believe they will continue north.
The huge impact of the Texas and Florida hurricanes and the California fires will drive years of construction and infrastructure spending. We expect increases above 2+ % a year as companies start to benefit from ongoing work in rebuilding infrastructure and private homes. (There is already a 4-year backlog when it comes to the rebuilding of homes in California!).
