Grandfather, how could you have missed the internet of things when investing during the Golden Days?”, your granddaughter – or great-granddaughter, for that matter – might ask you in 2040. “Sorry, dear, I was busy with the Covid-19 pandemic, Trump, and the Brexit negotiations back in 2020.” “Covid-19, Trump, Brexit – what are you talking about?!”
- What if the year-end rally has already started? Yet investors are busy with rising infections, US elections, and Brexit.
- The 5G theme is a common denominator for short- and longer-term trends.
With hindsight, and painful as it may seem, there may be things that matter more than what the news channels bombard us with on a daily basis.
Our technical analysts claim that the year-end rally has already started. This is in starkest contrast to all the concerns out there around the three topics mentioned above. Yet the measures currently in place to contain the pandemic are nowhere nearly as stringent as they were six months ago – and the political consensus is against reverting to such levels. Then the ‘blue wave’, i.e. a landslide win by the Democrats, is becoming a serious possibility. We highlight the boost in US consumption that this would bring in 2021, and particularly in 2022. Lastly, the Brexit saga is set to drag on further – unless a no-deal or hard Brexit happens soon. That, however, would be the best-advertised disruption of the past 20 years. At least the customs officers on both sides of the English Channel have had more than four years to prepare – so have global investors.
We assume there are plenty of investors out there who do not believe that the year-end rally has already started. We therefore looked for a common denominator that ties the short- and long-term trends. We think that 5G fits the bill; the rollout is happening right now. Beyond the chipmakers and equipment manufacturers, there are a whole bunch of corporates that will benefit from abundant connectivity. A blue wave would trigger further massive investments by the US government into digital infrastructure. Hard to connect this to the Brexit topic? Perhaps, but remember: no country is an island for the internet of things – not even a splendidly isolated United Kingdom.
What is going on in the markets? Julius Baer’s experts share their views.