Labor shortage in 2022 is a demand driver for Technology/automation...
Signs of economic slowing are becoming more prevalent, allaying concerns that the economy is so "hot" that the Fed needs to further accelerate rate hikes. But the unknown is how quickly inflationary pressures abate. As our clients know, we believe goods inflation will decline faster than consensus expects, which in turn alleviates the inflationary upside risks.
And in this context, we believe investors need to balance their concerns of downside risk, with the emerging opportunities. Take a step back and think about what are the key structural fractures becoming highly evident in 2022:
- importance of energy and food security -- USA best positioned. OW Energy
- need to rejigger supply chains to "friends" or back to USA -- USA best positioned
- evidence of labor shortages throughout the world -- raises ROI of "automation"
- on this last point, OW Technology. USA best positioned (leader in technology)
Of the above, financial markets have reacted appropriately. That is:
- USA vastly outperformed rest of world -- our thesis in 2022
- Energy crushing other sectors -- Energy is our top sector pick in 2022
Investors deem Technology "done" but we think Technology demand will accelerate next few years...