Rachel Shulman, Author at ARS

The Future Is Not What It Used to Be: Finding Opportunities Amid Global Disorder

Posted on January 18, 2024June 28, 2024 by Rachel Shulman

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Navigating the Complexities of Market
Dynamics in 2024

Executive Summary

Following last year’s strong market performance, U.S. investors should see equity markets continue their upward trend, but it will not be a straight line. The outlook for the next 12 months will likely be determined by the impact of domestic and global politics which will affect the prices investors are willing to pay for current and future earnings of businesses. There remains continuing concern for the protection of purchasing power of the U.S. dollar given today’s levels of debt and deficits. We believe the current investments in technology, defense, industrials, materials, and healthcare companies will be important beneficiaries of this outlook, serving clients well over the next 12–24 months.

Outlook Highlights

Resilient Market Performance

Despite global uncertainties, the U.S. markets outperformed pessimistic expectations in 2023, with the S&P 500 closing the year at 4769.83, significantly above the forecasted 4000.

Key Investment Sectors

Continued investments in technology, healthcare, and defense are expected to yield considerable returns over the next 12 to 24 months.

Geopolitical Influences

The upcoming global political events, including elections in over forty nations, will play a critical role in shaping economic and market outcomes.

Strategic Investments

ARS recommends focusing on companies that are essential to reindustrialization, productivity, and national security, given their potential to thrive amidst market fluctuations.

Our Perspective

The current landscape of high technology adoption and geopolitical shifts presents both challenges and opportunities. ARS’s strategic focus remains on sectors and companies poised for growth despite potential economic slowdowns. By prioritizing investments in industries driving technological advancements and infrastructure development, ARS aims to leverage the anticipated economic shifts to benefit our clients. Additionally, the firm advocates for a careful selection of equities over bonds to safeguard against the declining purchasing power of the U.S. dollar.

Disclaimer

The information provided in this report is for informational purposes only and is not intended as investment advice, or an offer or solicitation for the purchase or sale of any financial instrument. This report is provided on the condition that it does not form a primary basis for any investment decisions. The opinions and analyses included in this report are based on current market conditions and are subject to change. ARS Investment Partners, LLC will not be responsible for any investment decisions based on this report. Please consult with a qualified financial advisor before making any investment decisions.

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What Matters Now: ARS Introducing Advocacy Trust

Posted on December 20, 2023December 20, 2023 by Rachel Shulman

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What Matters Now: Investing For the Next Normal

Posted on November 3, 2023November 8, 2023 by Rachel Shulman

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Transitioning to the Next Normal

Posted on October 13, 2023June 28, 2024 by Rachel Shulman

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Inflation Is Moderating, Cost of Living
Is Rising

The manifold forces driving today’s economic activity and the outlook for the coming period will result in an economy that differs markedly from anything we have experienced. The many forces at work include the return to more historical interest rates, geopolitical fragmentation and attendant dangers, the reindustrialization of the United States economy with leading-edge technology resulting in greater productivity, the climate transition, and a realignment of the world order.

Executive Summary

In the current economic setting, U.S. fiscal and monetary policies face constraints due to high fiscal deficits and political divisions, placing significant reliance on Federal Reserve monetary policy. We are observing three critical shifts: increasing cost of living, a global realignment, and reindustrialization of the economy, which are creating pivotal investment opportunities. Investors need to adapt to a prolonged environment of higher interest rates.

Despite existing challenges, the U.S. economy shows resilience, supported by key fiscal policies such as the American Rescue Plan and the Bipartisan Infrastructure Act. These initiatives, coupled with advancements in technology and strategic national security measures, are expected to continue driving capital into the U.S., sustaining its economic strengths amid global uncertainties.

Outlook Highlights

Geopolitical Fragmentation and Economic Realignment

The ongoing geopolitical fragmentation alongside the strategic reindustrialization of the U.S. economy using leading-edge technology is reshaping productivity and the global economic landscape. These forces are driving a realignment of the world order and creating distinct investment opportunities.

Historical Interest Rates and Fiscal Policy Limitations

We are witnessing a return to more historical interest rates, concurrent with an environment where fiscal policy is constrained by record-high deficits. This scenario compels an increased reliance on the Federal Reserve’s monetary policy, differing significantly from past economic cycles where monetary and fiscal policies could jointly buffer economic downturns.

Market Dynamics and Investment Opportunities

Current market dynamics are shifting, with significant investment opportunities emerging in industrials, energy, materials, and other previously underinvested sectors. This shift is driven by the need to adapt investment strategies to a higher-for-longer interest rate environment, marking a departure from the recent dominance of tech mega-caps.

U.S. Economic Resilience Amid Global Challenges

Despite the challenges posed by global economic conditions, the U.S. economy remains resilient, supported by significant fiscal policy measures like the American Rescue Plan and the Inflation Reduction Act. These policies, coupled with advancements in technology and strategic national security measures, are expected to continue attracting capital flows into the United States, reinforcing its economic strength in the face of global uncertainties.

Our Perspective

As we navigate through the complexities of today’s evolving economic landscape, our analysis suggests that the United States is entering a period marked by significant transitions. These include a shift to more historical interest rates, a reindustrialization with cutting-edge technology, and critical geopolitical realignments. The convergence of these forces requires a thoughtful reassessment of traditional investment approaches.

Our perspective remains that while the landscape is fraught with challenges, it is also rife with opportunities. For investors who can navigate this complex environment, the potential for significant gains is substantial. We advocate for a proactive approach to investment, one that leverages detailed insights into these transformative trends to capitalize on the emergent opportunities they present.

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What Matters Now: Déjà Vu All Over Again: The 1970s or The 1920s

Posted on September 21, 2023October 30, 2023 by Rachel Shulman

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What Matters Now: The Fitch Downgrade, Geopolitics, and the 2024 Election

Posted on August 22, 2023October 18, 2023 by Rachel Shulman

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What Matters Now: Today’s Turbulence Requires a Fresh Investment Approach

Posted on July 25, 2023October 18, 2023 by Rachel Shulman

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Today’s Turbulence Requires a Fresh Investment Approach

Posted on July 25, 2023June 28, 2024 by Rachel Shulman

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Navigating Through Unprecedented
Global Challenges

These are turbulent times as evidenced by significant bank failures, an attempted coup in Russia, ongoing tensions over Taiwan and trade, and the debt ceiling debacle in Washington, DC. The combination of the COVID-19 pandemic, the war in Ukraine and the resulting geopolitical, social, and economic problems along with the challenges posed by climate change and the introduction of generative artificial intelligence (AI) has created one of the most interesting and complex investment landscapes we have witnessed.

Executive Summary

Global disruptions in commerce and economic distortions due to policy responses are reshaping investment landscapes. Highlighted in our January 12th Outlook, the significant rise in the cost of living, the realignment of the global order, and the reindustrialization of the global economy are defining key investment opportunities for the next decade.

Investments in the real economy, encompassing goods and services, are critical. This period, shaped by decarbonization, deglobalization, and remilitarization, ushers in a new era requiring strategic adaptation.

Decades of governmental investment neglect are being countered by targeted fiscal policies and unprecedented monetary resources. The Chinese government’s diminished role as a global growth driver underscores the need for investments in essential sectors like national security, technological and industrial leadership, clean energy, and healthcare technology.

The U.S. remains a prime destination for foreign capital, reacting to new legislations like the Inflation Reduction Act and the CHIPS and Science Act, which have stimulated approximately $470 billion in recent private sector capital expenditures.

Outlook Highlights

Investment Opportunities in the Real Economy

The investment opportunities in the real economy, encompassing goods and services, rather than just the financial side of economic activity, are particularly noteworthy. It’s crucial for investors to avoid assuming that this period resembles past ones, as our world has significantly changed in just a few years.

Fiscal Policies and Monetary Resources

The multi-decade neglect by governments in required areas of investment is being reversed by new and targeted fiscal policies. At the same time, we never had the degree of monetary resources in the system that we have today. This is a notable shift from previous periods.

Shifts in Global Leadership

One notable difference is that, unlike previous periods, this time the Chinese government cannot be counted on to drive global growth as it had in the past. We believe that investors should focus on the strategically vital economic segments that governments are targeting for required spending.

U.S. as a Magnet for Investment

The U.S. has been, and remains, a magnet for attracting foreign capital. Although we have written about these shifts since November of 2020, they have become the reality as money from all levels of government enters the economy, and corporations react to new legislation.

Our Perspective

The multi-decade neglect by governments in required areas of investment is being reversed by targeted fiscal policies accompanied by an unprecedented influx of monetary resources. Investors are urged to recognize the significance of these shifts, which are redefining investment paradigms. The traditional reliance on certain global economies to propel growth is diminishing, notably with the reduced role of the Chinese government as a previously dependable growth driver. Instead, a more diversified and strategically focused approach is becoming essential for capturing value in a world where economic and geopolitical landscapes are rapidly evolving.

By embracing these changes and understanding their profound implications, investors can navigate uncertainties and identify opportunities that others may overlook. This perspective is what guides our approach, aiming to ensure that our clients are not merely reacting to global changes but are steps ahead in aligning with the emerging economic order.

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