Weekly View - Life on Venus?
Last week saw multiple forest fires raging in California, Oregon and Washington state, one of a record five simultaneous Atlantic hurricanes making landfall in Florida, and even a ‘Medicane’ threatening Greece. As these events occur with greater regularity it is worth restating that climate change is a fundamental investment theme for us – all the more following Ursula von der Leyen’s explicit linking of “NextGenerationEU” funding to increased ambitions for cuts to carbon emissions. Coincidentally, in the same week as these storms and conflagrations, the potential for life was found in the atmosphere around Venus. It is perhaps too early to pack our bags, but maybe one day climate crisis will generate alternative investment opportunities now barely imaginable: consider, for example, the prospects for certain high-profile companies as they continue their ambitions in space?
The flotation of cloud data storage company Snowflake was a runaway success. All this in spite of a further tech sector correction—possibly a result of retail investors following Warren Buffett into the stock at the expense of their existing tech investments. But while excitement is understandable, and the success of Snowflake provides encouragement, we believe that keen selectivity is critical in evaluating tech IPO prospects.
Last week’s meeting of the Fed did little or nothing to clarify forward guidance on rates, leaving markets disappointed. Nonetheless, with uncertainty growing around the US elections, we expect the Fed to be a valuable support for the market in the coming months, increasing its asset purchases in Q4 if the economy continues to slow and a significant fiscal boost is not forthcoming. In Asia, the Chinese recovery continues, with upside risk to our 2020 growth forecast. We remain positive on China, and on northern Asia in general—yet we are also aware that the impressive rebound in Chinese exports (up 9.5% year on year in August) is vulnerable to slowing momentum in Europe and North America and rising coronavirus concerns in these regions.