Merrill hæfter sig ved, at nedgangen i kapitalinvesteringerne i amerikansk økonomi slet ikke var så store under coronakrisen som under finanskrisen. Desuden er der kommet et hurtigt opsving i den seneste tid, især i teknologisektoren. Merrill fastholder en overvægt i sine anbefalinger inden for virksomheder, der investerer i cloud computing, digitization, cybersecurity, artificial intelligence and the Internet of Things (IoT). Merrill tror også, der kommer et opsving i investeringer i mindre og mellemstore virksomheder.
Cultivating the Future Economy
The strength in the auto, manufacturing and housing sectors
is an important feature of this recovery because the goods part of the economy is relatively more important for overall CAPEX than services, which could continue to be hit relatively harder by the pandemic.
There was not a recession in consumer spending on goods, which muted the impact on CAPEX. Even as the way consumers purchase goods (increasingly online) changes, the strength in consumer goods spending will likely lead to
higher levels of business spending through the “accelerator effect.” Housing in particular is currently booming.
The monetary policy boost that supported goods spending is here to stay and will be an important pillar for CAPEX through 2021, providing support through a number of channels. Directly, firms are seeing lower new issuance borrowing costs and are also refinancing debt at lower rates.
From a corporate margin perspective, lower interest rates combined with labor market slack will help boost margins and free cash flow generation, making room for CAPEX.
While rates are low, the data are not all positive on the financing front, however, as commercial banks are tightening standards for commercial and industrial loans to both large and small businesses.
The pandemic also highlights the growing role technology spending plays in overall U.S. CAPEX. Technology spending drives the trend in U.S. We expected technology spending to continue to lead the way and gain share, and the pandemic has served to accelerate that process.
Economists have long noted the muted cycles in business investment spending on technology, and this time was no different. While the coronavirus had some negative impact on activity, on both the demand and supply chain sides, the existing trends in cybersecurity, cloud computing, digitization and artificial intelligence remain in place and are the driving force in the bulk of tech spending on software and research and development.
There was not even a recession in the more cyclical technology spending
on hardware this time around, as the pandemic fueled demand for technology- and productivity-enhancing investments to facilitate work from home and virtual education solutions, for example.
Looking ahead, surveys of capital spending expectations seem to be improving both here and abroad. The National Federation of Independent Business (NFIB) small business survey is showing that firms have pared back spending the in last six months but future plans for spending are increasing.
This suggests pent-up demand among small businesses in the U.S. Regional Fed manufacturing survey data are also showing a pickup in CAPEX
expectations components. The domestic CAPEX cycle is also influenced by global factors, and the data are mixed, but with a positive tilt.
Economic policy uncertainty is on the rise as the U.S. approaches the presidential election, but rather than stifling investment, there could be a pull-forward of business investment underway as companies, investors and economists digest the potential for a change in the political environment.
Higher corporate taxes would likely have a significant negative impact on earnings and after-tax margins. On the other hand, there
is upside for CAPEX-related stocks if large-scale infrastructure spending is pushed through this year or next, and the election result in and of itself (regardless of who wins) should provide enough clarity for some businesses to pull the trigger on projects.
Overall, the CAPEX decline related to the coronavirus-induced recession was shallower than most expected, and the recovery has been quicker. New orders for core capital goods are running at a 35% annual rate over the last three months, the fastest pace since 2011, signaling continued strength ahead. Not surprisingly, BofA Global Research expects 50% real growth in business equipment spending in the third quarter, followed by positive gains through the end of 2021.
From a strategy perspective, this is considered a positive backdrop for industrial capital goods stocks and technology.
We remain overweight the technology sector, favoring industries and themes tightly linked to the U.S. CAPEX cycle like cloud computing, digitization, cybersecurity, artificial intelligence and the Internet of Things (IoT).
Industrial capital goods stocks are also historically a “tried-and-true” way to get cyclical exposure in an economic recovery, and S&P 500 capital goods stocks have slightly outperformed the overall S&P 500 since the market
bottomed in late March.
Consider capital goods companies with domestic sales exposure until there is more clarity and consistency in the global data.
