Observations in International Equities: Boring is Beautiful

Observations in International Equities: Boring is Beautiful

Craig Blessing: Let’s stay away from predictions which could be problematic and maybe do something more useful, which is tell our investors what we think are the things that they really should be watching in 2024, that that might move markets and maybe an area or two where everybody seems to agree on something. And it may be an opportunity because they’re wrong.

Joe Salmond: Yeah, so maybe three things I would highlight that are on my radars this year. Absolutely is an anti-forecast I guess is making up a word there but it’s uncertainty. And the first is geopolitics. We have hotspots in the world right now. An unusual number. We have Eastern Europe, Ukraine, Russia, which could escalate to another level at any moment.

We have the Middle East, which by the time this video comes out, could be a completely different situation or it could calm down equally. And if those areas start to heat up, we’ll probably see more tensions in Asia as global competitors see opportunities there, too, to kind of push boundaries. So, I think that’s one is there’s a lot of risk around that.

The second is the political climate. We have, I think the most national elections globally, the most percentage of the world population voting in a global election this year. And that’s going to have huge impacts both leading into elections as countries try and improve the situation to win votes or afterwards as we see big changes and obviously the big one is the US, which is going to have massive impacts both within the US and across the globe, and that will be the big theme I think of this year.

I think we the market was watching the Fed last year. That was what everyone cared about. I think this year we’ll switch to watching the political cycle. People will try and second guess predictions of who is going to win their campaign promises. And I think that will lead to a lot of volatility.

And then maybe the third one on kind of a different track is, is there a theme that the brain is talking about, which was the theme of 2023, that that was what worked. And I think 2023 was a year where people were able to give the vision of the benefit of the doubt. They bought things up on the possibilities. And I think 2024 may be a year where people want to see results. They want to see that that can be profitable. And I’m a huge personal enthusiast. I probably drive Brian and the rest of the team crazy talking about it.

So, I’m not negative on it, but I think there will be some companies that surprise on the positive side. But there will also be others who, when reality hits, are not as profitable and there will be movement around that as people start to kind of assess the reality.

Brian Burrell:  I’ll do three words Boring is beautiful.

So, expanding on what worked in 2023 and how that translates into opportunities that 2024 2023 was great. You had boring money market funds earning you over 5% and that’s a nice, boring, steady return. Answering 24, we’re debating how many times the Fed is going to cut now. So those returns that you’re going to get in those simple risk-free assets are diminishing.

So, what are we looking for in terms of opportunities in equities? Well, where can we find boring is beautiful companies. You know what? I had a few areas. So, you have companies in the utilities sector, for example, that are producing great income, but also growing that portfolio as we go through the energy transition, they’re building out renewable infrastructure assets and so on.

And so, you get a little bit of growth along with that boring income stream. You know, I’d also highlight some of the consumer staples names. It hasn’t been a popular trail recently because of all the hype around GLP ones, but we’re starting to see some of these consumer staples names like Danone Joe mentioned earlier, come to fairly attractive dividend yield levels.

You also have some of the growth in some of the more attractive areas within like protein centric yogurt foods. So that’s it’s an interesting area where your alternative of cash is getting less attractive. And some of these companies that are actually levered to these exciting themes are producing good income streams and giving you a little bit of growth on top of that.

So, you know, overall, I think boring companies could be pretty exciting.

Craig Blessing: Perfect. Well, thank you, Brian. Thank you, Joe. And thank you to all of you for listening today.

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