Opportunities on the Horizon: Investing Through a Slowing Economy

Thematic updates | WEALTH OUTLOOK 2023 | MID-YEAR EDITION | 48 FIGURE 4 : US-Mexico Trade Will Continue to Increase 0 2 4 6 8 10 12 14 16 18% 75 80 85 90 95 00 05 10 15 20 US trade with Mexico as a share of total trade Share of total Trade Source: Haver Analytics as of May 2023. Cybersecurity is another high-quality subsector that may benefit from larger defense budgets. We look for companies that are focused on the privileged access management space and those specializing in the proactive identification of cyber threats and marketing corporations. Demand for these services is expected to stay strong as chief information officers make cyber defense a bigger priority ( FIGURE 5 ) . Both defense and cybersecurity both stand to potentially benefit from the long-term repercussions of a G2 polarization as the US and its allies dedicate more resources to national security. Before the Ukrainian/Russian conflict, investments in defense were focused on drones and advanced communications, but now countries are spending more on aerospace and defense. We look for companies that are part of the defense supply chain, such as makers of instrumentation and digital imaging, as well as companies with existing demand from the US and its allies, such as Germany and members of NATO. Even if the balance of power oscillates in the White House or chambers of Congress, the stance of more protectionist trade will be steady. We are intent on seeking to identify the industries that may benefit from the inevitable “high fence” the US will put up to keep others out in this increasingly polarized G2 world.