Tectonic Shifts are slow moving secular trends that impact markets over long periods of time. Investors should be aware of these catalysts for growth which impact markets in ways that may not be self-evident but could result in costly errors when they are ignored. Global Perspectives Tectonic Shifts include ongoing developments in energy, global trade, technology and frontier markets.
Tectonic Shifts: Trends in the Real Economy
Economic growth fuels demand for imports, aggravating the trade deficit, which plummeted in the great recession as demand dwindled. Exports have faced headwinds even as the U.S. dollar has weakened.
Abundant natural gas in North America and the ability to extract oil from shale are changing the global energy landscape. The IEA recently forecast that the U.S. will be the world’s largest oil producer by 2020.
Frontier countries are emerging markets with lower capitalizations and less liquidity. Although volatile, they offer high growth potential and are fueling global growth as they evolve and mature.
The shale oil and gas revolution has made energy cheaper for U.S. manufacturers and spawned many high paying jobs. The recent drop in oil prices has caused the energy sector to cut back.