Is Middle America the Next Big Emerging Market?

Top economist Nancy Lazar and top strategist Francois Trahan, who recently teamed up to form their own macro-focused firm, are finding opportunities in a new ’emerging market’ you might be overlooking: Middle America. Lazar tells WealthTrack’s Consuelo Mack that “U.S.-based industrial companies” are her top place to look for investments right now, because she expects them to benefit “not only from potentially stronger domestic revenue growth but also the potential for mergers amongst them and/or international investment which is just starting to happen. … I think internationally you’re going to see some of these larger industrial companies see this opportunity in the United States very similar to what happened in the emerging world over the past 15 years, but instead of buying companies in China or India, they increasingly buy companies, the small and mid-cap stocks … in the United States.” Companies are now attracted to the U.S., she says, because America — for all its political shortcomings — offers a good deal more stability than emerging markets, as well as lower interest rates than EMs. She is optimistic about the U.S. jobs outlook, thanks to the manufacturing and energy sectors, and expects slow to moderate growth with low inflation, which will keep rates lower than normal. Trahan, meanwhile, talks about the unique nature of the American consumer driven economy, and what that means for the relationship between inflation and price/earnings multiples.