One of our enduring themes for several years now has been the unfolding capex revival. While there have been a few false starts for the manufacturing sector, which has been in recession for the better part of three years now, we think a recovery is finally gaining traction. In the equity markets, this should be increasingly reflected across a broader group of industrial companies. We view this as a structural revival that is being supported by four key pillars—a tight labor force, an aging capital stock, an innovation boom, and government intervention.
In this Economics Weekly, we outline our key arguments for this structural revival and what has changed over the last year or so, particularly with regard to the policies that the Trump administration is attempting to institute.