If the United States of America did not exist, it would be necessary to create it. For without America, the world would not be what it is.
America remains the unashamedly capitalist dynamo of the world economy. It is the chrysalis of newly emergent technologies that will continue to change the way we live. It is the home of literally hundreds of corporations which are global benchmarks in their field.
America has problems, to be sure. Deep social cleavages along racial and (yes) class boundaries make for tension and dissent, often expressed violently. In a fabulously rich country there are alarming pockets of deprivation. Its infrastructure, largely built in the 1930s and 40s, is in need of renewal. America’s ability to enforce its will overseas by military means alone is probably in decline. The rural white middle classes in the States Between (that is between the East Coast and California) feel left behind and unheard. And Washington under President Trump has become another problem rather than the provider of solutions (as I recently explained).
But, for all that, America is upbeat. Having travelled from sea to shining sea during October, this month I offer American opportunities in the shape of US corporations that have impressed me along the way. Join me for an incredible journey through corporate America.
American History – Ever Present
Europeans did not discover America – it had pre-existed for uncounted millennia – they just stumbled across an arboreal paradise, inhabited by highly civilized peoples who knew how to live in harmony with the land. But eventually, the opportunities that America offered its newly arrived European inhabitants became the crucible in which to think bigger than in the lands they left behind. They created a state dedicated to the propositions that human beings were essentially free, and that they could dedicate their lives to the pursuit of happiness – and wealth.
In this continental state they could leave behind the tutelage of repressive religion, land-owning tyrants and unequal laws – or so they believed. The enlightenment idea that all men are inherently equal (in the sense of deserving equal treatment – rather than in equality of outcomes) first found form in constitutional law. (Though the American judicial system drew heavily on English common law.)
Americans are never permitted to forget the unique mission for which their country was founded. In Europe, history often seems an academic field of study; in America the current urgency of America’s past is constantly proclaimed in a million statues, monuments and memorials which speak of the long and often painful journey that America has undertaken in order to be what it is. Americans are instinctively optimistic and forward-looking precisely because they are constantly reminded of the lessons of their history. For that reason, there is no sterile debate about the role of the market or the future of capitalism as there is in Europe: Americans know that only the market system ensures prosperity.
American Economics
The US economy is growing at a clip of around 3 percent per year[i]. More people are in work than ever before. Corporate profits are bearing up. Wages are rising modestly. Inflation is under control. The stock markets are in record territory.
This good economic performance is partly export led: Europe, Japan and the emerging markets are growing strongly this year in a synchronised global recovery – the first for a decade. Corporate America posted a ten percent increase in profits in the first half of this year, although the rate of profits growth slowed to 4.4 percent (annualised basis) in Q3. Of the 45 companies in the S&P 500 Index that have reported earnings in October, 36 have exceeded market expectations[ii].
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Borrowing costs around the world remain low – although the Federal Reserve has signalled that another rate rise could occur further to its December meeting. That has already been discounted by the US markets. The package of tax reforms promised by the Trump administration could further buoy the markets. Goldman Sachs has signalled a 65 percent probability that some substantial tax package will get through Congress by early 2018 – in which case it reckons the S&P will put on a further 2.5 percent.
American giants which sell abroad like Boeing (NYSE:BA), Apple (NASDAQ:AAPL) and McDonald’s (NYSE:MCD) are benefiting from the tail wind of a weaker dollar and strong growth in their major foreign markets. Corporate America is humming.
American Retail
If the English are a nation of shopkeepers, the Americans are a nation of shoppers. Nowhere else is the power of branding, the efficacy of marketing and the dominance of the retail sector so preponderant.
Despite the advances of the internet shopping behemoths led by Amazon.com (NASDAQ:AMZN), urban Americans still love department stores. Walking down Fifth Avenue in New York one encounters the same big-surface large-window iconic names as in Chicago’s Magnificent Mile and San Francisco’s Union Square: Macy’s (NYSE:M) (which also owns Bloomingdale’s) and Bergdorf Goodman (owned by another icon, Nieman Marcus (private)) are just two.
In contrast, Americans generally buy groceries in out-of-town large-surface units. In city centres small convenience stores flourish, many of them privately owned. One of the largest convenience store chains in the USA is the Japanese-owned 7-Eleven (ultimately owned by Seven & I Holdings Co. (TYO:3382)). The US markets seem to have taken against conventional retailers even though they are still patronised by hundreds of millions of Americans. This negative sentiment may have been overdone.
Four American bricks and mortar retailers which may be undervalued
Macy’s Inc. (NYSE:M). The very word “Macy’s” is synonymous for most Americans with high-end department stores. The Union Square outlet in San Francisco is the largest department store in the USA with a massive food court in the basement. In New York, Macy’s is the biggest department store on Fifth Avenue. Be aware that Macy’s shares have bombed over the last year, falling from around $44 in October 2016 to $21.30 today on the back of disappointing earnings data. Seeking Alpha now thinks that Macy’s, which has a P/E half that of rival Nordstrom (NYSE:JWN), could be a buying opportunity.
The Kroger Company (NYSE:KR) owns some of America’s biggest supermarket brands. For example, in Colorado, Kroger owns and operates the City Market large-surface supermarket chain. 2016 revenues were $115.34 billion, making Kroger the second-largest general retailer in the USA (behind Walmart (NYSE:WMT)) and the twenty-third largest company in the United States. Kroger is also the third largest retailer in the world and the second largest private employer in the United States. Kroger operates 2,778 supermarkets and department stores. Kroger’s headquarters is in downtown Cincinnati, Ohio. It operates supermarkets and other store formats in 34 states, including 786 convenience stores and 326 jewellery stores. Kroger operates 37 food processing facilities, 1,360 supermarket gasoline (petrol) stations and 2,122 pharmacies. In October Kroger announced plans to sell off its convenience stores.
Albertsons Companies LLC is an American grocery company founded and based in Boise, Idaho. It is privately owned and operated by investors including Cerberus Capital Management LP. With 2,200 stores and more than 250,000 employees, the company is the second largest supermarket chain in North America after Kroger. Before its January 2015 merger with Safeway Inc. in a $9.2 billion deal, it had 1,075 supermarkets located in 29 US states under 12 different banners. Its predecessor company, Albertsons Inc., was reorganized as Albertsons LLC and sold to AB Acquisition LLC (a consortium put together by Cerberus). After buying back the majority of its former stores it sold to SuperValu in 2006, AB Acquisition changed its name to Albertsons Companies Inc. in 2015. Clearly, there has been a lot of financial engineering going on here. I would not be surprised to see Albertsons re-emerge on the US stock market in due course.
SuperValu (NYSE:SVU) which has its HQ in the Minneapolis suburb of Eden Prairie, Minnesota, has been in business for nearly a century. It is the fifth largest food retailing company in the United States, and ranks in the top 100 on the 2015 Fortune-500 list. In June 2006 Albertsons Inc. sold 1,124 of its stores to SuperValu. In January 2013, SuperValu announced it was selling all remaining Albertsons stores to Cerberus Capital Management for $100 million in cash with Cerberus assuming $3.2 billion of outstanding debt. SuperValu would keep its Cub, Farm Fresh, Shoppers Food & Pharmacy, Shop ‘n Save and Hornbacher brands as well as its wholesale supply operation. Over the past year the shares have fallen from around $30 to $16 because of falling sales figures, although it remains highly cash generative. Stock News Gazette thinks that SVU looks cheap.
American Media
Just as one learns about the state of an economy by the condition of its shops, one also gets insights from watching TV and reading newspapers. For anyone visiting America from Britain, watching American TV engenders a sense of déjà vu. The Apprentice is a favourite on both sides of the Atlantic, though arguably Donald Trump has done better out of the American version than Lord Sugar has done out of the British variant. My favourite programme in the UK, Dragon’s Den, morphs into America’s Shark Tank – though the American sharks are even harder-nosed than the British Dragons.
Antiques Roadshow is a facsimile of the British format, though normally filmed indoors without the grand country house backgrounds. By the way, Americans have very classy antiques in their attics. Then there are the innumerable property shows which owe much to Location, Location and Under the Hammer.
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Naked and Afraid is a blend of Love Island and I’m a celebrity Get Me Out of Here – though more informative (it features dieting advice). It also has more tension: the naked couples keep swimming (quite needlessly) through shark-infested waters…Will they make it? Much of America’s homely day-time TV output relies on UK-inspired formats (not that Americans know that) – and let’s not even talk about talent shows. Where the Americans outgun the Brits is in big-budget original drama. And for this one turns to the cable channels, of which Netflix (NASDAQ:NFLX) is now the dominant player.
America’s newspapers – with the exception of the anodyne USA Today – are all heritage local titles of which the New York Times, the Wall Street Journal (ultimately owned by News Corp (NASDAQ:NWSA)), the Washington Post and the Los Angeles Times are the most famous abroad. These are world-class newspapers which still wield huge clout, even if they struggle to make money. The Washington Post is a trophy asset owned by Jeff Bezos, the Founder-CEO of Amazon.com (NASDAQ:AMZN) via media holding company Nash Holdings LLC.
Call me a British snob if you will, but I find all the American TV news channels equally insipid, flatulent and rebarbative. Not so much fake news as information-light. I wonder why America, with more universities and more Nobel Prize winners than any other nation, puts up with that.
Two American Media Giants – one soaring, one struggling
Netflix (NASDAQ:NFLX) announced on 16 October that it had exceeded its targets for new subscriptions. Headquartered in Los Gatos, California, the company expects to spend $8 billion on original programming next year to entice new viewers to its existing subscriber base of 104 million globally. Its recent hike in subscription fees appears to have been accepted, if not welcomed, by its customer base. The Crown and Stranger Things have been run-away successes with viewers – and Netflix retains ownership of all of its intellectual property. Revenue increased by 30 percent to $2.99 billion in Q3 2017. The stock has gained about 65 percent this year giving the company a market cap of $87.5 billion. The only cloud on the horizon is that some content owners such as Walt Disney Co. (NTSE:DIS) are planning to offer their own streaming services. Rival streaming service Hulu (private) won this year’s Emmy Award for The Handmaid’s Tale.
AT&T (NYSE:ATT) has fared poorly of late. On 12 October the company reported a 90,000 fall in video subscribers in Q3 2017 mainly due to intensifying competition but also because of “stricter credit standards”. The company has also been hit by the string of natural disasters in the US (Hurricanes Harvey and Irma, the Mexican earthquakes and then the California wildfires) which have impacted local employment and damaged assets such as cell phone masts. On the other hand, the rollout of streaming has facilitated cost-cutting. It share price has lost around 30 percent over the last 12 months, but Seeking Alpha thinks that the stock – trading around $34 as I write – looks cheap given the dividend yield at that level of 5.5 percent.
American Finance
On 11 October, a drop in trading earnings at JP Morgan and Citigroup failed to excite Wall Street. Yet the fund managers, led by Morgan Stanley (NYSE:MS) and Edward D Jones & Co. (private), are reporting bumper profits that have put vim back into financial sector stocks.
Three outstanding US finance stocks
Wells Fargo (NYSE:WFC) is the huge American retail and commercial bank which started life back in the 1850s as a stage coach company. It is the world’s second largest bank by market capitalization and the third largest bank in the US by assets. In July 2015, Wells Fargo became the world’s largest bank by market capitalization, edging past ICBC of China before slipping behind JP Morgan Chase in September 2016 in the wake of a scandal which led to sanctions in the State of California. Its shares have more or less flat-lined this year.
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JP Morgan Chase (NYSE:JPM) is currently the largest American bank by assets. It came about by virtue of the merger of the aristocratic wholesale bank JP Morgan with the plebeian retail bank Chase Manhattan in 2000. It was a merger between Old Money and New. JPM’s shares continued to climb in the last week of October, surpassing the $100 mark on the back of positive news flow.
Charles Schwab (NYSE:SCHW) is the omnipresent broker-dealer which permits virtually all Americans to invest in stocks and bonds and to manage their 401ks (US government recognised tax free retirement accounts). Schwab is mostly accessed online but they dispense advice in person at innumerable locations across America. You might term them the Starbucks of American finance. The stock has been powering away during the month of October and is now trading at over $45. The Business Union thinks it is a Buy.
Three Niche US Players in Mature Markets
NCR Corporation (NYSE:NCR) is, amongst many other things, still one of the global leaders in the production of automated teller machines (ATMs) or, as we say in Britain, cash machines. NCR’s ATMs are predominant in the USA and are sold across the world. This is a mature technology with relatively low growth – though there are many countries where ATM networks are still growing and the global replacement or upgrade market is massive. This business line is very cash generative.
Johnson & Johnson (NYSE:JNJ) is another heritage American pharmaceutical, hygiene and consumer products company, founded in 1886, whose products can be found in homes across the globe. Headquartered in Brunswick, New Jersey, the company had revenues of $79.1 billion in 2016 and net income of $16.54 billion. JNJ’s major pharmaceutical products include medicines used for immunology, neuroscience, infectious diseases, and oncology. Incivio (telaprevir) is a hepatitis C protease inhibitor. The group also manufactures medical equipment and aids. As part of its environmental initiative the company has made a foray into solar power at its site at Spring House, Pennsylvania. On 23 October a US judge overruled a previous $417 million verdict against JNJ, which came about when a jury sided with a terminally ill plaintiff who said that Johnson’s baby powder caused her ovarian cancer. The one year share price graph shows steady upward progress with this stock outperforming the market, being about 25 percent up.
Juniper Networks Inc. (NYSE:JNPR) headquartered in Sunnyvale, California develops and markets networking products. Its products include routers, switches, network management software, network security products and software-defined networking technology. The company was founded in 1996 by Indian-American Pradeep Sindhu. It went public in 1999. By 2001 it had a 37 percent share of the core routers market, challenging the market dominance of Cisco (NASDAQ:CSCO). It has more recently been focussing on internet security, which unlike routers (the black boxes that make the internet work) is a developing technology. It had revenues of $4.85 billion in 2015 and net income of $633 million. After a recent sell-off further to a profit warning on 11 October, the shares – currently at $26 – may have been oversold.
Neural Cities (1): New York
The Big Apple is still the swanky capital of American finance, advertising, media, legal services, television and the performing arts. It is in some ways the most European of American cities while remaining the gateway to the American dream, just as it was when the immigrants from the Old World arrived there by the ship-load in the early 20th century. With a population of some 8.2 million people across the five boroughs (Manhattan, Queen’s, The Bronx, Staten Island and Brooklyn) New York is America’s most populous city. And Manhattan, with 1.7 million people, is the most densely populated borough in the USA.
New York is a global must-see destination with possibly the most arresting skyline on Earth, now dominated by the new One World Trade Centre. Wall Street remains arguably the world’s most important global financial market with the HQs of global banking giants such as JP Morgan Chase & Co. (NYSE:JPM), Citigroup Inc. (NYSE:C) and innumerable investment firms. Recently Google (NASDAQ:GOOGL) opened its second global HQ in the city’s financial district.
Five emergent technologies in which the USA has the edge
Quantum Computing (QC). When I first started to write about QC in the summer of last year my sources were confined to academic journals and their popularisers such as New Scientist. Now, everybody in California (well, nearly everybody) is talking about QC. The key is the inter-action between rich and ambitious Silicon Valley companies and America’s top universities. In 2014, Google hired Dr John Martinis from the University of California at Santa Barbara to design its own superconducting “qubits” (a radical advance in computer hardware). It seems that QC has gone from the theoretical to the engineering stage, with Google at the forefront. I’ll have more to report on this soon.
Geo-exploration. At least one American company is working on new ways to find oil and mineral deposits below the surface of the Earth using instruments that detect gamma rays and other forms of radiation emitted from the Earth’s core. At present, this technological advance is shrouded in secrecy but I may be able to shed some light on this shortly.
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Space travel. Elon Musk is regarded as a visionary by much of corporate America. I am told that SpaceX is already making money as a satellite launcher – and that Mr Musk will be launching a vehicle in which investors will be able to profit from its forthcoming Mars programme – which could launch as early as 2024. Admittedly, this may be for investors with long time horizons. This is a space (no pun intended) we shall continue to watch.
Rapid inter-city transport. Elon Musk’s stable of companies has mooted the construction of a high speed underground travel concept called a hyper-loop between Los Angeles and San Francisco. Underground levitating capsules would travel through a vacuum at near supersonic speed. I am told that Mr Musk will soon announce a breakthrough in tunnelling technology, using narrow bore holes. Similarly, on 12 October Sir Richard Branson announced that the Virgin Group will launch a US-based company called Virgin Hyperloop. The technology for Hyperloop One is yet to be commercialised after tests of a prototype at Virgin’s DevLoop site outside Las Vegas. Sceptics point to engineering problems – the capsules will need to maintain a low-pressure environment which will not be suitable for most people. So possibly the technology, in the first instance, could be used to transport essential goods and supplies at very high speeds.
Blockchain. Jamie Dimon, CEO of JP Morgan recently trashed Bitcoin as a fraud that will soon blow up. So did BlackRock Inc. (NYSE:BLK) CEO Laurence Fink. Yet they are still enamoured of the amazing technology that underpins Bitcoin and other virtual currencies – Blockchain. In fact JP Morgan is rolling out its own blockchain programme to secure cross-border payments with Royal Bank of Canada (TSE:RY) and Australia and New Zealand Banking Group (ASX:ANZPB). This trio is provisionally calling the Blockchain payments system the Interbank Information Network. According to the Wall Street Journal[iii] JP Morgan wants to increase the network from three to 24 banks over the next 12 months.
Neural Cities (2): Chicago
Often known as the Windy City, on account of the freezing winds that blow from the North across Lake Michigan in winter, Chicago is America’s third city by population but is the pre-eminent capital of logistics. The city is the child of the railroad revolution that swept across this part of America from the late 1840s onwards. Even today, Chicago is the nexus of all railroads and highways that cross America – and, by extension, its airline industry too. The legendary USA Route 66 begins on the corner of Lake Shore Drive.
In the old days – and still to a lesser extent today – farmers on the Western prairies sent their wheat, corn, hogs, beef and lamb to the vast markets and meat-packers of Chicago. Food-processing, packaging and distribution are still massive industries. So is finance. The Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange (CME) are still the dominant marketplace for commodity futures although they abandoned the open-outcry model recently.
Chicago is a city where architecture is taken seriously and it boasts amongst the most impressive public buildings in America such as the Harold Washington Library and the Chicago Institute of Art. Illinois is a solidly Democratic state which offers a higher level of state-funded welfare to its poorer citizens than other states.
Pizza was invented not in Italy but by Italians in Chicago. Chicago’s pizza-makers like the Gino’s chain (private) are revered – but Japanese, Polish and Chinese food are big here too. Major corporations with their headquarters in Chicago include Boeing (NYSE:BA). Fedex (NYSE:FDX) has a huge distribution centre here though its HQ is actually in Memphis, Tennessee. Walgreens Boots Alliance Inc. (NASDAQ:WBA) is an American holding company headquartered in Deerfield, Illinois that owns Walgreens, Boots (UK) and a number of pharmaceutical manufacturing, wholesale and distribution companies. State Farm, a mutual, is one of America’s largest insurance companies and is based in Bloomington, Illinois. UAL Corporation (NYSE:UAL) which owns United Airlines is based in the Willis Tower in downtown Chicago.
Neural Cities (3): Los Angeles
The Californian city known affectionately as La La Land – the home of Hollywood – has an official population of 3.9 million spread out over an area of 503 square miles (1,300 square kilometres) – a very different city scape from that of New York. But, in fact, LA is just one city amongst a cluster of about 40 – all nestled, cheek by jowl, across the mountain and ocean rimmed bowl that is Los Angeles County and Orange County – amongst the most populous counties in the USA with an estimated 15 million people[iv]. LA and Orange Counties form effectively one enormous conurbation embracing such Spanish-named communities as Pasadena, Pomona, Santa Ana, La Mirada, Alhambra and Santa Monica. Plus the Anglo-Saxon-sounding Long Beach, Huntingdon Beach, Manhattan Beach, Anaheim – and, of course, Beverly Hills.
I had supposed that Beverly Hills was a suburb of LA City – but no, it is a separate city in its own right and with its own mayor. (The mayor is normally either a celebrity or a billionaire as, almost uniquely in America, this one is unpaid.) Downtown Hollywood, despite its evocation of the movie industry, is tatty (except for the gloriously Art Deco Roosevelt Hotel). The Dolby Theatre on Hollywood Boulevard – where the Oscar ceremony takes place each year – is a drab suburban shopping mall. What you see on the TV is a mall draped in red velvet – it is totally fake. Just as the tropical islands off of Long Beach are in fact oil rigs which have had a makeover: artifice prevails – nothing is what it seems. Most American cities have theme parks: LA is a theme park dedicated to the study of itself.
The hundred-million-dollar mansions on Hollywood Heights command a view of an endless garden suburb criss-crossed by jammed freeways; the distant Pacific Ocean obscured by polluted haze. If Hollywood were not infatuated with itself, few celebrities would want to live there. There are so much more salubrious places to live in America.
And yet the dream machine continues. LA is still the navel of the motion picture industry. Fox Studios in LA is part of Twenty First Century Fox (NADAQ:FOXA). The Walt Disney Corporation (NYSE:DIS) is here. Universal Media (part of NBC Universal, a private company) also has its HQ in LA County. Viacom (NASDAQ:VIA) and Time Warner (NYSE:TWX), although with major presences here, have their HQs in LA’s arch-rival, New York City. The Hollywood moguls, after more than a century at this game, still know how to articulate the human condition in an idiom that has universal appeal.
When it rains in LA – that makes the news. But the monster-city sucks water from the Colorado River nearly 400 miles away. October’s catastrophic fires in Northern California are a terrible reminder of the danger of persistent drought.
Neural Cities (4): San Francisco
Imagine a city surrounded by deep-blue water on three sides and covering 74 hills with an invariably perfect Mediterranean climate, offering persistent bright sunshine almost all year round. It has perfect beaches, woodland and extraordinarily beautiful parks and botanical gardens. Imagine further a cultural centre with a world-class opera house, its own symphony orchestra, the second largest financial centre of the USA, the best food of a vast continent and 20 universities, making it one of the modern world’s powerful knowledge-hubs. Imagine the home of a clutch of the most innovative companies on the planet. But – sorry: if you haven’t been to San Francisco you will never know how beautiful it is…
Perhaps its secret elixir is that, defined by nature within limited boundaries, it is small. San Francisco is just twice the area of Manhattan, though has half its population – just 850,000 or so, making it about the 12th largest city in the USA spread across 43 neighbourhoods. Much less famous San Jose, down the road, is bigger with over one million people.
Silicon Valley is not in either San Francisco or San Jose – it is the crescent of tech-driven communities between them: San Mateo, Palo Alto, Mountain View (where Google (NASDAQ:GOOGL) lives) and Santa Clara. Facebook (NASDAQ:FB) is in nearby Menlo Park (next to Stanford University) and Netflix (NASDAQ:NLFX) is in Los Gatos, nearby. Many Silicon Valley workers are chauffeured daily from downtown San Francisco in dedicated company motor coaches – laptops humming as they go.
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Spanish monks got here from (what is now) Mexico in 1776. California joined the Union in the 1840s. The San Francisco gold rush began in 1849 – and the city never looked back. The earthquake and fire of 1906 were devastating – but, in fact, San Francisco has endured four major earthquakes and seven major fires since its foundation. Nowadays, only the Japanese have more advanced earthquake-survival building practices.
San Francisco is belligerently liberal and multicultural. You can see Cantonese-speaking seniors eating dim sum in Chinatown against the backdrop of a rainbow flag. The Russian Orthodox Cathedral is ravishing – but most Russian émigrés are of Jewish heritage. There are more cultural festivals here even than in New York. It is the only city I visited in America which is serious about recycling.
Major corporations that have their HQs here include Pixar, the animation studio; Twitter (NYSE:TWYR) the social media channel beloved of Donald Trump; Apple Corporation (NASDAQ:AAPL), the global paragon of computing and communications technology – Steve Jobs started the business in a garage and many San Franciscans claim to have known him; Wells Fargo Inc. (NYSE:WFC) (see American Finance); and cloud computing supremo Drobox (still private). And, of course, Fitbit (NYSE:FIT) – most San Franciscans, all fitness-crazy, wear its products.
Impressions
After a month in America I am fluent in American. I use sidewalks, elevators and cell phones; I dispose of trash and eat cookies. When people ask me How am I doing, I tell them I am Good – and then bid them Have a nice day. America does that to you – it is so assimilative. It wins you over subtly and imprints its images on your deep imagination. It is impossible not to be affected by its optimism.
I came to America expecting to find a paradox. Namely, that the nation whose constitution proclaims that the objective of life was the pursuit of happiness is itself so unhappy. And it is true that watching America’s current President in action is like watching a slow-motion car crash. (I will have more to say about that shortly.) Yet, I have to tell you that I have observed many more happy Americans than unhappy ones – though poor and homeless people are in evidence. And I observed many more fit Americans than fat ones.
Americans, when they are not aiming at you with semi-automatic weapons, are the most courteous, most helpful, most gracious people on Earth. That is because they are, by and large, incredibly fortunate. And the pioneer mentality – the shared memory of hardship which impels the pursuit of comfort – also makes them amongst the readiest people to adapt to innovation. America will continue to teach the world how to live, work and play for the foreseeable future.
Leaving San Francisco Airport bound for London, I recalled WH Auden’s lines: God bless the U.S.A., so large/ So friendly, and so rich[v].
Action
For a globally balanced investment portfolio, you would expect to have about 16-18 percent of your portfolio allocated to America, reflecting America’s share of global GDP. But because American financial markets are broader and deeper and more liquid than most, you might want that to be nearer to 20 percent. There are countless America-oriented funds available but one that UK investors might consider is the JP Morgan Intrepid America Fund (MUTF:JIAAX) which is up over 16 percent year-to-date.
[i] The Q3 2017 growth data was ahead of expectations. See: https://www.washingtonpost.com/news/wonk/wp/2017/10/27/u-s-economy-grew-3-percent-from-july-to-september-meeting-trumps-goal/?utm_term=.e12aa6411114
[ii] USA Today, Money, page 1B, 18 October 2017. Source: Thomson Reuters.
[iii] Wall Street Journal, 17 October 2017, page B10 – article by Emily Glazer.
[iv] The official population statistics are almost certainly an underestimate.
[v] On the Circuit, found in About the House, 1965. Auden was reflecting on the tendency of literary audiences in remote parts of the USA that he would never visit again to pay him handsomely for his lectures. Sadly, this author received no such emoluments.