Merrill Edge Bank of America Corporation 3 Trends Changing Our World

Transcription

1 Merrill Edge Bank of America Corporation 3 Trends Changing Our World Chris topher Hyzy, CIO, U.S. Trust Bank of America Private Wealth Management (Recorded on August 14, 2013) Hello I'm Chris Hyzy with U.S. Trust. One of the most transparent themes around the world in the last few years and what we believe over the next few decades is the rebalancing of global growth, mostly driven by the massive change in demographics around the world. There are three main areas that the demographic change is impacting right now. [GRAPHIC] The World s Changing Demographics ` 1. Population shifts 2. Scarcity of resources 3. Growing economic influence of women (Source: U.S. Trust Investment Strategy Committee) The first is population, that is aging population in a developed world and the youthfulness in the emerging world which is leading to a big rise in the emerging market middle class consumer. The second area is the scarcity of resources. And then lastly is the growing economic influence of women. Not in the United States, but all around the world. The Global Population Shift One of the bigger catalysts out there right now is the massive population shift that is occurring. [MAP GRAPHIC] The Aging of the Developed World* In 2010: 1

2 Median age was 38 By 2030: 2 Median age could reach 43 By 2030: 20% of the U.S. will be over 65 *Includes the 34 member countries of the Organisation for Economic Cooperation and Development (OECD) Source: OECD; National Intelligence Council s Global Trends 2030 report, December 2012 The median age of the population in the developed world led by the U.S., Germany and Japan is somewhere in the mid 30s and that is going to increase significantly. In fact, in the United States in the next couple of decades 20% of the population will be above the age of 65. When you take a look at that and couple that with what's going on in the emerging world, the rising incomes particularly in the emerging markets led by the middle class consumer, the needs and wants that they have will likely change. That is durable goods needs, the access to content, the access to other entertainment, the internet build out in certain countries that still do not have it. When those needs start to change habits change, diets change, consumer spending patterns, and healthcare needs change as well. In fact, we believe the healthcare build out in the emerging world is one of the greatest investment themes we could see over the next decade or two. The Growing Demand For Resources The pressure on our resources is growing by the day and it's not just energy although energy is a major component of it. It is our water. It is our agricultural commodities. These areas will in and of themselves undergo a significant change and a key component of that is the population shift. The Rising Empowerment of Women When you take a look at the United States and the changing nature of social norms outside of the United States the female labor participation rate is on the rise. There is a direct correlation between that rise as well as economic growth. This leads to changes in education, educational services, overall changing nature of 2

3 workforce hours and that directly leads into an overall level of higher education, particularly at the youth level and the infant level as they start to mature, their incomes rise and it changes the entire nature of consumer spending patterns. What Should We Make Of These Changes? So what does all of this mean for us? There are massive changes going on, and all of this leads to a very large opportunity set. Global demand for health care will increase, particularly where populations are aging The healthcare system around the globe will certainly be impacted by a lot of these demographic changes, particularly the aging nature of the population. As that continues and people continue to live even more productive lives longer and longer the spending patterns on healthcare are going to rise. But at the same time that means that rising nature of R&D, research and development, is also going to rise and that leads to further advancement of our healthcare system. When you take a look at the consumer spending patterns that we all go through, whether it is travel, leisure, entertainment, the management of content, the social changes that are going on, the behavioral changes; Increased consumer spending leads to growing need for data storage and access All that leads to the growing need for storing data, access to data and the ability to make that access very seamless. That is going to hit directly on the entire mobile system that the globe works off of, whether it is in the United States or in other countries. Big transformation in energy could be from oil to liquefied natural gas The last area that is likely to be affected is energy. The big transformation is likely to be from the hydrocarbon world, in other words oil, right into what we have here an abundance of in the United States, liquefied natural gas. What this will likely do is create a whole new export market for the United States to other areas of the world that simply do not have accelerated access to these natural resources. We have gone through these massive shifts before. What is different this time at the heart of it is the big change in demographics. 3

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