BMO Global Investment Forum Summary Report

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Over three days a selection of our investment managers, economists and strategists congregated in London for our annual Global Investment Forum (GIF). The GIF is designed to tune out the day-to-day market noise and focus on key market drivers over the medium term.

Topics and findings included:

The rise of intangibles’

Some of the most successful companies in the world don’t use much conventional capital and often don’t actually produce anything physical. If we look at Facebook, for example, their profitability is based on the intellectual property that drives their networking technology. As ‘intangibles’ grab a growing proportion of the global economy, their almost infinite scalability should drive longer growth cycles.

Inflation in ‘Goldilocks’ territory

The specter of deflation has all but disappeared from the world economy. Inflation is rising in the advanced economies but even in the U.S., pressures remain modest and under control – not too hot and not too cold.

A U.S. recession is not inevitable

The U.S. is well into its second-longest growth phase since World War II and the consensus is saying recession will arrive in late 2020. We disagree. Declining union power and increasing corporate concentration are limiting wage pressures. The rising role of intangibles means that supply can respond rapidly to strong demand without putting pressure on inflation. Indeed, inflationary pressures are mild and the U.S. Federal Reserve is ahead of the game.

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