The markets have had somewhat of a bumpy ride this year amid all the tariff-related uncertainties. However, there may still be pockets of the market where opportunities are knocking.
In an interview with Hedge Fund Alpha, the legendary investor and former U.S. Secretary of Commerce Wilbur Ross shared the areas of the market he’s most bullish on - and why the Magnificent Seven may lose some of their luster.
Bullish on hydrocarbons
He believes global trade will rise at a much slower pace in the next six or eight years versus where it has in the past. Global trade had been growing faster than the global economy, but Ross doesn’t think that will continue, mainly because of what the U.S. is doing directly and because of what’s happening to other countries, especially the U.S. ability to import from China.
“I think we're going to be looking at slower economic growth overall, and that probably does not portend well on a global basis for the mature industries, but industries like automotive ones like that that don't have a huge secular growth trend,” Ross said. “But I think where there is going to be pretty clearly increasing demand is going to be for hydrocarbons, and so I'm very bullish on the hydrocarbon sector.”
Ross includes both hydrocarbon producers and companies that make the equipment used for its extraction. He called attention to the International Energy Agency’s forecast that global supply of hydrocarbons will outstrip even world demand in 2025, with the implication being a little lower.
However, Ross thinks U.S. shale producers can continue to do well as long as prices stay noticeably above $60 a barrel. He added that the Gulf countries can do well even at lower prices, so he thinks the outlook for hydrocarbons is clear.
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