Given the above trends, my baseline expectation for 2014 is that capital spending continues to improve, a trend that was already evident in the latter part of 2013.
So why does this matter for investors? To the extent there is even a modest pickup in capital spending in 2014, this should help support U.S. equity market valuations. In terms of specific beneficiaries, I believe capital spending is likely to be led by financial, telecom and service industries. This suggests that technology stocks may be beneficiaries if capital spending begins to accelerate.
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here.
Source: BlackRock research