Question

Consider the period of greed.  We actually see that Large Companies and Growth Companies outperformed other sizes and styles of companies.  Ignoring the potential spread of COVID-19 (or assuming that the spread could be contained, as happened with PSARS and H1N1 (swine flu)), what economic catalysts are consistent with the market setting new highs, especially in large cap growth companies?  Be sure to fully justify your answer.

Answer 1

Following economic catalysts are consistent with the market setting new highs, especially in large cap growth companies:-

1. Reliable IP protections promote a strong U.S. economy

The U.S. biopharmaceutical industry depends on predictable and reliable intellectual property (IP) protections, including patents, to maintain its role as the global leader in biopharmaceutical innovation. While these strong IP protections promote innovation and pave the way for the research and development (R&D) of new medicines for patients, they also have a tremendous impact on the U.S. economy.

Here is a snapshot of the industry’s significant economic footprint in the United States, by the numbers:

• $1 trillion. The biopharmaceutical industry supports more than $1 trillion in U.S. economic output annually, including the direct output of the sector, the output of its vendors and suppliers and the economic activity of its workforce.
  
• 4 million. Because of its large supply chain – which includes companies in industries ranging from construction to scientific and business services – U.S. biopharmaceutical jobs have a high multiplier effect. As a result, the industry supports more than 4 million jobs across America’s economy.
  
• 6 million. A recent study finds that intellectual property-intensive manufacturing industries have an outsize positive impact on the economy and support 57.6 million American jobs.
  
• $54.7 billion. In 2018, U.S. biopharmaceutical R&D and manufacturing generated $54.7 billion in exports.
  
• $43 billion. The overall economic impact of company investments in U.S. clinical trial sites – which includes the ripple effect of expenditures by clinical trial vendors and contractors and spending by industry and vendor employees – totals nearly $43 billion in economic activity in communities throughout the U.S.

2. Telecom and E-Commerce

• The U.S. is a global leader in the information and communication technologies services sectors, with exports and foreign-affiliate sales totaling nearly $300 billion in 2016.
• Greater trade in this sector help U.S. economy grow, and promote global economic development as the use of information and communication technologies increases countries' abilities to promote innovation, to improve productivity, and to lower transaction costs

3. Overseas investors-Hidden $7.7 Trillion Catalyst

• While Wall Street tends to focus almost exclusively on the attitudes and trading patterns of U.S.-based investors, a surge of buying from overseas has been an overlooked source of strength for U.S. stock prices. Holdings of U.S. equities by foreign private investors reached a record high of $7.7 trillion in July, more than double the amount in 2012, according to the most recent data compiled by the U.S. Treasury Department, as cited by The Wall Street Journal in a detailed report summarized below.