After the recent election, my colleague James Norrington provided an update on the tactical asset allocations of the Alpha multi-asset portfolios, highlighting the use of “rules-based protective momentum” in the underlying model to eliminate human biases. However, in the aftermath of the election, behavioral finance aspects have come to the forefront.
President-elect Donald Trump has swiftly announced potential cabinet appointees, including Robert F Kennedy Jr for America’s healthcare agencies. Kennedy’s criticism of the US industrial food system and pharmaceutical industry, particularly regarding vaccines, has stirred controversy. Despite his concerns about big pharma companies, his nomination is likely to face opposition from Washington’s lobbying networks.
Following Kennedy’s appointment news, European pharma stocks like GSK, Sanofi, and Roche, as well as US vaccine developers Moderna, Pfizer, and Novavax, experienced significant declines. However, the hype surrounding the appointment may overshadow the challenges Kennedy will face in reforming the pharmaceutical industry amidst legal complexities.
Kennedy’s criticisms of the US food system align with growing consumer opposition to ultra-processed foods and their health risks, a trend also observed in the UK. The demand for specialty ingredients has surged, presenting opportunities and challenges for agribusiness companies like Archer Daniels Midland and Tate & Lyle. Tate & Lyle recently acquired CP Kelco, a US-based speciality ingredients manufacturer, in response to changing consumer preferences, despite initial concerns about the deal’s impact on the company’s balance sheet.
Speculation about a potential bid from Advent International for Tate & Lyle suggests growing interest in the food market segment. This could lead to increased attention on companies like Treatt, a producer of natural extracts and ingredients, as larger players seek to enhance their product offerings.
The evolving landscape of the food and pharmaceutical industries post-election highlights the importance of staying attuned to market dynamics and regulatory changes. As investors navigate these uncertainties, a balanced and diversified portfolio strategy remains crucial for long-term success.