Industries Vulnerable and Resistant to Inflation and Recession

When marketing to potential investors, particularly High Net worth Individuals (HNI) and Family Offices (FO) it’s important to understand that they have their own research on what they wish to invest in.  Therefore, it’s important to listen to what they have to say and report back to us so this list can be adapted to their needs.  This is primarily a marketing document to assist us in selling our investments to HNI’s and FO’s and to assist us in deciding which investments to feature.  The drivers of this inflation and potential recession are different in some aspects than before.

• A special note about renewable energy.  While it’s a hot topic politically, the threatened cuts in oil and natural gas production from Russia and Saudi Arabia have created an unusual market situation.  Because of an unexpected artificial shortage and the rise in inflation, the price of carbon-based energy is expected to rise more rapidly than the price of renewables such as solar and wind.  This dislocation is expected to cause the substitution of renewables for carbon-based energy more rapidly than previously expected.  Energy is generally vulnerable to both recession and inflation, but this unusual situation is broadly expected to benefit renewable energy.  ^[1]

Recession

1. Industries resistant to recession:

• 1. Renewable energy
  2. Military
  3. Discount stores
  4. Food:
     • Grocery stores, low end
     • Fast food
     • Frozen pre-packaged food
  5. Beverages, low end
  6. Alcohol
     • Exceptions:
       • Top shelf and specialty alcohol sales fall
       • Upper-end collector wine brands current sales suffer although collector brands tend to hold their value historically
     • Tobacco
     • Marijuana products
  7. Transportation, basic
     • Freight and logistics
  8. DIY and repairs
  9. Healthcare, general
     • Exceptions:
       • Biotechnology
       • Medical devices sales tend to fall during recessions
  10. Drug Manufacturers

2. Industries vulnerable to recession:
   1. Retail consumer
   2. Restaurants
   3. Travel and tourism
   4. Leisure and hospitality
   5. Service purveyors
   6. Real estate, except for multifamily housing
   7. Manufacturing and warehousing
   8. Metal manufacturing
   9. Furniture and home furnishings
   10. Motor vehicle sales of Internal Combustion Engines (ICE), ( Except electric vehicles and hybrid electric (EV, HEV, and PHEV) are expected to rise in this unusual environment)

[1] https://www.wsj.com/articles/opec-supply-cut-could-tip-global-economy-into-recession-iea-says-11665650917?mod=Searchresults_pos1&page=1