A FEW weeks ago I was interviewing Sarbjit Nahal, an equity strategist from BofA Merrill Lynch Global Research. Nahal had helped put together a new research report called Globesity – The Global Fight Against Obesity, which outlines the increasing efforts to tackle obesity as a new investment theme for fund managers.
BofA Merrill Lynch think they’re on to a megatrend with a shelf-life of 25-50 years, and identified a list of 50 stocks – all somehow linked to obesity – which are concentrated in four areas: pharmaceuticals and healthcare, food, weight loss and nutrition, and sports apparel and equipment.
Nahal also told me how 1.4bn people currently are overweight globally, and obesity is the fifth biggest cause of death.
After speaking to Nahal, I started thinking. If I were forced to invest all my money in the current climate, would I feel more confident about investing in the obesity trend – exposure to insulin makers, hip and knee replacement equipment, food trends, fitness and so on, or investing in European equity markets?
I decided that the answer would have to be the obesity trend. Do I feel confident that more people will fall into the obese category and live unhealthier lives over the next decade? Yes.
Do I think that the European equity market recovery will continue? I have absolutely no idea.
EURO CRISIS REDUX
A lot of focus at the moment is on Spain and the general sentiment seems to be that it’s a matter of time before the Spanish authorities request a full bailout.
Matthew Lynn, the founder of Strategy Economics, was in the studio with me – he says that the real trouble isn’t Spain, it’s Italy.
Lynn argues that Italy could be a lot more serious an issue than we think given the anti-euro position of former Prime Minister Silvio Berlusconi’s People for Freedom party. It’s a sizeable party, and if it succeeds in gaining traction heading into the elections next year, things could get interesting.
Lynn points out that Italy has the third largest sovereign bond market globally, with total outstanding debt of €1.9 trillion (after the US and Japan), and that it wouldn’t take much for nervous selling to ensue if there was even the slightest talk of Italy exiting the euro.
I wanted to know whether it made a difference that a big portion of the debt is held domestically, but he said that if Italian bonds first see losses, it will be felt by financial institutions globally. Lynn does see opportunities in Italy though, but only after the April 2013 elections.
Louisa Bojesen is a co-anchor of CNBC’s European Closing Bell @louisabojesen