Each year I like to look ahead and make some predictions about our economy. As someone who actively invests, it is important for me to form a macro-view in order to make investment decisions from the "top down" as they say. Of course, one must also pair one's macro views with bottom up analysis of individual companies. And, as I've learned in my more recent years, to also be guided by the "technicals."
From my macro-view predictions I form my investment thesis, which in turn I apply to the selection of industry sectors and then individual stocks or ETFs. Before I list my predictions, let me preface my overall thesis about the change going on in our Country.
With the Presidential election over, America is at an in-flexion point - a point of change. Some people can not see it. Some people saw it coming. For the last few years we have been stuck between two very different visions for the future. This created uncertainty. Because of the lack of clarity, with two very different possible political outcomes, businesses and investors have delayed decisions and actions. Capital was not put to work. Banks didn't lend. Opportunities were put on hold. Consumers delayed large purchases.
With the outcome of the election, and the fact that leadership now controls the executive and legislative branches of government, not to mention key appointments in the judiciary branches, a more distinct vision for the future is taking shape. I know that many do not like what they see and are scared. But there is a positive narrative too. As an investor or business owner, it behooves you to anticipate and position for the future.
It is obvious that the pendulum is swinging to the right for sure! Lots of smart cookies who definitely have anti-establishment views are taking over Washington. Big changes are ahead in the Land! You can't tell me it wasn't time. The streets are gonna be running pink. As in pink for all the pink slips that are going out. Exciting stuff! Change is always a bit un-nerving, more for some than others. And truthfully, it is too early to say how effectively it all works out. But for all of us who wanted to "drain the swamp," there is a distinct gurgling sound being heard!
But enough ... here's my first five predictions, with others to follow in the future:
Prediction #1:
We will have a massive wave of immigration! What Trump wants to do for infrastructure is going to require an enormous volume of labor that America does not have. In order to rebuild our infrastructure we will see a surge in LEGAL immigration from Latin America including Mexico. Hispanic population in the U.S. is going to grow and prosper. How ironic!
And much of the greatest rebuilding needs are in CITIES, where blacks andHispanics will benefit. Trump said during the campaign that he'd be better for those communities and this is one reason why.
Expansion of infrastructure is going to require Imports of raw materials in a big way! This is going to lift mining and depressed countries like Brazil and Venezuela. It is also going to give a big lift to both U.S. and foreign steel industry. Which in turn it's going to be a big help to South America and our trading partners whose economies are in desperate need! It will also help U.S. rail and shippers that transport these materials.
Our expansion of energy in the U.S. in a big move towards energy Independence is going to play into this as well. Each dollar of foreign oil that becomes a dollar of U.S. oil equals stimulus in the U.S. The expansion of our energy infrastructure means demands for raw materials and labor too. And, energy independence is in our National Security interests!!!
Like Obama wanted to leave a legacy of transforming healthcare, Trump wants his the legacy to be the builder who rebuilt America. Let's hope Trump is more successful than Obama - who's system is a imploding.
And much of the greatest rebuilding needs are in CITIES, where blacks andHispanics will benefit. Trump said during the campaign that he'd be better for those communities and this is one reason why.
Expansion of infrastructure is going to require Imports of raw materials in a big way! This is going to lift mining and depressed countries like Brazil and Venezuela. It is also going to give a big lift to both U.S. and foreign steel industry. Which in turn it's going to be a big help to South America and our trading partners whose economies are in desperate need! It will also help U.S. rail and shippers that transport these materials.
Our expansion of energy in the U.S. in a big move towards energy Independence is going to play into this as well. Each dollar of foreign oil that becomes a dollar of U.S. oil equals stimulus in the U.S. The expansion of our energy infrastructure means demands for raw materials and labor too. And, energy independence is in our National Security interests!!!
Like Obama wanted to leave a legacy of transforming healthcare, Trump wants his the legacy to be the builder who rebuilt America. Let's hope Trump is more successful than Obama - who's system is a imploding.
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NOTE: When people think of immigration they tend to recall Lady Liberty and Ellis Island. Remember, that was the "big door" for LEGAL immigration in the day! Trump favors a BIG DOOR and legal immigration. He also wants to deport illegal immigrants who have committed crimes. Which we should do! Once the others, who do not have a criminal history, see that they can immigrate legally, they may leave and apply to come back through a legal process. I think the definition of the "wall" will be revisited, in the context of looking for better strategies and tactics for border control.
Prediction #2:
NOTE: When people think of immigration they tend to recall Lady Liberty and Ellis Island. Remember, that was the "big door" for LEGAL immigration in the day! Trump favors a BIG DOOR and legal immigration. He also wants to deport illegal immigrants who have committed crimes. Which we should do! Once the others, who do not have a criminal history, see that they can immigrate legally, they may leave and apply to come back through a legal process. I think the definition of the "wall" will be revisited, in the context of looking for better strategies and tactics for border control.
Prediction #2:
My first prediction was a contrarian one. I said that we would see a giant increase in LEGAL Immigration in America in order to support the $1 trilliion infrastructure projects that the Trump Administration will seek to put through.
My second prediction ties directly into infrastructure again, and more specifically to transportation. Expect new announcements to push forward High-Speed Rail connections between Boston, New York City, Philadelphia, and Washington DC. This had been talked about for a long time and Amtrak would be the big winner, along with related Industries and of course, Americans.
Outlying cities with Amtrak connections to those major cities, such as Albany and Poughkeepsie NY also stand to benefit.
Since railroads, as well as the steel industry, are Unionized for the most part, they're likely to get behind Trump's initiative in a big way. We're already hearing them support re-renegotiating of U.S. Trade agreements. Getting the Unions to come on board and support a Republican Administration is a major blow to the Democrats.
Prediction #3:
My second prediction ties directly into infrastructure again, and more specifically to transportation. Expect new announcements to push forward High-Speed Rail connections between Boston, New York City, Philadelphia, and Washington DC. This had been talked about for a long time and Amtrak would be the big winner, along with related Industries and of course, Americans.
Outlying cities with Amtrak connections to those major cities, such as Albany and Poughkeepsie NY also stand to benefit.
Since railroads, as well as the steel industry, are Unionized for the most part, they're likely to get behind Trump's initiative in a big way. We're already hearing them support re-renegotiating of U.S. Trade agreements. Getting the Unions to come on board and support a Republican Administration is a major blow to the Democrats.
Prediction #3:
This was an easy one, until Sessions became the A.G. As a staunch legalization opponent it is hard to say what direction the Federal Government will go. Recreational marijuana needs to be legalized by the Federal Government in order to clear the way for the existing and growing number of States which have already done so to come into compliance. With the passage by CA, MA, NV, and ME, joining OR, WA, and others in legalizing recreational pot, the Federal Government can no longer simply look the other way. Regardless of whether the Federal Government wants to, it will eventually have to bow to pressure from the rolling trend of legalization by more and more states.
What's key here is not just the fact that there is a new recreational drug! There are all sorts of possible implications that result from this fact. Here are some of the consequential results I predict:
What's key here is not just the fact that there is a new recreational drug! There are all sorts of possible implications that result from this fact. Here are some of the consequential results I predict:
- A drag on beer and liquor industry sales. In turn, this will present some challenges for the restaurant and entertainment industry which depend on alcohol sales for a large percentage of their profits.
- Fewer deaths from alcohol and related accidents and acts of violence, domestically, and otherwise.
- Greater profits for insurance companies that have paid out large sums in relation to all the negative impacts of alcohol on society.
- Fewer crimes that involve both alcohol and marijuana, resulting in Reductions in the prison population and efforts by Governments to reduce the cost of prisons. Police will reallocate resources to better uses, which will have beneficial results. Corrections industry Unions and workers will have some struggles.
Prediction #4:
The biggest loser from the election is Democratic Socialism, as Bernie called it. Capitalism is going to make a comeback. And, with it, the spirit of Entrenepeurship and self sufficiency. The best way to explain why I am all for a major set-back for Democratic Socialism is to watch this video.
Prediction #5:
The biggest loser from the election is Democratic Socialism, as Bernie called it. Capitalism is going to make a comeback. And, with it, the spirit of Entrenepeurship and self sufficiency. The best way to explain why I am all for a major set-back for Democratic Socialism is to watch this video.
Prediction #5:
Italy breaks from Euro and goes back on the LIRA. Like the U.K., citizens will vote down the reforms that are required to stay in the European Union. Germany and France will try to find a compromise, leading to a complete restructuring of the E.U. While France will publically stand behind Germany, their leaders will be under tremendous pressure to address border/immigation issues, forcing Germany to accept concessions which Greece and the U.K. could not extract in their negotiations. Italy's departure marks the unraveling of the E.U. framework as we know it. What comes next is still impossible to tell. But one thing is for sure, Trump isn't the only one who's going to manage to bring down the "establishment!"
CLICK HERE FOR MY SECOND SET OF PREDICTIONS.
CLICK HERE FOR MY SECOND SET OF PREDICTIONS.
