The Trump administration must put the breaks on the frightening explosion of entitlements. The Cato Institute’s Dan Mitchell lays out what is ticking time bomb for America: [T]he federal government is spending more today on defense than it was back in the 1960s, even after adjusting for inflation. And outlays for "domestic discretionary" programs also have increased. But what's obviously driving fiscal policy is the relentless expansion of entitlements (referred to as "mandatory spending" for purposes of the Budget Enforcement Act). And because of demographic changes and bad policy … [Read more...]
Who are the Stock Market Winners of the Election?
It has only been 10 days since the presidential election, but the equity markets have moved markedly on a change in outlook. A Trump victory and a Republican sweep in congress has created some winners and losers--at least in the short-run. With big moves in markets ahead of any concrete policy actions, this could be a case of the stock market jumping the gun. Below is a graphic that shows the performance of the 11 S&P 500 sectors since the presidential election. The big winners are financials, followed by industrials, discretionary stocks and healthcare shares. The losers: utilities, … [Read more...]
Donald Trump Laying the Groundwork for an Investment Explosion
The Swiss know about the enormous potential in America Infrastructure rebuilding. Here swissinfo.ch delivers a concise rundown on some potential winners. Trump has announced big investments and wants to build this wall in Mexico,” Sika spokesperson Dominik Slappnig, told Swiss Public Television SRF. The Swiss firm specialising in construction material employs over 1,500 people in North America and made a turnover of CHF839 million ($848 million) in the region. It has already acquired two American companies - FRC Industries in Alabama and L.M. Scofield in Los Angeles - this year. “We’re … [Read more...]
With Trump Win, Mexico and Canada Quickly Come to the table on NAFTA
After Donald Trump won the 2016 presidential election on Tuesday, leaders of both Mexico and Canada were quick to come to the table saying they’d be willing to look at renegotiating, or in Mexico’s words “modernizing,” the trade deal. Mexican Foreign Minister Ruiz Massieu told reporters that, regarding NAFTA, his country thinks now “is an opportunity to think if we should modernize it, not renegotiate it, but to modernize it." Canadian Prime Minister Justin Trudeau also told reporters today that he is ready to renegotiate NAFTA. Trudeau said “I think it's important that we be open to … [Read more...]
Portfolio Strategy: Shock, Awe, and Investing After the Election
Trump’s victory will undoubtedly go down as one of the biggest upsets in U.S. political history. Despite being written off by the D.C. elites, the globalists on Wall Street, the in-the-bag-for-Clinton news media, the know-nothing Hollywood crowd, and many in his own party, Trump pulled off a stunning victory. Americans across the country and especially in the rust-belt states turned out for Trump in a big way. They’ve apparently had enough of the status quo from both parties. Trump didn’t run on a traditional Republican message. He ran a populist-outsider campaign that in many ways hews … [Read more...]
The Exploding Shift to E-Commerce is Killing Retail Hiring
The Wall Street Journal exposes the weak underbelly of America’s e-commerce explosion. WSJ reports: Logistics companies returned to hiring last month after a dip in September, adding thousands of jobs in trucking, warehousing and air transportation. Air transportation companies added 2,500 jobs in September, bringing total job gains in the segment to 13,400 over the past year. And rail transportation gained of 400 jobs after deep cutbacks in recent months that have cut payrolls by 19,800 jobs over the last 12 months because of a steep decline in coal and energy shipments. Meanwhile, … [Read more...]
Trucking Companies are not Upgrading or Expanding Fleets
It is hard to look at the above headline and not be concerned about U.S. 2017 economic momentum. The Wall Street Journal paints an unpleasant picture: Orders for heavy-duty commercial trucks in North America plummeted 46% in October from the same month last year, providing a grim outlook for truck manufacturers in the coming year. In a month when fleets often set their plans for adding new trucks and replacing older rigs for the following year, market forecaster ACT Research’s preliminary order October volume was 13,900 vehicles, flat from September’s order volume and extending a trend of … [Read more...]
The Great Distortion
We have written often on this site about the great distortion in financial markets caused by a long period of misguided monetary policy. Here the WSJ reports that the Japanese life insurance industry, managers of over $3 trillion in assets, is now looking to reach for yield in foreign government and corporate bonds because the Japanese Central Bank has mandated a zero percent interest rate on 10-year Japanese government bonds. Japanese life insurers have future liabilities that need to be funded. A zero percent return isn’t going to cut it so the reach for return isn’t much of a choice in … [Read more...]
Portfolio Strategy: Will the Bubble Get bigger?
Janet Yellen gave a speech earlier this month where she suggested that the Fed should run a “high-pressure” economy in an effort to fix structural damage done to the supply-side of the economy by the financial crisis. What is a “high pressure” economy? Here’s Yellen’s explanation and justification (emphasis is mine). If we assume that hysteresis is in fact present to some degree after deep recessions, the natural next question is to ask whether it might be possible to reverse these adverse supply-side effects by temporarily running a "high-pressure economy," with robust aggregate demand … [Read more...]
Germany Massively Wasting Its Potential to Grow
The Wall Street Journal shows that German businesses have piled up $500 billion in cash and deposits leading to underinvestment in German industry. FRANKFURT—German companies are sitting on a half-trillion dollars of cash but are reluctant to invest it in their own country, potentially threatening the country’s competitive edge and European economic growth. Germany’s nonfinancial businesses have saved more than they have invested for the past seven years, piling up about €455 billion ($500.4 billion) in cash and deposits, German central bank data show. Over the past decade, German … [Read more...]
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