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Don’t Just Settle for a One-Fits-All Life Insurance Plan in 2018

Last May, Five Thirty Eight forecasted several changes in the health insurance industry once the GOP healthcare bill was passed. Fast-forward to today and some of these forecasts, including increased premiums for lower income individuals and lower premiums for young, healthy policyholders, have, indeed, happened.

Simply, the reality is that Americans now need to pay more to get the best health insurance possible, and this is fast becoming a concern for many, especially those who live paycheck to paycheck or are otherwise burdened financially already. Add to that burden the high cost of healthcare, which in part is due to hospitals being incentivized to be expensive as we touched on in ‘Make Sure You Avoid Healthcare Stocks’. It is thus imperative to find a value-for-your-money policy to ease the financial load of being insured. To this end, you ought to reconsider those one-fits-all life insurance plans, even though getting one might be the most convenient.

As The New York Times explains in ‘The Problem With One-Size-Fits-All Health Insurance’, this approach to insurance coverage “disproportionately hurts low-income people” because it affords people no choices other than all medically necessary healthcare interventions. Unfortunately, “necessary” in this context means any “any care that offers a clinical benefit” regardless of their cost. This means that you are more than likely to receive hi-tech medical care even if there are cheaper alternatives.

To illustrate, let us consider the same example given by The New York Times: A policyholder of a one-size-fits-all policy suffering from prostate cancer will, in all likelihood, get the highly technical yet rather expensive proton-beam therapy as a medical intervention, even though it has not been proven to be significantly better than more affordable treatment alternatives such intensity-modulated radiation therapy. Now, this setup is well and fine for people who have money to spare, but for those with lower incomes, this approach is quite burdensome, especially considering the availability of health insurance plans that allow you to say no to high-cost treatments that have little to no medical value.

Even more, why even settle for a rigidly structured policy that affords no flexibility when there are better options available? Take Health IQ, a startup in the industry which according to Venture Beat “collects data to let health-conscious people save an average of $1,238 a year on their life insurance premiums.” The company, founded by Munjal Shah, has in fact helped thousands secure a staggering $5.3 billion in life insurance coverage in a little less than 2 years.

So, how then can Health IQ help people save on their life insurance? The startup, a pioneer in the rapidly expanding InsureTech industry, requires prospective clients to take the Health IQ test, a carefully designed quiz that’s aim is to gauge not only the current health of an individual but also their lifestyle. Those who score elite in this test are presumed to be healthy and living a healthy lifestyle and are thus qualified to get the savings. Meet certain fitness thresholds in the course of your policy and you will get additional savings every year. This type of insurance is far more suited for those who follow a healthy lifestyle than the more general insurance options.

Getting value-for-your-money life insurance is not actually rocket science, but it is not that easy either. But with patience and due diligence, finding one that suits your needs is now, very possible.

Here’s What To Expect After The Market Selloff

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So…What’s Next?

A sell-off happens for good reasons.

The equity market is adjusting to fundamental changes in liquidity.

  • Previous conditions: Cheap money has been floating around everywhere with no inflation to show for it. There’s also been share buybacks galore as CEOs used free money to boost share prices by reducing their company’s outstanding shares.
  • Current conditions: The era of low inflation and cheap money is ending. Inflation is picking up and interest rates are poised to rise another 0.75%. Share buybacks will discontinue.

The trigger was Friday’s strong payrolls and strong wage inflation. The markets read this to mean economic growth would drive inflation and higher interest rates. This would likely lead to more fed rate hikes.

Now, these are good things because they are deriving from economic growth, instead of the previous 10 years of financial shenanigans.

But stocks look pricey as a result.

Higher input costs like wages will pressure company margins.  That means lower earnings, so the price-to-earnings ratios (P/E) are overstretched. Meanwhile, higher bond rates make stocks look less competitive. For example, when a stock was pumping out 2% in dividends but bonds paid <2%, then the stock looked valuable. But no longer. Ten year Treasury yields are around 2.8%. (The basic income investor question is: Would you rather own the safest asset – U.S. government bonds – yielding 2.8%? Or would you rather own “riskier” stocks yielding 2%?)

As subscribers to our sister site TheMoneyballTrader.com know, I expected a bit more of a blowoff because the market typically overshoots. We certainly got that. Now we are seeing some selective buying back in.

Stocks now look attractive for a few reasons.

One is mechanical: when stock prices surged 8% in January, this put institutional investors under pressure to sell equities. Most major funds have a bond/equity balance that they must maintain. Post-selloff, they can buy back into stocks.

What Will Trigger My Buy-In Target?

Here again, TheMoneyBallTrader subscribers know that last week I said anything below 2,650.

I said 2,650 for two reasons.

First is a back-of-the-envelope approach. The economy should be growing 3% per quarter. Maybe 4% with the tax cut.  (My gut feel). Instead, it grew 7% in January. If we expect Q1 2018 to be another 3% rate, then it should be 2,700 by March end (~6 weeks away).

An alternative is a more rigorous, data-driven approach.

I have a proprietary labor-driven metric (the SouthBay Fair Value becnchmark).  As you can see from the 20 year chart, this data reflects strong correlation between the Fair Value Index and the S&P 500.  The 2nd chart is the same data on a shorter time-scale.

Based on this data, the market was overvalued 10% on a y/y basis.  So a drop to 2,650 is more in-line with the underlying economic fundamentals.  And that’s about where we are.

Sincerely,

Andrew Zatlin

Editor of Moneyball Economics

The Absolute Best Forecast Of Where Bitcoin Is Headed

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Fibonacci, the Golden Ratios, and Stock Trading

Stock prices ebb-and-flow according to various factors, not all of which are financial.

There’s the human factors – success attracts investors, losers lose investors – and so there’s a herd effect that tends to move prices higher or lower as people react to news and circumstances.

There’s also mechanical factors – once buyers have bought, there are fewer buyers and stock prices sag.  And so on.

This is the technical aspect of investing and it does make sense. For example, you do want to track the money flow (forget the price – is more money flowing in or out, indicating more or less buying enthusiasm). A lot of the overbuying and overselling can  be explained by this aspect of stock trading.

There are also technical measurements that are more akin to mumbo jumbo or Rorshach tests – you see patterns that you want to see.  One such technical metric is the Fibonacci numbers or the Golden Ratios. Wiki it to learn more (https://en.wikipedia.org/wiki/Golden_ratio). The concept is that nature follows a certain set of ratios. The shape of the Nautilus shell, for example, embodies the ratio. And for a good reason: the proportions echoed in the Golden Ratios deliver a certain physical strength and solidity. It is found in everything from art to architecture.

Some investors believe that these ratios can also apply to stock prices. Which seems strange – how could physical ratios map to investments and in particular financial behaviors. Believe it or not, they can and do.

Shopping is one classic example of human financial behavior.  Think about the ratios used during a sale. We often see stickers telling us to take 25%.  Over time, the sale price drops: take 50% off! And at the most extreme, take 70% off.

These figures correspond neatly to Fibonnaci numbers. The Fibonacci numbers say that when a stock is retracing (aka falling), it hits several ratios of the peak price: 61.8%, 50%, 31.8%, and 23.6%.

If the stock were on sale, those figures would translate to discounts of 28% (100%-61.8%), 50%, 68%, and even 76%. Very, very close to what we encounter in real life when sales are underway.

In other words, there seems to be a human perception at work where we are stimulated to act when we encounter certain proportions of change. We know that the human beast is wired to act – fight or flight. It’s just a little hard to imagine that there might be actual formulas that dictate how far we will run. (A lion is chasing me: how much distance do I need to be in order to feel safe?)

In the stock market, technical traders applying the Fibonacci ratios would say that these become resistance lines. The stock price will move to these levels and then bounce around. The thinking is that prices are drawn to these points. And when they hit the resistance level and continue to drop, then the stock price tends to gravitate to the next resistance point and that’s defined by the next Fibonacci number.

Too neat and pat? Well, it just happened with Bitcoin.

Start with the peak price of $19,870. The Fibonacci numbers tell us the resistance levels are:

  • 61.8% = $12,280
  • 50% = $9,935
  • 31.8% = $7,590
  • 23.6% = $4,690

And here’s what just happened. On Dec 16th, Bitcoin peaked and then steadily dropped. On Dec. 30th it fell to $11,962 and then promptly climbed back to $17,152

If you buy into the Fibonacci framework of thinking, then you would say that the stock price bounced off the first resistance level (the difference between the predicted $12,280 and the actual $11,962 is just noise).

Under the Fibo rules, if the price dropped again and remained below that $12.3K level, then it would next drop to $9,935 or thereabouts, before bouncing again. And that’s exactly what it did.

On Jan 16th, it fell below $12,000 and then promptly slid to $9,981 – the next Fibo resistance level. And then it bounced up again (again, the predicted resistance point was $9,935 and the actual $9,981 is just noise).

Twice in a row it would seem that the Fibo numbers were predicting the price destinations.

Here again, the theory is that with the resistance at $9.9K (as defined by the Fibo numbers), the next resistance would be $7,590. So let’s look at what happened.  For almost a week, BTC held at $11,000. But the price did not recover the $12,280 level – implying that it would fall back down again and re-test $9,935.

And BOOM! It fell below this level and promptly marched down on Friday to $7,760. Fibo said $7,590, but what’s $170 difference between friends.

It recovered but because it stayed well below the $9.9K level, it was destined to re-test $7.6K.  And, sure enough, on Feb 5th it is doing that.

From a behavioral standpoint, investors are being offered a deal: BTC is on sale at 61% off the recent peak price. If you liked it at 50% off, why wouldn’t you add to your position at 61% off?

Because that’s how investors – aka shoppers – think.  But I think there’s a lot more downside still, and that’s what the resistance points are indicating.

Is this a deal? Even at $7K BTC is up 7x over the year. So it’s hardly a bargain.

Never mind the emotional or behavioral aspects of buying an asset at a perceived discount.  Consider now the practical limits: where is the new money?

Recall that a lot of money piled into BTC the last few months.  They no longer have money to put into the pot. Worse, there is a margin squeeze which is adding to selling pressure: many buyers used leverage.

Plus go back to fundamentals.  Is Bitcoin for transactions or a storage of value?  BTC was used in the gray economy for buying goods and services.  For example, Craigslist has a filter on the FOR SALE section where buyers can indicate that they take cryptocurrency.  So there is a value of sorts.

But the bulk of the price surge comes from BTC as an alternative to dollars and gold.  And that makes it hugely emotional and driven by speculation.

Which means that a blowoff will remove almost all of the speculative surge.  Which means that BTC has a floor of $1,200 – it’s transactional value.

Pump and Dump: price collapse started when short selling commenced Dec. 18th As retail money came in, smart money found an exit. Starting Dec 18th, the CME allowed bitcoin futures. With just 35% margin, put options could be purchased.

Follow the history: Bitcoin peaks December 17th. Bitcoin begins to slide the next day, Dec. 18th, on the day that investors can start shorting it. Cause, meet effect.

What happens next

BTC will drop to $4,700.  That assumes that $7,000 won’t hold.  And that’s not a cause for panic – BTC was $1,000 last January, so that’s still a handsome profit.  And I believe that there are a lot of people who will sit tight.  That end-of-year surge caught a lot of people by surprise.  They didn’t sell all Summer when BTC was $4000, so why sell now?

But a lot of people are now going to be forced to sell, and that’s the pressure into tax season.

Sincerely,

Andrew Zatlin

Editor of Moneyball Economics

Make Sure You Avoid Healthcare Stocks

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Make Sure You Avoid Healthcare Stocks

Buffett: Healthcare Costs are an Angry Tapeworm in the Belly of the US Economy

JP Morgan, Berkshire Hathaway and Amazon announced a joint agreement to develop a healthcare alternative on January 31.

This is a BIG deal. Why?

Well first, these companies have a combined 1 million workers. Second, other companies will likely follow suit and join.

Really what’s going on is are businesses are stepping in to fix what politicians won’t.

The history of American healthcare is a history of shared expense and employer supported payments.

Hospitals emerged in the early part of the 20th century and they were business failures from the start.

They have high fixed costs (buildings, equipment) and high operating costs (physicians, nurses, operating staff). That turns into a positive: a large barrier to entry reduces competition. Also, they have a massive base of repeat customers.

The first big development came in the 1920s with the concept of prepaid health care access. That was the start of Blue Cross. For hospitals, a guaranteed revenue stream reduced risk.

The second big development came in the 1950s when employers started to foot the healthcare bill.  

This required two things to come together.  

First was labor’s bargaining strength: after World War II there were fewer workers and stronger labor demand. Second, Washington made healthcare payments a fringe benefit that fell outside of wage definitions. Workers liked it because wages get taxed and healthcare coverage wouldn’t get taxed. Companies liked it because they pay matching taxes on wages, but the healthcare would be exempt.

But this is where things began to go horribly wrong.

This always happens when payments (costs) are spread across a large base: the payers purchasing power gets diluted.

See, the business model was originally like a co-op: members pre-paid for services and that enabled hospitals to thrive and provide services.  But the employer-supported plans created a system of massive greed:

  1. Pool of money surged: more participants contributing more dollars
  2. Buyers (employers) were not the consumers.
  3. Hidden prices: healthcare is probably the only industry where prices are hidden
  4. Guaranteed money

By inflating the guaranteed payment mechanism, the business model pivoted away from guaranteed money in order to stay alive and towards guaranteed money to charge maximum prices.

Hospitals Are Incentivized To Be Expensive

Start with the concept of nonprofits.  The most profitable businesses in America today are non-profit hospitals.

Non-profit means that hospitals can’t show a profit: they must spend all their revenues.  And they do: on executive pay and doctor pay and union pay.  This is why 60% of all hospitals are non-profits – so they can make massive profits and call it take-home pay.

Hospitals are basically local monopolies.  They charge whatever the market will bear.  The hospital system leverages that monopoly to always raise prices.

The customer market is fragmented: companies must negotiate one-on-one. They are doomed to fail.

Where else can you conceive of a system where the intermediaries – the payment system negotiators – are multi-billion dollar profit making companies?

The healthcare system is a runaway train.  healthcare costs go up because the system can raise prices and those higher costs are then spread out across hundreds of millions of payees. You and I may grip about paying another $100 a year. That’s tens of billions of dollars extra per year to line the pockets of the healthcare system.

A successful system would drive down the cost of providing healthcare.  A lot of treatments are routine.

Instead, the healthcare ecosystem actively resists any and all moves to lower costs of services and treatments that are essentially commoditized.  It took forever for nurse practitioners to be allowed to give shots and other routines treatments instead of the higher priced doctors.

Healthcare spending takes away from other forms of spending and the reality is that the cost of providing the service is much lower than the prices charged. This is enabled by (1) the evil of guaranteed and growing funding and (2) a lack of competition.  

In terms of scale and impact, healthcare is indeed an evil tapeworm that needs to be tamed. But how do we restore some balance?

The Amazon Move: Changing The Balance Of Power

There was an attempt to introduce collective bargaining into pricing. The U.S. government is a major purchaser of healthcare services – through the Veterans Administration, through the Defense Department, and through entitlements like Medicare and Medical.

The U.S. government represents tens of millions of users.  But when they attempted to introduce drug price negotiation, Big Pharma lined up lobbyists and successfully blocked the move.

Clearly politicians won’t make the necessary changes.

It’s An Amazon Retail Play

Look at it as another marketplace and one where Amazon does one thing well: creating a marketplace that eliminates the middle-merchants by connecting consumers closer to suppliers. The consequence is lower costs as the supply chain tightens, as competition emerges and as prices are more visible.

Backing the Amazon play is the one million strong base of angry customers who can’t be bought off.

That number will balloon as it gains traction.

Expect Walmart to jump in.

The goal is to reduce the pool of funds available to the healthcare system.

So who loses funds?

  • Healthcare facilities: mixed.  Hospitals are somewhat immune: while they are big abusers, they are also monopolies.  Perhaps they can be cut down to size if the new system rewards the cheaper HMOs and physicians outside of hospitals
  • Drug companies: This will be a bloodbath.  Epipens that enjoyed 10x price hikes?  Sorry, expect alternatives to emerge.
  • Insurance companies: Very exposed.  Ultimately they are playing a middleman role and Amazon is a middleman-killer.  They are glorified paper-pushers adding no value in a digital world.
  • Prescription management: this will get streamlined

There are two bottlenecks in the system which are lovingly maintained by incumbents.

The first is money. Insurance companies control the aggregation and disbursement.  

Hospitals and service providers play hide the price. Both of these will get beaten up because Amazon is all about price clarity.  They could probably develop and deliver a proprietary system for managing the funds, one that will be a lot better and cheaper than what’s out there costing billions.

The second bottleneck is prescriptions. A lot of money goes to drug companies.

Imagine being able to source your medicines as you would a book on Amazon.  Prices would collapse.  But there is an inherent risk – are suppliers delivering quality products?  That’s the same risk you take when buying anything off Amazon today.  But instead of a shirt that  might not fit, it’s drugs that don’t work.  Not good.  So some work is needed here.

KEY TAKEAWAY: Disinvest from Healthcare Stocks

There are no discernible winners at this time.  Oh, some companies will win, that’s for sure.  But it’s not clear which ones.  Amazon will be playing kingmaker and it has the capability to bring certain functionalities in-house.

Biotech and certain device & drug companies will be immune.

But the trend is to cut healthcare funding – which will make the market turn bearish.

It will take time.  The healthcare industry will put up a fight. Don’t expect them to take losing 1 million higher-income consumers lying down.

You don’t have to rush for the exits, but the writing is on the wall.

Sincerely,

Andrew Zatlin

Editor of Moneyball Economics

Why Your Portfolio Should Prepare For Seven More Years Of Trump

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INVESTING IN THE TRUMP AGENDA

I am going to make the case that you need to have a Trump Investing Plan.

To begin, I will “assume” that Trump will be a 2-term president with enormous political strength.

Second, I want to explore how his agenda will affect the stock market.

Jimmy Obama and Ronald Trump

Pop quiz: which era are we talking about?  

Following a misspent war fought in Asia that yielded only pain, the U.S. turns remorseful and elects a humanistic, sensitive member of the Democratic party to be President.  

At the top of the agenda are social issues like human rights and the environment.  

Meanwhile, the U.S. lacks an industrial policy, which allows the world’s largest Asian economy to pursue rampant mercantilist policies and outright intellectual property theft.  

At the same time, licking our wounds, the U.S. assumes a softer foreign policy which enables Russia and Iran to go on the offensive and seize territory.

If you guessed Jimmy Carter, then you are correct,  

If you guessed Barack Obama, then you are also correct.

And the déjà vu continues.

The blowback comes in the form of a populist Republican President from outside the traditional government circles. He immediately assumes an assertive stance on the world stage and drives an America-first approach to trade and foreign policy.  

He argues for lower taxes.  He gets accused of being a racist, an idiot, dangerous to world peace.

If you guessed Ronald Reagan, then you are correct.

If you guessed Donald Trump, then you are also correct.

It’s The 1980s Again

The pattern that emerges is one where the U.S. gets distracted and then re-focuses.

The distraction begins with launching and then winding down a major, all-consuming war (Vietnam, Afghanistan/Iraq).  

Winding down the war requires enormous attention to extricate from the battlefield and to cope with the inevitable economic malaise. U.S. enemies take advantage of this period when U.S. political focus is elsewhere.

Then focus returns. The American entrepreneurial spirit re-asserts itself, at which point pushback ensues.

World events need to be seen within the context of U.S. distraction and focus. Especially now that we are on a path of focus.

Other countries are aware of this pattern and move accordingly.  

About three years ago, the timeline for exiting Iraq/Afghanistan became clear.  

That is, the U.S. was determined to exit the Middle East and, once the exit was prosecuted, it would be only a matter of time until the U.S. focus would return inward.

Russia acted swiftly. It stole Crimea and established an airport in Syria to match the seaport at Latakia.  

These are hugely significant because they re-established a geopolitical means to project power and military aggression at Europe’s soft underbelly.  

This is very, very important to grasp. Russia wants to dominate Europe. It uses its natural gas and weapons to do so.  

But Russian territory is in the north and in the Black Sea. The only way to threaten Europe is via naval strength but that’s a problem: the distance between the Mediterranean and Mother Russia prevents re-fueling.  

Everything depends on maintaining a port in Syria.  And an airport adds to the ability to project power across Europe, Turkey and the Middle east.

Russia took advantage of the U.S. in retreat while knowing that their window of opportunity was limited.

Similarly, Iran negotiated an amazingly one-sided deal: $150 billion (bn) and a time-out on nuclear weapon building.

China also took the opportunity to launch major initiatives to consolidate their power, especially in Pakistan. A subservient Pakistan is critical to China’s efforts to manage India.

But now we are back to a period of focus. Under Reagan the catch-phrase was “Morning in America.” Under Trump it is “Make America Great Again.” Ultimately it means the same thing: a more focused, assertive America.

Traditionally this limits the ability of our adversaries and allies to maneuver.

The Trump Agenda

There are simple characteristics of the “Trump Agenda.”

First he is re-defining checkbook diplomacy. The U.S. tends to throw money at foreign policy problems. 

Billions to Pakistan, the Palestinians, the Israelis, NATO, etc.  Trump is re-visiting the arrangements and asking if the arrangements fit U.S. needs.

For example, on the campaign trail he correctly pointed out that NATO benefits Europe but that they don’t contribute their fair and agreed upon share.  If the U.S. is shouldering the lion’s share of the spending, then we should expect more.  

NATO is a 70 year old agreement.  What is wrong with re-visiting it to see if it meets today’s needs?  Naturally, the established order was upset and they attacked him and misrepresented his positions.

He did it again with Pakistan and with the Palestinians.  The current arrangements are mafia-like: pay money and we keep the peace, or else there will be trouble. Trump is making it clear that he is uninterested in status quo. Whoever pays the piper, calls the tune. He rewarded the Israelis for their strong alliance and support (Israel votes with U.S. at the U.N. more than any other nation.)

In other words, Trump is about reciprocity. People who get freebies don’t like to suddenly face demands and expectations. So expect a lot of pushback.

I would also argue that the world is mean reverting. Throughout history, the world functioned according to trade. The poles were Europe, Iran, India and China.  Other regions linked into the trade routes.

We diverged from this structure when the “New World” was discovered. It launched new maritime adventures and colonization. And it temporarily distorted the natural state of things.

A mean reversion means several things.

First, the concept of nation states is more exception than rule. Nations emerged when there was a combination of geographical boundaries and ethnic integration. (Egypt for example).  

But mostly the world was governed by strong city-states.  As European colonization fell apart, territories were carved up (Sykes Picot) and usually not along traditional ethnic lines.  

In the face of rampant Russian imperialism, Kissinger saw the need for united fronts and he championed the evolution of city states into nation states.

There is no clean emergence from colonialism. The Middle East has been struggling for identity. Nations did not emerge along traditional ethnic lines. Adding to the instability was the cultural shock that came from a sudden exposure to the modern world.

Other residual hotspots of instability include Kashmir and North Korea, for example.

Another follow-on of mean reversion is that some countries have a traditional strength.  There has always been a Persian empire, for example.  At the same time, some countries are punching above their weight class.  Russia has never been a global entity.  A splintering is inevitable, likely initiated by the end of oil and the collapse of their economy.

Reverting to the mean is never linear or smooth. But it is inevitable. And the implications for today are that commercial priorities – trade and economics – will take the lead.

Far from fighting history, Trump is actually consistent with historical precedents.

Why Trump Will Succeed

Let’s get away from the 30,000 foot view and get back to the street level.

Trump is applying checkbook diplomacy at home as well as abroad.  For starters, he just delivered a massive tax cut.  Putting money into the pockets of voters just months away from a midterm election – that’s basic politics. Expect even more voters to choose Republicans.

Now we are starting to hear about Trump’s follow-on fiscal stimulus: a $1 trillion infrastructure spending bill.

Naturally the knives were out to cut down any proposal, no matter how good or bad.

Trump fan or not, there are many levels of awesome going on here, including:

  1. A combined short-term and medium-term fiscal stimulus. The tax cut has 1~2 years of impact. Meanwhile, infrastructure spending has 3~5 years of impact, and more if it’s not a bridge to nowhere.  What I mean is that bridges take years to design and build.  The US economy benefits from both a multiyear spending activity AND true productive enhancements.
  2.  Expect the benefits to stay with US companies.  As an example, Trump today announced a 30% tariff on solar panels.  Expect there to be a BUY AMERICAN emphasis on the $1T.  That is a sharp contrast with spending under Pres. Obama.  For example, when San Francisco built a new Bay Bridge at a cost of $7.2B, much of that spending went to China.

The protectionist moves add a bit more juice as well.

This is very similar to Reagan’s approach.  Cut taxes, boost fiscal spending, get tough on trade.

And we’re seeing the immediate consequences of Trump’s efforts.  The Democrats tried to shut down the government and then they caved.  Trump has the power and he is using it.  I am worried – I prefer checks and balances.  I’d like Trump to have a strong challenger.

As an investor, you should prepare for 7 more years of Trump.

Defense, big builders, industrials, and more inflation.

Defense: Northrop Grumman (NOC) is my preferred selection because they are the leaders in drones.

Builders: It’s early yet.  But watch the big construction companies: Fluor (FLR), Aecom (ACM), and Chicago Bridge (CBI)

Industrials: too many to name.  I would just do an ETF like IYJ.

Inflation: The dollar is dropping hard, but that’s unnatural.  The economy is strengthening. Inflation is returning. Interest rates are rising. And liquidity is dropping – as QE unwinds.  

This means that the weak dollar is an artificial construct – it is the outcome of manipulation.  I would guess that this is another Trump-initiated bully club to beat our trading partners into submission.  For example, a cheap dollar and strong yuan makes the Chinese populace face inflation and turns them against the leadership.

 

Sincerely,

Andrew Zatlin

Editor of Moneyball Economics

P.S. January 25, 2018: Benzinga – NBA Intends To Take A 1% Cut, Or ‘Integrity Fee,’ If Sports Betting Is Legalized