January 26, 2017, 3:30pm EST                                                                                         Invest Alongside Billionaires For $297/Qtr

We talked yesterday about the significance of Dow 20,000.  Higher stock prices are fuel for higher stock prices.  And higher stock prices are fuel for better economic growth.  It’s all self-reinforcing, and we discussed the reasons why stocks can still go much, much higher from here.
As I said, this serves as a validation marker for some that have been waiting to see what the Trump effect might be on markets.  If you’ve listened to the consensus voice on Trumponomics, they’ve told you over and over how disastrous the protectionist rhetoric would be the U.S. economy and for the world.  I’ve said, given the position of the world, post-Great recession, that Trump’s tough talk is leverage that can be used to ultimately create a fair playing field on trade, which can ultimately lead toward a rebalancing of the global economy — something that has to take place to put the world back on a path of sustainable growth, and end the cycle of booms and busts. That’s a win-win for everyone.

We’ve seen it working with industry leaders (they’re playing ball).  And expect a similar outcome on the geopolitical front.  This approach doesn’t work in normal times, but we’re not in normal times, almost a decade after the onset of the global financial crisis — where global economies remain weak and vulnerable.

With this in mind, Mexico and Canada are in focus with the announcement this week of the NAFTA renegotiation, the wall and the Keystone pipeline.  And the media is hot and heavy on the cancellation of a trip to the White House by the Mexican President.

Let’s take a look at how Trumponomics is working for our two biggest trading partners, thus far.

This is the chart of the dollar versus the Mexican Peso.  The rising line represents the dollar strengthening and the peso weakening, and vice versa.

If we look at this exchange rate as a gauge of trade partner health, we’ve seen the peso hit hard through the campaigning period under the protectionist fears of a Trump administration – and post election.  That has represented a negative-scenario message for Mexico. But since the inauguration, the peso has been strengthening (not weakening), even as President Trump signed an executive order to renegotiate NAFTA. The message behind that usually means: the U.S. does better, Mexico does better.

What about Mexican stocks? Similar story.  As the U.S. stock market is on record highs, the Mexican stock market too, is sitting on record highs. When the prospects are better for U.S. growth, our trade partners do better.

What about Canada?  The same story.  The Canadian stock market is on record highs.

The worst-case scenarios are good fodder for attracting readers and viewers.  That’s why the media is obsessively focused on the potential negatives. But with some perspective on the bigger picture, and with respect to the position of the world coming out of the crisis period, those worst-case scenarios have lower probabilities than they think, and would have you believe.  That’s why reality is crafting a very different story.

We are likely entering an incredible era for investing, which will be an opportunity for average investors to make up ground on the meager wealth creation and retirement savings opportunities of the past decade.  For help building a high potential portfolio for 2017, follow me in our Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks.  Our portfolio more than doubled the return of the S&P 500 in 2016.  You can join me here and get positioned for a big 2017.


November 14, 2016, 4:45pm EST

We talked last week about the Trump effect on stocks.  With a new President promising aggressive growth polices and a supportive Congress in place to make it happen, the Trump plan is now being coined as Trumponomics.

As we discussed last week, the markets are reflecting this hand-off, from a Fed driven economy to a pro-growth government driven economy, positively — pricing in a period of hot growth.  And it couldn’t come at a better time — in fact, it may come at the perfect time.

The Fed has been able to manufacture stability but not demand and inflation.  Fiscal stimulus is designed to fill that void — to boost aggregate demand and inflation.  That’s why the bond market has shifted gears so dramatically, now reflecting a world with a trillion dollar infrastructure spend on the table, tax cuts, deregulation and incentives to get $2.5 trillion of U.S. corporate capital repatriated. Prior to last week, despite all of the best efforts from global central banks, and a Fed that was telegraphing a removal of emergency policies, the bond market was reflecting a world that was in depression, with the 10-year yield well below 2% in the U.S. and negative rates throughout much of the world. Today the U.S. 10 year traded above 2.25%, returning to levels we saw last December, when the Fed made its first post-crisis rate hike.

As we’ve discussed, growth has a way of solving a lot of problems, including our debt problem.  Politicians and economists love to scare people by emphasizing the enormity of our debt (close to $20 trillion). But our debt size is all relative — relative to the size of our economy, and relative to what’s going on in the rest of the world.

Take a look at this table…

  General Government Gross Debt as % of GDP
2007 Latest Change
United States 63% 104% 65%
United Kingdom 44% 89% 102%
Japan 187% 229% 22%
Italy 103% 132% 28%
Germany 64% 71% 11%
Canada 64% 92% 43%

Source: Billionaire’s Portfolio, TradingEconomics.com

You can see, in a major economic downturn, debt tends to rise. And it has for everyone. The downturn has been global.  And the rise in debt has been global.

The fears that a big debt load will lead to a dumping of the dollar, hyper-inflation and runaway interest rates don’t fit in this picture of a broadly weak recovery from a paralyzing global debt bust. Coming out of the worst global recession since World War II, inflation hasn’t been the problem. It’s been deflation. Inflation will be a concern when the structural issues are on the mend, employment is robust, confidence is high and the real economy is working. That hasn’t happened.  But an aggressive and targeted government spending plan can finally start changing that dynamic.

And the markets are telling us, an inflationary environment is welcomed – it comes with signs of life.

Gold is the widely-loved inflation hedge.  And gold isn’t rising out of concerns of overindebtedness.  It’s falling hard in the past week, in favor of growth.

With this in mind, we may very well be entering an incredible era for investing – after a long slog. And an opportunity for average investors to make up ground on the meager wealth creation and retirement savings opportunities of the past decade, or more.  For help, follow me in our Billionaire’s Portfolio, where you look over my shoulder as I follow the world’s best investors into their best stocks.  Our portfolio is up 16% this year.  That’s 2.5 times the performance of the broader stock market. Join me here.