I have been debating, arguing, and kibitzing with Harry S. Dent for nearly a decade.
You may know Harry as the cutting edge economic and demographics guru who's written many books on topics I have reviewed in past years (read more here for ?When the Demographics Tailwind Becomes a Headwind? .
Sometimes I agree with Harry.
Other times, I think he is out of his mind.
But whenever we butt heads, the outcome is always informative and entertaining, if not outrageous.
On Sunday night at 8:00 PM EST, I will be debating Harry live in a global webinar that will be broadcast live in 135 countries.
The event will be moderated by my friend, Greg Owen, in Sydney, Australia. Harry will be opining from Florida, while I?ll be refuting his opinions from San Francisco, California.
Some of the topics covered will include:
1) The likely outcome of the November 8th election and the possible outliers
2) The election impact on your retirement portfolio
3) The true causes of the divide currently afflicting the US
4) How new media enabled Donald Trump to shatter election conventions, and how Hillary Clinton counterattacked
5) The long term outlook for all asset classes
You can attend this fascinating, ground breaking global event for only US $75/AU $97.
Attendance is limited to only the first 1,000. Please click here to purchase a ticket.
It should be a real barnburner of a webinar.
https://www.madhedgefundtrader.com/wp-content/uploads/2016/10/John-Thomas-Harry-Dent-e1477452680675.jpg301580DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2016-10-28 01:06:352016-10-28 01:06:35You Are Invited to Join the Great John Thomas-Harry Dent Debate
We?re only a few days away from the first ever debate between Harry Dent (world renowned economist and New York Times best selling author) and myself, titled:
This is your last chance to register, only a few places are left.
Featured Trade: (NOVEMBER 18TH LAS VEGAS,? NV GLOBAL STRATEGY LUNCHEON), (TRADING THE DAY AFTER THE ELECTION), (SPY), (TLT), (UUP), (USO), (AAPL), (GLD), (THE TECHNOLOGY NIGHTMARE COMING TO YOUR CITY)
SPDR S&P 500 ETF (SPY) iShares 20+ Year Treasury Bond (TLT) PowerShares DB US Dollar Bullish ETF (UUP) United States Oil (USO) Apple Inc. (AAPL) SPDR Gold Shares (GLD)
November 9th, the day after the presidential election, could prove the most challenging day to trade the markets in four years.
Stocks could explode higher, utterly collapse, do nothing, or do all three on the same day. This could be the preeminent whipsaw day of the decade, if not the century.
At the moment, the market has fully discounted a Clinton win, a Democratic capture of the Senate, and a marginal Republican win in the House of Representatives.
There are two possible scenarios here.
The ascendance of the pro globalization, pro infrastructure view could unleash tens of billions of dollars of new equity allocations that immediately take the major share indexes to new all time highs very quickly.
The major indexes could add 10% over the next six months.
The pro growth outcome would send the dollar (UUP), gold (GLD) and commodities (COPX) soaring, while bonds (TLT) may take a dump.
On the other hand, a Clinton win, the expected outcome, could also deliver a ?Buy the rumor, sell the news? type event.
That could trigger a quick 5% correction, and then a more prolonged grind up to new highs by yearend. We saw much the same in the wake of the Apple (AAPL) earnings release on Tuesday, October 25th.
So there you have it: up now, or up later.
That?s the easy part.
Let?s say Donald Trump wins, to which I assign a 1% probability. That would be an enormous surprise which markets hate.
Stocks markets (SPY) would focus on an immediate decline in international trade and a huge increase in budget deficits, and would probably open down 5%-10%.
Virtually all other asset classes will fall as well, thanks to an expected doubling of the national debt and slower global growth. Defense spending would also rise.
This is not expected, so Trump supporters should not hold their breath.
However, what if there is no definitive outcome on November 8th? What if the election is thrown into the courts as it was in 2000 regarding Bush vs. Gore.
Remember all that "hanging chad" counting in Florida? They didn?t get an election outcome until December.
Since the Senate blocked President Obama from appointing a Supreme Court justice, the august body is now split 4-4. So we won?t get any definitive rulings there.
A final decision may have to be rendered by the House of Representatives, in which the Republicans have a 30-seat majority. That would hand the election to Trump on a silver platter.
This is unprecedented in US history. Risk assets would take an extremely unfavorable view of such a development and most likely would send stocks into a bear market.
For this to happen the margin in a large state, like Florida, with 29 votes in the Electoral College, would be enough to swing the election outcome either way.
The margin would have to be only a few hundred votes, triggering multiple recounts and oceans of litigation.
Yes, it may all come down to Florida one more time. ? If you are a long term investor or financial advisor, which is most of you, it would probably be better to just not trade at all on November 9th.
Given the vast expanse of time, the impact on your portfolio should be minimal. It?s tough to beat the earnings power of American corporations for the long haul.
If your candidate won, go out and have a glass of champagne. If he lost, buy a bottle of cheap gin and finish it.
https://www.madhedgefundtrader.com/wp-content/uploads/2016/09/Vote-for-Me-Button-e1474334192792.jpg400388DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2016-10-27 01:07:312016-10-27 01:07:31Trading the Day After the Election
I tell people at my strategy luncheons that living in the San Francisco Bay area is like living in the future.
There is an explosion of high tech innovation going on here, and we locals often find ourselves the guinea pigs for the latest hot products.
However, sometimes the future is not such a great place to be.
I learned this the other day when I received a parking ticket in the mail. I didn?t recall finding a notice of violation tucked under my windshield wiper in the recent past, so I looked into it.
To my chagrin, I learned that the city is now outfitting its buses with video cameras pointing forward and sideways.
The digital recordings are then transmitted to parking control officers sitting behind computer screens for review.? They issue tickets, which are mailed to the registered owner of the vehicles.
San Francisco suffers from one of the worst parking nightmares in the country. The streets were never planned, they just sort of happened on their own during the frenzy of the 1849 gold rush.
They were built to handle the traffic of horses and carriages, and later cable cars, not the crush of traffic we have today.
Sky-high real estate prices have driven millions into the suburbs across the bridges over which they must commute. So parking has always been in short supply and it is very expensive. When I drive into the city for a Saturday night dinner, sometimes the parking tab is more expensive than the meal.
Newly minted millionaires from tech IPO?s are now buying vintage Victorian homes, and then retrofitting garages underneath them. Every time this is done, it eliminates another parking spot on the street to make room for the driveway.
So while the traffic is increasing, the number of parking spots is actually declining.
The city originally installed the cameras to catch offenders driving in bus lanes during rush hour. When they discovered that the cameras also captured the license plates of illegally parked cars they expanded the program. Last year 3,000 such tickets were issued.
The program has been so successful that the cash-strapped city will greatly expand it this year. And with a great San Francisco track record to point to, the firm selling the system is planning on going nationwide. Soon it will come to a city near you.
Like I said, sometimes the future is not such a great place to be.
Parking in San Francisco Can be Tight
https://www.madhedgefundtrader.com/wp-content/uploads/2013/04/Cars-parked.jpg311406Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2016-10-27 01:06:492016-10-27 01:06:49The Technology Nightmare Coming to Your City
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(YOU ARE INVITED TO JOIN THE GREAT JOHN THOMAS-HARRY DENT DEBATE), (IS RESIDENTIAL REAL ESTATE TOPPING OUT?.OR NOT), ? (DHI), (LEN), (HD), (TPH), (AN EVENING WITH TRAVEL GURU ARTHUR FROMMER)
DR Horton Inc. (DHI) Lennar Corporation (LEN) The Home Depot, Inc. (HD) TRI Pointe Group, Inc. (TPH)
Those are the three most important elements of a successful real estate transaction.
A glut of $2 million plus mansions has suddenly hit the market in the posh Berkeley Hills, with dozens of signs for weekend open houses congesting every corner.
However, in nearby West Oakland a mere few miles away the market is on fire, a gritty, but rapidly gentrifying area near San Francisco Bay.
There you can pick up a fixer upper Victorian for as little as $400,000 walking distance from the BART station, and a mere five minute commute from pricey downtown San Francisco.
So is the residential real estate market going up, down or sideways? Which neighborhood has it right?
There is no doubt that this is not our father?s real estate market.
Nationwide, luxury homes are in recession. Some of this reflects profit taking by the smart money that got in at the 2011 bottom.
Prices in key markets like San Francisco, Seattle, and Portland have nearly doubled in five years.
New York penthouses listed for tens of millions of dollars, heavily dependent on the Russian and Chinese buyers, are going begging.
Multifamily dwellings, that have been on a tear, have also gone soft.
However, it is still early days for new entry-level homes.
While Millennials thought it was cool to live with significant others in postage-stamp-sized inner city apartments, throw a couple of kids into the mix, and the picture changes completely.
The US birthrate, falling for the past decade, has taken off like a rocket. The birthrate among woman over 25 is suddenly exploding, while for those over 35 it is rising at an even faster rate.
As with the original Great Depression, the 2008 Great Recession ended up pushing out the demographic curve by five years, delaying new family formation.
Yes, I know what you are going to call it. This is nothing less than the start of a millennial baby boom which will power our economy for the next 20 years.
The biggest demand is now in starter single-family homes with 3-4 bedrooms, modern kitchens, and generous backyards in leafy suburbs.
The math here is very simple.
Why face an onslaught of 4%-12% annual rent increases, when you can build equity, install your own solar panels, and harvest great tax breaks through home ownership?
A silent revolution in home finance is making all the difference.
You hear a lot about the difficulty in getting home loans from traditional brick and mortar banks these days.
Tales are legion of mountainous paperwork requirements, low loan to values, second signers, ridiculous appraisals, and stringent FICO standards.
Blame The Dodd-Frank financial regulation act. Some eight years after all the big banks required bailouts, the government still has them on a short leash.
But guess what? Banks aren?t the main players in the market anymore.
Non-bank lenders now account for 56% of the residential real estate market.
Firms like Quicken Loans, Stearns Mortgage, and Freedom Mortgage have moved aggressively to offer streamlined online applications and instant approvals.
Just for fun, I called Quicken Loans in Detroit, Michigan to get a refinancing offer on my San Francisco Bay Area home.
Within a minute, the agent was looking at my house from Google Earth, and had obtained an appraisal from Zillow.com.
I only needed a FICO score of 700. Within three minutes, he received approval to refinance 70% of the appraised value with a 5/1 ARM at a 2.87% interest rate. The closing would be in 30-40 days.
Banks are now responding by attempting to claw back lost market share. Wells Fargo recently announced a first time buyers program with only 3% down. Other banks are rolling out similar programs.
?What about rising interest rates?? you may ask.
My bet is that interest rates will rise so slowly that the impact on monthly mortgage rates will be negligible.
The great thing for stock investors is that the demographics are ramping up just when housing inventories are at 30 year lows.
New home construction in recent years by risk averse builders is proceeding at less than half the frenetic rate we saw during the 2000s. And this is an industry where it takes two years or more to ramp up production.
This all shines a great spotlight on the home construction industry.
In the sweet spot are Lennar (LEN), DR Horton (DHI), Home Deport (HD), and Tripointe Group (TPH).
The performance of these shares has been lackluster for a couple of years. They have additionally been hammered by the recent selloff in interest-rate-sensitive asset classes and fixed income surrogates.
They are about to play catch up with a vengeance.
Real Estate is Hopping in West Oakland
https://www.madhedgefundtrader.com/wp-content/uploads/2016/10/West-Oakland-House-e1477451958111.jpg302400DougDhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngDougD2016-10-26 01:07:422016-10-26 01:07:42Is Residential Real Estate Topping Out . . . Or Not?
Travel guru, Arthur Frommer, says that now is the best time to travel in 20 years, thanks to a combination of a strong dollar and desperate price cutting forced by the recession overseas.
Nine? years after oil hit a historic peak at $148/barrel, when $500 fuel surcharges abounded, and the demise of the travel industry was widely predicted, costs in some countries, like Mexico and Costa Rica are 50% lower than a year ago.
Talk about price elasticity with a turbocharger!
Frommer believes there are three sea change trends going on today.
Business is moving away from the big three travel websites, Travelocity, Orbitz, and Priceline who have more preferential side deals with airlines than can be counted, towards pure aggregator sites like Kayak.com which almost always offer cheaper fares.
There is a move away from traditional 48 person escorted bus tours towards small group adventures, like those offered by Gap Adventures, Intrepid Tours, and Adventure Center, which? take parties of 12 or less on eye opening public transportation.
There has also been a huge surge in programs offered by universities that turn travelers into students for a week to study the liberal arts at Oxford, Cambridge, and UC Berkeley.
Arthur's? favorite was the Great Books programs offered by St. Johns University in Santa Fe, New Mexico.
He says that the internet has given a huge boost to international travel, but warns against user generated content, 70% of which is bogus and posted by the hotels and restaurants themselves.
The 86-year-old Frommer turned an army posting in Berlin in 1952 into a travel empire that publishes 340 books a year, or one out of every four travel books on the market.
I met him on a swing through the San Francisco Bay Area (his ticket from New York was only $150), and he graciously signed my original 1968 copy of Europe on $5 a Day, which was crammed in my backpack for two years.
Which country has changed the most in his 60 years of travel writing?
France, where the citizenry have become noticeably more civil since losing WWII. Bali is the only place where you can still travel for $5/day, although you can see Honduras for $10.
Always looking for a deal, Arthur?s next trip is to Chile, the only country he has never visited, because the currency there has crashed, thanks to the weakness of the Chinese economy and the collapse of copper prices (CU) chronicled in this newsletter.
West Berlin 1968
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