The Trumpanomic Effect: Part One

Now that the election is over and we know who the president is going to be, it is time now to analyze what I think will be one of the largest impacted areas of a Trump administration.

The economy.

As an investor I am now spending considerable time evaluating some of the promises that President-Elect Donald Trump made during his campaign as they apply to economic considerations. And what I see is enough to make me literally salivate. Of course, he is not yet in the White House, and the House and the Senate need to be onboard with any plans the Trump administration may lay before them. But there is a positive here if you have not noticed.

The republican party, and even some of the most staunch never Trumpers within the republican party are all now clearly and openly rallying in favor of the president-elect.

Seeing Ted Cruz moving in and out of Trump tower negotiating with both Trump and Pence and other members of the transition team, and hearing Cruz now speak to the American people about his now positive views on what Trump will offer is one thing. But Mitt Romney has also apparently moved on over to the Trump train as well, even after virtually calling for the election of Hillary Clinton early on in the campaign.

It's one thing that the GOP controls both the House and the Senate. It's entirely another that they are in support of the president-elect, and by all accounts, appear to also be entirely onboard with much of his agenda as well. Even Ted Cruz specified that Trump's overwhelming defeat of Clinton and the GOP win over democrats, despite what all thought would be considerable odds, defined a clear mandate by the American people that they want the campaign promises to be fulfilled. And if the GOP wants to maintain their power, they are going to have to deliver on that mandate or face their ouster come the next round of mid-term elections.

So, when it comes to the economy, it looks like we may see the ratification of a good number of some of the ideas that Trump offered to right the listing economic ship. And from an investors perspective, this means we may see some very interesting positive developments in the stock market going forward.

And by the way, it's not just the stock market that will benefit. If Trump can get done what he wants to do—especially in the first 100 days—of course American workers will see massive benefits as well. It's really not rocket science to understand that the underlying factor of more Americans working, even making higher wages, coupled with other factors are the benchmark of a strong economy.

Think of the impact of the middle class and my point is proved. When the middle class is vibrant and strong the economy flourishes. When the middle class is in jeopardy, the economy slips and falls.

One thing that seems clear to me is that if Trump can get done even half of what he advocated for during the campaign, we are going to see massive upswings in jobs, and even massive upswings in median income across the United States. I honestly believe that a whirlwind of economic growth is right around the corner, and if the economic policy put forth by the Trump administration looks anything like I think it will, we are headed for long term growth that may even make the undeniable success of Reaganomics pale by comparison.

In the following series I will outlay some of the factors that I think will spur on this economic growth, and the reasons I think they can be powerful enough to potentially uplift the American economy in very short time. I don't think we're looking at four or more years to see results here. I think we will begin to see results, actually, after just two years into the Trump administration. And in some ways if I am to be totally honest, even two years may be a conservative estimate.

Why?

Because if the American people can see the light at the end of the tunnel, and if there is a positive attitude toward what our economic future holds, this will reflect very early on (and in some cases is already being evidenced a mere 10 days after the election results) in how Americans react to it. Things to watch with abided attention are the U-6 unemployment figures, consumer confidence figures, retail sales, and the housing market—particularly housing starts as opposed to depletion of existing inventories.

My shortlist advice? You better have some cash lying around to toss into the markets, and I will be telling you where I will be putting a lot of mine, because waiting too long may well put you miles behind the curve once this thing really gets going.

I told you all along that Trump would win, and win big, and laid out all of the reasons I saw that coming. Now am I going to tell you that the economy is the next big winner, and will lay out all of the reasons why I see that coming as well.

The Danger of Talking Points in Elections

Democrats and liberals will often utter talking points, which on the surface sound fine. But rarely do they think through what the effect is ultimately of any of it. They simply drop their line, smile, and walk away feeling there is no reason to further explain. This is especially dangerous when these talking points are actually acted upon by our elected officials.

Take this democratic talking point as a case in point: "Everyone should have the ability to own a home."

On the surface it sounds wonderful and fair. Owning a home is the dream of a good many Americans, and in communities where people own their homes, the communities generally tend to thrive since there is a tighter bond between the real estate and the person who occupies it.

This talking point, and the action that was taken in support of it lead to the biggest financial decline in recent history and nearly caused an economic collapse.

Sure. The blame was placed on the big banks, Wall Street, and the rich. But the truth is that while there is some blame to lay there, a larger part of the blame lies on the politicians who signed into law the opportunity for people who could not otherwise afford homes to have them anyway.

Let's keep in mind that what the banks had to do in order for this to be possible was to have to take on enormous amounts of risk of capital. In answer to that they created credit default swaps and took on other measures which could not truly be valuated when all was said and done. When loans were called, no one had the money to pony any of it up.

Therefore the system fell apart.

The current lineup of democrats on the stage vying for the presidency are all spouting off talking points, and not a single one of them are backing up what they are saying, or explaining how they intend to do any of the things they say they want to. Americans are lapping it up like fresh milk to a cat. Granted, there are a handful of republicans doing the same thing. The difference is that most of the republican candidates are actually explaining how they intend to get something done, and stating the reasons behind why it must be done.

The key behind, for example, how the republicans intend to fix the economy? Jobs. And in one particular case, putting to task those countries that have for years siphoned off good jobs and unleveled the playing field when it comes to trade. Republicans know, and history shows clearly, that when Americans are working, and when the middle class is viable and strong, the economy thrives.

As for the democrats, they want to attack the so called evil rich who are simply counting their change and leaving everyone else behind with evil grins on their greedy faces. "Tax the fat cats. Pay their fair share. Close the gap between the rich and the poor."

The truth is that while this sounds fine on the surface, and I can certainly see where a good many Americans might be on board with this idea, it is a completely dangerous and counterproductive path to take.

When is the last time you received a paycheck from a poor man?

The rich are hard working people who build businesses and innovate products to sell to consumers not just here, but abroad. They are the machine that drives jobs which provide for the welfare of Americans. Yes the idea is to maximize profits. Sure, the playing field is a bit uneven. Yes the corporations have as much to be blamed for when it comes to how we lost those jobs as the government is to blame for opening trade in ways that allowed for it to happen, and which all but took away America's competitive edge, especially in the case of manufacturing. The heart and driver of the middle class in America.

What the republicans want to do is to restore manufacturing in the United States, and make it harder for countries like China and Mexico to provide cheaper labor which hurts American jobs. The republicans want to remove things like Most Favored Nation status and reinstate tariffs which were designed to even things out—a tariff on goods coming from China, for example, puts the cost of their products on par with the cost of making things at home in the U.S. Lacking a strong incentive for American businesses to get labor from China, they'd be more inclined to keep their shops open right here at home and keep Americans working in them at good and competitive wages.

The main thrust of this post is that at the end of the day as we approach the 2016 elections, we need to be paying attention to what is being said on both sides of the aisle. We need to not only hear the talking points. We need to be able to see the forest for the trees. We need to be able to read between the lines. We need to be able to consider the consequences—intended or unintended—when it comes to any decisions that might be made in consideration of what sounds good. As well, we need to fundamentally understand what has driven down our economy, and our standard of living. It has not been the rich. It has not been tax loopholes. It has largely been trade policy which has allowed for companies to provide jobs abroad and leave Americans behind, unable to compete. I will be fair and say that the republican party is largely to blame for this. But the fact is that they now see the harm it has done and want to set it straight while the democrats simply want to take from the rich to redistribute wealth without considering the impact of that, and without considering the benefits to restoring manufacturing, and restoring good paying jobs and the middle class to rebuild the country economically.

Why are the democrats so hell bent on focusing on welfare programs instead of jobs?

Because it equals more power for them to push their agendas through and hold the American people hostage. Americans who have more, have more power and control over their lives. Americans who have less become dependent on what the government can provide, and so the power is given to them, and the power of the American people erodes.

We are at a critical time in our nation's history. In order for us to get back on the right path, I think we need to stop listening and adhering to the talking points. We need to begin to dissect the talking points in a way we haven't done in a long while and begin to really get at the root of how we make America great again.

Unemployment Numbers May Drive Future Auto Sales

The unemployment numbers released today show some sign that just maybe we may be beginning to see a bit of a turnaround. Certainly the DOW Jones Industrial Average, and frankly all of the indices, have been on fire. The DOW has seen record highs.

This leads to one other thing we know. Auto sales have lagged both in the United States, and big time in Europe. All indicators point to a trend in the United States over the past 5-8 years that says that Americans in particular have been keeping their cars for longer periods of time.

When the economy stinks, who the heck can take the chance to buy a new car? Just drive what you have and run with it.

In fact, if you'd have invested in many of the auto parts companies like O'Reilly, for example, you'd have seen some pretty nice gains. People keeping their cars longer means they'll need parts to keep them running in tip top shape.

Which brings me back to the automakers. If and when, and I really think it is more a matter of when than if, the economy really starts to get some of its legs back, I think the very first thing the average American is going to do is replace their old car.

Sure, houses are nice, and the housing market has been having a pretty good run as well lately. But cars are still at the heart of every single American that drives. A new car is a treat. And if jobs numbers begin to improve, and people feel more secure in the jobs they have, and especially if the economy begins to provide less uncertainty as to where it's headed, Americans will park a shiny new car in their driveway.

It's a high ticket item, but it's not as high a ticket item as a house is. And the interest rates are still running relatively low, making any deal at the dealership even more enticing.

I am focusing on American automakers as well in this idea. I like Ford a lot. Mostly because Ford is the smaller of the Big Three US automakers, and because they have streamlined their business massively, and I think they have the most to gain with market share. Not to mention they are making some pretty nice cars.

Why American as well? I think there is a growing amount of interest in this country to buy American. We are beginning to see many more efforts by retailers to stock their shelves with American made goods. Walmart recently said it would add $50 billion over the next 10 years of American made goods. Big home improvement chains like Menards, which are all over the Midwest states, especially around Minnesota, Illinois, and Wisconsin, has been on a rampage stocking their stores with American made and regularly offering American made sale prices and incentives.

I just think that more Americans are becoming aware that in order to really seat this country back into a good economic situation, we are going to have to start putting factories back on line, and in turn Americans will have better employment choices in sectors of manufacturing, which historically paid good wages and benefits to the average American. The fact that you can have a good paying job without the need for a college degree is also a plus since more Americans working and making good money no matter their status means many more dollars will flow in the real economy, and ultimately into these American businesses.

Ford Motor Company is my top pick. But I think if you invest in any automaker right now, in 12-24 months, you'll see substantial gains. Maybe the dip in unemployment is just a short term fluke. Or it is something that signals a turnaround. Either way, I don't see this economic downturn as being a permanent thing, and like I said before, the very first treat when all is good will be a shiny new car.

And that's why I think the automakers are good buy right now.

Full disclosure: Jim Bauer currently has stock in the Ford Motor Company.

Buying American Made Is Easier Than You Think

Every time I bring up the idea of buying more American made goods in order to help supply more cash to the American economy, and encourage businesses to identify demand for goods made in America, and essentially increase efforts to manufacture their products here, and provide more jobs to Americans who still are hard pressed to find meaningful work that pays workers good wages, I get met with dissent.

"Things cost too much to make it here," people say. "American companies cannot compete with lower wages in other countries."

I tend to find these accusations to be false. It sounds good. It's certainly what we have been led to believe by not only the companies who make things, but the government has touted this often as well, and always like to bring up the idea that this is a global economy, and that commerce with other countries is vitally important to the American economy and her people.

Yet the largest employer in the United States is currently Walmart, unemployment remains at considerably high levels, median income is down by nearly $4,000 per year per American, and for the last 30 or so years wages in America for the average worker has either declined, or been stagnant. The middle class is on their death bed, and the gap between the rich and the poor is ever widening.

The fact is that there are still things made in America, and they don't necessarily cost more than goods made elsewhere. It just takes a little extra time to look for things made here. Among some things still made in America, aside certain makes and models of automobiles, are socks, outdoor grills, water heaters, dishwashers and other appliances, plastic containers, glassware, cutlery, shoes, and many other items that people generally have a use for.

Consider something here that I find interesting. That is that there are approximately 300 million people living in America. If each and every American bought just $365 worth of American made goods, this would pour approximately $109.5 billion dollars into U.S. manufacturing. Not only would this provide an incentive for American companies, and even foreign companies, to do business here and employ Americans, but this would also assume that more money would be able to be collected by the IRS. More people working, making higher wages, and essentially having more buying power in the real economy means less people on the dole, less requirement for the government to engage in social programs which cost taxpayers huge dollar amounts, and at the end of the day this means more people able to afford any premiums that may be associated with American made versus foreign made goods.

In America it was fine at one time to think about benefits of globalization. Unfortunately I think we are seeing the proof is in the pudding that what globalization has largely done has been to cost Americans much needed work, benefits, and higher wages, and has forced Americans more than ever to struggle through their own financial woes with less ability to provide for their families and pursue their dreams, desires, and goals.

It's just $365 a year in American made goods. This generates $109.5 billion of revenue for American manufacturing. I think getting to a point where we think more and more about the importance of making things here, the more opportunity Americans will have to have to find American made products, and the easier it will be to slowly inch our way back up to doubling, and even tripling these numbers pouring into the American manufacturing sector of our economy.