- the source for market opinions


December 30, 2019 | The Stampede

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

The common wisdom on The Street is Trump’s a cinch in November. Confidence that the growth-at-all-costs president will win in the coming election is part of the reason investors think markets will melt up in the next few months.

After all, it’s the economy, stupid. Unemployment’s at a 50-year low. Corps are making big bucks. Stocks at record levels. Consumer confidence and spending are strong. Residential real estate is stable. Wages are up. The trade war with China is easing. Inflation’s running cool. Interest rates have come down again.

So, how could Trump lose? Even if he is a paleo?

But wait. What’s the thundering sound? Hey, it’s a stampede of Millennials!

Some people think moisters and women will punt the president, causing him to lose by up to ten million votes. As a research paper called ‘The Ok Boomer Decade’ spelled out this week there’s already evidence a sweeping move to the left is taking place among the under-40 crowd. The numbers are actually stunning. In the 2018 mid-term elections 68% of 18-to-24 year olds voted Democratic. The result was almost identical for those aged 25 to 29, and stayed at 59% among the 30-to-39 cohort. Republicans only regained the edge among voters over 50. Boomers.

The pendulum is shifting, we’re told. This new decade will see a relentless move left as the largest demographic (Millennials) turns desires and entitlement into votes. Surveys show people under 30 don’t fear socialism, want bigger government, increased social program spending and are willing to live with seriously higher taxes to get it. Taxes on others, of course. Like the Boomers, the rich, homeowners and corporations. It’s why Elizabeth Warren and Bernie Sanders have been embraced. This is what AOC is all about. And MMT – modern monetary theory.

So the 2020s may bring war on inequality. The 99% chasing the 1%, using government to level the field. It’s already emerging in Canada, as you know. BC’s socialist government and its tax war on real estate is a good example. Trudeau’s slashing of TFSA contributions, the attack on small business financing and the new uber-tax bracket hitting incomes over $200,000 also fit the pattern.

Those drifting left, doubting capitalism, feeling shut out of the housing market, hating the gig economy and struggling to form families don’t care much about federal government deficits or balanced budgets. No wonder poor Andrew Scheer’s message went fallow. In the world of MMT believers, the government tells the central bank to print enough money to achieve social justice – universal health care and education, a debt jubilee, state-built affordable housing and a guaranteed annual income. Since the debt is owed to the people, it’s not bad. Why repay it?

Now layer Greta on top of inequality, social justice and elastic monetary policy, and the shift left continues. People under 30 believe overwhelmingly in the reality of climate change and are happy to use the term ‘emergency’ to describe it. More justification for a tax attack on those lifestyles which they feel contributed to the crisis. Carbon-emitting cars and planes, over-sized houses, excessive consumption and the hoarding of assets. Don’t be surprised in the decade ahead to see capital gains taxes on Canadian real estate, a top tax bracket touching 60%, a wealth or inheritance tax and carbon taxes far above current levels. Poor Alberta.

Now, none of this is overnight stuff. Trump may well snuff the lefty Dems in eleven months. The Canadian Cons may wisely go centrist and topple Trudeau. Boomers are not a washed-up asset class yet.

But we’re not blind, either. A year ago MMT was just a worn, discredited, far-out economic theory espoused by people who keep ferns. Now it’s at the heart of a US presidential race. Greta is a cult hero to millions. Every incident of extreme weather fuels a movement. The political polarization of the developed world is coming down to divisions of age, class, even gender. In democracies, when a majority feels put down, delayed, disenfranchised or pissed, radical things can happen. There are now more Mills than Boomers, an imbalance which grows daily.

So if Trump fails in November, this will be why. If he wins, it could be a generation’s last huzzah. His kind will be gone.

What to do in terms of your own life? You assets?

Tune in next year. I’m taking tomorrow off to work on the bunker.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the Weekly Recap.

December 30th, 2019

Posted In: The Greater Fool

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site


This site uses Akismet to reduce spam. Learn how your comment data is processed.