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Deglobalization Webinar-slides--02-22-2017

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Deglobalization Webinar-slides--02-22-2017

Deglobalization Webinar-slides--02-22-2017

  1. 1. De-Globalization 22 February 2017 War Room
  2. 2. HiddenLevers War Room Open Q + A Macro Coaching Archived webinars CE Credit Idea Generation Presentation deck AccountabilityScenario Updates
  3. 3. Market Update Protectionist Trends US Border Tax Scenario: De-Globalization De-Globalization NEW
  4. 4. HiddenLevers MARKET UPDATE
  5. 5. Market Update sources: HiddenLevers, NY Times, CNBC, Kitces Blog, CNBC New Advisor Model Marketplaces GOP Agenda Running in place Yellen Fed Now Irrelevant
  6. 6. HiddenLevers PROTECTIONIST TRENDS
  7. 7. Protectionism: USA Sources: HiddenLevers, CNN Money, Forbes, The New York Times, The Washington Times, USA Today, CNBC
  8. 8. Protectionism: Global sources: HiddenLevers, IBTimes, CNN, CNN 2, Xinhua, Guardian, Daily Beast, UK First year as top 10 US trading partner, not on Trump’s radar Much lower trade deficit than China/Mex IT sector getting hit from Trump H1-B shift France Mexico China India Promoting domestic consumption since 2009 financial crisis Growing clout with Europe + EM as it turns away from unwelcoming western markets Out of EU, into better trade deals on its own +1.7% Highest GDP in first world 60% of business leaders saying Brexit already having negative impact on firm Fear of Le Pen, heavy populist agenda Gap between German + French Yields greatest ever China-France new deals on nuclear + industrial chain Will retaliate against US, eliminating US jobs Pivoting away from USA – Spain, Lat Am China-Mex relations at an all time high
  9. 9. • Tariff of Abominations (1828) • Tariff of 1857 • Morrill + Civil War Tariffs (1861-1864) • Smoot-Hawley Tariff (1930) • Trade Agreements Act (1934) Protectionism: Historical Analogies Sources: HiddenLevers $1.06 $0.97 $0.91 $0.79 $0.78 Year 1929 1930 1931 1932 U.S. Real GDP ($ Trillion)
  10. 10. HiddenLevers US BORDER TAX
  11. 11. Border Tax: 101 Sources: HiddenLevers, Daily Signal 2015 U.S. GPD: $18tn Imports $2.7tn Exports $2.2tn The great majority of GDP is still domestic.
  12. 12. Border Tax Opponents: Wal-Mart and major retailers Koch Industries and oil refiners Border Tax: Corporate Civil War Sources: HiddenLevers, Fortune, Bloomberg 52-48 GOP Border Tax Supporters: Boeing, GE, Oracle 20 other major exporters GOP can only lose two votes in Senate: Tom Cotton (Arkansas - Wal-Mart) David Perdue (past Dollar General CEO) both opposed
  13. 13. Border Tax: Winners + Losers sources: HiddenLevers, Reuters, Goldman Sachs Retailers, Apparel, Tech Hardware suffer Aircraft, Software, Media benefit WINNERS Discount Retailers (Chinese imports) Net Import Share of Products by Industry Drivers also suffer – gas prices may rise 30 cents to offset tax on imported oil
  14. 14. Border Tax: Currency Impact Sources: HiddenLevers, Nasdaq, Markwetwatch USD action in 2017 shows border tax less likely Rise in value of USD now may reign in US economy Currency shift has 5y lag from trade balance +8% -2.5%
  15. 15. Border Tax: Threat of Retaliation sources: HiddenLevers, Financial Times, WTO CHINA MEXICO
  16. 16. HiddenLevers SCENARIO: DE-GLOBALIZATION
  17. 17. SCENARIO: Currency Wars Outdated sources: HiddenLevers Currency Wars De-Globalization
  18. 18. GOOD: Tax Plan Works source: HiddenLevers Corporate civil war ends up growing GDP USD gains mostly priced in Exporters win foreign revenue not taxed Import tax doesn’t harm corporate tax cuts
  19. 19. BAD: Punishing Mexico source: HiddenLevers Border Tax kills Mex imports / labor / repatriation US impact limited, but US jobs will be lost Loss of immigrants hurts US GDP US auto + retail hurt – lot of Mex connects
  20. 20. UGLY: Trade War source: HiddenLevers China + Mexico retaliate as Border Tax takes effect Heavy GDP loss, China likely the winner Warning on 1:1 trade duties has been given China winning trading friends globally
  21. 21. SCENARIO: De-Globalization Good: Tax Plan Works Bad: Punishing Mexico Ugly: Trade War USD -10% S&P 500 -25% USD FLAT S&P 500 -5% USD +6% S&P 500 +14% The positive impact of corporate and personal tax cuts overwhelms the negative impact of import taxes, driving growth and market gains. President Trump has singled out Mexico, and might attempt a tariff or a NAFTA rollback, with modest US impact. A trade war with China or other major trading partners might ensue if the BAT is passed. Economic growth could fall as a result, driving a correction.
  22. 22. De-Globalization– Take Aways Exporters win, Importers lose Big risk = trade war Border tax plans will struggle in US Senate Protectionist US handing leadership baton to China
  • PeerapongJitjaturan

    Sep. 11, 2019

Deglobalization Webinar-slides--02-22-2017

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