War Room - December 2014

1. The Immigration Fight
11 December 2014
War Room

2. HiddenLevers War Room
Open Q + A
Macro Coaching
Archived webinars
CE Credit
Idea Generation
Presentation deck
Product UpdatesScenario Updates

3. Market Update
Demographics Scenarios
The Immigration Fight
Future of US Immigration
The Immigration Fight

4. HiddenLevers
MARKET UPDATE

5. Market Update
Crude Awakening Jobs Explosion
Online retail is Holiday Retail
sources: HiddenLevers, CNN, Financial Times, LA Times, Yahoo Finance
GOP takes Congress

6. Market Update – Ebola Pandemic
sources: HiddenLevers, Business Insider, Forbes
Macro – geopolitics
US + Middle East collude
to crush ISIS + Russia
How
OPEC no production cut
US begins exporting oil
Macro Snapshot – Crude Awakening
-45%
Macro – economics
USD strongest in 5 years
20% more US production
15% less consumption
Millennials + Boomers driving less
+10%

7. Macro Snapshot
A few more danger signs, including yield curve, Shiller P/E, and bond spreads. The
almighty dollar continues to crush all comers – at what point is this bad for US?
Don’t cross the red line

8. DEMOGRAPHICS SCENARIOS
HiddenLevers

9. healthy population pyramid
US population pyramid (2014)
USA Demographics 101
sources: HiddenLevers, CIA World Factbook, US Census Bureau

10. GOOD: Successful Immigration Reform
source: HiddenLevers,
GOP + President move to merit system
rhetoric centers
on skilled labor
US educated
foreigners stay
in US
private job
creation
increases
short term GDP
positively
impacted
long term GDP
at 90s levels
more fuel for
secular bull
market

11. BAD: Immigration Gridlock
family ties
continue as
basis for
immigration
polarized society
status quo maintained due to inaction
illegal
immigration
doesn’t abate
source: HiddenLevers, US Citizenship and Immigration Services
short term
GDP
eeks along
diluting human
capital, not
building it
Long term
GDP
biggest casualty

12. UGLY: Baby Bust
aging baby
boomers are a
headwind
negative labor
force growth
negative population growth + GDP decline
mirroring
Europe + Japan
source: HiddenLevers, Economist
young people
leave for
opportunity
elsewhere

13. Scenario: US Demographic Shift
Successful
immigration reform
builds US human
capital, driving GDP
growth to 90s level.
Gridlock = status
quo, where illegal
and family-oriented
immigration
continues, without
major benefit.
If US population
begins to backslide
like Europe, malaise
will set in. As in
Japan, QE can’t fix –
population growth
needed.
Good
Successful
Reform
Bad
Gridlock
Ugly
Baby Bust

14. HiddenLevers
THE IMMIGRATION FIGHT
$

15. US Immigration: Global Perspective
sources: World Bank GDP, World Bank Pop, HiddenLevers Analysis
Population growth is positively correlated (+0.3) with GDP growth –
it’s difficult to grow GDP when population is dying or leaving
-2
-1
0
1
2
3
4
5
6
7
8
GDP Growth (%)
Pop Growth (%)
Population Growth
/ GDP Impacts:
• Raises consumption
• Improves worker /
retiree ratio
• Builds human
capital
• Global deflation
debunks limits to
growth theories

16. US Immigration: Current Picture
sources: US Dept of Homeland Security, US Census Bureau, TD Economics
2004-2014
1m new immigrants / year
33% of population increase
60% of labor force growth
Big 5 states
receive 60%
CA
NY
FL
TX
NJ
2014-2024
Adult population all
be over 55 years old
Fastest growing age
segment: 70-74
54% of immigrants are
age 25-54

17. US Immigration: Impact on Economy
Population
Growth drives
40% of GDP
Growth
(1% per year)
Population Group Total Addition
New Immigrants 1 Million
Births to Foreign-Born Women 1 Million
Total Population Growth (2013) 2.3 Million
=> 80% of population growth due to immigrants
sources: Census, CNN, Reuters, Pew Research, Time, St. Louis Fed
Immigration to
soon account
for 100% of pop
growth

18. US Immigration: Obama Executive Order
sources: Washington Post
Legal reprieve to 3.7 million illegals
with US citizen children, must be in
USA for 5 years
Immigrants who came as children can
apply for deportation deferral. Now
immigrants over 30 qualify.
Visa facilitation for who invest in USA
Visa facilitation for anyone pursuing
science / tech / engineering / math
degrees
NO expansion of HI-B visa program
NO ACA coverage for new legals
NO visas for migrant workers
3.7 million made legal
6.2 million illegals left

19. HiddenLevers
FUTURE OF US IMMIGRATION

20. IMMIGRATION: Congressional Action
sources: Migration Policy, Fox News
GOP now has majority, still using minority tactics
to stall executive order.
- Homeland Security funding only to Feb 2015,
rest of budget is Sept 2015
- Die Hards trying to wage battle now, trying to
threaten govt shutdown
- Calling Obama actions unconstitutional – they
should have beaten him to it.
1. increases GDP (consumption/production)
2. family values agenda
3. less govt spending (no enforcement)
4. secure the Latin vote
No increase in
illegal immigrants
since 2010

21. US 1965 Reform + Global Models for Reform
sources: Center for Immigration Studies, TD Bank, Library of Congress
Canada + Australia + UK:
• 60%+ merit-based immigration
• Points for education, skills in high
demand areas, language fluency
• Less temp visas, more “green” cards
1965 Reform:
• Opened non-European
immigration
• Prioritized family ties
• Allowed for merit consideration
(origins of H1-B and other visas)
• 41 million legal immigrants in US
today, highest share since 1920

22. IMMIGRATION: Deflation Antidote
sources: US Census Bureau
Deflation
avoided
Malaise a la
EU + Japan

23. IMMIGRATION: Recap
Domestic fertility rate below
replacement level
Obama immigration action will stick
new brain drain = next level GDP boostillegal immigration irrelevant

24. Product Update
eMoney
integration
whole site
scenario selector
correlation
Risk
score
risk monitor
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coming soon