Posted this on Facebook this morning, but thought some of you might be interested as well:
Predictions re the economy:
1. Trump trades very large tax cuts for large infrastructure and defense spending. Sub-prediction: The infrastructure spending goes to private contractors, not state / local governments, to avoid empowering public employee unions
2. Deficit and therefore national debt expand enormously. The GOP has previously demonstrated willingness to throw out fiscal rectitude when given the chance for tax cuts and spending growth (see GWB administration).
3. Growth accelerates, mostly due to infrastructure spending, somewhat due to tax cuts on high incomes / corporations (which are stimulative, though not as much as they could be if directed to poor people).
4. Unemployment continues to fall and a bunch of those guys sitting in their rooms taking PKs and playing video games rejoin the labor force.
5. Inflation, which is already starting to pick up, accelerates, because there’s not that much slack in the economy right now.
6. In response to inflation, the fed begins seriously increasing rates, likely towards the back end of 2017.
Implications:
1. Get long assets, whether the stock market or real estate or whatever.
2. If you want to bet on specific stocks, bet on large government contractors, the kind that build roads, bridges, airports, bombers, ships, etc.
3. If you want to bet on real estate, multifamily would be a good place to go, given that rents are exquisitely sensitive to employment growth.
4. Lever up with long-term debt. Inflation becomes your friend and today’s rates are going to look very appealing 12-24 months from now.