Economic Outlook
Despite record voter turnout and a staggering $5 billion political spend between both parties, Democrats’ hoped-for ‘blue wave’ failed to materialize on Tuesday. Instead, the reality was closer to a purple wash.
Democrats won a slight majority in the House – they were up 26 seats at last count, three more than the 23 needed to flip control, with more races expected to be called in their favor on Wednesday – but Republicans picked up seats in the Senate, solidifying what had been a razor-thin majority. Almost all of those seats were won by staunch conservatives who are expected to back the Trump agenda. Meanwhile, it’s unlikely that the Democrats will come anywhere close to the 40 seats they would have needed to signify a “tsunami-like” victory. However, at least one Democratic narrative was validated as 18 of the 29 Republican districts that flipped to the Democrats were won by women, cementing the ‘year of the woman’ narrative… CLICK for complete article
China is ready to negotiate a trade deal with the United States as both economies stand to lose from a prolonged trade war, Vice President Wang Qishan said today as quoted by Bloomberg. Wang was speaking at the Bloomberg New Economy Forum in Singapore, and added that trade was the “anchor and propeller of China-U.S. relations.”
However, President Xi’s number-two as Bloomberg called him, also warned against “right-leaning populism” and “unilateralism.” CLICK for complete article
As quarterly profits double for Warren Buffett’s Berkshire Hathaway conglomerate, the legendary investor moves to buy back over $900 million in shares in one of the first signs of vindication for bulls who say the run it’s over.
Buffett thanks Trump’s December 2017 tax cuts and lower-than-expected losses in Berkshire’s insurance business for what turned out to be a Q3 2018 operating profit of $6.88 billion—up from $3.44 billion a year ago…. CLICK for complete article
No, Make That – Something “Historical” Is Happening
I’m sure you’re busy. I certainly am given all that’s going on in the economy and markets but I think items like Angela Merkel stepping down – the rise in interest rates – the Turkish bond crisis, which pushed 10 year borrowing rates from 10% to 22% in just 12 month – along with the devastation in emerging markets like Brazil and Argentina merit our attention.
More to the point – our financial well being rests on understanding what’s driving these events, yet few people seem to. And by the way – while I appreciate there are a ton of opinions and analysis out there, the only way to evaluate and judge whether one approach or model is better than another is the examine the track record. And on that score I don’t know a better one than what we’ve produced at the World Outlook Financial Conference. We unequivocally forecast the record bull market run since March, 2009 – and we haven’t changed our long term view despite the fact that at the last World Outlook Conference in early February we correctly predicted that market opportunities had shifted.
We went from a “buy the indexes” because everything is going up to a “stock pickers” market because 2018 would be choppy with very little overall progress. And here we are over 10 months later and the major indexes are basically flat while our individual recommendations of companies like Canopy Growth, Aurora, Netflix, Viemed, Boyd Group, Photon Control and others registered double digit gains – much more in some cases.
In February, 2017 we clearly stated that the bull market in bonds was over and that interest rates were about to rise. At this year’s conference we’ll forecast how far they might go. Just locking in your mortgage when we told you to would have paid for the price of a ticket many times over.
That’s what I love about investment markets. You don’t have to be good looking and charming – you just have to get it right. In the end there’s no BS, no stories, no excuses – just results.
Making money and protecting you from losses is the goal of the conference, and I’m very pleased with the results. For anyone who acted on the specific advice, the $149 ticket was probably the best investment they made last year.
Here’s A Bit of A Shock
What’s about to happen is going to make the last five years seem tame. My goal is to make sure you are protected and profit financially. Unfortunately the vast majority of people won’t be. Just look at the beginning of the unworkable pension mess in Dallas, Chicago and Puerto Rico. Consider that Illinois’ pension liability is now 280% of its entire annual tax revenues. This is not going to end well.
I don’t think it will in Europe either. One of the main themes at the Conference and on MoneyTalks has been that we are witnessing the historic demise of the European Union – and the implications for stocks, bonds, currencies and precious metals is huge. The next year will be pivotal. Brexit will take place. Italy and the EU will have to come to an agreement on a “no win” Italian budget deal that will either signal the end of the EU’s agreement on debt financing or Italy will leave.
By next week, we’ll have the results of the mid-term elections in the US, which depending on the outcome could derail the Trump tax reductions, which have played a big role in pushing the US stock markets and dollar higher. Or if the Republican’s win we could see even more tax reductions introduced. If the Democrats win there could be massive uncertainty talking about impeachment for the next two years. Who knows, but the markets will be impacted no matter what the outcome.
My Point
The world is changing in dramatic fashion. The increased volatility is going to intensify. The World Outlook Financial Conference track record speaks for itself. Our official World Outlook Small Cap portfolio has delivered double digit returns every year. We can help you navigate those changes and the volatility.
To sum it up – this is my long winded way of saying I hope I see you at our 30th annual Conference along with speakers like Martin Armstrong, Ryan Irvine, John Johnston and Josef Schachter to name just a few.
Then again, maybe you’re not interested – and believe me I get that. Maybe you already are on top of things. Maybe there’s something good on TV. I have no idea. All I know is that periods of historic change provide incredible opportunities and incredible danger.
All I’m trying to do is help you avoid the danger part and take advantage of the opportunities.
The 2019 World Outlook Financial Conference is Friday, Feb 1st and Saturday, Feb 2nd at the Westin Bayshore Conference Centre in Vancouver. For tickets and other details CLICK HERE.
I hope to see you there.
Sincerely
Mike
PS Check our the list of “extras” with our VIP tickets – and the EARLY BIRD prices for the next two weeks!
- Breakfast and lunch with bonus speakers and presentations
- Reserved seating
- VIP Investment Kit
- and more…
Finally
As you may know I am hugely interested in educating our younger generation and to that end we have a special offer – if you buy a ticket – you can bring a student absolutely free. The only thing is that we ask you to let us know that you want a student ticket when you purchase your ticket. We have a limited number set aside and we want to be able to accommodate you.
One of the most successful investing strategies is to identify long term trends, and then find companies that will ride those waves of changes. Let’s go one better and identify TWO long term trends:
Firstly, Western governments will continue to expand programs to reduce greenhouse gas emissions. While much of the media and political focus is on efforts to impose penalties on carbon emitters, there is an even larger push towards energy efficiency and consumption. This is happening internally via directives to every level of government to find reductions in energy use in their building and facilities, in the use of automobiles, shipping choices, supplier assessments – the full gamut of government activity.
It is also happening through government regulation, particularly in Europe, which seeks to force all private businesses and landlords to achieve energy reductions. And the key is – these demands are not in any way tied to necessarily saving money – just that a reduction in consumption is achieved. So the trend will continue irrespective of economic conditions or financial issues!
Secondly, the cost of electricity, particularly in warm climates in developed countries around the world, will continue to go up. The perfect storm of rising global temperatures, increasing population in these warm climate areas (think Texas and California versus Massachusetts), and overall consumption demand increases have resulted in huge price hikes in the last 15 years. And there is no sign that those upward pressures will lessen.
All well and good – now we need to identify an investment opportunity. One that is positioned to benefit from both of these trends.
Our favourite pick so far is a “14 year overnight success story” based right here in Canada. Smartcool System (TSX:V – SSC) has a proprietary retrofit technology that reduces energy consumption in HVAC and Heat Pump systems by 20 – 30%. The kind of bottom line savings in energy and money that is being demanded by every developed nation on the planet. Office buildings, school campuses, warehouses, car dealerships, apartment buildings, shopping malls – there is no enclosed space that cannot benefit from Smartcool’s products. Not surprisingly, Smartcool has clients around the world including some of the biggest Fortune 500 brands.
Smartcool almost missed these two trends altogether, mainly due to coming to market prematurely. In 2004 Smartcool was formed to market the technology in North America. Electricity rates had not yet begun to skyrocket and there was very little government impetus towards reducing energy consumption. As a result, Smartcool struggled to gain market traction and growth – a terrible combination for a publicly listed tech company. Interestingly, Smartcool Asia was experiencing significantly greater success than the North American efforts. In hindsight, this was a great indicator of the future demand and potential for Smartcool’s technology.
Internally SSC continued to develop the technology and add new applications, but struggled to create shareholder value. The breakthrough that puts this company back on investors’ radar was technological advancement elsewhere – specifically the new generation of heat pumps being installed to replace the older HVAC heating and cooling systems. Heat pump technology, built by the world’s largest manufacturers like Mitsubishi, provides both heat and cool from the same system rather than a separate boiler and air conditioning system.
Smartcool’s retrofit technology performs at significantly higher levels with these systems, so much so that clients are seeing their return on the installation cost cut in half. In some cases as quickly as 12 to 18 months.
This boost has allowed the company to expand its worldwide sales network and even announce a significant acquisition that has boosted monthly revenues to historic highs.
While the stock has not moved yet it has a significant upside, and potentially in a timely fashion. As fatigued early shareholders are replaced with new trend spotters, as quarterly financial numbers hit new highs and as new global sales operations are launched – we suggest you put SSC in your watch list.
-
I know Mike is a very solid investor and respect his opinions very much. So if he says pay attention to this or that - I will.
~ Dale G.
-
I've started managing my own investments so view Michael's site as a one-stop shop from which to get information and perspectives.
~ Dave E.
-
Michael offers easy reading, honest, common sense information that anyone can use in a practical manner.
~ der_al.
-
A sane voice in a scrambled investment world.
~ Ed R.
Inside Edge Pro Contributors
Greg Weldon
Josef Schachter
Tyler Bollhorn
Ryan Irvine
Paul Beattie
Martin Straith
Patrick Ceresna
Mark Leibovit
James Thorne
Victor Adair