Friday, October 24, 2014

Money Show 2014 - Andrew Busch

Andrew Busch was the sixth speaker at the Opening Remarks section of this Money Show convention. His talk was entitles "Mid-Term Elections: Who Wins and What it Means for the Markets". He is Editor-in-Chief and Publisher of the Busch Update. Andrew Busch used to work for BMO. He has a website.

He says if you get economic growth right, nothing else matters (i.e. social policy). Monetary policy has reached its limits. Mario Draghi must get EU policy right or the EU will not grow.

In 2013 the republicans stopped the government and the people hated them for it. It was bad public relation. Then came Obama care and the republicans are back. Tax Reform is the only policy for economic growth if they get it right. It looks like the republicans can get the senate in the mid-term elections.

President Obama's job approval is at 42.9%. This low level could lead to 10 seats turnover in the senate. If the Democrats win the senate then the status quo will split congress and crush remaining proposal for entitlement reform, Obama will fix EPS regulations which was brought up in the house but shot down in the senate.

If the Republicans win control of the senate then republicans will take control of committees and chairmanships. They will hold hearings on everything from EPA to Dodd-Frank Act to IRS. Things will not get worse. The republicans will attempt to put bills on the president's desk via the budget reconciliation process and lots of legislation from the Job Bill, Ryan Tax reform, energy reform and Obama Care reform.

The US has high tax rates and this is why Burger King bought Tim Horton's. Apple has issued a bond to pay its dividend. It has the cash, but it is offshore. Because of US tax rates you get bizarre behavior from companies.

Lower reparation taxes would help. They are now at 35%. Reagan lowered them to 5 and one half percent one year and a lot of offshore money came into the US. However, to do tax reform you need the president behind it.

In 2016 social Security runs out. The net interest on the US debt is going to expand greatly over the next few years.

Three political takeaways is Tax Reform, Regulations from Energy to Finance and Geopolitics (which currently is unstable.)

The S&P 500 had a support level and 1905 and when it went below that, it crashed further. The is gloomy

Germany does not want QE because then EU countries will not have to do reform, like labor market reforms.

If the market drops 10%, then your portfolio should fall less than 10%.

What does lower oil tell us? It broke support levels of $91.25, then $85.93 and $84.00. US oil demand is down by 2B barrels and the oil supply is up by 2B barrels. So there is a 4B barrel excess.

On my other blog I am today writing about The North West Company (TSX-NWC, OTC-NWTUF) ... continue ...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

No comments:

Post a Comment