We’re looking forward to a profitable and profoundly interesting 2018, complete with some dramatic economic changes and transformations as we near the end of the TwentyTeens and the start of the third decade of a once-new 21st century.
The Trump Christmas present to the US and to investors is a $1.6 trillion-dollar tax cut featuring a corporate tax rate cut from 35% (highest of any industrialized nation) to 21%, which will put the US stock indices into hyperdrive during 2018. Additionally, about 80% of American households will get tax cuts during 2018, giving Americas more money to spend save or invest. The tax cut is something Trump campaigned on, and delivered.
The tax cut will cause increasing inflation. The corporate tax rate cut will also bring untold numbers of good new jobs as business and corporate America ramps up, and will bring wealth and prosperity to Americans for the first time in a generation.
The Congressional Budget Office says the tax cut will add $1.4 trillion to the national debt over the next decade. The theory behind the tax cut is that US business and industry, muzzled since the days of George Herbert Walker Bush (“read my lips: no new taxes”) will be unleashed and expand dramatically, bringing more taxable profits and more taxable job salaries which will offset the theoretical addition to the national debt.
Democrats and the media are outraged by all this.
The test of a great nation is its people’ ability to come together and pull together in times of crisis. As we now know, that ain’t us.
A state of war exists between the people of the American Heartland/American South and the coastal secular elites. The coastal secular elites want all traces of the Traditional American South and the Confederacy and all aspects of evangelical Christianity expunged. The heartland folk respond by buying more AR-15s.
“Four hostile newspapers are more to be feared than a thousand bayonets.”- Napoleon Bonaparte (1769-1821)
The US continues to be as divided as it was during the nation’s first civil war of 1861-65. This second one continues so far to be mostly a war of words and propaganda. The USA’s mainstream media- the NY Times the Washington Post the Associated Press the Huffington Post USA Today and the television networks and cable news channels and AOL- all are even more committed to taking Donald Trump down through hate innuendo and propaganda than they were a year ago. For example, USA Today reported in a December 2107 editorial that “Trump is unfit to clean Obama’s toilet.” Is that journalism? We’ve not seen comments like that directed toward a sitting president in our lifetime.
We told MW readers in January 2015 that Donald Trump would be elected president. And we told readers Trump was not a Republican and that he would be attacked from both political sides for his drain-the-swamp views on traditional Washington DC.
The heartland Americans who elected Trump are still very much on his side. Trump voters were not pro-Republican voters in 2016. They did not vote for a party but for an individual. We doubt the Trump Deplorables will support Republicans in November of this year. The Doug Jones Alabama senate race victory over Roy Moore is a ghost of Christmases to come for the Republicans.
But the hate onslaught continues against Trump and it is unlike anything we have ever seen in our country against an elected leader.
No one can operate for long under such a level of attack and Trump is being worn down and the key issues that got him elected thwarted.
Because of this, we estimate that Trump’s chances of remaining in office for full-year 2018 are about fifty-fifty. And we think that is so even after the great gift to American prosperity of a tax cut.
2018, the second year of the Trump presidency, will also witness the start (finally) of a massive US infrastructure rebuild. The Amtrak crash just before Christmas of last year was a head-up for it.
Trump’s one-year-old presidency already carries long-term changes for America. If he does manage to stay in office, Trump has the opportunity during his first term to pack the Supreme Court with two three or even four conservative Justices and to bring in far more conservative rulings from the nation’s highest court for the next thirty or forty years. He also will have the chance to appoint many conservative federal court judges that will affect court rulings on a much broader scale.
Trump also has a new Federal Reserve Chair on deck and will have the opportunity to replace others on the Federal Reserve with economically-conservative board members who are not Keynesians and who want to see growth, low unemployment and prosperity and as opposed to social justice progress.
If Trump is removed from office through violence (quite possible) or through a journalistic/media coup- the NY Times’ et al’s hate-filled propaganda machine (quite possible) conservative Mike Pence will become president. Pence’s values are far more traditionally conservative than Trump’s- Pence is a devout Catholic who became an Evangelical- and as a former governor and an experienced classic politician he knows how to get things accomplished in Washington in a way that would be reminiscent of Lyndon Johnson.
The transportation industry is being transformed. Electric vehicles are not only on the way, they are close to mainstreaming. General Motors, Ford, Daimler, Volkswagen, BMW and Volvo all are committed to an electric-vehicle future.
Anheuser Busch Inbev has just ordered forty of Tesla’s electric semi’s, introduced by Tesla in November 2017. These trucks are fully electric and are equipped with Tesla’s semi-autonomous pilot system. Budweiser says the move is part of its goal to reduce its operational carbon footprint by 30% by 2025. But there’s more: PepsiCo has ordered 100 Tesla electric semi’s and UPS has ordered 125.
So this may be the year Tesla becomes a legitimate company with an income. It also may not be: China’s electric vehicle company NIO has marketed a car similar to Tesla’s Model X and half the price. NIO has also introduced an electric SUV and has plans to export these EV’s. NIO is privately held but several public Chinese companies including Alibaba Baidu and Lenovo have stakes in it.
Electric vehicles are still a delusion when it comes to being “clean and green” because much of the electricity needed to charge them comes to us via coal-powered and nuclear-powered electric plants. Solar and wind electricity are becoming powerful forces however, and eventually we’ll get there.
The USA’s motorcycle era particularly the USA’s Harley-Davidson era, something that has lasted for more than a half-century, is ending. Harley’s quarter-century-long boom, based on the BabyBoomers’ choice of a Harley Big Twin bike as its favorite toy, is ending as the Boomers age and drop out of sight. Harley Davidson motorcycle sales are falling by about 9% a year. The “outlaw” motorcycle clubs- The Hells Angels the Bandidos etc- still support Harley-Davidson but these are small groups of enthusiasts and they cannot support Harley in the manner to which the company has become accustomed. And the Millennials age group- younger Americans now coming to power and responsibility- do not see America’s “open road” that was once out there, would rather use a Car2Go or an Uber than deal with auto maintenance or the “hassle” of driving, and would no more think of buying a Harley than of buying a giraffe.
Global sales of military equipment weaponry and services rose by 1.9% to $375 billion last year. It was the first increase in global arms sales in five years. Defense companies based in the US and Western Europe prevail. Of the top 100 global defense companies 63 are based in USA and Western Europe and they account for 82% of global arms sales.
The top three: Lockheed Martin (USA: LMH) with $40.8 billion in sales, Boeing (USA: BA) with $29.5 billion, and Raytheon (USA: RTN) with $22.9 billion. Each had 4% increase in sales YOY. Lockheed sales were driven by the acquisition of helicopter maker Sikorsky and by higher delivery volumes of the F35 combat jet. Boeing raised its dividend by 20% and will generate $12.5 billion this year in single-aisle passenger jet 737 sales. The US is deploying Tomahawk missiles faster than Raytheon can build them.
There is a fierce battle taking place between the USA’s largest technology companies Apple Amazon Facebook Microsoft and IBM to recruit the world’s best AI (artificial intelligence) talent. China is home to many of the best minds in this field and Google wants them. Google’s parent company Alphabet is opening an artificial intelligence center in China to capitalize on the talent there. Alphabet chairman Eric Schmidt has said that China will overtake the US in the artificial intelligence field by 2025 and will dominate the artificial intelligence industries by 2030 unless the US government alters the track of its educational system.
In Germany, socialist Chancellor Angela Merkel has led the country since 2005 and her era is clearly over. Skeptical Germans handed Merkel a just-squeaking-through political win and a continuation of her leadership in September 2017 but with no majority, which meant a coalition government would have to be cobbled together to run Germany. But coalition talks with other political parties have collapsed, and as the new year begins there is not yet a new government to run Europe’s largest economy for the next four years.
The most likely scenario in Germany is that new elections will have to be held. A conservative party or coalition of conservative and centrist parties will pick up the reins, and Merkel will be out. Meanwhile, Germany’s Deutsche Lufthansa is buying other European airlines and becoming Europe’s dominant airline. We expect this consolidation to continue in 2018 as Lufthansa make overtures to purchase parts of Ryanair Holdings and Air France. And the long slow process of Germany’s Bayer purchasing USA’s Monsanto will finally close, creating a drug/chemical/Agribiz colossus.
The UK: Even though the United Kingdom’s historic Brexit vote authorized England’s departure from the EU, the British Parliament has wangled veto power over any further efforts in that process.
So an actual Brexit is unlikely any time soon. It’s almost certain not to happen for years if it happens at all. The British Pound chugs slowly back up as Brexit fades into history as another thwarted popular vote, back up to around $1.35 and likely above $1.40 later in the year. And an additional legacy of the Brexit vote, whether or not the UK actually does leave the EU, is that British manufacturing is at a 30-year high.
American actress Meghan Markle will marry England’s Prince Harry in May of this year, the first American to marry into the British royal family since 1937 and yet another signal flag for changes that are taking place in the world of kings and queens.