Immigration + US election - June 2016 War Room
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Immigration + US Election 30 June 2016 War Room
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Transcript of Immigration + US election - June 2016 War Room
Immigration + US Election30 June 2016
War Room
HiddenLevers War Room
Open Q + A
Macro Coaching
Archived webinars
CE Credit
Idea Generation
Presentation deck
AccountabilityScenario Updates
Market Update
US Election 2016
US Immigration Snapshot
Scenario: Immigration
Immigration + US Election
NEW
HiddenLevers
MARKET UPDATE
Market Update
sources: HiddenLevers
Upper Middle Class
Housing DelinquenciesPopping
Fed done until 2017
(uncle)
Theranos
Market Update - Brexit
sources: HiddenLevers
Gap 1: Referendum <-----> Parliament Action
Gap 2: EU Markets <-----> US Markets
Gap 3: Press Sensationalism <-----> Actual Impact
Gap 4: Betterment <-----> Human Advisors
HiddenLevers
US ELECTION 2016
Election 2016: Markets Like Certainty
sources: Investing.com
Returns usually higher in Nov/Dec than Sep/Oct in election years
Election 2016: Markets Don’t Favor One Party
sources: First Trust
Election Year Returns:• Mean performance = 11%
• No pattern regarding party winning
• Only 17 elections in Modern American Era (post WWII)
• Not enough data to determine party significance
Election 2016: Most Diverse Electorate Ever
sources: FiveThirtyEight
CLICK TO TRY
Key Trump Lever: Non-college-educated white vote.
Election 2016: Gridlock vs Double Gridlock
sources: HiddenLevers
Trump + GOP Congress
Trump + Dem Congress
Clinton + GOP Congress
Clinton + Split Congress
Clinton + Dem Congress
Trump + Split CongressStatus Quo
ObamaGOP 54/46GOP 247/188
execsenatehouse
(pipe dream)
(pipe dream)
HiddenLevers
US IMMIGRATION SNAPSHOT
Immigration: Who is Coming to USA?
sources: HiddenLevers, Migration Policy Institute,
College Educated
Myths Busted
upper classes + educated people are having more kids not less
teen pregnancy is at an all time low
China + India top senders, Mexico not in top spot for years
Immigration: Who is Making Babies?
sources: UNO, WSJ, Pew Research
USA fell below replacement fertility rate in 2008. Immigration makes up the difference.
Demographic Group FertilityHispanic 2.15Black 1.88White 1.75Total 1.87
Break Even 2.08
Global Comparison FertilityTotal US (2007) 2.12Total US (2015) 1.87Germany 1.44Japan 1.43
Immigration: Skilled Dreamers = GDP Growth
sources: OECD
USA has above average growth compared to test scores. Will this last?
Immigration: Candidate Positions
sources: HiddenLevers
• Stricter HIB Program
• Build a wall at US Mexico Border and make Mexico pay
• Ban Muslim Immigration
• Deport all 11m undocumenteds
• Nationwide e-verify for employment
• Give “dreamers” a clear path to citizenship
• Restart Obama’s executive action to legalize 6m undocumenteds
• End family detention and close immigrant detention centers
Hillary Clinton Donald Trump
HiddenLevers
SCENARIO: IMMIGRATIONNEW
Scenario Update: Demographics Emphasis
Boomer Outflows
Immigration
GOOD: Skills-Based Boom
source: HiddenLevers, OECD
US govt gets a clue on importing best + brightest
foreign college grads get green
card with diploma
smart immigrants create growth
adds 0.5% to
GDP / year
HIB program expanded
BAD: Gridlockbroken US govt = missed opportunities
source: HiddenLevers
GDP stuck in low gear
30% of immigrants have college
degrees
status quo1m immigrants
per year
gridlock getting worse
not better
UGLY: Trump Wall
executive power comes in level
of enforcement
source: HiddenLevers
deportations + scrapped H1B = economic decline actual wall
unlikely
GDP hurt by less production + consumption
hard shut down leads to market
correction
foreign markets benefit from
skilled workers
Scenario: Immigration
Good:Skills-Based
Boom
Neutral:Gridlock
Ugly:Trump Wall
GDP Growth
-0.5S&P
-25%
GDP Growth
2%S&P
+5%
GDP Growth
3%
Skills-based immigration reform could raise GDP growth to 3%, enabling new market highs - but this is far fetched given that neither party views it as a priority.
The status quo remains the slow growth witnessed the last few years. Current valuation levels imply low equity upside without a boost in growth.
An actual wall is unlikely, but a crash in immigration caused by new policies might drag GDP growth down, causing a correction.
S&P
+16%
Immigration – Take Aways
immigration is most important 2016 issue + neither candidate gets it
elections not at all correlated to market returns
Trump Wall = GDP Killergridlock will not improve, likely worse post election
let’s take all the credit
