May

14

I'm going out in a limb. I believe we are near an inflection point. I have no idea when it'll be over. It seems clear to me that it'll soon be President Pence.

I would consider a possible change when analyzing the markets. I would also consider the possibility that no tax package will get through until Trump issues are stabilized. If current challenges continue, next October could be interesting.

Discount all of this by your assessment of probabilities.

George Devaux writes:

James Carville - "It's the economy."

In the 8 years since the last recession, government expenditures (federal, state and local) have declined from 41% of the economy to 34%. The percentage decline resulted from flat expenditures by those entities combined with growth in other elements of the economy. Therefore, non-governmental entities have driven all of the growth in that 8 year period - a compounding rate of 3.6% per annum. That rate is pretty good for such a long period.

If government entities continue with flat, expenditures, the percentage share will continue to decline. That is fine with me. However, I expect that at least some governmental entities will increase expenditures. The result will be that the growth rate improves, and the growth moves toward the underlying rate of 3.6% in the non-governmental sector.

It appears that revenue flowing into the US Treasury is increasing. Inflows for state and other government entities may parallel the increase of flows into the US Treasury. If that is the case, the governments probably will increase their expenditures. The result will be a growth rate of about 3.6 % even without tax reform. Small adjustments in regulations will help.

Growth above 3% is an immunization vaccine for POTUS. Minus 2% - fake a heart attack and resign.

See the introductory quote.


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