Saturday, January 27, 2018

DOLLAR TO REMAIN LOW...BENEFITS TRUMP FRIENDS



Record profits, Record Quarterly performance, record stock markets' price appreciation, record dividend payouts to wealthy shareholders, new tax laws to make the wealthy more richer to richest. Dollar would remain low. Yes low it will be as Trump is focused towards making the richer to richest.  Investment banks, private equity firms, hedge funds, insurance companies, finance companies, and asset management companies are one of the biggest gainers going ahead and also they will be printing more in the long term. DowJones to scale new highs going ahead as quarterly profits increases, buyback of shares increases and over and above when infrastructure spending boost will be given.

Tax rate cut down benefits passed to rich is clear but dollar will remain low.  Dollar low benefit goes to the US multinational corporations' offshore profits which are maximized when these profits are   being converted in local currencies back to the dollar, before they repatriate those profits back to the United States at the new lower Trump tax rates (12 percent instead of 35 percent repatriation tax rate) and, even more lucratively, when they pay no taxes on offshore profits virtually at all starting 2019. The richer will become richest many folds in the long run.

Trump trade war fight is only to increase its own export in those countries. Trade deficits etc are just numbers game to be narrowed in the long run. The Trump private friends circle is similar to what precipitated the 2008 financial crisis prime players. Investment banks such as Lehman, Bear Stearns, insurance giant AIG, and GE Credit were the prime players during that time and now we are waiting for new sets of names to emerge going in the long term. The US FED and its upcoming vacancies will be all Trump people followed with major planning of new draft policies being designed with the help of the top close business friends of Trump. Real Estate Prices will grow and another boom phase will be soon joining the US markets. The bankers market and financial business will grow. Leveraged deals will pick up as funding will increase from the government spending on infrastructure space.

Low dollar will boost the climate for the richest Americans to treble their earnings by the next 3 years. Repatriate of cash would make them grow their wealth as domestic interest rates earnings and buyback of shares would push the US capital market to new highs. Hence private equity, hedge funds, insurance companies, finance companies, and asset management companies would grow up more. Leveraged deals and over exposed trade activities is about to begin.

Trump friends would rule at the Treasury, in the White House, at the New York Fed, and in a majority of the Fed governorship. Infrastructure would push up the inflation which will be taken as a positive vibe by the economy but actually common people of US will be squeezed and richer will become richest. Dollar game is to make export cheaper and also to make the currency gains to be more lucrative.

Moral of the story is that bubble is in the process of being made and also bankers would make good bonuses in the long term as US FED and US banking gets more into the drawing room of Trump. The debate is how much capital will fly out and how much would come back into emerging countries. The production cost debate of US is that it’s costly to produce in US compared to other economies like India and other Asian countries is no longer valid now. Artificial intelligence and 3d manufacturing has changed the landscape of the US manufacturing which would reduce its cost of production compared to the emerging economies. 

This is the key area where they will pull back the capital and invest but not aggressively in US as they wait for supportive policies from Trump.  The flight of capital will be used as a tool to blackmail and renegotiate higher levels of export form US within other countries. Trump strategies of US economic growth is all linked with his friends to be made more cash rich. Another recession after 8 years is in the making.

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