Subject: Ross Rant Aug 20
I now believe things are lining up for a good, not great, stock market over the next several months, and into 2021. Retail sales are improving better than expected. HD, Target, and WMT being standouts to show not all retail is bad. The virus has been partially contained, and is declining in the surge states with big populations-TX, FL CA and AZ, and generally across the country. This means unemployment will continue to decline into October. While we can possibly see new surges, there seems to be a recognition that masks and distancing do matter, bars are points of spread, and more people are now complying. Progress on vaccines seems to be going very well, and it is possible that by late October they will announce that more than one will be ready to deploy before year end for free and in large scale by mid to late Q1. Unemployment will continue to decline into single digits and likely be at around 7%-8% by end of Oct. Durham will be announcing more indictments or guilty pleas. His final interrogation is this Friday with Brennan. Soon after Labor day I expect a lot more from him. The lawyer plea was just a teaser. Trump is now essentially tied with Biden in the 15 key states, and that is a huge change from just a month ago. He is within the margin of error overall. Biden had been up over 12% at one point. Biden falters in the debates. Trump reelection looks far more promising. Market continues up.
There will not be national mail-in voting. There will be more Mideast peace agreement announcements in September and October. The EU will begin to show some GDP growth. China will continue to buy farm products, and many more companies will onshore back to the US as time goes on, bringing jobs back. The violence in cities will continue, and the exodus will continue to the point that the citizens will demand something be done to reverse that problem. The Dems take heat for it. The whole BLM movement will be seen to have been destructive, and the pandering by CEO’s and others will be much reduced. The whole defund cops will stop in most cities as more murders scare the rest of the voters, and the guys with checkbooks, who contribute to campaigns. Suburban women will be much more concerned with law and order as women fleeing from urban cities move to the suburbs with stories about crime out of control. Schools will reopen, and more people will be able to go back to work. The $400 stipend will not be enough to keep workers home in many cases, and they will return to work. The delay in that going out has very likely already sent many back to work. The Fed will continue to underpin the capital markets. Mortgage rates will remain at historic lows, move out from crime ridden cities will continue, and housing will boom-very big help to economic growth. Most important, the national mood of despair will turn more positive by late October. Trump gets reelected and R’s hold Senate. Market goes up into 2021. The left wing will riot over election results, but then the cops will be able to act to control it maybe in some cities, but not Portland, Seattle, NY, Chicago, and San Fran where there will be more looting. By early 2021 the vaccine is widely available and life starts to return to more normalcy. Travel starts to come back by late spring. Durham sends some big names to jail. All of this will seem over optimistic to some, but if you remove your politics from the analysis you will see each of these things on its own are reasonable to occur. There is always the black swan circling, so nothing is for sure, but one must make decisions about investing and living your life, and it is time to take a view and begin to act. Everything changed last week. This does not mean the market will not be volatile into November, but the longer term trend is what matters. In late March I said stay calm and invested, and in early May I said you will be sorry if you are not already fully invested, and here we are. Now I am saying it again, but watching carefully in case things reverse and Biden looks like he might win, in which case I am a seller in late October. Across all my portfolios I am up 24% YTD by doing almost nothing. Just by being 100% all equity for the whole year, and 70% in big tech or tech related plus HD and WMT. My performance proves you do not need to be smart, or a good trader, to make a lot of money, and you don’t need a money manager if you have the right stocks and just are patient. My investing strategy is, buy stocks of a small number (13-15) of very good leading companies, take big positions to back what you believe in, go play tennis almost every day, and let the stock market take care of itself.
There are some commercial real estate properties still marketable because they are essential use such as grocery, medical office, vet clinic, drug, etc. Some of these assets are trading at reasonable prices. Mostly there is no price discovery for other assets yet, and might not be for another 6 months, or maybe a year. Nobody can reasonably predict what 2021 will look like for anything until the election is behind us and there is a readily available vaccine. Who wants a gym, or a large retail center, or a major conference hotel right now. Not unless the seller gives it to you, and even then I am not sure you want a big box hotel to carry for who knows how long. Some forecast it could take until 2024 or 25 for the big hotels to get back to where they were in 2019. Select service in drive to locations is a very different product, and some are worth buying. There are likely sellers who are now wishing to retire, and not have to rebuild the business in this environment who are sellers. They may have a very low cost basis and be happy to sell, and not risk higher cap gains taxes if the Dems win. The servicers are in no rush as they have already had to cover their obligations, and now just collect fees.
What will office look like in the next year or two. Very likely there will be partial remote and partial satellite offices, with a smaller NYC, Seattle or San Fran headquarters. The exodus from these destroyed cities is now a flood and growing. Result is multifamily in these cities is going to have a tough year in 2021, as NYC already has record vacancy and rapidly declining rents. The flight from San Fran is now becoming a flood as tech companies tell staff they can work from home, or from a satellite office. This is not going to get better for landlords for maybe several years. Rents will not recover in major cities for a very long time, while in near and mid suburbs they are rising rapidly. Industrial and distribution is the place to be. There will be no full scale return of arts and entertainment in NYC for another 6 months to a year, and then who knows what it will look like. The restaurant business, one of the great attractions in NYC, is decimated. San Fran is a hell hole now, and Seattle is out of control, and going down the tubes as city council seems bent on helping crime thrive. Chicago is too dangerous for anyone to be in, with a mayor who has no clue, and NY rapidly catching up in shootings. Portland is now left to the radicals, and small business is being destroyed by bums using their doorways as their bed and toilet. Manhattan is quickly becoming as deadly as Chicago, and there is no punishment if arrested under Cuomo’s no bail law. Cities like Baltimore, Cincinnati and St Louis have become shooting galleries with cops being restrained and defunded by left wing idiot city councils. And in light of this, Kamala says she wants to take away your guns. Consider this- all US combat deaths in Afghanistan in 19 years are 2,401. Just this year in Chicago, NY, Baltimore, St Louis, and San Fran, the US will be well more than half that many, or more, and of that in 2020, and almost all will be young black men. So much for BLM and the brainwashed kids on campus who don’t get it. The tax bases in all these cities and states is being decimated, leading to a real crisis in diminished services and eventual inability of pensions to meet obligations. And given all of this, Biden wants to raise your federal taxes, and those of the employers. I feel like I am living in an alternate reality. It is not even political. It is simple common sense. Taxpayers flee, so raise taxes even more on those remaining so they also flee, and it becomes a death spiral. Massive crime wave -defund cops. Kids are seriously harmed by not being in in-person classes, so teachers union says no in-person classes. The Dems could not run a simple little primary in the upper east side by mail in ballots, the post office says they cannot assure on time delivery of ballots, so they want to make mail in ballots nationwide. It is like an SNL skit, only real. Have they all lost their minds. It is not that the proof that their thinking has not been proven to be totally wrong. Just look at what is happening. I will continue to hide out in the Hamptons and Longboat Key. In the Hamptons, it is likely schools will go to halftime to accommodate all the kids from the city who now live here. Real estate values in the Hamptons are moving up very quickly to numbers I find hard to believe as families move out of Manhattan. The more the Dem cities defund cops, and the more murder and mayhem happen weekly in Dem run cities, the more Trump goes ahead, the more he gets a portion of the black vote.
Biden was the point man in Ukraine. Russia invaded, Obama Biden refused to give lethal weapons, Russia got a stronger position. They will never give up Crimea. Trump gave missiles to Ukraine and the Russian advance was stopped. Now there are discussions to bring some sort of possible settlement to that hot spot. Biden did, by his own admission, blackmail the Ukrainians to remove the prosecutor. We still do not know the whole story of that, and it is clear they were bribing Biden Sr with the payments to Hunter. Meantime Ukraine suffered war.
Lastly there is China under Obama Biden. Biden was the one traveling to China to negotiate with them. Result: In the eight years, China was able to take over the South China Sea, to get American companies to ship millions of jobs to China and become dependent on China for drugs and rare earths. China got away with massive espionage, and a buildup of its military while Obama defunded the US military to a point we could likely not defend anyone. Are we to believe Biden was not influenced by Hunter getting $1.5 billion of Chinese government money invested into his make believe private equity fund. Talk about conflict of interest and corruption. Does anyone really believe Hunter would have gotten $1 if not for the attempt to influence his father by China. Biden claims he knows nothing about any of this. Hunter just flew on his official plane and he never asked why.
Under Obama Biden we had the slowest economic recovery since 1948, 2.3%adjusted for inflation, worst labor recovery in generations-unemployment did not drop to 4.4% until 2017, labor participation fell to 62.8% from 66.2%, and for prime age men it was the worst since 1948. Result, a lot of workers dropped out because they were given 99 weeks unemployment plus food stamps, plus other entitlements which was disincentive to return to work. A university of Chicago professor has calculated that the marginal tax rate to a worker as he earned more as the entitlement phase out rolled off was 48%, which he claims added to the length of the recession. Obama let fracking start but then put in all sorts of regulations that held it back from allowing the US to be energy self-sufficient, which self-sufficiency was key to giving us the ability to deal with the Arabs and Iran. The slow recovery also forced the Fed to undertake a much larger QE program than would have been necessary had there been a normal robust recovery. In 2015 we nearly fell back into recession were it not for the Fed actions. During the last six quarters of Obama Biden GDP grew at 1.9% -down from the slow average of 2.3%. So now Biden wants to raise taxes, add a lot of regulation, end fracking, replace all school buses, and phase out fossil fuels by 2030. His labor law proposals are totally pro-union and eliminate right to work laws. It would reflect the Wagner Act of 1935. He also wants to add a requirement that the Fed has to consider racial equality as a part of any decision on monetary policy. He also will have all sorts of regulations to allegedly deal with racial inequality, whatever that means, instead of opportunity to have a good job with a growing economy as we had in the past three years. All this higher taxes and excess regulation while the world works to recover from the worst economic catastrophe in history. Just in case you wonder why I will get out of the market if he wins.
So here we are with the record of dangerous failure under 8 years of Obama Biden, and the press claiming Trump destroyed US foreign policy when he just did a historic deal in the Mideast, and now they want to bring back Biden and Susan Rice to make it all like it was. And I have left out Russia in all of this. Forget your politics. Just look at the facts of who did what.
Several people who cared for their old parents through encroaching dementia and Alzheimer’s have emailed to say they see the exact same progression with Biden. A NY doctor has also said the same. There is no question at all now that he has early dementia, and it is progressing. They keep him hidden in the basement hoping he can last until November and then inauguration without everyone realizing it. The debates will end that façade. The story I heard that there is in place a plan to remove him, and have Harris become president, becomes more believable each time Biden is let out of his cave to speak. There is a reason there are no press conferences. They managed to hide Woodrow Wilson in his final year in office, but each week Joe will be more exposed. This election is all about Obama managing the process to have Kamala become president, and then to surround her with the old Obama team, with him as puppet master.
Who is Kamala. Attended a mediocre college, and law school, failed bar exam first time, passed second time, then got job as a junior prosecutor in Alameda. Met Willie Brown, 30 years her senior, but the most powerful politician in CA at the time. Began sleeping with him, suddenly got series of increasingly powerful jobs right up to be senator, and now potential VP and president. Then she left Willie and, in time, married a white Jewish lawyer. At least she had the smarts to pick the right guy to sleep with to get ahead. That is how she got the nickname heels up Harris. She is cunning, but not smart.
The Dems are beside themselves over the post office mail in. They likely figured they could force Trump to agree to mail in, in order to get the stimulus passed, but he changed the game on them again. Now they are in freak out mode along with the press. They claim voter suppression. Nobody is saying everyone can’t vote like always for 200 years. They can apply for absentee ballots if they are afraid to go to the polls. Polling stations can be open longer, or have more stations to have distancing. If I can safely check out groceries at the market, I can vote safely. If I can check into a hotel safely I can vote safely. The Dems encourage protests with mobs but it is not safe to vote in person. Fauci says there is no reason not to have in-person voting. Nobody is suppressed, but the media will replay that line over and over, along with Kamala is a moderate. The post office was a disaster and poorly run until now so suddenly Pelosi is going to determine how it should be run. Badly as usual. All political BS. I am sure the hearing will be a rerun of what Barr had to endure.
Note that the polls are of “registered” voters. Not likely voters. There is a huge difference, especially when there is little enthusiasm for Biden to get people to go vote. How many actually vote is what matters. That is why the Dems are so desperate to get mail in with vote harvesting. That is what the real game is. The latest likely voter polls in 15 key states have the race dead even -1% difference. Just wait for the debates, more violent crime, and Durham, followed by August unemployment declines, and the $400 to begin arriving. In case you have not followed it, Durham is the US attorney appointed by Barr to find out what really happened in 2016-17 that resulted in the Mueller report, and the spying on the Trump campaign. Several senior Obama people are going to go to jail, and this will make Watergate look like child’s play. This is the biggest scandal in American history when it all comes out in September.
I have been reading “Citizens Of London”, the story major American leaders in London during the war and the decisions of FDR and Eisenhower and Churchill. It is amazing we won the war. Thanks to FDR we almost did not, and thanks to him, Stalin took over half of Europe and we had the cold war. FDR made such disastrous decisions one wonders how he was left looking like a hero when he cost the lives of millions, and the loss of much of Europe. It is clear he never really understood what was happening with the Jews, Stalin, war strategy and plans for the post war period. Eisenhower made a terrible decision to let the Montgomery and the Brits push forward in France with a northern attack which failed, and created a situation that extended the war another 6 months, leaving the Russians time to take over Poland and half of Germany. FDR abandoned Poland leading to thousands of deaths that could have been prevented. Lastly the US air force refused at first to use British advances in fighters, and it cost the lives of thousands of US bomber crews.
It was a fresh reality look at history away from the hoopla of winning the war. In all, not just because of the dreadful mistakes in WWII, but many other things, FDR may have been one of the worst presidents in history. He likely cost the world more lives than all presidents put together, and he left Stalin the ability to create the Iron Curtain. You need to read the book if you are a history buff like me.
Thank you for your incite. Have to partially disagree with you about FDR being one of the worst presidents. FDR comes in second – Obama was the worst – period!