A collection of today’s economic, market, political, geo-political, and human-interest news, thoughts, and analysis.

 In This Month’s edition:

  • Halftime
  • The Crystal Ball
  • Growth = Treasury Bonds?
  • Double Negatives
  • Growing Debt Bubbles
  • ETF Fund Flows
  • The Spin Off Cycle
  • Work!!!???
  • By The Numbers

There was an abundance of subject matter to address this month. Most of what follows is a little gloomy in the face of rising markets. However, readers should not panic or race out and bury their cash in the back yard. This information is presented to inform and educate. Brian Wesbury would probably add me to the club he refers to as the Pouting Pundits of Pessimism. He has been a longtime advocate of what he calls the Plow Horse economy that just pushes ahead through all the factors that stand in its way. I respect Brian and his views on the free markets and economic cause and effect. He is very smart and very thorough, he has yet to find an economy he doesn’t like.

There are many very smart people who believe things will continue on a positive trend…too many for my comfort level. The market will likely chop sideways looking for some sort of confirmation before making the next big move. We believe the probabilities suggest a major move down before a major move up, but we could be wrong. If we are, we want to position ourselves to make money no matter what happens. Investors should remain vigilant and know the arguments supporting both possible outcomes.

There isn’t much in the way of political references in this month’s piece, but I have not forgotten. I am preparing a separate special election edition which should come out in a week or so.

Strange Indeed

The year is well over half way done…hard to believe I know. As was the case in 2015, the stock market this year has shown some very volatile tendencies. We saw the worst start to any year in the history of the market only to rebound to near record highs in March. BREXIT temporarily brought it back to earth as the first six months ended showing only a slight gain. The emotional rollercoaster continues as July and August saw equity markets rise to new record highs on the backs of accommodative central banks.

August is redefining its reputation as one of the weakest months of the year. For the first time since 1999, The DOW, S&P 500, and NASDAQ all closed at record highs on the same day (8/11/2016). Other than an expected continuation of almost zero interest rates, I don’t see any other reason that supports these levels. The S&P 500 is up just under 7% for the year. Lots of people are worried, so complacency doesn’t seem to be an issue.

On the heels of a historically bad start to the year, Citi strategists warned that the global economy seems trapped in a “death spiral” that may lead to a serious equity bear market. Goldman Sachs issued a statement to start the second half cautioning, “Both stocks and bonds looked expensive after rallying together and are now vulnerable to a quick sell-off.” GS believes equities could sell off due to negative growth surprises, bonds are unlikely to hedge equity risk, and the bank has decided to increase its allocation to cash and gold.

Raging in the background is a dysfunctional presidential race being led by the two most unpopular candidates in our lifetime. Voters do not trust or like Hillary and they are afraid of Trump. She’s corrupt and he’s a loose cannon. FBI director James Comey called her careless referring to her handling of government emails on her private server. When pressed, he had to acknowledge that several of her ongoing statements were untrue. Meanwhile, Trump cannot stay on message, and that message is too often a headscratcher. Okay, so much for my political comments for this piece.


The threat of terrorism is far too often becoming a reality. The rule of law in our country is disappearing along with common sense. Good guys are demonized, bad guys are lauded, and success is somehow synonymous with greed.

Job growth strongly rebounded in June and July, while May’s awful numbers were revised down to a paltry 11,000. July unemployment remained near full employment levels at 4.9% while more working age adults are unemployed than almost ever before. How do you reconcile that relationship? Wage growth came to life a little but still lags far behind historic levels and does not reflect an economy that is at or near full employment.

Recent economic data pointed to healthy retail gains, a pickup in industrial production, and some signs of inflation. However, one month does not a trend make. Politicians and economists remain hopeful, but their hopes may border on wishful thinking. Ben Leubsdorf recently wrote in the Wall Street Journal, “Overall growth appears to have rebounded solidly in the spring after a winter lull, and continued strength in household spending stands to propel the economy in coming months.”  Solidly? I think the problem lies in the new normal of accepting previously considered unacceptable indications of growth as encouraging.

Why is it that home ownership is at a 51-year low while mortgage rates have remained near record lows for years? How can the unemployment rate be at 4.9% but the labor participation rate be at 62.8%…the worst level in about 40 years? The unemployment rate is low because the Labor Participation Rate is down…not because of healthy job/wage growth. Too many of the new jobs being added are of the part-time and low wage variety. Why do we not see any signs of wage inflation at what is generally considered full employment? The numbers don’t add up. And the markets are at all-time highs.

GDP growth remains anemic as it has for the last eight years. Obama will be the only president in the modern era to oversee GDP growth of less than 3% during his time in office. Ahead of its release, experts were optimistically projecting that Q2 GDP would come in at a less than optimal 2.6% annualized. The actual number was a meager 1.2% on the heels of a terrible Q1 result of 0.8%. We remain mired down somewhere between recession and viable growth. Yet, if we were to believe the picture painted by the President in his speech at the Democratic Convention, our economy is very strong. This is creating a big disconnect between the message and what the average voter is experiencing. And the markets are at all-time highs.



Corporate profits are poised to fall for the fourth consecutive quarter. Revenue also continues to decline for the sixth quarter in a row according to Thompson Reuters. The price of oil hovers near its recent lows. Interest rates are near zero but artificially buoying the stock market instead of the economy. Both measures are retarding growth. Corporations are buying back shares with their excess cash which serves to increase earnings per outstanding share and mask an already stretched P/E ratio. And the markets are at all-time highs.

10-year U.S. Treasury Bonds are outperforming stocks as recent yields hit almost 40-year lows of 1.367%.  Morgan Stanley believes the 10-year yield will fall to 1% before it’s done. Yet, those same U.S. Treasury yields look robust when compared to the rest of the world where negative interest rates are becoming more common. Investors in Europe and Japan are so hungry for safety that they are willing to pay a premium for new issues. They are willing to pay more than they will receive back at maturity. There is a troubling message hidden somewhere in that equation. And the markets are at all-time highs.

Corporations are flush with cash yet they continue to add debt to their balance sheets because it’s cheap. The federal debt is approaching $20 Trillion with no end in sight. Oh, and global warming is evolving into concerns about global cooling.

In the 1968 song titled Master Jack, the group 4 Jacks and a Jill offered a very appropriate lyric for today’s economy, “It’s a strange, strange world we live in, Master Jack.” Strange indeed!

 The Crystal Ball

Economic and market forecasting with the goal of providing specific, actionable information is becoming more fairytale-like than prescient. Over the last few years, industry sages have been consistently wrong including their predictions on Emerging Markets, oil prices, GDP growth, jobs, and interest rates.

The belief is that the financial markets are so massively large that their inertia alone drives both global economies and volatility making forecasting a virtual guessing game. In addition, government fiscal and monetary policy interference introduces variables that cannot be accurately introduced into the models. Forecasting, which is largely based on historical data, is no longer predictive in the short term.

So, how does the average investor make prudent decisions in the new normal where nothing actually seems to be normal? We use traditional financial forecasting data differently. We give little credence to what all the experts are saying will happen in the next year or two. While interesting, not even the most brilliant forecasters know with any clarity or certainty where we are headed. We discount the past as it’s only the future that matters.

Our approach is based on long-term market trends and allocating in accordance to the probabilities assigned to potential outcomes while understanding that outcomes in either direction are possible at any time. We like to assess where we are in the long term cycle and then use technical and fundamental data to help us assign probabilities of near term outcome. We ask ourselves what the likelihood is of the markets going up, chopping sideways, or going down as well as to the degree they might move in either direction.

Once we are comfortable with that view, we allocate risk (not assets) to reflect our sentiment. Currently, we are very underweight the traditional markets (stocks and bonds) and heavily overweight investment solutions that are not necessarily dependent on the equity or fixed income markets for their success. This won’t always be the case. If stocks go through another major correction…and they will…we will rotate capital into the traditional markets to participate in the recovery from the decline we are positioned to avoid.

The Wall Street Journal recently discussed three fundamental approaches to investing that are also rooted in the longer-term view. They involve an analysis of how expensive the market is based on the earnings multiple, bond yields, and dividends.

The first measurement comes from Professor Robert Schiller who uses the 10-year average earnings ratio that is adjusted for inflation. The Shiller P/E ratio has averaged 17 since 1870. Today it is above 25, which implies below average future returns as it eventually reverts to the mean. This level generally includes some painful periods where the P/E average over-corrects as it seeks the long-term average. An analysis published in 2012 shows “on average stocks have produced a miniscule 0.50% annualized real return for the next decade when starting from a point where the Schiller P/E was above 25.” This is not very encouraging considering where we are currently.

Vanguard founder Jack Bogle uses a three-step process to forecast where stock prices might go over the next decade. His formula simply adds the market’s current dividend yield to average price growth over the last 100 years. He then adjusts that total by the amount the current market P/E ratio varies from its long-term norm. Currently the market dividend yield is 2%, which is added to the 100 annual average price growth of 5% giving you a 7% average total growth expectation over the next 10 years before adjusting for the earnings multiple.

Since the price investors are willing to pay for earnings (the P/E ratio) is currently 20 times earnings (by his measure) versus the long term average of 17, he reduces his 7% expectation by the difference of 3 and arrives at a ten year 4% average annual total return for stocks going forward. If inflation averages 3% going forward, the real rate of return would only be 1%. Fortunately for the average investor, inflation has been non-existent in a way that a 4% return in a 1% inflationary environment is the same as a 6% return in a 3% inflationary environment in real terms.

For bonds, Mr. Bogle uses a proven formula where the yield to maturity is a good predictor of bond total returns for every ten-year period since 1906. The 10-year Treasury note currently yields around 1.5% suggesting that Treasury bonds will not perform nearly as well over the next ten years as they have for the last decade. In fact, they are likely not to keep up with inflation thus producing a negative real rate of return. Corporate bonds will probably only be slightly better.

Each of these three views corroborates our own that there is limited upside from current levels in both the equity and fixed income markets. This will change, but for now, there are better places to take risk.

How does Jeffrey Gundlach of the DoubleLine Capital ($100 billion fund) feel about the markets at this time? “Sell everything…Nothing here looks good.” Sell the house, sell the car, sell the kids is how a well-known artist responded. Wow! Goldman Sachs is reducing exposure, and Bill Gross suggests we are in a high risk low return world and that investors should reduce risk and be willing to accept lower than historical returns. George Soros and Stanley Druckenmiller have also turned negative on stocks.

Growth = Treasury Bonds?

You would have probably fired your advisor in 2006 if he/she suggested that you buy U.S. Treasury bonds as your primary growth asset. As it turns out, it would have been a prudent bet. The S&P 500 (SPY) has averaged 7.27% over the last decade while the 20+ Year Treasury Bond ETF grew at an average rate of 9.31%.

These two asset classes have essentially traded places over the last 10 years, which serves as yet another example of how out of whack everything is right now. This is not the first time we have witnessed such a trend. It also occurred in the 1970s and the 1930s, which were periods of awful stock market performance.

Probably the biggest contributor to this anomaly is the fact that U.S. GDP growth has only averaged 1.3% over the last decade. As a result, investors have been on the defensive driving bond yields down and prices up as the laws of supply and demand play out.

The take away at this point is that both stocks and bonds are a bit stretched suggesting caution should be applied. For the typical investor who is 100% allocated between equities and fixed income, this may be a worrisome time. So, what do you do? Cash is safe but pays nothing. A more prudent portfolio allocation today might include exposure to non-traditional investments that are not dependent on the equity or fixed income markets for their success or are structured in such a way to mitigate or eliminate catastrophic risk.

 Double Negatives

We are seeing use of negative interest rates spread to more economies. Even the 10-year benchmark German Bund recently fell into negative territory for the first time ever. In other words, investors are willing to pay the government for the privilege of having them hold their money before returning it a decade later. Amazing! The government gets paid to borrow, and the investor receives less in return. I wish those were the terms the last time I bought a car or financed a real estate purchase. Strange indeed!

Negative interest rates do not stimulate. Look no further than Japan. They do make people hoard cash, which reduces the money supply, which in turn is deflationary thus producing a negative feedback loop. Money is not spent under the expectation that it will buy more later on. Pricing power goes away and prices drop thus reinforcing deflationary pressures. Growth ceases to occur. Hiring slows, layoffs accelerate, and recessions ensue.

The benchmark U.S. Treasury 10-year note was recently yielding about 1.3% representing a historic low. Comparing it to other sovereign debt, it looks like a high-yield alternative. The fact that money is flooding into these vehicles is telling. Confidence in global growth is deteriorating in the face of world central banks continuing to try to engineer artificial growth at the expense of normal economic cycles often leading to abnormal swings in the markets. As usual, it will be the unintended policy consequences that hurt us the most.

Many now believe we will not see rate hikes for the rest of this year and through 2017 even though two months of strong jobs numbers are raising the odds of something happening this year. I personally think we are too close to the election for anything to be done before December. Cash is piling up as bonds mature or are called in order to retire more expensive debt that can be replaced with virtually free money. Demand is outpacing supply driving interest rates down.

Growing Debt Bubbles

Three major areas of economic concern are the growing levels of at risk college debt, auto loans, and credit card debt. More on that in a minute.

In the background, our federal debt has grown by $13.6 Trillion over the last two presidential administrations. Our indebtedness represented approximately 54% of GDP when George W. Bush took office. Today as Obama sees the light at the end of his tunnel; our national debt is closing in on $20 Trillion and represents a staggering 102% of GDP when including entitlement obligations. By the time he is out of office, he will have loaded more debt on the backs of future generations than all 43 of the previous presidents combined. If government fails to address this growing debt problem, it will almost certainly lead to a fiscal and economic crisis. The effects could be quick and severe. The probable result will be falling bond prices, spiking interest rates, and a deep recession.

Sadly, neither party chose to address this as a concern during their conventions. Both seem to embrace an infrastructure ruled by entitlement spending promises and an ineffective tax system that fails to support the giveaways no matter how optimistic one engineers the variables. In the end, it’s just math, and again the math doesn’t add up. The Congressional Budget Office (CBO) has essentially condemned the current system suggesting that the future will be defined by fiscal disaster after fiscal disaster.

Looming somewhat ignored, are three previously mentioned potential debt bubbles that could create another credit crisis. Together, credit card debt, auto loans, and student debt sum to over $3 trillion dollars. Eight years ago, a very small part of today’s $8 trillion in mortgage debt almost brought down our financial system. These other debt bubbles are arguably even more uncertain.

JPMorgan’s Jamie Dimon recently addressed the $1 trillion auto loan market as being “a little stretched”, and said, “Someone is going to get hurt. It won’t be us”. The robust growth in car sales over the last couple of years has been funded by the loosening of underwriting standards and a surge in subprime lending. Dimon suggests that the value of the collateral (used cars) will begin to drop as inventory, due to rising defaults, begin to flood the market. Sound familiar? It should. While the amount of auto loan debt is about one-eighth the size of the mortgage market, it could still jolt the economy. Debt in subprime asset backed loans held by investors could spiral if defaults and an inventory glut actually occurs.

Total outstanding student debt sits at approximately $1.3 trillion. It was only $400 million ten years ago. Almost all of this debt is either guaranteed or held by the federal government. New research indicates that many of the students that took out these loans are economically worse off than had they not gone to college. Many either dropped out or have been graduated without being prepared for today’s workforce. This carries two major risks:

  • The inability or unwillingness to pay their loans.
  • These individuals fall into a debt trap for years ultimately hurting, not helping, the economy.

There are currently 7 million borrowers in default with millions more poised to join them. More than 20% of all outstanding debt is at least 90-days delinquent. These are just like homeowners flooding into default during the housing crisis that was part of the financial collapse of 2008/2009. The problem is that there is nothing that can step up to stabilize this market as home values eventually did for the housing market…except for the tax payer. Better get ready.

Unfortunately, politicians on many levels believe the solution lies in creating even more debt or in some cases forgiving the debt all together. Smoke and Mirrors! More debt tightens the noose. Someone has to pay for the forgiven debt in the same way someone will pay for the free college many tone-deaf politicians prescribe.

 ETF Fund Flows

The fear factor seems to be driving ETF flows. Within these flows are messages that support a defensive bias where investors are attempting to ‘stock-proof’ their investments.

June saw the worst outflows from actively managed US funds since the Financial Crisis with over $21 Billion leaving actively managed funds. Over $8 Billion went to passively managed equity funds. Investors appear to be ratcheting down risk and unwilling to continue to pay for active performance that rarely outperforms.

Investment News recently pointed out that ProShares Ultrashort S&P 500 ETF (SDS) has again become the largest leveraged ETF by doubling its AUM. SDS provides a two to one inverse exposure to the S&P 500 index. The expectation is for every dollar the S&P 500 goes down; SDS will go up $2. It theoretically works the opposite in reverse. In addition, the SPDR Gold Trust (GLD) has received inflows of $10 billion dollars this year, which is double that of any other ETF fund. The motive here seems to be a flight to safety in the face of mounting fears. Overall, flows are rotating from equity ETFs into bonds at a rate second only to inflows to gold. HMMMM.

As a vehicle, ETFs are quickly overtaking mutual funds accelerating a trend away from more expensive active management. Over the last ten years, ETF assets have grown from $230 million to over $4 trillion. It is estimated that ETF investments may hold the majority of the $20 trillion fund market by 2020. How assets are allocated determines well over 90% of an investors return. Active management is only responsible for a very small piece of performance. More and more, investors are moving away from active management in favor of low cost, indexing.


The U.K. stood up and flexed its sovereign muscle when her citizens voted to exit the European Union. The citizenry essentially decided to take back their country.


Brian Wesbury had a sane and common sense view of the decision. I summarized some of his thoughts below.

The S&P fell over 5% in the two trading days following the vote which will lead to Europe’s second largest economy to be the first to leave the 28-member European Union. In whipsaw fashion, the S&P quickly recovered and is now up 18% from Feb 11th lows. The selloff was emotional, not real. It was an overdone overreaction. Britain leaving the EU will not, on its own, cause recessions in the US, Europe or Britain.

The original goal of the EU was to act more like how Washington DC works with the 50 United States. The structure was created to establish freer more efficient trade, simpler travel between member countries, and provide for a common currency. However, Britain decided early on to continue using the Pound instead of the Euro.

Interestingly enough, Switzerland & Norway are not part of EU but were given what amounts to a ‘social membership’ where they receive the same basic benefits. Wesbury believes the UK will become like Switzerland and Norway. Britain runs a trade deficit with the rest of EU. Big business in Europe will push their governments hard not to harm that trade in response.

The real problem that led to this revolt, if you will, began when the EU took over and the bureaucrats started forcing social reforms on their member countries. Issues like environmental and immigration policy were jammed down the member’s throats. Britain ultimately rejected the intrusion on their sovereignty.

The concept of a European Union was economically good but failed at the extremes, and England’s action will probably lead to other countries doing the same. There is a heightened level of anxiety across the European continent over immigration, jobs, and forced globalization.


Wesbury predicts that leaving the EU will be a net positive for the United Kingdom, not a negative. Simply look at it from a cost benefit analysis. It cost Britain far more on many levels than the value of the benefits they received in return. Getting away from the bureaucracy especially surrounding immigration and environmental laws will create a much more efficient UK.

Wesbury categorized this decision as a modern day Magna Carta. The original Magna Carta gave people control of their lives while taking away power from the king and introduced the rule of law and property rights. It was the foundation of what eventually became our Constitution. In this case, BREXIT simply returned some of the rights that they previously relinquished when joining the EU. This was a revolt against the bureaucrats making up the EU.

The EU won’t survive as an organized entity unless they find a way to exist without imposing endless strangling regulation on its member states. The EU forced UK to take immigrants and place them on their welfare system because it was deemed unfair if they did not. Immigration is great if there is a requirement to assimilate and carry your own weight. It fails when it becomes recruitment for welfare participants. It fails if you become a bi-lingual, or tri-lingual, or multi-lingual society. It fails if different subsets of society operate under different laws. It fails when various groups are constantly pitted against each other even if only politically.

Immigration was very successful in the United States during the late 1800s and early 1900s because there was no welfare system. People came over, assimilated, embraced America, learned the language and became part of a burgeoning workforce. That is no longer the case, and until it is, the outcome will be contentious at best.

Britain’s decision is just another example of the anti-establishment movement that is sweeping the world. Free people everywhere are tired of the bloated bureaucracy that holds back the masses and are moving towards a less bureaucratic structure. This is the same wave that swept Reagan and Thatcher into office. This is the natural reaction to government overreach.

Wesbury views the initial market reaction to BREXIT was an example of economic hypochondria that has prevailed ever since 2008 where investors believe that the next crisis is looming around every corner. In his opinion, there are two important things to remember to counter this sentiment:

  1. We no longer have mark-to-market accounting which is what “caused a forest fire to turn into an inferno.”
  2. The panic of 2008 was a once in a century event. Banks are over capitalized today.

What he is probably missing is that the next perfect storm will consist of events or factors that have never occurred before in a similar combination. These historic events are all unique in their own right. Everyone is always surprised how many once in a century events occur every 100 years.

I like Wesbury’s summation…What works is freedom, and the UK just voted for freedom. This will be a positive for the world economy. He is in the camp that the markets are undervalued and the “plow horse economy” will continue to grow.

Felix Zulauf, a member of Barron’s vaunted round table, also sees BREXIT as a political instead of an economic event. He believes its part of a movement in opposition to the political establishment and “the disintegration process of the EU is beginning.”

This event seems to handcuff the Fed for the balance of the year. It appears doubtful that we will see rate increases for the balance of the year which, by itself, is a positive for the stock market. However, given the uncertainties surrounding economic weakness and political turmoil in the US and in Europe, equities could become very stressed over the summer and fall. A decline of 5% to 10% may present good entry points for traders.

There are only “four threats to Wealth Creation” according to Wesbury:

  1. Monetary Policy
  2. Tax Policy
  3. Trade Policy
  4. Government Spending and Regulation

Unfortunately, none of these seem to be trending in favor of ‘Wealth Creation’.


“Getting them right leads to prosperity, getting them wrong leads to recession. Right now the Fed is not tight, trade is more free than it was 20 years ago…” The only burden is in the area of spending and regulation. Wesbury is of the opinion that 2% growth is acceptable given the size of government and suggests that new technology will be able to create enough wealth to offset the burdens that government are putting in the way of growth. What really matters are earnings. Corporate profit growth will ultimately determine how the markets behave.

The Spin-off Cycle

According to Barron’s, 19 of the Russell 1000 companies have announced spinoffs this year. This is the highest level for the last 20 years. Elevated activity in corporate divestitures usually signals a peak in the profit cycle and is usually the consequence of decelerating corporate profits.

The parent companies and the spun-off businesses usually perform fairly well in the year following the deal and outperform the market as a whole. However, economically, this serves as another reason to remain a little cautious.

In a related area, it appears that wages have turned the corner and are starting to increase. Under ideal conditions, wage increases are accompanied by increased productivity where corporate bottom lines feel little impact. This relationship does not seem to be in place right now, so rising wages will serve to add momentum to the profit decline trend.

 WORK???!!! (Maynard G. Krebs)

States continue to wrestle with the welfare reform in an effort to make sure those who really need it have access to all the benefits they can receive. Many states are beginning to incorporate work requirements and the results have been staggeringly positive. Essentially, work requirements are aimed at able bodied adults without dependents. As a result, between March and April of this year, food stamp recipients decreased by 773,134 individuals.

Some examples include Maine where the number of cases of able bodied adults without dependents dropped by 80%. Kansas saw their case load drop 75%. The Foundation for Government Accountability found that 60% of Kansans who left the food stamp program found employment within 12 months and their incomes rose an average of 127% per year.

Indiana saw a 68% drop in able bodied adults without dependents using food stamps. Work requirements help ensure those most in need will have benefits and move those who can towards self-sufficiency.

The current administration takes pride in the massive increases of people on food stamps which it has fostered. Shouldn’t it be the other way around? Shouldn’t the government be proud when it creates an economy where fewer people require assistance? In addition to means testing, shouldn’t all welfare programs have some sort of requirement or checks and balances in place to make sure that only those truly in need are receiving benefits? Shouldn’t the programs promote self-sufficiency instead of permanent dependency?

By The Numbers

What follows are some interesting statistics I have collected over the last few months. For purposes of full disclosure, I have not verified every single fact. I’m not even sure where to start on a few. However, they seem reasonable and pass the common sense test:

  • George W. Bush and Barack Obama have now combined to implement 1096 major regulatory rule changes. Obama has set the record with 600 changes and still has 6 months left. Those 600 major regulatory changes are estimated to cost our nation $743 billion annually (American Action Forum study). This amounts to a regulatory tax of $2,294 per American in the form of higher prices, fewer jobs, reduced profits, and lower wages.
  • States that have more people on Welfare than employed: California, New Mexico, Mississippi, Alabama, Illinois, Kentucky, Ohio, New York, Maine, and South Carolina.
  • Investor’s Business Daily recently reported the following UN International Heath Organization survey:
    • Percentage of individuals who have survived cancer 5 years after its diagnosis:
      • S.: 65%
      • England: 46%
      • Canada: 42%
    • Percentage of individuals diagnosed with diabetes who received treatment within 6 months:
      • S.: 93%
      • England: 15%
      • Canada: 43%
    • Percentage of seniors needing hip replacement surgery who received it within 6 months
      • S.: 90%
      • England: 15%
      • Canada: 43%
    • Percentage of individuals referred to a specialist able to see one within one month:
      • S.: 77%
      • England: 40%
      • Canada:                 43%
    • Number of MRI scanners per million people:
      • S.: 71
      • England: 14
      • Canada:                 18
    • Which of these three nations have national health insurance?
      • S.: No…but unfortunately headed that way.
      • England: Yes
      • Canada:                 Yes
    • Each president appoints a cabinet which consists of individuals who oversee the critical areas of government. Typically, these appointments are people who have come from both the private and public sectors as well as academia. What follows is the percentage of appointments of individuals that came from the private sector with real life business experience for each president in the modern era:
  • Roosevelt – 38%
  • Taft – 40%
  • Wilson – 52%
  • Harding – 49%
  • Coolidge – 48%
  • Hoover – 42%
  • D.R. – 50%
  • Truman – 50%
  • Eisenhower – 57%
  • Kennedy – 30%
  • Johnson – 47%
  • Nixon – 53%
  • Ford – 42%
  • Carter – 32%
  • Reagan – 56%
  • GH Bush – 51%
  • Clinton – 39%
  • GW Bush – 55%
  • Obama – 8%
  • Hmmm…92% of those appointed to the top government posts have had little or no experience in the private sector. They have spent most of their professional life in government or academia or in the case of our president, as a community organizer. They live in the world of theory versus practicality.
  • Presidents typically bring in about 6000 people from cabinet members on down. What type of person will either Clinton or Trump bring in on their coattails? A good question to ask yourself before you pull the lever.
  • In early 2015, 90% of what we read, watch, and listen to were controlled by 6 media giants. There are 1500 newspapers, 1100 magazines, 9000 radio stations, 1500 TV stations, and 2400 publishers that are owned by the 6 corporations shown below with a few of their more important entities. (Note: since these numbers were published, GE has divested itself of all media concerns. Comcast replaced GE as one of the top six):
    • General Electric:                 Comcast, NBC, Universal Pictures, Focus Features.
    • Disney: ABC, ESPN, PIXAR, Miramax, Marvel Studios.
    • VIACOM: MTV, Nick Jr, SET, CMT, Paramount Pictures.
    • Time Warner: CNN, HBO, Time, Warner Brothers.
    • CBS: CBS, Showtime, Smithsonian Channel, NFL.com, Jeopardy, 60 Minutes.
    • Newscorp: Fox, Wall Street Journal, New York Post.

Consider these facts:

  • ABC News executive producer Ian Cameron is married to Susan Rice, National Security Advisor.
  • CBS President David Rhodes is the brother of Ben Rhodes, Obama’s National Security Advisor for Strategic Communications.
  • ABC News correspondent Clair Shipman is married to former Whitehouse Press Secretary Jay Carney.
  • ABC News and Univision reporter Matthew Jaffe is married to Katie Hogan, Obama’s Deputy Press Secretary.
  • ABC President Ben Sherwood is the brother of Obama’s Special Advisor Elizabeth Sherwood.
  • CNN President Virginia Moseley is married to former Hillary Clinton’s Deputy Secretary Tom Nides.
  • No wonder so much important stuff goes unreported.


  • Consider Yourself Lucky…if you were to assemble a group of 100 people who represent the exact proportion of all people living in the world, the following would be true:
  • 57 would be Asian
  • 21 would be European
  • 14 would be American (North, Central, & South)
  • 8 would be African
  • 52 would be female, 48 male
  • 30 would be Caucasian. 70 non-Caucasian
  • 30 would be Christian, 70 non-Christian
  • 80 would live in poverty
  • 70 would be illiterate
  • 50 would suffer from hunger and malnutrition
  • 1 would be dying, 1 is being born
  • 1 would own a computer
  • 1 would have a university degree
  • If you wake up in good health, you are better off than the 1 million people who will die each week.
  • If you can go to your place of worship without the fear that someone will assault or kill you, you are better off than 3 billion people.
  • If you have a full refrigerator, clothes on your back, a roof over your head, and a place to sleep, you are better off than 75% of the world’s population.
  • If you currently have money in the bank, in your wallet, and a few coins in your pocket, you are better off than 92% of the world’s population.

(Important note: The above was sent to me by a reader. Most of the data passes the smell test, but I cannot verify every number)

As mentioned at the beginning, I’m trying to put the finishing touches on a post-convention campaign analysis, but the candidates and events are so fluid that it is tough for find the right time to wrap it up. I’m not too worried as most people aren’t even engaged yet. Pre-Labor Day activity is lost on the average voter. Most likely voters do not even begin to pay attention until the debates, so all of Trumps verbal diarrhea and Clinton’s convention bump will drift away by then. Trump’s advisors have not persuaded Trump to use his Imodium prescription as of this writing.

Thanks for your interest.


Bruce Anderson

Managing Partner

South Georgia Capital, LLC, 2135 City Gate Lane, Ste 460, Naperville, IL 60563

630-447-2760    bwa@sgcim.com    www.sgcim.com

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