On Monday morning, April 5th, we presented a 15-minute slide deck to Zacks Ultimate members as part of a one-hour monthly strategic session (ZUSS for short).
The topic of my analysis was selected two weeks ago. Here is a description of the email I submitted on March 24th …
US National Debt: Are We Heading For A Government-led Financial Crisis?
Dave Born and Kevin Cook try to confront the largest elephant in the room. Deficit spending has saved the economy from recession, stocks have saved from the crash, and debt seems less important now at these low interest rates. However, we have just exceeded $ 28 trillion, and current interest expense alone amounts to hundreds of billions of dollars.
The $ 1.9 trillion US Rescue Plan Act and the potential $ 3 trillion infrastructure bill will create a decade-long deficit of trillions of dollars. The CBO predicts that over the next six years, national debt will grow by nearly 60% to more than $ 44 trillion. Disasters appear to be imminent as interest rates on US Treasuries rise.
But one of our strategists says people in the “debt clock disaster” are wrong. Notice to find out where Kevin and Dave stand in this historic showdown.
(End of promotional phrase promoting ZUSS’s “agree” segment)
Dave Born politely took the “deficit and debt problem” aspect of the debate. This gave us an out-of-consensus view that it is not a problem now and will not be a problem in 2050. Before / if / when debt doubles GDP, we can fully address them over the next few decades.
Coincidentally, John Oliver chose the national Doo Doo for Sunday night’s show “Last Week Tonight” at HBO. I know neither Dave nor I saw the show when we recorded the segment on Monday morning.
And I’m very grateful that Oliver and I shared some of the same conclusions about Congressional Virtue Signals, so we couldn’t proceed with the presentation with exactly the same beliefs-they. Will last by packing “pork” on all spending invoices for their special benefit.
How will debt hurt future generations?
They may also share much larger conclusions.
You may disagree with Oliver’s politics, but listen to one or both of us for our final answer to this question.
Whether it’s amazing synchronicity, chance, or whatever you want to call it, we both ended the video with a big hammer to that moral question.
John also does a good job of crushing monologue flesh “debt disaster” hypocrites, but I’m focusing on the real answer to why inflation and interest rates are so restrained. -It’s Index Innovation (ETI) Stupid!
Technological innovation has been a major driver of economic growth and change throughout history, and war and politics play a small role. And in the last few centuries, the innovation has become exponential as technology converges and expands mutual influence and development.
And best of all, at John Oliver’s show, which I saw for the first time on Wednesday morning, he handed me a new killing in the form of an IMF economist. “”
I skewer the bird just above the end of the turkey spit business.
US Debt Hawks Meets Larger Birds of Prey: ETI
The video that accompanies this article provides a longer version of its ZUSS presentation in the hope that it can provide a compelling case for everyone … at least a “debt is a problem” alternative. Make me think about the idea.
In essence, I argue that “growth is the solution” and explain why technological innovation has ignited incredible economic productivity and wealth creation while eradicating inflation. ..
This is not a new idea for me. In December 2017, I wrote one of the most important economic and investment thoughts, and what’s happening there was called the Technology Super Cycle. I wanted multiple innovation trends to reach the root of all business cycles and government / central bank interventions, or ways of “breeding and replacing” their lack.
At that time, I recommended four stocks to represent the theme of “technological innovation” across two sectors. NVIDIA NVDA and hardware / software Lam Research. Align Technology ALGN and CRISPR Therapeutics CRSP for leveraging biotechnology / medtech.
It was only two years later that I learned that ARK Invest’s Cathie Wood is building an innovative investment philosophy and building a “thematic” ETF company that is actively managed based on such ideas. did. She calls the key themes and impetus for growth and wealth creation “disruptive innovation.”
On Monday night-after I filmed my “National Debt Rocks!”, As a tastier coincidence has it. ZUSS Segment-I saw Elon Musk start a conversation with her on Twitter.
Details of that important dialogue can be found in the video. It also explains what it means for exponential wealth creation (EWC) and ETI (exponential innovation) to “dominate the roost” of the economy with much greater leverage than its relationship with Congress. To do. Or that compromised budget procedure.
My strongest message to anyone pretending to be able to predict when and how government bonds will be a problem is, “You or your economic advisory board is Apple, Amazon, Tesla TSLA, or Square SQ. Did you really anticipate the powerful rise of? “
Technology super cycle is real
Here’s an overview of The Technology Super Cycle, a groundbreaking research report for 2017. Here, we’ll dig into it like Colombo and unravel two mysteries …
Missing Link # 1: Hidden Productivity
Missing Link # 2: Extinct Inflation
Key fact: Innovation drives profit growth with invisible productivity and efficiency that keeps inflation low and investment high.
How fast technological innovation is changing our world and the global economy, and what impact will it have on investors?
Both citizens and investors benefit from high technology such as smartphones, apps, cloud and HPC (High Performance Computing), semiconductor efficiency and software automation, biotechnology, and advanced energy technologies such as hydraulic crushing.
But for the past eight years or so, this strong growth has not really been seen in the GDP of the 2% economy.
We can believe pessimists that innovation is somehow hurting economic productivity by burdening us with systems that are complex to learn, prone to failure, and vulnerable to hacking. It’s as if. Or they may think that productivity only causes work to go abroad, lowering profits and wages.
However, in mid-November, we provided better answers to Zacks Ultimate members at our monthly ZU strategy session. In the “Agree” segment, I asked the Research Director to discuss whether “this time is different” in terms of growth and equity valuation.
My treatise: Technology was actually accelerating growth, but productivity was also accelerating in ways uncaptured (or unpublished) by the Bureau of Labor Statistics, and some derivatives of derivative measurements. And denominator both changed, so it wasn’t seen in government data.
(End of Executive Summary for 2017 Tech Super Cycle Report)
Be sure to catch the video attached to this article so you can see all my slides on the debt issue discussion!
Speak right away!
Kevin Cook is a Senior Stock Strategist at Zacks Investment Research and operates the TAZR Trader and Healthcare Innovators portfolio.
Time to invest in legal marijuana
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