Trump's Nominees Will Reshape the Fed

The Federal Reserve Board of Governors consists of 7 positions filled by appointment. President Trump already has two vacant seats that need to be filled. Over the next 18 months he may need to fill another 2 or 3 seats. His ability to recast the Fed may have more immediate impact on the country than his Supreme Court picks.

Trump needs to pick someone with real world, problem solving experience:
 

Instead of the jokers that we have been running the show:
 

It is preferable to find someone who will bring balance to their thought process and deliberations:
 
Ok, back to work (that was fun)!
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The Day After

Many Americans are waking up this morning disappointed, surprised, elated and shocked. Pundits are prognosticating about what the next four years will bring and social media feeds are filled with election commentary and lamentations. The financial markets are also uneasy, just as they were when the Brexit vote occurred in May. What are we supposed to do?



Start by focusing on the things that you can control. You may feel downtrodden after the election result, but that doesn’t change your financial goals. In 48 months, we all will be older and hopefully nearer to achieving financial freedom. Your children or grandchildren will be that much closer to going to college. Developing a sound financial plan, reducing debt, living within an established budget and investing wisely are key components of financial independence. It’s imperative that you begin with the end in mind. If you haven’t thought about what to do, find an independent financial firm that can help you get organized and take the first steps.

Our republic has lasted for 240 years. We have elected both good leaders and poor executives. The country will live on today and hopefully for another 24 decades. As individuals, we aren’t that lucky. With limited time on the earth, it’s important to make sound choices on the things we can control. Rather than gloating or sulking about the election result, use this time to begin planning and dreaming for what your life will look like in 2020.
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What Mainstream Americans Understand that Mainstream Media Doesn’t

It started nearly a quarter century ago on May 1st 1992 and on Music Television of all places. That’s when MTV introduced viewers to The Real World. They labeled their program as an “unscripted drama”. Eight years later Survivor dropped in primetime and changed television for a generation. From Jersey Shore to Real Housewives, viewers have been fed a steady and growing diet of reality television. Every American knows one when they see it.

My guilty pleasure is Duck Dynasty. A quirky, off-beat look at an enduring southern family comprised of larger than life outdoorsmen, their patient, devoted wives, kids and the overly normal community they live in. It’s a faithful telling of the clans’ misadventures and it boldly puts their traditional values on full display. As their shenanigans play out, viewers are shown a family that is confident in who they are as individuals and what they believe collectively. One more thing: obviously, it is scripted and many viewers (yours truly) apparently think their lampoon is entertaining.



Mainstream media delved into the “scripted drama” genre in 1997 during Bill Clinton's presidency. They tried desperately to suppress news of sexual shenanigans by our sitting president. They would have succeeded if not for the efforts of Matt Drudge and his eponymous website, The Drudge Report.

“Journalism” took another hit in 2004 during George W. Bush’s re-election. CBS news anchor Dan Rather and his producer, Mary Mapes unsuccessfully tried to “rescript” Bush’s military records into a narrative that matched their political agenda. An unpaid army of bloggers unraveled the plot within 24 hours and Rather was forced to resign from a position that he held for 23 years.

In 2008 Presidential candidate John McCain was the victim of a New York Times effort to manufacture a plot line about an affair with a lobbyist. The lobbyist sued the Times for defamation and the newspaper was forced to settle. These scripted fables always involve republican candidates and never involve democrats. The dishonesty is akin to Uncle Si's tea jug. You know it's close at hand even when you can't see it.

In 2016, mainstream media (they stopped being called journalists some time ago) finally shed their journalistic pretense altogether and devolved into full-time scripted “reality” authors. They are locked in a battle to prevent Donald Trump and the Republican party from winning the election. Here’s the thing: they think their audience believes their scripted fiction.

Mainstream America learned to spot unscripted drama on cable and now they can smell it out with ease. Even worse, media hacks are fomenting war with a reality TV show personality who has more experience in the genre than they do. Regardless of who you intend to vote for, it’s made for a gripping drama.

During Watergate, Woodward and Bernstein spent hours digging up corroborating evidence and witnesses. They pressed and pressed until they had people willing to go on the record and facts to support their claims. Instead of digging up an airline itinerary that shows Trump on the same plane as his alleged accuser, the New York Times hires a NYU film student to put her in soft focus like a cable reality show. The end product comes off as less convincing than a Willie Robertson soliloquy. 

As I shared a draft of this story with my partners at LeConte, they asked about the takeaways for investors. A good point since people read our commentary to learn from our investment process, not politics. Here's what comes to mind:

1Don't let things you can't control distract you from the things that you can control. You control your vote and who you choose to support financially. That's it. Don't get mired down by everything else that competes to divert your attention.

2Cultivate your own independent thinking and decision-making prowess. You can no longer rely on journalists, Google or blogs (including ours!) for the best solutions to your unique financial questions. You have to do the hard work to get the best results.

3Never run for political office unless you enjoy people lying about you. They will and your recourse will be stilted by time and your opponent's ambitions.

4The fruit of the Spirit (Galatians 5:22-23) DOES NOT include hate, anger, etc. Don't let anything or anyone steal your joy for living the life that you have in front of you!

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Ignore the Noise on Election Night and Focus on This

We expect the Keystone State to be the key to the Presidential election outcome.


Pennsylvania is where the action will be focused on election night and specifically, in the 6 strongest democrat counties. Allegheny, Delaware, Erie, Lakawanna, Montgomery and Philadelphia gave Obama a massive lead in 2012 that Romney failed to overcome in the 50 counties that he won:
Obama's margin of victory was 287,865 over Romney. He build a 716,840 vote advantage in these 6 counties. Philadelphia county alone provided Obama's margin of victory.  



Looking from 2008 towards 2016 reveals Clinton's biggest fear. The Keystone state has been trending in Republican's direction.



Will Hillary be able to turn out Obama's voters in these key counties and provide her the margin of victory (and the Presidency) that Obama enjoyed? Will Trump register enough new Republicans to give his a shot at victory?



During Obama's time in Washington registrations in Pennsylvania have trended away from Democrats:



While our conservative political leanings are no secret, we don't have a prediction on how this will play out. We are skeptical that Republicans can take the state without support from the one million unaffiliated voters that are registered. These voters will be Trumps target in the final month of the campaign and the key demographic that we will be following on November 8th.
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The Economic Reality of America (facts vs. political hyperbole)

Republicans and Democrats have both held conventions, presented their candidates and painted their picture of America today. The next 100 days is certain to be a wild and crazy ride. If one candidate builds a polling lead the other side will hit back hard and ugly. Truth is the first casualty of war and it will be so of this election cycle. Facts don't lie but most politicians do. To remedy this, we have assembled some facts to help you understand where our economy stands. Maybe this will help you choose a candidate that can address these problems.



Since George W. Bush's time in office household income has been stuck in a downward spiral. The financial rewards of Quantitative Easing By he Federal Reserve during Obama's time in Washington enriched upper class asset holders but never made it down to the middle class:



During Obama's two terms in office housing costs have skyrocketed, The median home price in America this year is over $300,000:



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Trump, Taxes & You…

We are at an interesting point in our political history. “Change” seems to be the buzz word that all political candidates are embracing in many aspects of their campaign. The current tax system is not immune to this change. If one of these major tax system proposals became law, it would be the first major overhaul of the tax system since the 1980’s under Ronald Reagan.

Donald Trump released his proposed tax plan on Monday. According to his release, the plan is designed to achieve 4 simple goals:

  1. Tax Relief for middle class
  2. Simplified tax code
  3. Grow the economy
  4. Don’t add to debt or deficit

What does it mean for you?

This is all just a big proposal that’s a long way from reality, but how would it impact an average client of mine. Let’s say this client is married and has $100,000 of taxable ordinary income. Under the existing tax system, this taxpayer would have a tax liability of $16,588. The Trump plan would have a 0% rate for the first $50,000 and a 10% rate for the second $50,000, so the tax liability under this proposal would only be $5,000. That’s less than a third of the current tax burden!

We have a long and winding road between now and the elections next year. Along this journey, we are going to hear many things about our country and especially taxes. I’d love to be your guide as we all try to process what this “change” means to you.

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