On June 23, Great Britain voted to leave the European Union, in what is referred to as the “Brexit” Referendum.  The new Prime Minister, Theresa May, announced that the
U. K. would sign Article 50 of the E. U. Charter, which would initiate the separation process, in early 2017.  Parliament is not required to abide by the Referendum; however, if it does, the Exit would be finalized in early 2019.  In the interim, the wheels of change are already effecting many business and personal decisions.

Approximately half of all U. K. foreign trade is transacted with other E. U. member nations.  Accordingly, goods and services are currently able to flow freely, within the E. U., without tariffs or even passing through border checkpoints.  That would cease, of course, when Great Britain leaves the Union.  Businesses would obviously need to determine, on which side of the Channel they should locate their various operations, in order to reduce tariffs and expedite the flow of business.

I believe that the people side of the equation will present more risk, especially since it might have a greater impact on the younger generation—Great Britain’s future!  The Millennials are generally in the early stages of their careers and, thus, more flexible in moving to new jobs, and in assuming different challenges.  Professional Europeans in the U. K. have probably already begun looking to transfer, or move to new positions, on the Continent.  Likewise, many Britons have already begun considering ancestral citizenship in various E. U. member countries.

But, consider what Great Britain might be losing if it follows through in its proposed separation from the European Union?  This younger pool of talent would tend to be highly-educated, professional and entrepreneurial types, who realize that their careers would have a greater chance of growth in the larger European Union.  Unfortunately, they are exactly the “Next Generation” of business and government leaders, which the United Kingdom can ill afford to lose!

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Now, don’t laugh.  This is one of those “You just can’t make this stuff up” blog posts.  The combination of the words, Donald Trump and Law-and-Order, is somewhat of an oxymoron.  If you’ve watched any of his rallies, Trump just spews hate speech, and incites violence.  Whenever there has been police-on-civilian violence, he has stressed his unquestioned support for the police; but, he has never suggested that the black man, or woman, might have been the victim.

Last week, Trump promised that he would be the Law-and-Order President, when he spoke in Wisconsin.  I was surprised, because he had just been there for a rally recently. Also, between his two trips, there had been another black man killed in Milwaukee, by a black police officer.  As Trump spoke, however, his motivation became apparent.  And the following day, staunch Trump supporter, former New York City Mayor Rudy Giuliani further convinced me.

In the Law-and-Order speech that evening, Trump also promised that he would win 95% of the Black vote.  Now, there’s just 80 days until the Election, and with him currently polling at just one percent of the demographic, that boast surely borders on lunacy! Giuliani said that Trump went to a dangerous area to give that speech.  Well, Donald Trump actually gave his Law-and-Order speech, in which he also extended a desperate appeal to the Black Community, in a town that is 95% White, and is 40 miles away from Milwaukee.  Was he really speaking to the Black Community?

I believe that Donald Trump was primarily speaking to the Republican Party Establishment, and to the White Community.  He was demonstrating to the GOP, which is leery about controlling him, that he can truly act “Presidential”.  At the same time, Whites recognized the absurdity of a Trumpian epiphany, and his befriending Blacks, or any of the other groups that he has previously denigrated on a regular basis.  But, in the end, Donald will be Donald!

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No, I’m not referring to refugees coming from Iraq, Syria and Libya!  Approximately half of the three million or so, have been re-settled in grossly overcrowded refugee camps within the Region, mostly in Jordan, Lebanon and Turkey.  The rest have taken various dangerous sea or land routes to Europe.  And as with any mass migration, in this case, there are always some criminals and terrorists mixed in with the masses who only seek safety, and a better way of life.

Over the several centuries of American history, we have also had various migrations, from Europe and Asia, and more recently Latin America and the Caribbean.  There are a number of Puerto Ricans, who are U. S. citizens, who have moved to the Mainland, for the better economic conditions.  And since the mid-1950s, the Island’s Revolution resulted in several million Cuban political refugees coming to the U. S., and more recently, some continues, but as economic emigres.

I recently described Venezuela as another failed state, just waiting to explode, and that post is linked as follows: https://thetruthoncommonsense.com/2016/08/07/venezuela-a-failed-state-thats-just-waiting-to-explode/.  Now, there have perhaps always been people entering the U. S. illegally, from various nations—either by just coming ashore or failing to return home when their Visas expire. And that will continue to be an on-going fact, as long as there are nations in political turmoil, or with dire economic conditions.  But in this post, I am suggesting that the situation in Venezuela will cause a sudden, mass influx when, not IF, it occurs.

Here in South Florida, we are ground zero as a destination for immigration from many places in Latin America or the Caribbean.  That’s because we have a diaspora of countrymen from literally anywhere in the Region.  The situation in Venezuela, however, is different from others, however, because the catalyst for leaving has already been set.  At this time, only the ignition is lacking.  And, with a population of 31 million, Venezuela has twice the potential number of sudden refugees, which might arrive in the U. S., as the entire remainder of Cuba and Puerto Rico combined.

I have lived in South Florida for almost forty years.  So, if I didn’t like immigrants or diversity, I would have been gone long ago.  For instance, when Fidel Castro sent 120,000 people from the Port of Mariel, Cuba, in just a few months time in 1981, Miami took them in.  And over time, they found work, paid taxes, raised families and became assimilated into our multi-cultural version of American Society.

The unfortunate fact currently is that we have an ignorant faux politician who is spewing hatred among our Countrymen, and suggesting that we should stop illegal immigration by building a wall.  His wife, Melania, came to this country for a reason.  Has he asked her why?  Oddly, in Donald Trump’s shallow-minded “address” on Terrorism on Tuesday, he suggested that “bigots and hateful people” should not be allowed in.  Donald, have you looked into the mirror lately?

NOTE: When there is a mass exodus, from any nation, not everyone leaves. And some people go to various countries, either where they have friends or relatives, or for any of a multitude of other reasons. But as usual in this Hemisphere, we will get a goodly number of Venezuelans.

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Many people who invest—meaning risking their financial assets—are lucky if they even have an idea as to what their portfolio’s market value is, let alone knowing “What” they own, and “Why”.  You should understand how the pieces all fit together.  Do you review what you own from time-to-time, and consider making changes—either to improve the performance of individual securities–or perhaps your goals or risk-tolerance have changed?  As you get older, perhaps you need to take less risk, since you might not be able to earn back what you might lose.  Also, if you work with a securities professional, don’t hesitate to ask lots of questions, and don’t settle for any half-assed answers!  Make them explain any recommend changes to you.

An investment portfolio should be diversified; because, different types of securities—stocks versus bonds, large company to small, and various industries—are impacted differently by both economic conditions and external factors.  For instance the nuclear accident at Fukushima Daichi, in Japan in 2012, undoubtedly caused stocks dealing with nuclear power to slump, while other types of energy surged.  Likewise, fluctuations in bond yields generally impact utility companies—low are positive, and high are negative.

I generally check the markets as or before the New York markets open in the morning. But, I go on to http://www.cnbc.com to see how Asia-Pacific closed first, and Europe is doing mid-afternoon (their time), before I consider what is moving the U. S. markets.  No doubt, wherever you are, you can check the global markets, as well.  In some cases, Asia-Pacific is merely responding to something that already hit NYC yesterday and, on the other hand, perhaps something happened in China, Japan, Australia, etc.  Likewise, Brexit or another movement of Russia toward the Balkans would generally effect Europe first.

I also check foreign exchange (ForEx) and bond yields.  The importance is not so much the actual numbers; but, if you look occasionally, they might begin to sink in. The key point is to be aware of shifts.  For instance, following the Brexit vote in U. K., in June, a number of currencies weakened versus the U. S. Dollar.  At the same time, current low interest rates on sovereign debt continue to indicate a continued weak global economy.

There are so many things—both obvious and some not—that might have ramifications on “What” is going on in the financial markets—and “Why”.  I believe that the current stock market strength is a wrong move, especially when you consider the extraordinary stimulus package announced jointly by the Bank of England and Exchequer, as well as the massive march, in London, requesting another chance to vote on the Brexit.

NOTE:  I have linked a recent post, regarding why I question the stock market’s current strength, linked as follows:  https://thetruthoncommonsense.com/2016/08/08/given-the-current-weak-economic-conditions-why-is-the-stock-market-so-strong/.  I believe that it beings a lot of what I have written together.

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By now, virtually anyone who can read or watch television is aware of GOP Presidential Nominee Donald J. Trump’s comments, yesterday in Wilmington, N. C.  As noted in the linked story, from The New Yorker, he said: “If she gets to pick her judges, nothing you can do, folks,” while considering the horror of a Hillary Clinton Presidency.  But, he continued, “Although, the Second Amendment People—maybe there is, I don’t know.”   That article is linked, as follows: http://www.newyorker.com/news/news-desk/why-gun-owners-should-reject-trumps-call-to-second-amendment-people?intcid=mod-latest.

“Second Amendment People” appears to be a new “dog whistle,” or code, for the fringe gun-owners who seem to believe that it is their right to own and carry arms, regardless of the time and place, or any infringement on other people’s rights of “…life, liberty and the pursuit of happiness.”  The danger of such comments—such assertions—is far beyond what the speaker might have meant.  And, maybe not!   The result of those words, however, is what truly matters—in the end.

Yesterday, Trump Surrogate and former NYC Mayor, Rudy Giuliani, tried to explain the comments as Trump invoking some mythical “Power of Unification,” the combined voting power of SAP.  And last night, House Speaker Paul Ryan said that it was probably “…just a joke gone bad.”  Really, I’m not making this up!   Are they really suggesting that Trump was calling for his loyalists to vote?  When in 2020?  A bad joke, just like the recent sarcasm in exhorting Putin?  Or maybe, just Donald being Donald?

Cheri Shalev, a Correspondent for the Israeli newspaper Haaretz, provided some excellent perspective regarding his interpretation of the recent RNC Convention, linked as follows: http://www.haaretz.com/world-news/u-s-election-2016/1.732387.  Mr. Shalev compares the political tone of that convention with events, which actually played-out, in Israel, in 1995, in which he wrote: “…words can kill.”

Shalev cites the hateful rhetoric that was hurled at Prime Minister Yitzhak Rabin, in the wake of the Oslo Accords.  Mr. Shalev went on to say that there are enough people, who are inclined to violence, and cannot separate political diatribes from practical exhortations.  And after it was reported that Rabin’s assassin, Yigal Amir, acted on what he (thought he) had heard, the inciters washed their hands and denied responsibility.

The Republican Leadership—if there is, indeed, any such thing—needs to find a way out of this mess.  They have created their Monster, and only they can pull the plug on Donald Trump. T hey should rightfully not shed any tears on what they will become after 2016.  As the preponderance of rational Americans view it: the Ship pf Fools has already sailed.  But at least, clean-up your mess—for the Good of the Country!

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I touched on this question, in a Comment at the bottom of a recent post;  however, I believe that the basic topic needs some clarification.  Just before the U. K. voted to “Leave” the European Union, the Prime Minister (at the time) and many British economists had cautioned that the long-term economic impact of leaving could be quite substantial.  Soon after that vote, some Britons began to doubt their decision, and a reported two million marched in London—asking to vote again.

Although the main stock index on the London Stock Exchange, the FTSE, dropped for the first two days after the Brexit vote, it then began to surge.  It is now up by 12.8% since then.  Most major global stock indices have likewise strengthened, and all three major U. S. stock indices have reached all-time highs.  But, where’s this strength coming from?

Last Thursday, the Bank of England and the Exchequer, the British central bank and treasury, respectively, announced a multi-pronged package of Monetary and Fiscal Policy actions, of substantial proportions.  This is the government’s attempt to confront the negative economic impact, which they expect the Brexit to cause.  At the same time, central banks around the world have maintained their base lending rates near, and some even below, zero.  Longer-term bond yields in most countries also remain near all-time lows.

Bond yields are an indicator of the strength of an economy.  When consumers fear a loss of their jobs, and business revenue is depressed, reduced bank loan demand follows.  That causes deposit rates to drop, and savers to suffer.  Additionally, the depressed commodity prices will also hurt the countries that depend on those revenues as a vital source of income.  And, at the same time, Corporate Earnings remain flat in the U. S, particularly  due to weak export demand.

It is usually advantageous for investors to establish balance in their portfolios, by spreading their investments among the “Asset Classes”—stocks, bonds and cash.  That strategy reduces the overall portfolio volatility, as stock and bond prices normally move counter to one another.  And cash obviously is intended to provide sufficient liquidity to meet unexpected financial needs.  But, with the stock and bonds markets currently both quote strong, undisciplined investors are straying from that proven strategy.  And this leads me to consider a potential answer to my initial question.

When investors shy away from current bond yields, they feel very little compulsion to tie their money up for years at those low rates.  (Sure, you can sell marketable bonds, if you need, or want, to take some money out; however, the price might be quite a bit lower than what you paid for them.) Accordingly, many investors might be enticed, by the rally in the stock markets, to binge on them.

Now, I’m not suggesting that the markets are gearing-up for a sharp fall-off anytime soon; however, I am pointing-out, that the recent stock market rally—after several corrections earlier this year—might come to an end, at some unforeseen time.  If you might be over-extended in stocks, be especially sure to check your portfolio frequently. (I will offer some suggestions as to what to look for in a subsequent post.)  For now, just keep in mind that: What goes up can come down, and vice versa.

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ed NOW!Leaders of a nation should hope to improve the lot of their citizens.  No one expects them to know the Ins and Outs of the many technical facets of their country— food supply, economy, health care, military affairs, physical infrastructure, etc.  They should have knowledgeable advisors for that, and also have assembled capable management teams to coordinate the full array of these fundamental national concerns.

The Presidents of Venezuela—past and presentseem to have been doing everything in their power to defeat such good intentions. Its various neighbors appear to have been discussing the problem, but they have not planned any intervention.  The Organization of American States has also talked about it, but failed to act. President Nicolas Maduro took over after the death of Hugo Chavez, who ruled from 1999 to 2013.

The sad part is that Venezuela was a rapidly developing nation, with hard-working, highly educated people, and it sits on the largest pool of known oil reserves in the world.  Chavez nationalized most businesses, and placed his lieutenants in charge of them, as well as the police and military.  Corruption ensued as the new business “owners” rewarded their governmental benefactors handsomely.  Technical expertise was lost as foreign corporations and domestic entrepreneurs were evicted from their operations.

Early on, the Chavistas confiscated housing and farmland and, by giving apartments and small parcels of land to the impoverished, it gained their loyalty.  However, as the price of oil—the nation’s lifeblood—plummeted, and the access to modern technology was lost in the energy industry particularly, Venezuela’s cash-on-hand has been running on empty.  Its peso is worth just pennies on the US Dollar, and inflation is expected to run at 1,700% next year.  Yes, that’s right, seventeen hundred percent!

Since there are tens of thousands of Venezuelans living here, in South Florida, we have excellent local newspaper coverage of what’s going on back in their homeland.  On Saturday, there was a truly sad, sad picture, in the Miami Herald: two young boys looking into a totally empty refrigerator, with only three jars of some sauce perhaps, looking for something to eat. Even worse, it was as large a fridge as any that I might expect to find here, in the U. S.  Pictures of extremely long lines outside of supermarkets reveal mostly bare shelves with foodstuffs, while those with non-essentials are stocked quite high.

About a week ago, Colombia opened a border so that Venezuelans could buy food.  The mass of people was approximately 100,000.  Also, even hospitals have run out of medicine.  Something more than talk needs to be done!  

President Maduro’s response to a Referendum, which overwhelmingly demanded a Recall Vote has been ignored. Also, he appears to be avoiding the vote, which could potentially turn him out of office since, if he lasts until January 10, his Vice President would replace him.  And, that would surely mean the continuation of the same counter-productive Chavismo.

In 1995, the UN Security Council authorized a NATO-led peacekeeping force, which included 18 non-NATO countries, in Bosnia.  Right now, the talk is not putting food into that refrigerator, those children’s bellies and store shelves, or medicine in hospitals.  Something, other than talk, is needed–and needed NOW!

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