Fully Adjusted Return Forecast for 2018


Below we discuss, in general, economic indicators for 2018 in light of the following critical risk factors. (Our June 11, 2016 Fully Adjusted Return Election Forecast, which correctly predicted Donald Trump's win, can be found at: https://www.linkedin.com/pulse/why-trump-win-william-michael-cunningham-am-mba/)

1, International: Instability affecting: North Korea, the UK, the EU (Brexit), Nigeria, Somalia, Russia, China, the Philippines, Mexico, Venezuela, the Ukraine, and Israel. We can be assured of one thing: wherever the next market shattering situation arises, it probably will not be on this list.

2. Domestic: In March, 2017, Valuewalk.com noted that "60% of references to President Trump within SEC filings are in the 'Risk Factors' section." This section of legal documents submitted to the US Securities and Exchange Commission is intended to inform investors and potential investors about risks to the financial situation of a given publicly traded (and in some cases, privately held) firm. We see continuing, significant and negative cultural instability. Charlottesville, Chicago, Houston, Dallas. Washington, DC is also on the list. See below.

3. US Policy: A policy error concerning: healthcare, social services, the environment, or defense. Also policy uncertainty driven by a new Fed Chair. The Congressional policy error is in place: there will be unintended consequences from the recently enacted Tax Reform measure, perhaps emanating from a simple error in language.

4. Technology: We expect a major computer and network breach or outage in 2018, perhaps affecting a critical public system, impacting millions.

5. Environmental: We see growing risk of major environmental incidents that damage communications and transportation infrastructure, already in need of enhanced maintenance, in some unforeseen way.

By any historical standard, this is a significant list. Timing and synchronicity are two added factors: more than one of these items may come to fruition at exactly the wrong time, with a distracted set of inexperienced, partisan policymakers unequal to the task of responding correctly. We anticipate the following:
  • Interest rates. Increasing.
  • Market volatility. We expect a major spike.
  • Bitcoin. Gaining traction, especially in light of increased traditional market volatility.
  • Equity returns. Lower than 2017.
  • Black Unemployment. Black unemployment falls at the end of a sustained period of domestic economic growth and falls with a decline in immigration. This is counterbalanced, however, by increasing racism in general and specifically negative, anti-Black racial attitudes. Given an increase in the latter, we expect Black unemployment to increase toward the end of 2018, despite positive headwinds from reduced immigration.
  • Fully Adjusted Return (FAR) Index. The FAR Index, a measure of social return, falls.
Of course, these risks are not evenly distributed. Certain business sectors and geographies will be safer than others. There are positive factors, such as the proven resilience of certain American legal institutions and commercial entities.

The bottom line is this: with a growing set of risk factors, a volatile domestic social and political environment, an inexperienced and possibly mentally incapacitated chief executive, a compliant, careerist Congress and a set of competent, non-incapacitated global rivals, the forecast reflects a uniquely negative environment.

For the full forecast, please join us at 2 pm on January 9, 2018 (1/9/2018). RSVP at https://forecast2018.eventbrite.com $250.00. (Extremely limited number of tickets.)

We accept Bitcoin. Address 1KKvs1W4EcMzKG1BWipbxjGW6hGUmJ7n1T

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