How to Really Grow the U.S. Economy
Every month, Jason and I do a Top 10 video for the Wealth Advisory newsletter. Our aim is to let our subscribers know which stocks in the portfolio offer the most immediate upside. And we have fun with it — Jason picks five and I pick five, and we have a little competition.
As the seasoned vet, I took it to Jason pretty good early on. Last April was probably my best month ever: I had Qualcomm and Disney, up 52% and 25%, respectively. In a month.
But I gotta say, Jason's really stepped up his game. In fact, I think he's got me this month. We just filmed the October Top 10 yesterday, and he made a couple really savvy picks. Plus, I'm gonna miss a HUGE gain on one of my picks...
The rules of our little Top 10 contest say we sell the morning we record and then buy the next day's open. That means I sold The Stars Group (NASDAQ: TSG) yesterday at $15, and I am buying it back today at... $21.25??? What the...
Now, The Stars Group is an online sports betting platform. The company recently hooked up with Fox for a service. And I've been telling Wealth Advisory readers that TSG is a "one of these days" stocks. Because my analysis says it's the leader, and one of these days, it's gonna start a very nice run higher.
Turns out that day is today! The Stars Group is up ~38% this morning on news that it is merging with the UK's Flutter Entertainment.
Of course, I am delighted that our Wealth Advisory subscribers are scoring yet another sweet gain, but dangitall, that 38% would have just about guaranteed victory for me this month! And the kicker is that we were supposed to film Monday, but I postponed it because my son was having his wisdom teeth removed!
Now, I gotta shift gears a little bit to address the trading action yesterday. You probably don't follow the market's every tick like I do, so you might have missed the reversal that occurred yesterday. Stocks were actually rallying nicely to start October...
Then the ISM Manufacturing Survey for September hit the wire.
Stocks tanked, and the Dow finished the day with a 343-point loss, because the survey showed a huge swing lower for manufacturing activity. In fact, at 47.5, it was the worst read in a decade!
Manufacturing activity is now in decline. And to top it off, the president tweeted that it was the Fed's fault, because interest rates are too high, thereby making the dollar too strong.
This simply isn't true.
Before I go on, let me say: I get that no president is ever able to be completely open and honest. First off, they're all politicians. So you know the truth is gonna get a little bent at times. Besides, any U.S. president is gonna be privy to all kinds of black ops stuff that can't be talked about.
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And finally, I have yet to see a sitting president tell the whole truth and nothing but the truth when it comes to policy stances and campaign promises.
But with president Trump, lying is like a part-time job.
Again, I am happy to take some things a president says with a grain of salt. But the simple fact is: it's the trade war with China that has now pushed the U.S. manufacturing sector into recession territory. The manufacturing recession is being led by export goods. And rising costs of raw materials due to the tariffs is a big reason why.
4% Growth? Pfffft...
Now, I'm glad Trump is taking China on. China has been gaming the system for way too long. My problem is with the specifics of how Trump is going about it. First off, he took on the whole world: Europe, Canada, Mexico...
China is the big dog, and we could really use our allies in this fight.
Secondly, the whole point of the trade war should not be to reinvigorate U.S. manufacturing. We're not making clothes and other low-value stuff in the U.S. anymore. That ship has sailed. Yes, companies are moving out of China. But they're staying in Asia, especially Vietnam.
Manufacturing currently represents 12% of the U.S. economy. That's it. Not a leader anymore. So it's just not accurate to say the U.S. economy could be pushing 4% growth if we could just get some jobs back from China.
Like I wrote on September 23, 4% GDP growth means the U.S. has to produce and sell an extra $760 billion worth of stuff. That's a tall order. And you set yourself up for failure when you tell people it will be easy.
Now, you wanna really grow the U.S. economy? I got ideas...
The Stars Group is a Canadian company. Flutter is from the UK. NOT AMERICAN!
How about we drop this ridiculous puritanical crap like having gambling and cannabis be illegal, get over the hate for wind and solar, and start leading in some of these new economic sectors? Because as it now stands, the biggest renewable investments are in Europe. The biggest electric car market is China, the biggest electric bus maker is Chinese, the biggest cannabis stocks are Canadian, and the most significant cannabis pharma companies are from the UK.
Simple fact: The U.S. won't grow as fast as we'd like if we keep ceding leadership to foreign companies.
Until next time,
A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.
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