In this political climate with no clear choice, it is time to insulate yourself from the pending economic downturn.
Why do we believe this is looming?
Based on the rhetoric, the bantering, the posturing, the hyperbole and most important the recent Jobs Report. These are all signs that the economy is not in growth or recovery, but in fact downward spiral. When they announced the Jobs Report it was the most dismal for the last 3 years and it had already been revised downward and we still missed. There were three factors to blame according to the media, however; the one that garnered the most as the reason was Trump. His blabbering about trade indifference, Mexico, etc., has created a fear in the economy and businesses. Here is our prediction of how it will play out with either Trump or Clinton becoming President.
If Donald Trump becomes President we will experience a severe economic crunch, because in his first 100 days he will cancel a majority of the social programs. No gradual or cutoff dates, just immediate. What does this mean? So even if these people are receiving income without earning it, the money still flows into the economy. With a cold turkey approach of canceling these resources, means less money in circulation. These people will seek employment, but we already see that businesses are starting not to hire. This will create a cash crunch, which means businesses will struggle, which in turn; banks will tighten their lending criteria even more, making it difficult to acquire funding for growth, starting a business, inventory, etc. Our prediction is this will last up to two (2) years.
If Hillary Clinton becomes President we will experience the same crunch just not as long. Why? Republicans still own the House and Senate and will be so upset that they did not win they will be unwilling to work with Hillary to pass any major initiatives to infuse capital into the market. However; the Clintons are quite creative and since President Obama has created a precedence for Executive Orders they will find a way to infuse capital. We predict this type of economic downturn will last up to one (1) year.
Bottom Line: Secure the capital you believe you will need in the future to be able to capitalize on this tremendous opportunity. What makes this a tremendous opportunity? Everything will be on sale. History has shown us that in an economic crunch CASH IS KING! He who has the cash, has the power. We must follow the habits of the squirrel and the ants. Store away in harvest so we can feast in famine.
FYI: This is not intended to be a political referendum to persuade votes and influence decisions. Please vote for someone. This is based on my 25 plus years of being in the capital markets.
Author: André Wilson ‘The Banker’, Managing Partner, former Wall Street investment banker, specializes in structuring and securing capital for small and medium size businesses.
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