Living in a Multipolar World About

Home , Crippled America, Tony Schwartz (author)

ADK | WEALTHCARE PARTNERS 2017 PERSPECTIVES - advisory version March 2017

Sentiment swings and other things This 2017 annual newsletter has been prepared for advisory cli- Transformative changes in 2016 revealed the complexity of a multipo- ents and friends of ADK | lar world. Where are we heading? - page 1 Wealthcare Partners. Diverse counsel from prominent Foundational considerations global sources shape our per- America’s rise to prominence. Our secret sauce, sustenance, and invis- spectives. Al Kaufman takes full ible hands. - page 5 responsibility for the content and hopes you find the material Mr. Trump goes to Washington helpful and refreshingly candid.

Health, wealth and wisdom. Hints from the past and considerations Al Kaufman, CFP®, MBA , CPA for the future. - page 9 Financial Consultant ADK | Wealthcare Partners The Old and the Restless. 11029 Niggli Road Alhambra, IL 62001 Russia, China and America are dominant military powers that have much at stake. Can we be friends? - page 17 Work#: (618) 488-6455 E-mail: [email protected] Investment landscape www.ADKwealthcare.com 2017 could be a year of seismic shifts for markets. Uncertainties serve to create a tale of two tails. - page 24

1 Sentiment Swings and Other Things

to bear territory. Yields on more than $7 assortment of percolating initiatives trillion of governments worldwide drifted buoyed the mood of the market, and into negative territory with little hope of country, like an extended ovation. fiscal help. Worldwide, there was concern When the dust settled, US equity that continued inaction could lead to a markets experienced gains of roughly 10% for the year, global equity in- The Economist – January 30, 2016 KAL rise of populists’ policies which could entail protectionist tariffs, windfall taxes, na- dices rose 6%, while global bond in- What a difference a year makes. 2016 tionalism and any number of ruinous dices reported minimal gains. 2016 kicked off with US presidential candi- schemes. ii was a roller coaster ride, but ended dates positioning for relevance in the rather well. upcoming Iowa caucus. Nonconform- As the year unfolded, sentiment-shaping ists had already upset the anticipated geopolitical events continued to surface Through early coronation between Bush and Clinton and US equity markets ultimately experi- March, much months prior. Americans were agitat- enced four pullbacks of 5% prior to the of the market ed and had been expressing their con- presidential election. Global indices fol- momentum cerns about the country heading in from late 2016 lowed a similar path. the wrong direction for years. They has carried for- i wanted change. ward. Now the And then there was Election Day in America! hard work be- By late February, financial sentiment gins. How will was influenced by presumed Chinese Despite pundit projections to the contra- the new administration, with a presi- economic weakness, a migrant crisis ry, financial markets welcomed Mr. Trump dent lacking in political and military in Europe, cheap oil, and assorted irri- to his new role with seven straight weeks experience (a first in US history), tants which, taken together, contrib- of gains. Global equity markets followed a affect national security, financial iii uted to world stock markets falling in- similar trajectory, but with less gusto. An markets and the world in general?

2 No one really knows, despite much puff- task is similar to turning around a core objectives as president. ery to the contrary. huge ship that has been adrift for As a developer, he constantly made many years. This will undoubtedly be America has lost some of its economic decisions involving building, buying, the biggest leadership challenge of his and military advantages over the past retrofitting, talent acquisition, man- life. According to financial markets and several decades. And the world has be- agement, funding, regulatory compli- consumer sentiment, so far so good. come a more dangerous place. Mr. Kis- ance, timelines, marketing, schmooz- (Please reference the next graphic.) singer, a highly respected strategic think- ing and budgets. He has shown the er and practitioner, believes that the On a lesser scale, Mr. Trump has faced ability to establish a clear vision and world is in a parlous condition verging many hindrances and disappointments surround himself with quality re- on anarchy—due to shifts in the materi- in growing successful business enter- sources capable of delivering the al balance of power from West to East prises. He has also dealt with politi- goods. While he has had a number of and also because the legitimacy of the cians at all levels as an international well-publicized professional setbacks, postwar world order is being chal- businessman. Multi-faceted obstacles who hasn’t at that level? It would be lenged. Similarly, he believes that the contemporary global context is highly imprudent to bet against flammable and that there is profound him despite some of his tension between economic globalization well-publicized flaws. At and the political persistence of the na- this early stage of his tion-state. iv Lots can go wrong. Among presidency, he has sur- other things, this state of affairs has sig- rounded himself with nificant implications on our economic some very bright and ac- and financial well-being. complished professionals who are relatively inde- The world now looks to new US leadership and many bold initiatives are envi- are not new concepts to Mr. Trump and pendently minded. These are good sioned for America. President Trump’s he may well make good progress on his signs.

3 A new US president is apt to be tested ro developments will be explored at sooner than later. North Korea and Iran length. A wide spectrum of plausible are already making noise. The hope scenarios could unfold leading some that that tax reductions, healthcare re- to believe that we are operating in a form, regulatory overhaul, military bipolar world with respect to finan- strengthening, infrastructure enhance- cial markets. ment, and similar achievements will smoothly fall into place is not realistic. Stock and bonds are also expensive by many measures. Therefore we should not be surprised by market adjust- This newsletter is dedicated to high- ments once in a while. As there are lighting important areas of interest to signs of excess, some minor dustings advisory clients associated with ADK | could help to reduce some of the froth Wealthcare Partners. A discussion out- (large margin levels for instance) and line will be provided in a separate bun- be healthy. dle, along with account metrics, so we Most of the gains in the market last can concentrate on areas most im- year were not attributable to earnings portant to you. and revenue growth, but instead to an expansion of the valuation (P/E) multi- ple. This will be difficult to sustain in an era of rising interest rates and exuber- ant growth projections. Global influ- ences may also become more pro- nounced and could weigh on markets more than anticipated. Therefore mac-

4 Foundational Considerations

Righteousness exalts a nation, “The health of a democratic society may be But sin is a reproach to any people. measured by the quality of functions performed by private citizens.” — Proverbs 14:34 — Alexis de Tocqueville, Democracy in America

However we have been slowly getting The public is demanding change, but off the exceptionalism track, ignored where are we headed? In order to regain our strength as a nation, and preserve lessons from the past, and are starting to pay the price. Incarceration levels, our freedoms, we need to get back to the In 1776 a nation was formed in a man- fiscal irresponsibility, immoral behavior, basics. Some housecleaning is in order. ner that had no precedent. Rather than deterioration of education, and assort- Until a higher level of civility emerges, it being built around ethnicity, tribal simi- ed other trends testify to symptoms of is unlikely that any foundational legisla- larities, or a strong leader, it was built a larger problem. A French diplomat, tion will emerge from Washington. US fi- around the idea of liberty and by citi- political scientist, and historian who nancial markets might fret at the thought zens who bought into that idea. Despite observed the developmental aspects of of various delays, but they are ahead of differences in backgrounds and religion, America in the 1800s, offers some themselves as the hope for rapid change the centralizing force that brought timely insights to this era of political in tax reform diminishes. Good things are America and Americans together was fragmentation and friction: taking place in other areas, just not as v liberty. America has since flourished quickly as many had hoped. like no other and this success is due, in “The American Republic will endure until the part, to the sense that we are a nation day Congress discovers that it can bribe the A thoughtful and vehement process is all public with the public’s money.” with a mission beyond ourselves and well and good, so long as we don’t lose beyond our borders. vi “Liberty cannot be established without moral- sight of the shining “City upon a Hill” con- ity, nor morality without faith.” cept. So what might a solid foundation in

5 America look like? Os Guinness, in his ly or by a political party. Fortunately, problems in the future. As is the case book A Free People’s Suicide, estab- there are many good and decent peo- with balding sequence, what once was, lishes that when reduced to its most ple in America who desire change in or- no longer is, and perhaps has been re- basic form, freedom requires virtue; der to benefit others as well as them- distributed elsewhere. virtue requires faith; and faith re- selves. Their voices will not tolerate IOUs, for instance, are not the same as quires freedom. And the three are prolonged periods of political theatre financial assets in reserve. A bald spot is self-reinforcing. If one leg of the trian- with so much at stake. The wheels of still a bald spot, even if you cover it up. gle is removed, the whole structure change are in motion now, and hopeful- Extracting more than an economy can re- ceases to exist. vii ly for the good! alistically provide, through excessive debt We have some injured legs which need Hair Today: Gone Tomorrow accumulation (common in developed tending to. markets and China), is similar to the While not all of our founding fathers comb over approach. Drawing funds from were men of faith, they acknowledged the Social Security Trust such that future the importance that religion played in beneficiaries are left holding onto IOUs shaping values. And the fact that the Some things we can control. Others not resembles the full bald look. You can cov- Christian faith played a strong part in so much. Natural and physical laws do er it, but it’s still not the same. And the country’s formation should not be not give permanent ground to artificial changing one’s appearance through dismissed. Our founders were deter- substitutes. Spiritual laws, such as the greater measures is akin to a nation try- mined to avoid state-sponsored reli- depravity of man, aren’t about to be ing to change its identity. At some point gion, but they would not have sup- supplanted either. the body suffers from harmful intrusion. ported the slow and methodical prac- Alternatively, financial markets and eco- Similarly, the body politic of the US has tice of removing God from so many nomic forces can be prodded with artifi- reached a point where some restoration facets of our public lives. Lawlessness cial support for a comparatively long is warranted, and is now underway. is growing and we have gotten to the time. However core weaknesses do not point of calling evil good and good evil. America is in the midst of whirlwind of evaporate; they tend to become bigger This pattern will not be resolved quick- change; many are having trouble

6 adapting to the reality of a new ad- better jobs, and higher living standards. The United States’ unique governmen- viii ministration with different ideas. Is a How so? tal framework is akin to a democratic republic with constitutional protec- change in direction needed in Ameri- The market’s invisible hand shifts re- tions—also termed a constitutional fed- ca or not? To the degree that change sources from declining sectors to more eral representative democracy. x Our is coming, or inevitable, there is an valuable uses as workers, inputs, and system nurtures freedom, liberty and a advantage to being flexible and adap- financial capital seek their highest re- capitalist economic system like no oth- tive while still preserving core values. turns. Through this constant roiling of er. But these are not the only building Doing so can make the difference be- the status quo, creative destruction blocks to our success. Free markets can tween success and failure in a busi- provides a powerful force for making be corrupted and a government cannot ness or government enterprise. We societies wealthier. ix Capitalism, with force anyone to be good. Therefore need to stop redistributing and start its private ownership of capital (means something else must also have contrib- growing again. Change is needed. of production), is generally viewed as uted to America’s meteoric rise in the best enabler of this ‘invisible hand’ Joseph Schumpeter, an Austrian-born world affairs in such a short time. Os phenomenon by virtue of the observa- American economist (1883 – 1950), Guinness provides insights as to what ble economic benefits which have ac- coined the term “creative destruc- this may be in his book A Free People’s crued to its adherents. Socialism and tion” when describing a dynamic eco- Suicide and what he terms the Golden communism, with their public owner- nomic system. Lost jobs, ruined com- Triangle of Freedom. In essence, this ship of capital and centralized planning, panies, and vanishing industries are term represents the observation that are viewed as less accommodating to inherent parts of the growth system. freedom requires virtue; virtue re- wealth generation and economic There is, however, a saving grace. quires faith; and faith requires free- growth. Complicating all this is the form Over time, societies that allow crea- dom. xi And America’s founders built of political sys- tive destruction to operate grow this into the fabric of society. more productive and richer; their citi- tem attached zens see the benefits of new and to a particular Freedom is the key, but requires a sup- better products, shorter work weeks, economic sys- porting cast of faith and virtue to re- tem. main sustainable. xii This self-reinforcing

7 loop could be viewed as our country’s unalienable rights and personal free- Therefore the Lord was very angry secret sauce of success. Unfortunately doms come from? this core has not been cultivated for with Israel, and removed them Freedom of religion is not supported decades and it will take time to repair from His sight; there was none left when a government takes steps to re- the damage done. but the tribe of Judah alone. move God from the public conscious- 2 Kings 17:18 With faith under attack, confusion ness. Our recent path has disrupted our about the notion of virtue, and a gen- faith and virtue legs, which has been Of course God also had a plan for re- eral belief that freedom implies that detrimental to our freedoms. you can do whatever you want, it is un- demption and Israel’s reemergence is Lawlessness appears to be on the rise likely that we will attain the common part of His program. However America in America at many levels. As it stands, goals that the Trump Administration as- has no guarantees. the US maintains the world’s highest pires to as quickly as proponents would Insofar as President Trump, there is incarceration rate; with about 4.4% of like, or financial markets anticipate. much apprehension. However he would the world’s population, we house 22% Some healing must take place before not be the first leader with blemishes to of the world’s prisoners. xiii significant legislation occurs, however have done great things. By surrounding foundational progress can be made in America is 240 years old; comparatively himself with qualified and competent the interim. This is not a knock on Mr. young for a country and unprecedented counsel, listening to them, acting in the Trump or his administration, but a in reaching superpower status. Still best interests of the country, restoring recognition that he walked into a hor- blessed in many ways, but gradually civil discourse and the rule of law, and net’s nest and it will take time to redi- losing its vigor. understanding his limitations, President rect energies and drain the swamp of There was a period in Israel’s history Trump has the potential of being a suc- those loyal to a bygone era. when God’s patience ran out—from cessful president and helping the US re- The secret sauce to restoring the prom- building their First Temple to Israel’s gain its strength and status in world affairs. The venom he is facing suggests inence of our country is very simple: defeat by the Assyrians. They had that he is on track to accomplishing Move closer to God in our thoughts and turned to foreign gods and after rough- many good things. ways as a people. Where else do our ly 240 years He had had enough. xiv

8 Mr. Trump Goes to Washington

used to love Oreos but stopped eating aspect of his life will go a long way in them once they moved their plants to determining his administration’s overall Mexico. His culinary habits have appar- success—which is important to all of ently changed somewhat [become us. Along these lines, his disposition healthier] since entering the White may serve as a helpful leading indica- House. xvi tor.

Defeating ISIS, building walls, elevating Apart from taking cholesterol-lowering Donald J. Trump became President border security, reducing individual tax- medication and being slightly over- Trump on January 20, 2017 at 5pm es, reducing corporate taxes, sup- weight, his physician speaks highly of GMT. Having slogged his way through porting job creation, renegotiating President Trump’s physical health. xvii a crowded and talented presidential trade agreements, repealing and re- President Trump has indicated a desire primary, the 70 year-old president placing Obamacare, renegotiating the to lose about 15 to 20 pounds, but still showed no lack of vigor in finishing Iran deal, harnessing North Korea, re- maintains an energy level of a much the course he set on June 16, 2015 building the military, reducing regula- younger man. Perhaps his love of work when announcing his candidacy for tions, reducing government bloat, and and acclaim, along with years of com- president. getting acclimated to the world’s most peting at a high level, have steeled his His sustained energy levels were par- powerful position may take some time resolve to succeed in the most de- ticularly impressive when considering to say the least. ‘Making America Great manding leadership role of his life. that he got very little sleep, exercised Again’ will take even more time and en- Still, with all the stress he will endure as infrequently, and relied heavily on ergy. As the oldest US president every President, a healthy rhythm will need three food staples during his cam- elected, Mr. Trump will need to find a to be established. Until that time, per- paign: Domino’s, KFC and McDon- balance that helps him stay enthusiastic xv haps we should lessen the relevance ald’s. According to a former aid, he for the duration. How he handles this and significance of his early morning 9 and late evening tweets. Apart from have been paired with objectives he ar- golf, tweeting may be one of the few ticulated thirty years later in a 2016 remaining activities that he enjoys summarized version of “Crippled Amer- during his off-hours. When tired and ica: How to Make America Great frustrated, it is not uncommon to al- Again.” Page references in the table ap- low negative thoughts lead to re- ply to an iBook format. The orange grettable outbursts. He will need to lettering, in honor of Mr. Trump’s or- alter his habits somewhat as he ange hue, serves to highlight various doesn’t have the time or patience to observations for consideration. continue defending poorly communi- cated tweets.

There is much we don’t know about President Trump, but he appears committed to certain themes and has discussed them repeatedly in various forums. How will he go down in history? Who knows? But we can get some clues about his intentions and Topical comparisons begin on the next inclinations using written sources page. from his past and contrasting them for consistencies. And perhaps garner Investment implications will be pre- some investment insights along the sented to advisory clients in a separate way. outline.

With this in mind, key points from his

1987 memoir “The Art of the Deal”

10 THEMES Trump: The Art of the Deal – 1987 Summary of Crippled America: How to

(Statements from a memoir co-written by Donald Trump and Make America Great Again - 2015 Tony Schwartz when Mr. Trump was around 40.)

Vision and Leadership “In my life, there are two things I’ve Foster competition in areas such as edu- found I’m very good at: overcoming ob- cation and health care, rebuild America’s stacles and motivating good people to military and its infrastructure, implement do their best work. One of the challeng- a simplified tax plan that cuts rates for es ahead is how to use these skills as the middle class, and bring manufactur- xix successfully in the service to others as ing and jobs home. I’ve done, up to now, on my own be- Privatize and public/private partnerships xviii half.” where possible. Offer incentives as needed to attract the best talent or attain the best outcomes.

Winning again “I like making deals, preferable big The idea of American greatness, that is of xx deals. That’s how I get my kicks.” the United States as the leader of the free and unfree world, has vanished. To restore its greatness, America needs to start winning again. xxi As priorities, restore America’s economic and military strength. Non-essential activities, will be -de funded or eliminat- ed. Introduction of a new tax plan that will “My style of deal-making is quite simple America needs a new tax plan that gives be revenue neutral and straightforward. I aim very high, the middle class and those with lower

11 THEMES Trump: The Art of the Deal – 1987 Summary of Crippled America: How to

(Statements from a memoir co-written by Donald Trump and Make America Great Again - 2015 Tony Schwartz when Mr. Trump was around 40.) and then just keep pushing and pushing incomes a chance to keep more of what and pushing to get what I’m after. they earn, while restructuring how the Sometimes I settle for less than I richest Americans will be paying taxes. sought, but in most cases I still end up The plan will be revenue neutral. xxiii xxii with what I want.” Federal deficits will probably rise, however higher debt is justifiable if capital is spent on credible projects. America must retain a strong infrastructure to compete.

Media and free publicity. “The power of the New York Times is Both liberal and conservative news out- just awesome. It is certainly one of the lets lie and distort the truth, but the me- most influential institutions in the xxiv dia is a great source of free publicity if world, . . . “ you learn how to play along. xxv As a fan of technology, more federal research dollars may be devoted to key technologies.

Healthcare and the need for competi- “I ask and I ask and I ask, until I begin to Obamacare, a costly ridiculous solution to tion in the private sector between in- get a gut feeling about something. And our health care problems, but be re- xxvi surance companies that’s when I make a decision.” pealed and replaced by creating competition in the private sector between insur- xxvii ance companies

12 THEMES Trump: The Art of the Deal – 1987 Summary of Crippled America: How to

(Statements from a memoir co-written by Donald Trump and Make America Great Again - 2015 Tony Schwartz when Mr. Trump was around 40.) Utilize the best aspects of America’s de- livery and insurance system to privatize risk and improve outcomes. Reduce un- necessary coverages, allow for targeted benefits, reduce state barriers to competition and foster technological development.

Establish a flexible framework that can lead to better competition. Support more foundational work in the mean- time—such as electronic transmission standards within healthcare.

Allow for price transparency and better outcome data to foster competition.

Border control with Mexico “Ask for the world on the assumption America needs to retake control of its that even if I got cut back, the break borders. Mexican-American relations will xxviii might still be sufficient.” improve when Mexico pays for a border wall. xxix

13 THEMES Trump: The Art of the Deal – 1987 Summary of Crippled America: How to

(Statements from a memoir co-written by Donald Trump and Make America Great Again - 2015 Tony Schwartz when Mr. Trump was around 40.) Identify the most cost-effective solutions to developing physical and electronic barriers to entry and situational moni- toring. Encourage Mexico to better police its borders. Improve cooperation with Mex- ico in economic areas of mutual importance.

US educational system concerns “Like a lot of federal government pro- The US educational system is failing. We grams, rent control grew out of a de- don’t need Common Core, we need com- cent idea that ended up achieving ex- petition in our schools. xxxi actly the opposite of its intended xxx effect.” Support charter and magnet schools and voucher programs. Encourage outcomes which translate into better preparation for students against international competition. More reading, writing and arithmetic; less PC.

Military strength “Bullies may act tough, but they’re real- America needs to operate from strength. ly closet cowards. Confront a bully and The United States must maintain the in most cases he’ll fold like a deck of strongest military in the world. xxxiv cards.” xxxii Project power throughout world to

14 THEMES Trump: The Art of the Deal – 1987 Summary of Crippled America: How to

(Statements from a memoir co-written by Donald Trump and Make America Great Again - 2015 Tony Schwartz when Mr. Trump was around 40.) “I don’t go out of my way to be cordial achieve foreign policy objectives. Defeat xxxiii to enemies.” ISIS. Weaken North Korea. Weaken Iran. Obtain a better understanding of regional parameters with China, Russia and NATO.

Economic strength and power “I was relentless, even in the face of the The United States also must rebuild its total lack of encouragement, because economy and use its economic power to much more than you think, sheer per- compel its allies and protectorates to sistence is the difference between suc- support US policies. xxxvii xxxv cess and failure.” Principal strategy of negotiation: the

side that needs the deal the most is the “The NYSE happens to be the biggest one that should walk away with the xxxvi casino in the world.” least. Challenge China and other trading partners who may not abide by trade proprieties. More bilateral trade policies in the works. Unclear on the net world trade impact.

Attain energy independence by nurtur- “If there’s one thing I’ve learned from US wealth in natural resources is the way ing US natural resources dealing with politicians over the years, to energy independence. Renewal energy it’s that the only thing guaranteed to sources such as solar and wind turbines force them into action is the press– or, are too expensive and inefficient to meet xxxix more specifically, fear of the press.” US needs. xxxviii

15 THEMES Trump: The Art of the Deal – 1987 Summary of Crippled America: How to

(Statements from a memoir co-written by Donald Trump and Make America Great Again - 2015 Tony Schwartz when Mr. Trump was around 40.) Utilize natural gas reserves to supply our energy needs for centuries. Approve Keystone XL oil pipeline for all available oil and gas.

Infrastructure upgrades “Providing jobs, in my view, is far more We need to overhaul American infra- Xli constructive solution to unemployment structure.

xl than creating welfare programs.” US highways, bridges, tunnels, airports, train systems and the like will create jobs.

16 The Old and the Restless

The United States remains the single US role as leader of the West, the with which may have lost some of their largest economy and the single most bringer of democracy, and the guiding visibility of late. Debt for instance. US powerful military in the world, but light to the world. xliii The Trump admin- federal government debt was roughly the rise of regional powers — notably istration seeks to make America great, 30% of GDP during Ronald Regan’s first China, Russia, and smaller regional but it’s unclear what the larger mission term; it stands at roughly 100% of GDP groupings that have been growing is. The world has certainly changed for Donald J. Trump. xliv Debt thresholds economically and militarily — have since 1989, but is America’s motivation will need to rise in order to get his been able to close the gap since the to shape global affairs or perhaps re- growth programs underway. And that post-Cold War period. xlii How the trench further and let regional dynam- concept will not rest well with fiscal U.S. proceeds in the face of these de- ics play out? conservatives. velopments, and potential threats, will help to shape economic opportu- Should the US be viewed as retrench- Moreover, rising interest rate levels will nities throughout 2017 and beyond. ing, our adversaries will be quick to fill create additional budgetary pressure any voids as they have in the recent on federal, state and local government The Trump admin- past. Mr. Trump seems to have a more purse strings, companies, and John and istration certainly assertive bias than Mr. Obama, but how Jane Q Public. As it stands, the overall appears committed that manifests itself is unclear. As it outstanding credit in the US is $65 tril- to enhancing the stands, geopolitical threats do not ap- lion – or 350% of GDP and the ratio is economic and mili- pear to be lessening and Western val- rising. China is in a similar predicament tary capabilities of ues are being pressed. We should not with a credit-to-GDP ratio of 300%.xlv the country and has adopted the con- be surprised when the Trump admin- cept of “Peace through strength” to istration is tested. And a misguided test Debt is a headwind to economic growth bring this about. However the utility by an adversary could quickly throw a at these levels. That much is certain. of this approach is not necessarily in monkey wrench into financial market And debt becomes more burdensome keeping with that under the Reagan optimism. when interest rates rise. administration. Reagan sought strength to fulfill what he saw as the There are other bugaboos to contend

17 seems to be weakened by the rise in nationalist sentiment—as per Brexit and other potential country exits on the horizon. A potential unrav- eling of the Europe Union is not generally viewed as being likely, but its problems are probably greater than many realize. More on this later.

Although relatively quiet of late, Russia had a memorable year in 2016 with an assortment of impressive economic and military gains— despite Western sanctions. Mr. Putin shows no intentions of backing down. Similarly, China continues to make progress in modifying its economy, improving its military technology, and testing its mettle as a rising superpower. Europe is trying to hold things together. A con- fluence of these forces suggests that Europe may lose ground to their more aggressive com- I inherited a mess, it’s a mess at home and abroad. A mess . . . Mass in- petitors, particularly Russia. Consequently, this stability overseas wherever you go. The Middle East, a disaster. North Ko- year may offer more surprises and volatility rea. We’ll take care of it folks. We’ll take care of it. than many financial market participants anticipate as the euro is a dominant currency, Euro- Donald Trump WH Press Conference 2/16/17 pean markets remain fragile, and the world is linked at the [financial] hip in many respects. A nationalist mindset contributed to political change in the United States What happens in Brussels does not stay in recently and is clearly present in Russia and, to a lesser extent, China as Brussels! well. Each of these countries is posturing for greater global relevance in the future by strengthening economic and military resources. The Europe- Since Mr. Putin would like to expand Russia’s an Union, despite representing the largest economic base in the world, boundaries to times past, and Russia already

18 has a strong political beachhead in Eu- However, Putin’s ruthlessness in Syria EUROPE rope, it may be profitable to focus on will not be soon forgotten. If he can A series of national elections over the Russia and Europe. Their activities could end the war in Syria and deliver year will help decide the future of the influence global financial markets more peace in 2017, he will have had an- European Union. As the world’s largest than anything else this year. other great year. But that appears un- economy, this is no small development. likely. He may have to be content The Eurozone's (19 of the 28 member RUSSIA with influencing European elections, states who use the euro) status as an gaining some relief on sanctions, and By some measures, Russia was 2016’s economic superpower would be se- establishing a better tone with Wash- dominant superpower. Only five years verely crippled if some of these coun- ington. It is unlikely that he will give ago, when NATO was bombing Libya, tries begin to revert to another curren- much ground. Hopefully he and Mr. Western leaders treated Russia like a dy- cy. What started in Britain may soon ex- Trump can develop a respectful rela- ing power that can be ignored. Having tend to France. And what happens in tionship, help to rid the world of ISIS, seen its communist beachheads slowly France will not stay in France. The pos- and work to de-escalate hot spots. erode in Central Europe, the Baltics, and sibility of another departure from the

European Union could take place at a Central Asia, Putin was determined to renovate his resources. And he has been time when the world is unprepared for successful. Withstanding the Western the fallout. sanctions over the past two years while creating a viable agriculture has been Recent levels of European government bond sales is another [indicative] similarly impressive. Russia became the world’s leading wheat exporter last year, source of concern as some members’ xivi bypassing the US. bonds have been sold off more rapidly

“The West is seeking to destroy Russia, but than others. The differences in yield be- Having effectively conquered the Syrian we will defend our homeland from anyone tween French and German bonds, for coastal strip with a naval base, Putin who wishes it harm.” example, has reached levels not seen launched negotiations with Turkey and — Alexander Zaldostanov (aka The Sur- since 2012, when a sovereign debt cri- Iran over Syria’s future, leaving the US geon; former physician and Night Wolves sis nearly brought the currency union and Europe out of the talks. Never since biker gang leader) crashing down. Since banks tend to the end of the Cold War has the West hold bonds of their respective govern- faced such a political defeat. xivii ments in Europe, a large sell-off of

Theresa May: Prime Minis- Angela Merkel: Chancellor of Marine Le Pen: National Geert Wilders: Party of Beppe Grillo: Five Star ter of the United Kingdom Germany Front in France Freedom in the Netherlands Movement in Italy bonds could damage their balance own currency. Formalized notices trading partners. sheets, making them more susceptible to (Article 50 of the Lisbon Treaty)  The International Monetary Fund a bailout—which could prompt a type of are being prepared for release in and the European Commission have “doom loop” driven by erosion of inves- 2017. Parliament must be consult- also urged Germany to reduce its tor confidence involving both banks and ed before Article 50 is invoked. external surplus. Others attribute their government’s ability to provide The government will also enact a their success to the notion that the bailout support. xlviii Negative develop- Great Repeal Bill which will end euro is weaker than the deutsche ments in Europe would not remain prob- the primacy of EU law in the UK. mark would be, so the current ar- lems in Europe; financial markets world- Exit fees and trade status within rangement unfairly advantages Ger- wide could be impacted negatively. the European Union have yet to many. lii Germans might attribute be established, but are expected this to reforms undertaken in 2002 The ECB continues to purchase govern- to be contentious. Xiix and Berlin’s tight fiscal policies. The ment bond debt (currently 60 billion eu- European Union and the Eurozone ros per month), and could increase that GERMANY have worked well from Germany’s purchase amount in tough times, but this standpoint and their leaders seek to  Germany is the largest political fallback mechanism becomes less attrac- keep these arrangements in place, and economic force in Europe. tive as skepticism grows over the struc- modifying where necessary. Since the advent of the euro, it ture of the European Union. Lots of  The Chancellor, Angela Merkel, took has doubled its exports to 50% of things could go badly in Europe this year. l office in 2005 and looks forward to GDP. Its current account surplus winning another four-year term lat- (a measure of trade activity), at GREAT BRITAIN er this year. (Germany has no term $295 bn, or 8.9% of GDP, is the li limits.) She does not appear vulner-  Committed to leaving the European largest in the world. Their suc- able, but her party, the Christian Union, but has always preserved its cess has led to criticism among

20 Democratic Union (CDU), may lose to a two-round presidential elec- zone. According to Le Pen, a return some clout in the Bundestag due to a tion process on April 23 and May to the franc would enable France to perceived shift in CDU values to the 7. A victory by National Font can- regain competitiveness and increase left in social, economic and energy didate Marine Le Pen on May 7 exports. She also plans to introduce policy. liii Any losses in power may would almost certainly bring a 3% tariff on imports and impose a make the Chancellor less able to grant about the end of the Eurozone. 10% tax on the salaries of all foreign concessions that are needed to coun-  French economic prospects look workers. (Programs similar to those ter populist movement gyrations dim. As a member of the Euro- being discussed in the U.S.) The Na- throughout Europe. zone France is prevented from tional Front is ideologically close to  Another reason why Germany seeks manipulating its currency to boost the Kremlin and has demanded that to retain the status quo is due to the competitiveness. Social tensions the European lift sanctions on Rus- Iv fact that it has claims on 750 billion will also weigh on politics as mi- sia. euros against other EU countries, grants—which currently represent  Ms Le Pen’s campaign slogan is “In with Spain and Italy each accounting over 10% of the population—are a the name of the people”. She is seen for more than 300 billion of those lia- source of frequent political and as a strong campaigner with a bilities. If the currency union breaks social friction. shrewd feel for simple language and apart, there is no assurance that Ger- anti-elite slogans. The share of many would be repaid. liv French people who view Europe fa-  2017 is a bell weather year for deter- vorably stands at 38% according to mining the future of the European Pew, a polling group; that makes the Union and the Eurozone, and perhaps EU less popular in France than in no elections are more important in Britain. The overall unemployment that regard that those taking place in rate is 10% and 25% for those under France over the next several months.  Current polls project that the na- 25. The young people support the tionalist candidate Marine Le Pen, FN more than any other group. She FRANCE of the National Front party, would frequently recalls the country’s capture about a quarter of the roots in Christendom. While she  The euro’s fate could hinge on the re- vote in the first round of the presi- may find it difficult to win the sec- sult of a presidential election in dential election. Her party’s main ond round of presidential elections, France, the eurozone’s second-largest proposal is to hold a referendum she seems to have much going for economy. French voters look forward Ivi on France’s exit from the Euro- her.

21  We should not be surprised if Ms Le country leaving the European Un- PVV in lends credence to the notion Pen becomes President Le Pen on ion and reintroducing the guilder that the Brexit is only one of several May 7. This outcome would likely rock as its national currency. The Party potential country exits on the hori- financial markets, which are not gen- of Freedom has a strong anti- zon. erally anticipating a Frexit and what immigration and anti-Muslim that might entail. While she seeks a agenda. The PVV party picked up ITALY referendum on leaving the EU, she fewer seats in parliament than  Italy’s ruling Democratic Party (PD) had been anticipated, but still in- would need parliamentary approval is as divided as ever. Matteo Renzi, creased their number from 15 to to do so. As the FN is highly unlikely former Prime Minister, is being chal- 34. Disaffected voters still gravitat- to win a majority in June’s legislative lenged by the president of the ed away from the mainstream elections a crisis of government may southern region of Puglia for leader- lvIi parties, but favored a party con- ensue. And it’s unclear how that ship of the party. Renzi, whose con- sisting of environmentalist and would unfold. The past 60 years of stitutional reforms were voted down left-wing forces. With the election European harmony is at stake. As in a December referendum, is now over, political parties will now President Trump might say, “Europe pushing for actions that could lead start negotiations to form a gov- has a Yuge problem on its hands. to new general elections to be held ernment within a more fragment- And their problem has become our as early as June. Rivals within the PD ed parliamentary setting. Even problem as well.” party favor status quo until the cur- with Wilders’ loss, his party could rent legislature expires in early become indispensable in provid- NETHERLANDS 2018. ing parliamentary support to a mi-  Whenever general elections are  The Dutch went to the polls on March nority government led by moder- held, they will probably yield a frac- 15 which initiated one of several key ate forces. lviii lix general elections taking place tured parliament. Opinion polls  A Dutch referendum in April, 2016 show that PD is competing closely throughout Europe in 2017. The Eu- helped to squash closer EU links with an anti-establishment party roskeptic Party of Freedom (PVV) was to Ukraine—to Putin’s delight. As (Five Star Movement) for first place. polling strongly ahead of the general one of Europe’s wealthiest coun- After a general election, the Five election, but ultimately lost steam tries, among the founding mem- Star Movement (M5S) may need to and moderate parties retained power. bers of the original EU, and home work with a third party, the North- Geert Wilders is the Eurospeptic Par- to the U.N.’s International Court ern League, to form a government. ty’s leader and favored leaving the of Justice, a strong showing by

22 Both of these parties want Italy to abandon the euro. If they band together, the alliance will post a verita- ble threat to the Eurozone. lx  If an election were held in Italy today, according to the latest polls, the win- ner would be Beppe Grillo’s (former comedian) Five Start Movement. lxi M5S is known to be sympathetic to Russia and Mr. Putin.

23 Investment Landscape

The inherent vice of capitalism is the unequal sharing of blessings; Brian Rogers: The most important per- son now isn’t the president-elect, but the inherent vice of socialism is the equal sharing of miseries. House Speaker Paul Ryan, who will help — Winston Churchill draft and push through tax reform. lxvi Oscar Schafer: From the time Ronald 2017 could ture the essence of other timely read- Reagan was elected in November 1980 be a year of ings, follow: until he was inaugurated in January seismic shifts 1981, the market was up 9%. It then fell for the mar- Bill Priest: Rising price/earnings ratios about 30% through August 1982. I’m kets and, did the heaviest lifting in recent years not predicting that, but we have had a quite possi- to catapult [US] stocks to fresh peaks. lot of euphoria. . . There are so many bly, the world. According to an es- That will change if bond yields head lxvii teemed group of investment profession- uncertainties this year. als selected by Barron’s, US stocks were toward 3% as expected. Now, the bur- Scott Black: First, it is uncertain what projected to end the year within a range den will fall on earnings and dividend lxiv of down 5% to up 6% or 7% -- with growth to propel growth higher. kind of legislation will be passed. Sec- stocks performing well through the ond, the Fed’s internal forecast for real year’s first half and then selling off Mario Gabelli: Trump’s victory meant GDP growth of 2.2% might not be so thereafter. Reasons for modest return a rebirth of capitalism, with all its wrong. US growth will be much better expectations include the presumed end flaws, and a defeat for creeping social- than that of the Eurozone. Lxviii of the bond bull market (after 35 years), ism. . . We are witnessing a wave of rising geopolitical risks, and markets optimism sweeping the country. The Jeffrey Gundlach: Negative rates are Lxiii which are already richly valued. question is: How much of the good toxic to banking systems. Also, they

news has the stock market already dis- don’t motivate consumption. . . Nomi- Some of the key points from these high- lxvi nal GDP is the single best indicator of profile panelists, that seemed to cap- counted?

24 the secular trend in interest rates. If fis- now to the period before WWI, an Some of the uncertainties expressed cal stimulus lifts the growth rate to 2.5% unstable time when a new power may be resolved somewhat by the tone - 3%, and you throw an inflation rate of rose. Today, China is the up-and- of the Trump Administration. Billionaire comer. . Under Obama, the US start- 2% to 3% atop that, conservatively hedge fund manager Ray Dalio, a gen- ed to reduce its function as the glob- you’re talking about nominal GDP al policeman and Trump will continue eral critic of the administration, recent- around 5%. How can bond yields stay at the trend. That creates geopolitical ly wrote, “The question is whether this 2.4% in that environment? . . . People vacuums, and others move in. The administration will be a) aggressive and are underestimating the risk of loss world will be much more volatile. thoughtful versus b) aggressive and lxxii right now. Lxix Trump’s trade initiatives will reinforce reckless.” the trend toward a reduction in glob- Abbey Joseph Cohen: Negative interest al trade and globalization in general. Overall, it becomes apparent that there rates are a fool’s errand. . . We are ap- Trade declined ahead of both world may be more questions than answers in lxxi proaching a period of global fiscal stimu- wars. the year ahead. lus at a very peculiar time. . This is the toughest year to forecast. We have a good sense that earnings will be up about 10%. But we don’t have a good sense of the geopolitical environment or tax and regulatory changes in the US. Lxx

Felix Zulauf: Trump is starting out with a highly valued stock market, and the Fed won’t be working with him to some degree. Future returns for equities will be much lower than what we have seen. . . The US stock market now is valued higher that it was 95% of the time in the past 100 years. . The world is changing dra- matically. There are many similarities Image adapted from the Financial Times, http://lexicon.ft.com/Term?term=fat-tails

25 In a time of such market uncertainty, the Even certain fixed income holdings, opinions in an interview with Mar- likelihood of more extreme outcomes with rates as low as they are, can ketWatch and admitted to being some- over the course of a year — good and offer a safe-haven feature in times of what confused about what’s going on bad — tends to rise. A graphic of this stock market duress. A growing risk in financial markets. On one hand, he concept is reflected in the prior page. Fi- of military confrontation with North sees numerous ‘dark shadows’ which nancial models, such as Modern Portfolio Korea, along with the prospect for have the potential for impacting mar- Theory, Efficient Markets and the Black- additional ‘exit pressure’ from within kets negatively. However equity mar- Scholes option pricing model all assume the European Union, are among the kets and sentiment are at very high lev- lxxiii normality. Growing uncertainty can events that may catch the market by els. To him this is indicative of living in a distort the short-term predictive value of surprise and prompt an overall valua- bipolar world. He can fathom the 10- these models as the odds of an extreme tion adjustment in my view—which year [Treasury] yield below 2% or 4%, or both this year—although he antici- event has risen (hence the term fat tail of course will bring opportunities and pates a non-consensus level under 2%. distribution.) risks. A market setback of a considerable Many of the sources offered in this Despite the rising potential of nega- amount in equities should also not be newsletter are essentially describing a fat tive events the odds of a recession in discounted. According to Mr. Fink, we -tailed risk environment when discussing the US remain low in 2017, so a bear are still in the midst of deflationary 2017 and the near future. Jeff Gundlach, market in US equities is unlikely. A forces due to drivers such as technolo- for example, offered this comment, resurgence of inflation is also not gy advancements and breakdowns in “People are underestimating the risk of very likely as supply-side policies do global trade and globalization. However loss right now.” not lend themselves to that outcome. it is also true that it would not take lxxiv While it is not possible to predict the much to spike wage inflation which timing and specific event that may un- BlackRock’s CEO, Larry Fink, oversees could be prompted with faster regula- leash negative market responses, I have the largest asset manager in the tory approvals than anticipated. While been adjusting portfolios in accordance world with $5.1 trillion under man- CEOS are encouraged by the prospects with this perceived greater risk potential. agement. He recently expressed his of change, they are currently not investing much currently due to policy

26 uncertainty. Markets are, therefore, largely ahead of themselves. lxxv

Confusing? Yes. But consistent with the divergence of opinion referenced by other prominent sources offered in this newsletter.

To the degree that a wait-and-see men- tality settles into the business communi- ty, volatility could quickly rise as GDP growth would probably lessen. As a clear picture has yet to emerge, bond market prices, for example, could get tossed around like a rag doll.

Different objectives among central bankers and abnormal currency flows into the US—through a scare of some kind— could also contribute to unexpected swings.

27 Summary

Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters. — Benjamin Franklin sions in places such as North Korea, Syria, Yemen, Iran, Turkey and Eastern Ukraine.

Geopolitical developments could quickly of decentralized leadership. With Domestic agendas, which dislike exter- usurp central bank efforts and political perceived self-interests at stake, nal annoyances, may have to give way discourse when it comes to influencing leaders in each of these countries de- to larger problems overseas. While not US financial markets in 2017. How this sire greater regional prominence and ideal, the barbarians are at the gate plays out is anyone’s guess. Janet Yellen, better representation on the world and dinner may have to wait. of the Federal Reserve, recently ex- stage. Various outcomes may be dis- pressed confidence in the robustness of appointing to financial markets, how- Earnings and GDP growth in 2016 were the economy and its resilience to shocks. ever sorting things out now may nur- not particularly stirring—with US GDP lxxvi However there could still be shocks ture future prosperity while lessening growth roughly 1.6% and S&P500 earn- out there that cause the market to stum- hostilities. Several global threats have ings growth near 2.4%.) lxxix lxxx Some of ble, particularly in today’s multipolar gotten to the point where they can the optimistic earnings and revenue world with polarizing policymakers. no longer be ignored. Combatting growth expectations built into 2017 Sunni Islamic terrorism (represented were predicated on completion of a Three of the world’s by the Islamic State and al-Qaida) number of heady policy outcomes foremost military and Shia Islamic terrorism (led by which may be delayed. And federal powers — US, Russia Iran) may ultimately become the debt levels will rise as the new admin- and China — are flex- common thread that compels each istration has little margin to work. ing and stretching military power to work together Which gets us back to a recurring their might in ways more closely. Success in this area theme in 2017: Living in a Multipolar that run counter to the global status quo could pave the way for resolving ten- World, with all its uncertainties.

28 If geopolitical events become more prominent this year—which is not too much of a stretch—the possibility of greater market volatility grows. The likelihood of moderately extreme outcomes to the negative would similarly increase. We will error on the conservative side when managing your resources, consistent with prudent fiduci- ary oversight.

The year is shaping up to offer plenty of surprises and intrigue. Saddle up your horses!

Please keep in mind that financial mar- Given that a massive monetary ex- kets are fickle in the short run and sub- periment undertaken by central ject to emotional bounces. There are in- bankers in 2009 is still underway, it’s dications that recent strong stock perfor- difficult to know what will influence mance has served to lift sentiment re- markets next and by how much. cently in a self-reinforcing cycle. This Therefore, we remain circumspect. works fine until the cycle runs its course.

WE APPRECIATE YOUR BUSINESS AND HOPE THAT OUR SERVICES HELP YOU SPEND MORE TIME DEVOTED TO THINGS YOU ENJOY. PLEASE KEEP US IN MIND WHEN YOU BECOME AWARE OF SOMEONE WHO COULD USE OUR SERVICES. THANK YOU.

29 Disclosures

Please call with your schedule preferences if we have not already made arrangements to discuss this newsletter and other facets of our re- source management service commitment to you. A newsletter-related discussion outline, which you will received separately, has been de- signed to serve as a helpful discussion reference. Newsletter highlights, lifestyle planning updates, portfolio characteristics, and account performance metrics are among the areas addressed—consistent with ADK accountability standards for advisory clients. Thank you for your business and the opportunity to assist with your endeavors. Please let us know how we can better serve you and others.

The way of a fool is right in his own eyes, But he who heeds counsel is wise. — Proverbs 12:15

The opinions voiced in this material are for general information only, do not necessarily reflect the views of LPL and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

International debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards. These risks are often heightened for investments in emerging markets.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Wealthcare Advisory Partners, a registered investment advisor. Wealthcare Advisory Partners and ADK | Wealthcare Partners are separate entities from LPL Financial.. 30 Endnotes

I “America’s presidential primaries: The Brawl begins,” The Economist, January 30, 2016. ii Out of Ammo?, The Economist, February 20, 2016. iii Zachary Crockett, “Donald Trump is the only US president ever with no political or military experience,” http://www.vox.com/policy-and-politics/2016/11/11/13587532/ donald-trump-no-experience , January 23, 2017. iv Niall Ferguson, Donald Trump’s New World Order, http://www.the-american-interest.com/2016/11/21/donald-trumps-new-world-order/ , November 21, 2016 v Eric Metaxas, If You Can Keep It (New York: Penguin Random House LLC, 2016), 19. vi Ibid., p 21. vii Ibid., p 54. viii W. Michael Cox and Richard Alm, Library of Economics and Liberty, http://www.econlib.org/library/Enc/CreativeDestruction.html ix Ibid. x Eugene Volokh, “Is the United State of America a republic or democracy”, The Washington Post, https://www.washingtonpost.com/news/volokh-conspiracy/ wp/2015/05/13/is-the-united-states-of-america-a-republic-or-a-democracy/?utm_term=.a15dc8932fc0 May 13, 2015. xi Eric Metaxas (2016), “If You Can Keep It”, New York, NY: Penguin Random House, pg 54. xii Dr. Os Guinness, “A Free People’s Suicide”, https://www.youtube.com/watch?v=LlHFR3dxuIg , September 13, 2012. xiii United States incarceration rate,” Wikipedia, https://en.wikipedia.org/wiki/United_States_incarceration_rate , 2013. xiv Chuck Smith, “Why Nation’s Fall: March 19” (Wisdom for Today). xv Jonathan Swan, Mike Allen, “Trump 101: he is definitely not a health nut,” https://www.axios.com/trump-101-he-is-definitely-not-a-health-nut-2240700410.html? utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosam, February 6, 2017. xvi Ibid. xvii Andrew Buncombe, “Donald Trump doesn’t exercise: US President eats Bi Macs, steaks and crisps on silver plates, The Independent, http://www.independent.co.uk/ news/world/americas/donald-trump-exercise-us-president-eat-big-mac-diet-steaks-lays-crisps-silver-plates-gym-a7565391.html, February 6, 2017. xviii Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 389. xix Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 5. xx Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 15. xxi Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7. xxii Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 56. xxiii Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7. xxiv Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 174. xxv Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7. xxvi Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 62. xxvii Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7. xxviii Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 136. xxix Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7. xxx Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 279. xxxi Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7.

31 xxxii Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 329. xxxiii Ibid., 382. xxiv Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7. xxv Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 151. xxvi Ibid., 183. xxxvii Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7. xxxviii Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 329. xxix Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7. xl Donald Trump and Tony Schwartz, The Art of the Deal (New York: Ballantine Books, 1987), 368. xli Donald J. Trump, Crippled America – How to Make America Great Again, Instaread, Key Takeaways & Analysis, 2016, 7. xlii “Understanding America’s Global Role I the Age of Trump”, Stratfor, January 3, 2017. xliii Ibid. xliv Economic Research, Federal Debt Public Debt as % of GDP, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/GFDEGDQ188S, March 9, 2017. xlv Bill Gross, “Show Me the Money,” Investment Outlook, March 2017. xlvi Amotz, Asa-El, “Middle Isreal: Year of the Russian Bear,” The Jerusalem Post, December 31, 2016. xlvii Ibid. xlviii “The Eurozone: On the Edge of Crisis”,Stratfor, February 14, 2017. xliix Alex Hunt and Brian Wheeler, “Rrexit: All you need to know about the UK leaving the EU,” BBC News, Feb 23, 2017. Retrieved from http://www.bbc.com/news/uk- politics-32810887 l Felix Zulauf, “Barron’s Roundtable,” Barron’s Magazine, January 16, 2017, S11. li “Economic and financial indicators,” The Economist, February 25, 2017, 76. lii Adriano Bosoni, “A Storm is Brewing over Europe” Stratfor, February 14, 2017. liii Andreas Kluth, “The permananet chancellor,” The Economist: The World in 2017, January 2017, 80. liv Felix Zulauf, “Barron’s Roundtable,” Barron’s Magazine, Janaury 16, 2017, pg S11. lv “A vote that will resonate beyond France,” Stratfor, January 20, 2017. lvi Briefing: French politics, The Economist, March 4, 2017, pg17. lvii Ibid., pg 16. lviii “Elections will Measure Euroskepticism in the Netherlands,” Stratfor, January 13, 2017. lix “Netherlands: Moderate Parties Hold onto Power,” Statfor, March 16, 2017. lx “Italy: The Wider Implications of Party Conflict,” Stratfor, February 22, 2017. lxi “Five Star Mystery”, The Economist, January 14, 2017. lxii “2017 Roundtable: The Big Shift,” Barron’s Magazine, January 16, 2017, S3. lxiii Ibid., S4. lxiv Bill Prisst, “2017 Roundtable: The Big Shift,” Barron’s Magazine, January 16, 2017, S4. lxv Mario Gabeill, “2017 Roundtable: The Big Shift,” Barron’s Magazine, January 16, 2017, S4. lxvi Brian Rogers, “2017 Roundtable: The Big Shift,” Barron’s Magazine, January 16, 2017, S4. lxvii Oscar Schafer, “2017 Roundtable: The Big Shift,” Barron’s Magazine, January 16, 2017, S4 and S12. lxviii Scott Black, “2017 Roundtable: The Big Shift,” Barron’s Magazine, January 16, 2017, S6. lxvix Jeffrey Gundlach, “2017 Roundtable: The Big Shift,” Barron’s Magazine, January 16, 2017, S7, S8 and S9. lxx Abby Joseph Cohan, “2017 Roundtable: The Big Shift,” Barron’s Magazine, January 16, 2017, S7, S8 and S13. lxxi Felix Zulauf, “2017 Roundtable: The Big Shift,” Barron’s Magazine, January 16, 2017, S7, S10 and S11. lxxii Adam Sarhan, “Billionaire Ray Dalio has one Question for Trump,” https://www.forbes.com/sites/adamsarhan/2016/12/20/billionaire-ray-dalio-has-one-question-for-

32 trump/#f90434f54225, December 20, 2016. lxxxiii Trevir Nath, “Fat Tail Risk: What It Means and Why you Should Be Aware of It,” http://www.nasdaq.com/article/fat-tail-risk-what-it-means-and-why-you-should-be- aware-of-it-cm537614, November 2, 2015. lxxxiv David Rosenberg, “David Rosenberg Crushes the Trump-flationary Dream: That’s Just Not Gonna Happen,” Macro Voices, http://www.zerohedge.com/ news/2017-01-29/david-rosenberg-crushes-trump-flationary-dream-thats-just-not-gonna-happen , Janaury 27, 2017. http://www.marketwatch.com/story/blackrocks-larry-fink-sees-dark-shadows-in-markets-2017-02-08, Feb 9, 2017. lxxxv Larry Fink interview, “BlackRock’s Larry Fink sees ‘dark shadows’ in markets,” http://www.marketwatch.com/story/blackrocks-larry-fink-sees-dark-shadows-in-markets- 2017-02-08 lxxxvi Matt Egan, “Newly confident Janet Yellen is a believer in the US economy,” http://www.nbc-2.com/story/34888781/newly-confident-janet-yellen-is-a-believer-in-the-us- economy, March 15, 2016. lxxxvii Wikopedia, “List of countries by Military Strength Index,” https://en.wikipedia.org/wiki/List_of_countries_by_Military_Strength_Index, March 9, 2017. lxxxviii Herb Keinon, “Hetanyahu in Moscow Leverages Putin Purim Greeting to Slam Iran,” The Jerusalem Post, http://www.jpost.com/Israel-News/Politics-And-Diplomacy/ Netanyahu-in-Moscow-leverages-Putin-Purim-greeting-to-slam-Iran-483736 March 9, 2017. lxxxvix “Economic and financial indicators,” The Economist, February 25, 2017, 76. lxxx S&P Earnings: 1960-Current, NYU download, http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/spearn.htm