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With the U.S. stock market scratching out a series of new all-time highs, I’ve decided to step back from the headlines and the related market mania to tell you about some significant upcoming geopolitical events that I’ve been warning my clients about.
All of these – regardless of their outcome – have the potential to seriously impact your portfolio… but, inexplicably, they are items that no one in the mainstream media is talking about. Read on and you’ll learn more.
As the good vibes continue to roll on Wall Street and with volatility seemingly in check, most everyday investors I come across have been lulled into a false feeling of complacency because of this year’s one-way market action to the upside. But as an experienced Wall Street veteran, I have that familiar eerie feeling deep down in my bones that this is just the calm before the storm and you need to be on guard to batten down the hatches to protect your portfolio at a moment’s notice.
Or better yet, keep some powder dry so you can be prepared to take advantage of some real buying opportunities because stocks will likely be significantly cheaper later this year than they are now.
The final rally: Why U.S. stocks will soar to over 31,000 just before the ultimate crash destroys Wall Street. The evidence America’s richest and most powerful bankers and brokers do NOT want you to see: Read more here … |
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Here’s why.
When looking at the upcoming geopolitical calendar, I see that it’s jam-packed with potential land mines for investors.
Here are my top 5:
- Netherland’s Prime Minister Election – March 15:
Historically, one of the more liberal countries in the European Union, the race in Holland for the Dutch parliament is leaning toward a far-right political party – the Party for Freedom (PVV) – led by Geert Wilders. Mr. Wilders’ policy proposals include a pledge to leave the EU and to ban all Islamic symbols, mosques, and the Koran. While the size of the Dutch economy may limit the immediate global economic impact, if a “Nexit” were to unfold, Wilders anti-refugee and protectionist sentiment would signal more change and set the stage for the other EU elections in 2017.
- Hong Kong’s Chief Executive Election – March 26
Here the race is less about the shift toward populism, but rather about the deteriorating relationship between the Hong Kong people and the Chinese administration. The backdrop to this race began unfolding with the Umbrella Movement in 2014. Last November, Chinese President Xi reiterated China’s policy of one country two systems, and quashed any ideas of political independence for Hong Kong. A recent report from Amnesty International finds Hong Kong’s human rights have deteriorated to their worst level since China took back control of the region in 1997.
- France’s Presidential Primary Elections – April 23 and May 7
In December, President François Hollande announced he would not run for re-election in 2017, further energizing the anti-establishment movement in Europe. The French presidential candidate with the most buzz is far-right candidate and party leader Marine Le Pen, who would like to leave NATO. She’s also suggested that Portugal, Italy, Spain, Ireland, Greece and Cyprus should all join France in leaving the European Union. Polls currently have her ahead in the first round of voting, putting her in a close race for president. Even if she’s unsuccessful in her presidential bid, her party’s growing appeal is shifting French politics farther to the right. What’s more, her National Front party has the most support among French people who are 18-34 years old.
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- Iran’s Presidential Election – May 19
Hassan Rouhani won in a landslide in Iran’s 2013 presidential election as he defeated the extremist incumbent President Mahmoud Ahmadinejad on a moderate platform with promises to work with Western powers. However, a hardline candidate may again see an opening as the Iranian economy has been just scraping along. Tensions are on the rise in Iran ahead of this year’s elections because of the following: (1) their currency, the Iranian rial, traded at all-time lows against the U.S. dollar in December; (2) Trump’s tough talk about renegotiating the nuclear deal; and (3) Rouhani’s recent public clash with the country’s conservative judiciary.
- Germany’s Chancellor Election – October 22
Angela Merkel is running for a fourth term and is currently expected to win, but the nationalist Alternative for Germany party (AfD) is growing in popularity. Following the horrific Christmas attack in Berlin, the AfD jumped to 15.5 percent of the vote while Ms. Merkel’s Christian Democrats dropped to 31.5 percent. This follows AfD’s outperforming Merkel’s party in her home state elections in September as they campaign against Germany’s open-door policies, which over the past year have allowed about 1 million refugees and migrants from the Middle East, Africa and Asia to settle in Germany. If Germany experiences further terrorist attacks, the anti-EU, anti-immigration party may continue to gain in the polls and make Merkel’s re-election bid uncomfortable.
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| Geopolital risk expected in 2017 |
In addition to my Top 5, the overarching geopolitical risk that has all of us wringing our hands is how Russia, China, North Korea and Syria might react to the Trump administration’s unconventional policies. Indeed, the highly regarded geopolitical advisory firm, the Eurasia Group, has identified 2017 as the “most volatile” year for political risk since World War II.
Britain’s shocking vote to exit the EU in June 2016 and Donald Trump’s surprising victory this past November may both be behind us. Â But populist movements in Europe continues to gain momentum, and calls for drastic political change are mounting around the globe.
All of this tells me that the UNCERTAINTY I warned about in my January 6 Money and Markets article may be the only certainty that lies ahead.
What does this mean for investors?
A few weeks ago, I reminded you of iconic investor Roy Neuberger’s sage investment wisdom: “Buy when others have fear and sell when others have greed.”
Currently, I see no “fear” priced into stock valuations.
My advice: Keep some powder dry because the geopolitical calendar is about to get very busy indeed! And get some experienced counseling, such as what I provide to the subscribers to my service Safe Money Report.
Best wishes,
Bill Hall
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Bill Hall is the editor of the Safe Money Report. He is a Certified Public Accountant (CPA), Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP). Besides his editorial duties with Weiss Research, Bill is the managing director of Plimsoll Mark Capital, a firm that provides financial, tax and investment advice to wealthy families all over the world.
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As if, in my opinion, having our current administration basically blackmailed by the Russians isn’t enough? Spy ships off the coast, new illegal cruise missles, Russians shelling the Ukraine,and nothing from the current administration? Houston, we have a problem… As this “other” fear begins to seep into the markets, it will be Katie bar the doors!… :(
Not to overdo the Russian bit, but with less than a month in office, the Trump administration — what there is of it — is already showing signs of collapsing of its own weight, which must warm the hearts of our geopolitical adversaries.
Leaving aside party and policy preferences, it can’t be a good thing when virtually anybody who watched, e.g., the last presidential press conference, can plainly see the ravings of a lunatic. The man can hardly complete a thought and often fails to understand even friendly questions.
(Not being a psychiatrist, I won’t speculate on sociopathy or extreme narcism — although those who are, do — but how about syphilis?)
The point is: mismanagement and incompetence suggest an increasing lack of stability, and that can’t be good for the markets.
As for “Katie bar the door”, make that “Katya” instead of “Katie” to bring it up to date.
Nice report. I believe you make much sense. I hope this gets published. Some of my other responses have not been when I have taken a different viewpoint to some of the other writers on the staff. I am hoping this policy changes because I very much enjoy the newsletter even when I disagree with some of the opinions expressed by some of the writers. People should not be ignored if they respectfully disagree with an opinion. Again, I appreciate the writings in this newsletter.
Iran seems to be the most “liberal” of all the Muslim nations, but Trump’s anti Iranian rhetoric could open the way for the religious Shiite hardliners to take greater control. It is only the need for oil that has caused this country to be allied with the Sunni nations, which already practice more or less hardline religious autocracy. Our need for that oil is now only minimal, since we have found so much of the stuff here. The U.S. and Russia together could dominate the oil markets, opening the way for pressure to reduce the power of the Middle East’s religious autocracies. Add in Iran, and big changes might be induced in the Muslim world. Remember, ISIS, al Qaida and other terrorist groups are basically offshoots of the Sunni branch of Islam. Don’t we want to reduce the power of that branch?
Your argument is that turmoil outside of the US will affect all markets adversely–but isn’t it also possible that turmoil in the rest of the world will move money here, causing the US to keep rising? Given ups and downs, of course
Hi Bill,
I doubt you are aware that you speak from an ingrained establishment position that favors policies that happen to be failing everywhere in the Western World, and which are leading to the rise of the alternatives you mention. The citizen on the street who is not part of the elites (including those in the government) senses that his world is crumbling around him, that his traditional values are disdained by coastal elites in Washington and Brussels. Those who are considered neanderthals by the ruling classes have their feelings confirmed with every newscast on CNN, where talking heads take unprecedented joy bashing the President. Deep down the working man and woman sense they are like the frog in a pot of warm that is gradually heating to the point where they will be cooked. Their feelings are regularly confirmed when they hear reports of things like the democrats making a conscious decision to abandon white working class voters in the recent election in favor of identity groups like LGBT, Black Lives Matter, and the No Boarders folks. So it is not surprising that they turn to alternatives, which happen to be on the right. But, as we see with those opposing Mr. Trump, the establishment is fighting back viciously. It is this battle throughout the Western Democracies that is the cause of your uncertainties. It is exacerbated by the dictatorships you mentioned taking advantage of the political weakness that has given rise to some of this anger by the citizenry.
Scott,
Might I point out that the trade agreements which have destroyed millions of American jobs are GATT and NAFTA which came out of Republican Congressional Majorities and were championed by Republican Presidents Reagan and H.W. Bush. Throughout history Income Inequity has gone up during Republican (Conservative) Domination and down during Democratic (Liberal Progressive) leadership. When Income Inequity goes up, the economy goes down as the Average American has less to spend. You might find it interesting that between 1929 and 2012, $10,000 invested only during Republican Presidencies would have only grown to rought $1,100, while the same amount invested only during democratic Presidencies would have grown to roughtly $350,000! This is the best example of how the economy is effected by the different political parties…
Scott, you have written with amazing eloquence and clarity. Those self-proclaimed ‘elitists’ here, and across the country and world, do not want to hear, much less acknowledge, the facts. They are more than happy to literally oppress and bully those who disagree, and who carry the burden of consequences of these insane policies. Middle America is no more than the objects of their hatred and oppression.
The ‘masses’ are about ready to fight in the streets as they realize that they ARE the frogs who ARE being cooked with no other alternative. However, this half the population is far more capable of engaging than the frilly elitists who hide behind political influence with no capability for a real fight. Take a guess on which side most of the police and military will fall.
What about the actual triggering of Article 50 ??? The actual start of negotiations on the terms of Britain’s Brexit … very very important
Reason 5 (b): Oktoberfest
https://lh3.googleusercontent.com/-ed2xRtW5E-w/AAAAAAAAAAI/AAAAAAAAAGg/t8fsuLZOwVI/photo.jpg
Would you then, Mr. Hall, advise to sell all foreign positions, such as HNP and SNP, and stick primarily with your 12 core stocks or similar ones? HMB.
Ha, ha, ha, ha, ha. This is good. I want to share my conversation with pal Warren Buffett.
Me: “Hey Warren, did you hear the one about the guy who warned us about all of the potential threats from around the world?”
Warren: “We’ve always had threats from around the world.”
Me: “But this one is real because Bill Hall said so.”
Warren: “Bill who?”
Me: “Trust me, Warren, this one is different. It’s palpable. Real. Tangible!”
Warren: (chuckling)
Me: “Screw value investing. I’m scared. The world is to unstable! Hell, the United States with Donald J Trump is unstable!”
Warren: “My advice to you is after you see a therapist, start buying on weakness. If you think the world is unstable and others do too, start buying world assets. I’m especially bullish on the USA. Buy now and hold them forever.”
Me: “Okay Warren, though Bill Hall scares me, I’m going to take your advice. I’m probably crazy!”