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Welcome to Facts That Make You Smarter, the official blog of Ty J. Young. Ty Young is often asked to provide commentary in the media on various financial, economic, and political issues and how they affect our money.

Facts That Make You Smarter gives you the talking points that would be used by Ty Young in preparing for a television interview, or speaking with a reporter. Each blog contains the for and against on each topic so you have a well-rounded view on the issue. Then, you can easily share what you’ve read with your family and friends at the golf club, church, ball park or wherever you spend your time.

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The First 100 Days: The ‘Trump Report Card’

The First 100 Days: The ‘Trump Report Card’
By Ty J. Young Editorial

The term “The First 100 Days” was first coined by President Franklin D. Roosevelt, in a national radio address. Ironically, he was referring to the 100-day record of the Congress in 1933. Since that time, the reference has been used to measure the success of a first term presidential administration during its first 100 days in office.

While the media and the Democratic Party have been nothing short of hostile, an objective review of the beginnings of the current administration would not be shed in a negative light.

Let’s Take a Look at the Trump Record for the “First 100 Days”:

1. Foreign Policy. It is hard to understate the 180 degree turn in foreign affairs that has occurred under President Trump. Seal Team attacks on ISIS insurgents… Assad uses chemical weapons? Fifty-nine tomahawks hit an airbase… North Korea firing missiles? Send a carrier group and at least one nuclear powered submarine into the area… Russia remains belligerent? Call them out on live TV with their foreign minister sitting next to us… America is not looking to fight yet another war, but instead of helping our enemies and attacking our friends, as was the case the last 8 years, we are now reaffirming our position in the world. The Iran deal remains in place, but Iran’s threat to our interests is probably next up on the Trump “Make America Safe Again” target list. We are finally operating, after 8 long years, from a position of strength and of moral clarity. So far so good! GRADE: A++++

2. Supreme Court nomination. A home run! Neil Gorsuch was every true conservative’s choice for the vacancy on the high court, and his case law history suggests a return to the primacy of the Constitution. The rule of law, free markets, and personal liberty will be the priority once again on a center-right court. Republican Presidents have had some Supreme Court picks go south on their conservatism: Reagan’s pick of Anthony Kennedy and Bush 41’s pick of David Souter, at the time, were seen as staunch conservatives and excellent choices for a Republican President. Both, however, rendered opinions since their appointment that were moderate to liberal over the course of time. Bush 43’s pick of Chief Justice John Roberts has proven to be a conservative one, but not on the most animating principal of the conservative movement – Obamacare – when Roberts sided with the Obama Administration. The most glaring example was Nixon’s choice of Harry Blackmun, who became one of the most liberal justice’s ever! But sitting here today, based on the evidence, President Trump’s selection of Gorsuch was a Grand Slam! GRADE: A+++

3. Rolling back the Regulatory State. To say that government invaded our lives like never before under the Obama Administration would be the understatement of the century. The use of executive orders, the EPA’s rule-making process, Dodd-Frank, and much more were a drag on the economy and employment growth, and a dangerous infringement on our privacy and our way of life. During the first 100 days of the Trump Administration, the roll-back of government regulations has been a top priority. From federal intrusion into local schools, to mining and land use restrictions, hundreds of Obama-era regulations which stifled all aspects of American life have been removed, with more to come. GRADE: A+

4. Taxes: A big commitment during the campaign was to pass major tax reform legislation. This would include massive tax reductions and flatter rates. Most importantly, business tax reductions are coming as well. Reducing the tax burden on business will help reduce the cost to the consumer, as the costs are always passed on to the end user. Trump released his tax reform proposal on Wednesday, April 26th, and it had significant tax rate reductions for individuals; an elimination of many deductions; and, an end to the Alternative Minimum Tax (AMT). Although we believe major tax reform is coming down the pike, when it comes remains subject to Congressional action – which means “who knows if, and when, we will get it.” GRADE: “I” for Incomplete

5. Obamacare Repeal: No way to put lipstick on this pig. The first attempt at “repealing and replacing” Obamacare was a dud and an embarrassment. Now, there seems to be some movement on Capitol Hill to compromise among warring Republican factions. But make no mistake: the law remains intact while each day brings a new failure, cost or calamity that it creates. People are receiving less care, worse care, and at greater cost than ever before. And when did “replacing” the bill become a priority? Republicans rode to office in 2010 and 2014 promising to REPEAL Obamacare. It wasn’t until just recently that we heard of the need to replace it. Why? The free market only stopped working during the Obama era, it can be put back to work if we would just get government out of the way! President Trump’s verbal commitment to repeal (and replace) remains the only thing that keeps this grade from being the lowest score possible. It would be a “D” but the “replace” strategy lowers the grade for misdirection. GRADE: D-
6. The Wall: The principal promise of the Trump campaign will not be built in a day, but has already succumbed to Democratic threats of a government shutdown. The inability to push forward on wall construction when you have the 2006 statute still on the books that authorized 700 miles of wall to be built, and you have control of both houses of Congress, has many conservatives very nervous. While the Democrats and establishment Republicans are not in favor of a wall, Trump’s voters are. Existing laws on the books, executive order, existing funding through Homeland Security or defense department budgets… it does not seem that the promise to build a wall – the primary campaign promise of the 2016 election – is a high enough priority. Again, not the lowest score, since the promise has not been abandoned, but an unimpressive start to this high priority project. GRADE: C-

OVERALL GRADE: B+ with an incomplete.

When you factor in the unprecedented, unprovoked, and unreasonable resistance the Trump Administration has endured from the media and the Democrats, this is easily an “A” on the fake news/media bias curve.

Presidential politics affects your savings. Whether it is potential trade conflicts, actual shooting conflicts, or just unwinding the morass of from the Obama era, his actions will move markets. It is important to keep the gains you have had from the inflated market by taking those gains off the table and find a protected principal solution.

Call our advisors at Ty J. Young Inc. to learn how you can have your money in a place where it is completely immune to the losses of the stock market and still participating in market gains. 877-912-1919.

Gorsuch Crucial for Individual Rights, Liberty, and Limited Government

“Gorsuch Crucial for Individual Rights, Liberty, and Limited Government”
Ty J. Young Editorial

The Supreme Court has always played a crucial and storied role in our nation’s history, and provides that critical “third” branch of government to help serve as one of the three checks and balances- which makes our system so unique in human history. The importance of the Court to your freedoms and liberty, therefore, cannot be overstated.

On Monday, April 10th, Neil Gorsuch was sworn in as the next Justice of the United States Supreme Court. President Trump’s election paved the way to keep the Supreme Court in a center-right orientation, even if the so-called conservatives often rule as liberals (i.e. Anthony Kennedy, the swing vote; John Roberts, the Obamacare vote).

Justice Gorsuch’s legal acumen and his record as a Circuit Court Judge are unmatched. His rulings are almost always confirmed by the Supreme Court, a record unparalleled by other judges in the modern era. Now, critical issues which divide the country will now come before the Court with a voting majority of 9 justices, eliminating the 4-4 splits of the last year.

What has Justice Gorsuch ruled on that will give us an idea of his future vote on key cases before the court, and what are some of those cases that will be heading to the Supreme Court this term?

I. Three Prior Rulings by Justice Gorsuch Which Were Pro-Freedom:
1. Government cannot impose unlawful regulations. In Gutierrez-Brizuela v. Lynch, Gorsuch rightfully ruled government agencies cannot promulgate rules based upon their own interpretations, it must be part of the statutory intent laid out by Congress, or it is invalid. This was a critical blow to the monstrous expansion of regulations under Obama. The ruling makes it clear agencies cannot take land, take your lake or creek, tell you where to build, or otherwise invade the rights you have as an individual unless it is expressly the intent of Congress. This will help the Trump Administration roll back the over-reach of Dodd-Frank and the EPA, which has been killing small business and personal property rights for the last 8 years.
2. Government cannot interfere with the free exercise of religion. In both the Hobby Lobby and the Little Sisters of the Poor cases, Gorsuch was clear in his opinion that the First Amendment was near absolute in terms of preventing the government of coercing, or out-right mandating, behavior or action that would go against someone’s religious beliefs. The Supreme Court agreed on both cases, and they remain the highest profile challenges to Obamacare that succeeded in defeating key aspects of the law.
3. Gun rights and the 2nd Amendment are critical to our individual liberty. In U.S. v. Miguel Games-Perez, Justice Gorsuch ruled that even a convicted felon had a right to bear arms, if the felon did not have knowledge of his loss of that right. Games-Perez stated during trial that he was unaware his conviction remained on the books, or that he was banned from possessing a firearm, and the unlawful possession charge should be thrown out. Justice Gorsuch agreed, stating: “… After all, there is ‘a long tradition of widespread lawful gun ownership by private individuals in this country,’ and the Supreme Court has held the Second Amendment protects an individual’s right to own firearms and may not be infringed lightly.”
II. Three Critical Cases (Out Of Many) in the Upcoming Supreme Court Term:
1. Religious freedom case in Colorado regarding a baker and a gay couple. The Court seems poised to take up this case with much at stake. A Colorado baker refused on religious grounds to bake a cake for a gay couple, who then filed a complaint under Colorado’s Anti-Discrimination Act (CADA). The courts ruled in favor of the plaintiffs. Given Gorsuch’s prior rulings in favor of religious liberty and the court’s current 4-4 split on most issues, this seems to be a test-case for how far the gay rights agenda has progressed under U.S. law.
2. Gun Rights under assault in California. In Peruta v. San Diego, the 9th Circuit ruled en banc to affirm the lower court ruling which stated in pertinent part: “…. there is no Second Amendment right for members of the general public to carry concealed firearms in public.” In January, Peruta filed a writ of certiorari to have the case heard by the Supreme Court.
3. The Trump Travel Ban. Another test case on executive authority under the Constitution, and the rights of non-citizens. Justice Gorsuch has not ruled on an immigration issue of this significance, but the Travel Ban itself seems congruent with the expected responsibilities of the Executive Branch to manage access to the country through immigration and to keep us safe. It is clear a Clinton appointee (or Obama’s choice of Merrick Garland) would almost certainly have provided the 5th vote to take away the Executive Branch’s authority to enforce the border altogether.

It is hard to overstate the importance of these rulings, even if they seem remote and unimportant in your own life. Any system of governance that maintains our individual liberty and freedom requires a fidelity to our Constitution, and the enforcement of the rule of law. Without it, you will eventually have anarchy, or government control, of our lives. Justice Gorsuch has the pedigree of an originalist, a believer in the anchor and bedrock principles found in the Constitution. Let’s hope he remains that way.

Now more than ever our social fabric is strained, even as our markets continually reach all-time highs. Isn’t it time to move some of those gains off the table, and put them into a principal protected investment? Call now to learn more at 877-912-1919.

Will We Get the Tax Reform We All Dreamed Of?

Will We Get the Tax Reform We All Dreamed Of?
Ty J. Young

Despite the media’s portrayal of chaos and disarray, the Administration seems to be focused daily on getting through the agenda it promised the American people on the campaign trail. Tax reform has not gone “big” since 1986, yet it seems possible we may get the first comprehensive deal in a generation. This will be a major boost for the country if this comprehensive tax reform is accomplished!

This is occurring despite unprecedented elite bias and leftist/progressive resistance nationwide. While bureaucratic resistance is not new, the public nature of it, and the brazen and dangerous lawlessness of much of it, is something we have not seen before. The mainstream press seems unaware they are living in a bubble, and continue to exhibit the same biases that made them irrelevant during the campaign, and the public uninterested in their daily pronouncements.

President Trump’s agenda has moved forward despite the “resistance.” Consider:

1. Ending regulations by the day? Check.
2. Dismissing holdovers from the previous administration? Check.
3. Improving border enforcement, despite unconstitutional interference by progressive judges? Check.
4. Drafting budgets with the most sweeping cuts to government spending in a generation? Check.
5. Calling for a 10% increase in the defense budget? Check. (Although more is needed).

All of this and more is happening behind the scenes and it is an impressive but incomplete list. The Trump Administration appears to be serious about tackling DC’s most sacred cows. This gives us hope that the tax reform package we have been promised will be forthcoming soon.


Tax reform means legislation – no executive action or order will do – which means Congress is involved.

Yes, I know.

But, America is a land made up of dreamers and if you can dream big anywhere, you can dream the biggest in America.

What would the “Tax Reform we all dreamed of” look like?

1) A Fair or Flat tax. The Fair Tax, a national sales tax replacing all forms of income taxation, is preferred. A flat tax on income would be the next-best in dreamland. Either would turbocharge growth and dramatically increase revenue collections. They would radically reduce compliance costs, and be much “fairer” to all tax payers and a juggernaut to the economy.

What we will probably get is something not so bad or, at least, a step in the right direction: flatter rates, 3-4 brackets instead of 7, eliminate deductions, a pro-growth change that is far fairer than the current system.

2) Corporate Tax reform. Imagine a world in which U.S. corporations were charged tax rates at or below their competitors globally. Manna from heaven? The 35% U.S. corporate tax rate is a punitive rate which drives corporate cash abroad, kills job and wage growth, and passes those higher costs on to consumers. The tax reform we are dreaming of eliminates the corporate tax altogether, but is politically impossible.

What we will probably get is corporate rates in the 15-20% range. Still, a major improvement from what the rates are currently.

3) Capital Gains. Why do we tax money earned through investment? If it is earned through investment, that suggests the person is helping expand economic growth, they are contributing to a business, someone’s salary, you name it. By “investing” the investor is signaling they are contributing to the community in ways the government never could. Having said that, in our tax reform dream world, capital gains taxes will be ELIMINATED.

What we will probably get is not much change at all. Trump’s proposals align capital gains rates with income rates. The House Republican plan is much better. Ways and Means Committee Chairman Kevin Brady has the rates tied to ordinary income rates, but he allows for a 50% deduction, effectively reducing the capital gains rates in half.

4) Abolish the IRS. A Reagan-era mantra of the right. Always a political non-starter, since you must have some agency responsible for making sure people pay their taxes, right? Not so fast – a fair tax eliminates the need for the IRS – a flat tax greatly reduces their role. The scandals surrounding the agency during the Obama-era certainly require a fresh look at how we collect taxes. Perhaps a “Department of Revenue” instead of the dreaded acronym?

What we will probably get is the Trump and Republican reform will reduce the staff, clear out the criminal actors, and remove the taint of scandal. It won’t come easy or quickly, but a less political and more professional IRS should emerge by 2020.

So much to do, so little time. Repatriating cash held abroad by U.S. corporations… Estate Tax… tax rates on S-corps… border adjustment tax (BAT)… there is so much to consider in our first chance at comprehensive tax reform since the 1986 Reagan-era landmark legislation. However, there are significant headwinds with the Obamacare repeal, a hostile media, and division within conservative ranks on what that reform looks like.

The Trump Administration has a chance to make historic changes that are not only profound reversals of the Obama era, but are pro-market, pro-growth reforms which will benefit all Americans. Our dream should be that he succeeds.

Repeal It Already

Repeal It Already
By Ty J. Young Editorial

What’s the worst that could happen?

As Obamacare co-ops close due to bankruptcy… as insurers continue to flee the exchanges… and as the taxpayer continues to get stuck with a bill for the nationwide failures of the Obamacare system, GOP leaders were under pressure to create a replacement plan. That pressure did not come from their voters, but from the establishment media and the Democrats. Republican legislators had only promised to “repeal” Obamacare during the last 8 years, and during the last four election cycles (2010, 2012, 2014, and 2016). While President Trump offered feint suggestions of a plan “…to cover everyone,” a replacement bill was not a Republican proposal nor was it the main theme of his or their campaigns.

Yet here we are, DC establishment Republicans once again mindlessly taking the Democratic bait. They have accepted the leftist progressive view that health care is a “right,” and not a responsibility. The pro-market, Constitutional argument for freedom… for “… life, liberty and the pursuit of happiness” has been conceded to the progressive claims of a right to something no one can grant, and an entitlement we cannot afford.

Obamacare has already failed –

1) The promise of millions enrolled was true – but the government doesn’t report when they stop paying their premiums or get off the exchanges. Best estimates suggest very few remain enrolled… new enrollees are repeat sign-ups… and ALL at a cost of billions of borrowed tax payer dollars.

2) Exchanges have failed – in some states you have one provider. Most analysts are predicting you will be down to zero in these states soon.

3) The subsidies used to prop up the insurance market are less than the cost of providing coverage for pre-existing conditions, and this is also driving insurers out of the market.

4) Small businesses have documented reduced hiring due to the costs of health care.

5) Most have lost their plan, pay more, have higher deductibles, and have lost their doctor thanks to the law.

6) Most Obamacare enrollees are Medicaid applicants – which the federal funding for the Medicaid expansion under Obamacare eventually runs out.

Based on these failings, the public should be demanding these Republicans fulfill their promise – “Repeal it already!” Because the worst is already happening…….

I. What’s the worst that could happen (if you repeal it without replacing it)?
1. Millions could lose insurance if they repeal the bill without a replacement: In the age that we live in, it is hard to say something would never happen. But millions have ALREADY lost their coverage under Obamacare……millions have ALREADY lost their doctors under Obamacare… Millions will most likely not lose coverage – most will find new policies at more affordable prices, and those who go without will be the same groups that are going without under the Obamacare system – the indigent lacking the knowledge or skill level to seek out Medicaid, and the young who don’t care.
2. Insurance companies begin to fail: Many will fail because they are addicted to the subsidies they received under Obamacare. Their chickens may come home to roost, but that would be the price for jumping on the progressive-socialist government hand-out train. No one wants a company to fail, but Americans don’t want their money to subsidize private industry, a lesson TARP and the bank bailout should have taught every politician in DC.
3. A Republican bloodbath in 2018: This also seems unlikely. Fulfilling your promises to your voters seems to strengthen your position back home with the voters. Again, the Republicans have fallen victim to the mindset of the left… the disinformation of the mainstream media……and the pollsters who got 2016 wrong. The public believed you when you said you would repeal Obamacare – they are waiting for you to deliver.

II. What’s the BEST that could happen (if you repeal it without replacing it)?
1. The pre-2009 health care system returns: Before 2009 we had a nominally market based system that helped keep costs down. 90% of the public had health care – either a private plan, or were on Medicaid or Medicare. There was no existing health care crisis, and the only issue was polling showing the majority of the country believed health care costs were too high. While the public broadly supports everyone being treated for their health condition, that is usually within the context of poverty and the elderly. A market based system with protections for the old and poor is far better than government mandate… and far more affordable.
2. Conservatives gain seats in the 2018 mid-term elections: By keeping their near-decade long promise to “repeal” Obamacare, conservative elected officials receive a boost from the credibility they gain for keeping their word. This helps re-elect Conservatives to the Congress in 2018. Most polling is national in nature – poll respondents in California have no impact on your voters in the Midwest and elsewhere.
3. More people will be able to afford healthcare: Obamacare has distorted markets, driven insurers out of certain states completely, some insurers have already confirmed they will no longer offer Obamacare policies… people have lost their plans, their doctors and in many cases, cannot afford the new higher premiums and deductibles. It has always been, in short, a disaster. By returning to free market principles, the market, not the state, will find a need for certain policies and provide them.

Repeal was always the promise the Republicans made to the public and their voters… replace is a recent addition to the debate, made under duress by the media and the Democrats. Three words for Republicans – “Repeal it already” … because the worst has already happened – Obamacare.

Bears Are Sharpening Their Claws

“Bears Are Sharpening Their Claws”
Ty J. Young
Buy low, sell high. Are we at the peak, or will we climb over the wall of worry? The Stock Market’s “Trump Trade” has flourished, with record-setting market numbers since his election last November. We are certainly in a “new normal”. If the P/E (price-earning) ratios were a historical predictor, we are due for a stock sell-off. If “animal spirits” were an indicator, this market may remain bullish. If you are solely looking at data, retail sales are pointing directly up, as is the most recent CPI report. If long term cycles are a gauge, we are nearing the end of 16-18 year bull market.

But the data leaves out some broader intangibles that are impacting stock prices. The Obama-era stock market gains were artificial, based upon certain historical factors:

1. Price inflation due to the printing of money.
2. Federal Reserve zero interest rate policies.
3. Historic levels of debt creation and fiscal deficits beyond anything we have seen before, and therefore expansionary in its effect.
4. It started from the bottom, in March 2009 the floor was reached at Dow 6,547. This meant it had no other direction to go but up.

The market was not growing because of the traditional business cycle: a new Apple device was announced, a new life-saving drug was created, or infrastructure spending or construction. There was no underlying economic growth supporting a bull market. In fact, it can be said that Main Street essentially decoupled from Wall Street.

So, the constant drumbeat from perma-bears that there was no way the market could keep going up, and that we will see a correction, proved to be constantly wrong. But that doesn’t mean they will remain wrong on the issue for much longer…there are several policy issues that could serve as headwinds, or as the trigger for, a significant market correction.

They are:

1) Failure to repeal Obamacare.
2) Failure to reform the administrative state.
3) Failure to reform the tax code.
4) Federal Reserve Interest Rate hikes.

Enough has been written regarding each one, but they all warrant repeating. Much of the “Trump Effect” in stocks is based upon a belief that action will be taken on the policy front in D.C. First, failure to repeal Obamacare, an election year promise since 2010, could send markets in a tumble. While some insurance carriers benefit from the subsidies received, the broader market indices are negatively impacted by small and medium sized business health insurance costs, corporate and individual compliance costs, and the Obamacare tax increases.
Second, failure to repeal and reform the regulatory state – from the auto-pilot nature of some spending programs to EPA regulations to Dodd-Frank – it is clear the Trump Effect is also benefiting from a market-place expectation that truly cutting government is in the works.

Third, reforming the tax code would be necessary no matter whose party was in power in Washington. The highest corporate tax rates in the world….the byzantine, inefficient, burdensome tax rates on middle income earners…the double taxation which keeps corporate cash abroad…every aspect of U.S. tax policy is bad for business. While the Trump plan and the House plan have varying degrees of good and bad ideas, the bottom line is both flatten rates on both corporate and individual tax payers. This will spur economic growth and in turn drive up tax revenue for the government. For the economy, it is an absolute must, and the belief it is coming has helped drive the market surge since last November.

Lastly, and the most unpredictable, is the Fed. Three rate hikes and historically the market has reversed. If a third hike since December 2015 is in the offering, that could spell trouble for stocks. It doesn’t have to, it didn’t for Greenspan in 2004, and often the strong dollar combined with other economic factors could simply show a strengthening of the economy and an extension of the current cycle. But that’s a lot of history to overcome.

If Washington doesn’t go to work, and get major reform legislation passed, the fear of a correction and a bear market becomes more and more real. When that reality hits, be sure you have your money in a place where it is safe from market losses. Our advisors at Ty J. Young Inc. are experts in helping people like you protect their principal while earning a reasonable rate of return. You don’t have to lose money, call us today at 877-912-1919.

Secretary Tillerson Draws a Line with North Korea

Secretary Tillerson Draws a Line with North Korea
Ty J. Young Editorial

Secretary of State Rex Tillerson had an eventful week while traveling to Asia. His stop in Korea included a speech in Seoul where he stated “military options” were on the table in dealing with the North Korean nuclear threat.

The North Korean nuclear weapons programs have been rapidly advancing. Their missile program has now reached the testing stage for intercontinental capability – which means the ability to deliver its payload to the U.S. mainland. North Korea most recently fired 4 missiles into the Sea of Japan on March 4, 2017, landing within 190 miles of the Japanese coast line. This was the most provocative and dangerous act the communist regime had taken to date, and the action helped bring greater support for the U.S. missile defense system being deployed to South Korea, known as THAAD (Terminal High Altitude Area Defense).

Diplomatic statements then ramped up – the Chinese called for cessation of the North Korean missile testing in exchange for the U.S. to suspend wargame drills with the South Koreans. The Chinese explicitly stated they wanted THAAD removed from the Korean peninsula. Secretary Tillerson then responded with America’s most muscular statement to date. In a joint press conference with South Korean Foreign Minister Yun Byung-se, Tillerson stated that the era of Washington’s “strategic patience” was over, that military options were on the table, and any action that would endanger U.S. forces would be met with the “appropriate response.”

It was stunning language coming from America’s top diplomat, and drew a line in the sand regarding how long the U.S. would allow North Korea to continue advancing with nuclear weapons.

With battle lines drawn, what are the “5 Things You Need to Know” regarding the US-North Korean nuclear program stand-off:

5 Things You Need to Know Regarding the U.S.-North Korean Nuclear Program Stand-Off:

1. The North Korean Nuclear Program goes back decades. North Korea has maintained a clandestine, and now public, nuclear power program since 1962, and it is believed their efforts to develop nuclear power covered for a nuclear weapons program. Initially denied by both the Soviet Union and China nuclear weapons technology, the North Koreans developed their own and were preventing UN inspectors from visiting their sites in 1993. It is believed they saw what happened to Iraq in the Gulf War and assumed nuclear weapons would be the only deterrent to a U.S. invasion. In 1994, the first can was kicked down the road as the Clinton Administration agreed to build nuclear power reactors and provide food to the North Koreans, in exchange for suspending their weapons program. Predictably, the North Koreans signed the deal but then simply cheated. Thanks to help from the AQ Khan network and the Pakistanis, the North Koreans developed a break-out program with their first underground test in 2006. They have been advancing their program, and their missile delivery capabilities, since then.

2. The political environment in South Korea makes our maneuvering room very small. With the impeachment of their President only a week old, the opposition party known as the Democratic Party of Korea will most likely win the next election. They favor engagement with North Korea, and smoothing relations with China. While that would be welcome, it could also be viewed as appeasement. Some question if the U.S. missile defense system will be sent home by the new, left-leaning government. THADD is the current U.S. missile defense system that can be used to shoot down intermediate range nuclear-armed ballistic missiles.

3. The Chinese play both sides of the fence in this stand-off. The Chinese certainly have a more difficult tightrope to walk than the U.S. North Korea is financially supported by the Chinese, and therefore America believes the Chinese have all the leverage over the North Koreans. However, China does not want a collapse of the North Korean regime, because they would have refugees flooding across their border, and most likely a U.S. beach-head on a unified Korean peninsula. From their perspective, the worst of all worlds. However, they are also facing the reality that they do not want the U.S. missile defense system in South Korea, and have reacted angrily to its implementation. So, while they don’t want a unified Korea, they also prefer that the North Koreans don’t agitate the U.S. into a broader military deployment.

4. Conflict between the U.S. and North Korea would be an economic catastrophe. $5 trillion worth of good traverse through the region each year … half the world’s cargo tonnage … one-third of all global maritime traffic annually … 60% of South Korea’s energy needs … even a non-nuclear military exchange would devastate the South Korean capital of Seoul with upwards of 250,000 casualties expected in the first week alone. Global commerce, as we understand it, would most likely grind to a halt.

5. Tillerson’s veiled threat of military options was necessary – as long as it is not a bluff. As stated above, a non-nuclear exchange would devastate the capital of South Korea. Most Pentagon analysts project the U.S. would move forces into the region from Guam, Hawaii and Japan. Assuming it did not escalate into a thermo-nuclear conflict, U.S. force projections combined with South Korean forces would defeat the North within 60-90 days. BUT – that is not how it plays out. Most now project a North Korean nuclear strike on U.S. bases in Japan. The testing by North Korea of intercontinental ballistic missiles suggest the possibility of a strike on the U.S. West Coast. U.S. political necessities would require a nuclear response, and then enters China. A U.S. pre-emptive strike could not guarantee we would be able to get all their nukes, and again, U.S. bombers heading towards the Chinese border would most likely lead to a Chinese response. In the end, there is a lot the U.S. can do short of war, but unlike the Obama red-line in Syria, it does no good to bluff or not be serious and then not follow through. If Tillerson was not bluffing, we have entered a new and more dangerous phase than ever before.

The dangerous nature of this issue goes straight to the heart of market gains and the protection of your money. The U.S. remains a safe haven, but as the risk of global conflict has increased, the direction of the stock market has become more volatile with each passing year. It may be time to move some of the gains from the last several years into a protected principal product. If you want to learn more, call us at 877-912-1919.


Strong Dollar… Has Never Been Weaker?

Strong Dollar ... Has Never Been Weaker?

Strong Dollar… Has Never Been Weaker?
Ty J. Young Editorial

Stock market euphoria… glowing jobs report… apparent economic growth… and a strengthening dollar all provide evidence of the boom that has been launched with the advent of the Trump era.

Despite the relative dollar strength on the global currency markets, a less obvious conclusion may be that the U.S. dollar has never been weaker.

Dollar strength or weakness can be a good thing or bad thing based upon other fundamentals in the marketplace. The current strength of our currency is surprising, given recent comments from President Trump and Treasury Secretary, Steve Mnuchin

But strong it is. The dollar has seen almost a 10% rise in value over the last calendar year, with most of that spike occurring since the election of President Trump.

A strong dollar has been U.S. policy for decades, despite the fiscal and monetary policy to the contrary. And most countries view a strengthening currency as a hallmark of a growing and prosperous economy.

So why is our currency, supposedly stronger than we have seen in years, possibly weaker than we ever could have imagined?

The dollar has always been backed by gold and became the global reserve currency after World War II explicitly because of its convertibility into gold. President Nixon ended dollar convertibility in 1971, and since that time the dollar floated in value against other currencies.

What has maintained our reserve currency status is power. The U.S. backed the global order from Asia through Europe by force of arms. The U.S. was the primary supporter of emerging markets; the U.S. set policy on global economics; the U.S. underwrote the costs of the UN, World Bank, IMF and many other global institutions; and most importantly, the U.S. maintained the open shipping lanes and freedom of navigation necessary to keep the global supply chain moving.

That came to an end under President Obama – he withdrew our forward deployed leadership in the Middle East, allowed China to be more assertive in Asia, and signaled to the world our withdrawal from leadership and enforcement of the global order. To date, President Trump’s “America First” policies do not suggest an aggressive American role in settling global affairs.

The dollar was once backed by gold, and always backed by American power. In today’s world, how strong is the dollar in realistic terms? And does it matter?

I. Three Reasons the Dollar Could Drop in Value:
1. Trump agenda calls for massive stimulus – more dollars lower their value. A $1 trillion infrastructure project… increase in defense spending… massive tax cuts… all of this fiscal stimulus creates deficits. An increase in deficits means more borrowing, and more borrowing means a weaker dollar.

2. Currency wars mean a race to the bottom. In order for their exports to compete, foreign governments have been lowering the value of their currencies relative to the dollar for years. This “race to the bottom” has meant every currency, including the U.S., has gone down in value. As a foreign government manipulates it’s currency downward, the market adjusts the dollar’s value accordingly. If that off-sets the foreign government’s move, then they simply adjust downward again.
3. Global competitors decide to use other currencies. Why should other countries use the dollar? We are not backed by gold, no longer backed by power, no longer enforcing global order. This is a discussion happening daily amongst finance officials around the globe. The less the dollar is used in transactions, and the more in circulation through debt financing, the lower the value will be. Right now Russian troops are in Syria, Libya, Iraq and most recently Egypt. China is building islands in the South China Sea. Former colonies such as the Philippines publicly suggest leaving us and joining a Chinese alliance. Was ANY of this possible before 2008?

II. Three Reasons the Dollar Should Remain Strong:
1. Still today the dollar remains the best, most important currency. When you are used in at least one side of 80%+ of all transactions and trades globally, and for 65% of transactions and trades you are the currency used by both parties, it is hard to argue the dollar has lost its place as the global reserve currency. America retains the deepest capital markets, a vibrant and innovative private sector economy, the safest and largest repository of stored gold, and a functioning rule of law that protects your investments. Anyone who has just a couple of those advantages, much less all of them, will have a strong and attractive currency to do business with.
2. Trump may reverse the Obama era withdrawal. With Russians on the march in both the Middle East and Europe… the Chinese extending their defense perimeter into the Pacific… Iran emboldened, enriched and empowered by the Obama Administration’s nuclear deal… it is hard to see where the U.S. can contain the damage wrought by the last 8 years. BUT, despite these setbacks, Trump has promised to destroy ISIS. He is committed to a massive defense buildup. Despite warning NATO on defense spending, he seems committed to the alliance… There are signs that Trump intends on stopping our global withdrawal, and retaining our global alliance structure in its current form.
3. Nowhere else to go. If China and the U.S. can’t do business, Vietnam and Malaysia step up to the plate. When Europe is paralyzed by indecision, the British are always at our side. The very nature of U.S. account balance deficits allows for the dollar to remain supreme – we serve as the world’s banker because our politics can withstand the account deficits (for now). China does not enjoy our advantages and their currency is in free fall for the last 2 years… the Euro has been in permanent crisis since 2008… the Russian ruble???). There is only one global currency, despite malevolent interests who would prefer something else, and that currency is the U.S. dollar.

We can’t say the dollar’s global position has been challenged before because it hasn’t. Consider these post World War II events:

A) Defeat in Vietnam
B) Ending the Gold Standard in ‘71
C) Watergate
D) Carter malaise and oil shocks of the 1970’s
E) Russian advances during that same decade
F) The 1987 “Black Monday” stock market collapse
G) 2000 dot-com bubble
H) 2001 9/11 recession
I) 2008 banking collapse

All of these events and more did not lead to questioning the value and strength of the dollar. But these are different times. Global events and foreign interests are no longer following our lead, and they are questioning why the “weak horse” still calls the economic shots.

But if the dollar is no longer backed by gold, and if American power appears to be in decline, the dollar still can remain the global reserve currency thanks to the abiding belief in the greatness of the American economy. When disorder spreads around the globe, safety and security of American banks, the legal system, and the American marketplace will help the dollar maintain its preeminent status.

Despite global disorder and bad actors abroad, the dollar may go up and down in value, but you have still enjoyed the most recent gains in the stock market. Now may be time to take some of those gains and put it into a safer place. You can ensure your money is completely protected in the event of the next market downturn. Give us a call at 877-912-1919.

5 Hazards to the Market that Could Come from D.C.

US Capitol

5 Hazards to the Market that Could Come from D.C.
Ty J. Young Editorial

It is a shame that if one watches the media on a regular basis, you would think the Republic is in its last days. Thankfully, most Americans spend their days working for their family, taking care of their kids, going to ball games, and desperately trying to avoid the political war zone we see and hear each day.

There are serious roadblocks to the Trump agenda that come from Washington, and failure to follow through on any or all of these issues could result in a precipitous decline in the stock market. Here are 5 issues directly tied to D.C. that could derail the Trump Agenda, and reverse stock market gains:

5 Hazards to the Market that Could Come from D.C.:

1. Delay in Obamacare repeal. A delay in the Obamacare repeal is a significant issue. The exchanges are going bankrupt… many insurers continue to pull out… the predicted death spiral is here! Without a repeal, and a free market replacement, health care in the country could collapse. It is a continuing death spiral given that health care is 1/6th of the U.S. economy this will obviously impact stock markets. The Republican plan released Monday suggests a three-way battle on Capitol Hill between “Ryan Republicans”, Conservatives, and Democrats. It won’t be pretty.

2. Delay on tax and regulatory reform. The markets have been significantly buoyant thanks to the suggestion of comprehensive tax reform, much like the last major reform bill in 1986. Failure to deliver what has been a major component to the market’s upward movement since the election could have the same effect, but in reverse. Regulatory reform is critical as well, but does not require as much Congressional action and can be done through the Executive branch.

3. Republican defections lead to continued gridlock. Moderate Republicans and Republicans in swing districts could become greater targets of the media and their voters back home for continuing to support the Trump agenda. Failure to act soon and the media attacks on Trump could inflict a mortal wound, and eliminate any fear of the Oval Office. If that happens, Republican defections could lead to gridlock. Usually, the market likes gridlock, but not with the expectation of deregulation and tax reform baked into the current upward momentum.

4. Scandals become permanent. There are three pillars to the D.C. scandal machine: (A) the bureaucratic state – invested in larger and a more controlling government; (B) the Mainstream Media – tied to the Democratic party and invested in chaos and Trump failure; and, (C) Trump’s own behavior. The constant tweeting keeps issues alive that perhaps would not become a subject for media scrutiny. If moderate Republicans concede to a permanent state of scandal, or constant investigations over the same types of issues they did NOT fully investigate during the Obama era, then getting things done – which is already a challenge – could become nearly impossible.

5. Fed Rate Hikes. We have called for raising interest rates for years, and the two minor hikes we have seen recently are a drop-in-the-bucket of what is needed. The non-political Fed seemed highly politicized during the Obama era, as rates were kept at zero for over 7 years in an artificial effort to keep the economy above water during the Obama years. Now, , with a Trump election victory, the Fed suddenly decides we should aggressively raise rates and do so often??? Raising interest rates and strengthening the dollar is needed, and it could slow, or reverse, stock market gains. But we needed rate hikes over the last several years as well. Rate hikes would have normalized market pricing. The lack of rate hikes created market distortion. They will naturally slow market growth – and while absent for the last 8 years, the Fed is signaling they are ready to go into over-drive.

Risks to your investments usually come from competition in the marketplace, but the greater risk of government intervention has become commonplace since the banking collapse of 2008. While stocks have benefited for the last 8 years from government policies – zero interest rates, money printing – those benefits have come with a price – a less free market, historic levels of debt creation, and a Fed-created bubble waiting to burst. The “Trump Trade” has been on the expectation that market driven reforms, tax reform, and regulatory roll-back will generate massive economic growth, the likes of which we did not see during the Obama era. But as the list above proves: D.C. remains the largest stumbling block to American economic success.

The “Trump Trade” has been exciting to watch, and your portfolio has most likely benefited. However, history says, “what goes up, must come down.” With the uncertainty of what is to come, it may be time to move your gains off the table and into a safe place. Call your Ty J. Young Inc. advisor today to learn how you can have your money protected against market losses and earning a reasonable rate of return. 877-912-1919

Trump Delivers!

Trump in Congress

Trump Delivers!
Ty J. Young Editorial

There was no arguing that on Tuesday, February 28, 2017, President Donald Trump delivered the speech of a lifetime!

It was Presidential. It was Reaganesque!

Even many liberal commentators agreed!

The New York Times, Washington Post, and MSNBC’s Chris Matthews were all providing an unbiased view that it was a great speech. Even communist Obama Advisor, Van Jones, stated on CNN: “For people hoping that he would remain a divisive cartoon which he often does, they should be a little worried tonight…” Tonight, he stated, Trump became “…presidential.”

Conservatives were of course elated. Fox News commentary included Chris Wallace, a decades long veteran of Washington, DC, calling the speech the best he had ever heard in that setting.

Strong words – Trump’s speech reaffirmed his platform and recognized the majesty that is America, and the hope his election has created.

5 Reasons it Will Be “Morning in America” Again:

1. The Speech showed Trump can be, and is, “Presidential.” He spoke of American Renewal. He showed positive, unifying leadership. He laid down the gauntlet to both Republicans and Democrats to get moving on his agenda. His recognition of the fallen Navy SEAL’s widow produced an epic standing ovation, and showed the face of American sacrifice and American greatness to the entire world. The most important quality Trump needed to show on Tuesday night was that he can be a leader for all Americans, and he accomplished that objective and more.

2. Trump reaffirmed his trade and infrastructure agenda. Something the Democrats should have been cheering, Trump reaffirmed he is outside Republican doctrine by stating again there would be a $1 trillion infrastructure package, and trade deals which benefit American interests. Deficit hawks may have squirmed in their seats, but they were promises made to, and supported by, the voters who elected him. A broadly defined infrastructure program is needed, as some of our roads and bridges are in significant disrepair. Revisiting unfair trade agreements is a needed priority.

3. Trump is building the Wall. As Trump stated: “To any in Congress who do not believe we should enforce our laws, I would ask you this one question: what would you say to the American family that loses their jobs, their income, or their loved one, because America refused to uphold its laws and defend its borders?” He then promised to build a “border wall” and said he would rid the country of “lawless chaos.” He did include a line signaling he’d be open to reviewing a comprehensive immigration reform package, but it is unlikely this represents a change of direction but a negotiating point. The wall is already authorized by a 2006 law, and his immigration orders make it clear he is deporting the bad guys.

4. We will repeal and replace Obamacare. This was not ambiguous, and it laid down the gauntlet for Congressional Republicans. It enjoyed one of the more sustained moments of applause – the President made it clear that Obamacare would be repealed. Even more than that, he hinted at policy proposals on what the replacement plan may look like – it will “… expand choice, increase access, lower costs, and at the same time, provide better healthcare…” Americans would receive tax credits to help pay for coverage, and he encouraged the expanded use of health savings accounts. He also suggested that selling insurance across state lines – a long time Republican policy proposal – would be included in the replacement bill.

5. Trump Tax Reform was front and center. What is most important to your money? Tax reform. His speech was short on specifics, but his intention was clear – we will be reforming the tax code for the first time since the historical Reagan Tax Reform Act of 1986. This would include massive reductions in the corporate tax rates, flattening the individual tax rates, and introducing a Border Adjustment Tax (BAT) as part of his trade reform. The BAT remains controversial as it will have winners and losers in US industries. But it will generate revenue from foreign entities wanting to sell here in the U.S. It will force companies to consider the costs of building plants abroad as opposed to here in America. And by cutting the corporate tax rates and eliminating the double taxation laws for multi-nationals, it allows companies to repatriate cash home to the U.S. at lower rates, instead of keeping it stashed abroad. Much of this tax reform plan will be a Godsend for the U.S. economy, your employment prospects, and your bank account!
There was more… Trump had already announced some of his budget priorities earlier in the week, which included a massive defense build-up. As he argued for his plan during his speech Tuesday night, the cameras continued to focus on Carryn Owens, the wife of Chief Petty Officer William (Ryan) Owens, a Navy SEAL who died in a raid in Yemen in January. Trump recognized Ms. Owens and her husband’s sacrifice, stating: “Ryan died as he lived, a warrior and a hero, battling against terrorism and securing our nation.” A roaring, standing ovation ensued, lasting longer than 2 minutes, as Ms. Owens tearfully looked heavenward, and mouthed the words “I love you.” It was a riveting moment.

There was no denying Trump’s message, his delivery, and the country’s embrace of it. It was a reminder of the feeling we once had, and can have again, that nothing is impossible – because we… are Americans.

As Trump shared, we are entering “…a new chapter of American greatness.”


Creditors Dumping American Treasuries: Good or Bad?

Creditors Dumping American Treasuries: Good or Bad?

Creditors Dumping American Treasuries: Good or Bad?
Ty J. Young Editorial

When foreign governments sell their holdings of U.S Treasury Bonds that’s a bad thing, right?

Usually … but not always. It could represent the free market working as it should.

As the media continues to prove its dangerous bias concerning all things Trump, many in the media have characterized the massive sell-off in treasuries as representing an anti-Trump position by foreign governments, or a fear of what the Trump economic plan will look like.

What they fail to report is the Treasury sales started in 2015, and accelerated to record levels in 2016 … under then President Obama.

As American treasuries are dumped by foreign creditors – What does it mean?

I. It’s a Good Thing When Foreign Governments Sell Their Treasury Holdings:
1. It means the market is functioning properly. A healthy market will show robust sales for U.S. treasuries because buyers can get a better return in the stock market. At some point, interest rates will go up to accommodate, and the selling will subside. The Treasury market was already selling off from 2004 through 2006 … and then the financial crisis hit. As usual, the global investing public immediately shifted to the safest instrument on the planet – the U.S. Treasury Bond. The result was a spike in sales for 3 of 4 years from 2007-2010.

2. It can benefit the American economy because Treasuries are redeemed in dollars. The treasury bond costs the taxpayer when it is redeemed, but Treasuries are redeemed in dollars. At some point, those dollars will be used on U.S. goods and services. The benefit of being the global reserve currency is that ultimately, those dollars come back home.
3. It could discipline Congressional spending because Treasury sales drive up interest rates. After you recover from the laughter, consider this: As bonds flood the market, interest rates go up. They must go up in order to attract investors. This, in turn, drives up the borrowing costs for the government. If it costs more to finance borrowing, theoretically it should slow increases in government spending. Yes, in theory.
II. It’s Usually a Bad Thing When Treasuries Flood the Market:
1. It’s a sign that buyers have lost faith in U.S. creditworthiness. As the primacy of the U.S. role in the global order has shrunk, many have feared the size of our debt could lead to not honoring our future obligations. The more obvious reasons are the ones that are most true – countries need to raise cash, they are re-balancing their portfolio, etc. The idea that a future U.S. government could, or would, renege on debt obligations is improbable. And most foreign debt holders know that.
2. It is a signal that interest rates are going up. In order to make a Treasury more attractive in a buyer’s market, you must raise the rates. That means borrowing costs are going up. Higher interest rates can dampen spending throughout the economy as it drives up the end-user costs of most goods and services.
3. Even when not a bad thing, it’s a bad thing. China is primarily selling to off-set the drop in foreign currency reserves. That suggests not a fear of future U.S. debt payments, but their own drawdown on cash. Simply put, it suggests China is struggling economically. This, from a competitive standpoint, can make Americans feel good – except when reality sets in, and you realize that a struggling China will most likely seek foreign conflict to rally their people. Just like Russia has done. Further, in the last quarter of 2016, it wasn’t just countries selling treasuries, but retail bond holders. (Saudi Arabia is the one major holder of treasuries not selling, and suggests an oil price/foreign policy motivation that is assisting U.S. interests in that regard).

In the end, a treasury sell off has positive and negative impacts, like most market events. The media’s efforts to put a political spin on the subject notwithstanding, treasury holdings remain up since 2008. The treasury market is performing exactly as it should – as the U.S. economy improves, countries seek to invest in Apple, Coca-Cola, and not government debt. It is when things turn south, and countries and people are in trouble, that they flock to the safest instrument on the planet – the U.S. treasury bond. This is a properly functioning market.

As the Trump bounce continues skyward, unabated, it is time to move some of your gains off the table, and consider a principal protection investment strategy. Call now! 877-912-1919