Who is Popping Trump’s Balloon?

Friday, 13 July 2018
London, UK
By Sam Volkering

  • The circus is in town
  • From one celeb to another
  • I told you, don’t buy a house

I’m looking forward to today. I’m popping into central London. Usually that wouldn’t be overly exciting. Particularly in summer; the Tube has an ambient temperature of a pizza oven.

But today I might get a glimpse at one of the funniest and stupidest thing I might ever see.

It’s a giant balloon of a baby Donald Trump.

You see here in the UK there are just three things that people are talking about this week.

  1. But now England lost, that’s over.
  1. Theresa May’s shambles of a government.
  1. A giant balloon of Baby Donald Trump.

As I write today’s Insider, Bloomberg news is covering President’s Trump’s visit to the UK. In fact, I’m now watching footage of Theresa and Phillip May. They’re standing regally in a big open driveway at Blenheim Palace.

There are members of the British footguard band in procession with their big, black fuzzy bearskin hats. There are people in tuxedos. There are people in ball gowns. There are secret service men talking into their wrists.

And here comes Donald and Melania.

It’s all very grand. Very elite. Very pompous. Very cringe…

But it’s not the President the British public are talking about. It’s the giant baby balloon.

The likeness is uncanny. Right down to the weird pouty expression and the orange hair. It is wonderful. And hideous.

And it’s the perfect explanation of what’s wrong in the world right now.

Markets

Overnight the Dow Jones Industrial Average closed up 224.44 points, or 0.91%.

The S&P 500 rose 24.27 points, or 0.87%.

In Europe the Euro Stoxx 50 index finished up 23.14 points, or 0.68%. Meanwhile, the FTSE 100 gained 0.78%, and Germany’s DAX climbed 75.84 points, or 0.61%.

In Asian markets, Japan’s Nikkei 225 is up 441.72 points, or 2%. China’s CSI 300 is up 0.11%.

In Australia, the S&P/ASX 200 is up 2.30 points, or 0.037%.

On the commodities markets, West Texas Intermediate crude oil is US$70.38 per barrel. Brent crude is US$74.28 per barrel.

Gold is trading for US$1,245.11 (AU$1,679.54) per troy ounce. Silver is US$15.93 (AU$21.48) per troy ounce.

One bitcoin is worth US$6,245.20.

The Aussie dollar is worth 74.13 US cents

Balloons and rocks

Now where were we? Ah yes — giant baby balloons.

The balloon is the creation of protestors who clearly aren’t fans of Trump. It will fly high in the sky from Parliament Square during Trump’s visit. It’s designed to mock him.

I don’t think he’ll care about it. If anything it just adds more attention to his visit and makes him feel even more important.

That’s part of Trump’s modus operandi. He’s controversial for a reason. He’s been like that his entire business career. And one giant baby Trump balloon is just another feather in his cap.

Remember, US politics is a popularity contest. And a little about how wealthy your backers are. This is also why Dwayne ‘The Rock’ Johnson may find his way into the White House sometime in the next decade.

He’s clearly got more ‘people power’ than Trump.

Another celebrity as President though? Well ‘The Rock’ can’t be any worse than Trump can he? It would make for an interesting G20 ‘family photo’. Johnson is a 6’4’, 110kg ripped ball of muscle — and a former WWE wrestler.

Standing next to Putin or Turnbull would be a sight to see.

Ah, the wonders of global politics. This is what it’s come to…

Clearly these British protestors aren’t that smart if they think this is doing damage to the President. Either way, I think Trump isn’t fazed one little bit.

It’s making him look better and the UK look worse.

I’m going to try and grab a selfie with the balloon today. I can’t promise anything, but I’ll give it a shot. Hopefully next week you’ll see a giant Baby Trump Balloon and me.

Or maybe I’m wrong and Trump’s not a fan. Maybe a Secret Service sniper might just ‘take out the baby Trump’. Seeing that balloon pop would be quite a moment!

From balloons to bubbles

Speaking of things going pop, there’s a good chance you’re an Aussie homeowner. And if you’ve had that home for a decade or more, there’s a very good chance you’re sitting on a massive windfall.

Now, we’ve covered Aussie property before. And depending on who you listen to it’s either doing one of two things: going up or going down.

I’ve tended to think for the last couple of years that it’s going down.

On 23 February last year I wrote:

Imagine if the property prices in Australia were to fall by 20%. Imagine what it would be like if you have bought a house in an overheated market, say for $800,000. Then only one year later you see it worth just $640,000.

And to make things worse, you still held a $720,000 mortgage, which the bank wanted back. They can force you to sell, or repossess the house. You’re now out of pocket your initial $126,000 and have nothing to show for it.

Then the next day followed it up with:

If you’re an ‘average’ Aussie in your 30-somethings, then listen up. Here’s the best piece of advice you might get this year.

Don’t buy a house in Australia. Not now. Not until the market crashes.

In my view buying a house in Melbourne or Sydney right now is the worst financial decision you might ever make.

I should add a caveat to this: I’m predominately talking about Melbourne and Sydney. But then again, that is where roughly 46% of the population live.

There’s a simple reason to my theory. It’s that asset rich, cash poor baby boomers are now heading into their retirement years.

Many of them will need to offload assets to live for the next 30 years. Their expenses will get more expensive. Medical bills, insurance, energy and the little luxuries in life are all heading higher.

They will need cash. And because they’ll be retiring, they won’t have any cash flow. Maybe they’ll get some money from rent on their investment properties, but it won’t be enough.

Not when you look at the huge capital gains they could simply cash in and live off for the next 30 years.

My take is that to live in expensive Australia there’s going to be an influx of properties to the market. It’s going to create an oversupply. It’ll be those who move first that will reap the benefits.

Meanwhile everyone else that’s thinking about it but slow to move will suffer. They’ll get more desperate to sell when they realise they can’t get exorbitant prices for their McMansions any longer.

This snowball effect will rapidly drive prices lower.

That’s not so bad if you’re sitting on a house that you own outright and paid a tuppence for.

But for all those new first homeowners that are just getting in the market, it will be devastating. The idea of negative equity isn’t something that Australians typically think about.

Everyone that fell foul of FOMO (fear of missing out) will soon start to feel the pinch.

And if things get really bad and default rates start to rise we could see a sharp pin pop our big Aussie property bubble. We’ve already seen the like of Citibank pull in the reigns on residential lending.

How long until the ‘Big Four’ push rates higher out of cycle with the RBA, to de-risk their books and discourage new lending?

I think it’s imminent. It’s a perfect storm brewing. Expensive Australia + retiring cash rich, asset poor baby boomers + falling prices + FOMO + rising retail bank rates = disaster.

I’m not saying property is a bad investment, by they way. But I do think that paying over the odds today is a mistake many will rue tomorrow. And if there is a long, protracted downward trend, a whole generation of young Aussies are going to suffer for it.

If I’m right and the property bubble in Melbourne and Sydney does pop, then what lies in store for investors? Well as we all know property isn’t the only place you can park some cash for potential returns.

If bricks and mortar are heading south then you want to be maximising your other investment returns. And I think one of the best places to supercharge wealth is on the stock market.

Personally, I’m not a trader. I’m in for the long haul because frankly I’m not skilled enough for rapid, quick fire trading. But just because I might not be a trader doesn’t mean you can’t make a truckload of cash from trading the ASX.

That’s why trading extraordinaire Jason McIntosh is part of the Port Phillip Publishing family. He’s quite possibly one of the best market traders in the country.

And he’s put together a seven part trading series that is 100% free for Port Phillip Publishing subscribers. As publisher Kris Sayce put it, ‘This one-week trading education series really IS free to our readers. You won’t be asked for your credit card details, I assure you.’

If you’re at all interested in learning how to trade the markets from one of the country’s best professional traders, then you must tune in this coming Tuesday. Sign up for it here.

Regards,
Sam