economy, retirement

Trick or Treat? The Potential Downside of Tax Reform for Investors

 

 

 

There is an old story that goes “beware what you wish for…” Things don’t always turn out as expected.

 

Along those lines I watched a fascinating interview of Tom Lee, head of research at Fundstrat, on Bloomberg this morning.

 

His feeling is that a Tax cut, as it is currently being discussed, could be negative for investors. “There’s two reasons; First, when cutting tax rate you raise the after tax cost of debt. Leverage becomes a problem for a lot of businesses. Second, because you are cutting tax rates you are effectively giving cash to all businesses, even businesses where you want to reduce allocation.“

 

His observation is that companies that are currently struggling with cash flow will have a temporary life preserver tossed to them, but it will not change the fundamental issues facing a lot of industries. It will distort markets.

 

Lee states that cuts to tax rates will “amplify negative return industries because they will get more free cash flow. “ But, again, it doesn’t change the fundamental issues that are making those industries less competitive. Examples can be seen in the struggles of brick-and-mortar retail vs online, as well as fossil fuel vs renewables.

In addition Larry summers, former Treasury Secretary, was recently quoted as saying this is the worst time to give a tax cut because of where we are in the economic cycle.

Lee continues by saying “Companies that benefit most, for example retail capital, that are invested in areas getting killed in digital age. “

 

Lee goes on to explain the impact of leverage and borrowing on companies and the market. “BB rated companies are borrowing at 50 bps less the US Treasury Bond. These are not companies with reliable cash flow. Junk grade companies in Japan borrowing at 10 bps over JGBs (Japanese Government Bonds). Central banks have made it possible for weak companies to borrow. “ Lee continues by saying many companies are, “Trading like they are never going to default.”

 

The reality of Tax Reform may or may not transpire depending on what happens in Washington DC. The impact of those decisions will impact the performance of your portfolio in the months and years to come.

 

It is crucial to manage risk in an appropriate fashion. To discuss this topic and/or your portfolio in more detail please feel free to reach out to me.

 

If you feel uncomfortable investing in the market at these levels, please reach out to me to discuss options that can help you protect your lifestyle regardless of what happens in the markets.

 

If you want to discuss these issues or learn more please feel free to contact me.

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

 

To learn more contact:

James Cox

Ph: 610-293-8309

Email: james_cox@devon-financial.com

Devon Financial Partners 744 W Lancaster Av Suite 235 Wayne, PA 19087

   http://jamesacox.com

 

 

 

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 954 RIDGEBROOK RD SUITE 300, SPARKS, MD 21152, ph# 410-828-5400. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. DEVON FINANCIAL ASSOCIATES LLC is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. 2017-49170 Exp. 10/19.

life insurance, protection

How will your family survive?

 

My son was born when I was 30 years old. Honestly, I didn’t get life insurance until I was 36. I had never been taught the importance of using Life Insurance to manage risk and protect your family. Recent studies show that I’m not alone. There is a huge gap in the level of financial literacy in the United States.

 

According to a recent study by LIMRA;

  • Among households with children under 18, 4 in 10 say they would suffer immediate financial trouble if a primary wage earner died today.
  • Another 3 in 10 would have trouble keeping up with basic living expenses after several months.
  • Overall, 7 in 10 of all households said they would have trouble covering everyday living expenses after several months if the primary wage earner died.

 

To be clear 37 million households have no life insurance… none…

Another 33 million households do not have sufficient life insurance to count themselves as protected…

 

Ask yourself… “How will my family be affected if something happened? Will they end up homeless, destitute, starving, unable to attend college or get a decent job?”

 

This is a huge gap that must be addressed and reduced. Many people say that life insurance is too expensive, but the truth is as longevity increases life insurance rates decrease. Life insurance has never been more affordable then it is today.

 

The likelihood that we will eventually die is… 100%. The question is what impact our death will have on those around us. What impact will our death have on those who depend on us, like spouses, or children, or elderly parents?

What about the impact your death will have if you have a special needs child? It will be catastrophic… And yet statistics show most of us are playing Russian roulette with our children’s futures.

 

Please reach out to me to learn how you and your family can be better protected.

If you want to discuss these issues or learn more please feel free to contact me.

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

 

To learn more contact:

James Cox

Cell: 215 768 5883

Email: james_cox@devon-financial.com

Devon Financial Partners 744 W Lancaster Av Suite 235 Wayne, PA 19087

   http://jamesacox.com

 

 

 

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 954 RIDGEBROOK RD SUITE 300, SPARKS, MD 21152, ph# 410-828-5400. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. DEVON FINANCIAL ASSOCIATES LLC is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. 2017-48484 Exp. 10/19

 

 

 

https://www.limra.com/uploadedFiles/limra.com/LIMRA_Root/Posts/PR/_Media/PDFs/Facts-of-Life-2016.pdf

 

disability, economy, life insurance, protection

Deaths of Despair

 

In March of 2017 a landmark study was released connecting financial security and death rates in the United States. The information is sobering and should be the focus of policy changes at all levels of government.

 

A recent study by Princeton Professors Anne Case and Angus Deaton titled, “Mortality and morbidity in the 21st century,” shows the connection between the rising mortality rates of the middle class in the US and “a measurable deterioration in economic and social wellbeing”.

 

This deterioration has not suddenly developed. Rather, “Case and Deaton document an accumulation of pain, distress, and social dysfunction in the lives of working class whites that took hold as the blue-collar economic heyday of the early 1970s ended, and continued through the 2008 financial crisis and the subsequent slow recovery.”

 

“Case and Deaton find that while midlife mortality rates continue to fall among all education classes in most of the rich world, middle-aged non-Hispanic whites in the U.S. with a high school diploma or less have experienced increasing midlife mortality since the late 1990s. This is due to both rises in the number of “deaths of despair”—death by drugs, alcohol and suicide—and to a slowdown in progress against mortality from heart disease and cancer, the two largest killers in middle age.”

 

To understand the scale of the change that is taking place… “The combined effect means that mortality rates of whites with no more than a high school degree, which were around 30 percent lower than mortality rates of blacks in 1999, grew to be 30 percent higher than blacks by 2015.”

 

As the economic situation continues to deteriorate for the middle class (just as it has for blacks in urban centers) in the United States, issues of alcohol, drug use and suicide worsen. Lack of education to keep up with a changing economy, lack of high paying jobs for physical labor, widening wealth and opportunity gap. And the situation does not improve for the next generation.

 

The authors suggest, “that the increases in “deaths of despair” are accompanied by a measurable deterioration in economic and social wellbeing, which has become more pronounced for each successive birth cohort. Marriage rates and labor force participation rates fall between successive birth cohorts, while reports of physical pain, and poor health and mental health rise.”

 

Declining marriage rates mean less stable households; falling labor force participation means less income and economic peril. Both of these weaken the next generation of children.

 

What is required is an understanding and appreciation for the changes taking place in the economy and the need for schools empower students for this new age, regardless of their background or skills. The educational system of the 20th century will not suffice in an era of rapid technological change.

 

We also need to develop and fund the social services that children and families need in order for them to escape the forces that drag them into despair. PTSD and abuse in families is a widespread problem as recently evidenced by the controversy surrounding #metoo on Facebook. Millions have spoken up about abuse that they have suffered from but were long silent about because of societal pressures.

 

Someone once said, “It takes a village to raise a child.”

 

We all need to be invested in the success, safety and happiness of those around us. Do not leave things to chance. Teach needed skills. Develop multiple ways to bring in income. Leverage what you know and what you can do. Protect your family from economic disaster using Life Insurance and Disability Insurance… they will thank you. Set money aside for the future… your future self will thank you. Develop a plan, and then learn to adjust as life changes things up on you.

 

To learn more please reach out to me.

If you want to discuss these issues or learn more please feel free to contact me.

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

 

To learn more contact:

James Cox

Cell: 215 768 5883

Email: james_cox@devon-financial.com

Devon Financial Partners 744 W Lancaster Av Suite 235 Wayne, PA 19087

   http://jamesacox.com

 

 

 

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 954 RIDGEBROOK RD SUITE 300, SPARKS, MD 21152, ph# 410-828-5400. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. DEVON FINANCIAL ASSOCIATES LLC is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. 2017-48476 Exp. 10/19.

 

 

 

https://www.brookings.edu/bpea-articles/mortality-and-morbidity-in-the-21st-century/

 

economy, new economy, retirement

“Morning in America…”

I was driving into work today and a Chevy Volt sped by me. Yesterday a Fisker Karma was parked in front of my office. Last month Tesla started mass production of the Model3.

Technology is bringing a renaissance to American manufacturing. New industries and new job descriptions are being created, even as “old economy” jobs become antiquated and outsourced to robots.

 

Technology is allowing people to use their existing assets in order to bring in more income, such as Uber and Lyft (using the car) and AirBnB (using the house). Websites such as Amazon, Ebay, Shopify and Etsy allow people to open their own virtual shops, without the need for brick and mortar retail space. The internet allows more and more people to connect to influencers and decision-makers, allowing people to earn money as consultants and contractors.

I remember when I was in middle school in the 1970’s, times were hard for my parents… I remember thinking ‘I want a simple government job where I don’t have to worry about things like pink slips, bankruptcy, or how are we going to afford presents for Christmas.’

The irony is after college I found I could not stand working inside an organization like the government. After a month of teaching I already felt the ulcer developing. I left and never looked back…

 

The truth is fear drives us to limit our options and many, many people today, in America and around the world, are trapped by fear. Many feel that conformity and cubicle wages are the safest path to financial security.

Nothing could be farther from the truth. The world is changing and we as individuals working within an economic system that’s evolving must be adaptable as well. We must become more cautious in our use of debt and credit; we must manage our finances… not let our finances manage us. We must learn new skills that increase our economic value and our potential income. We must become more independent and self-sufficient; we cannot rely on our company to hold the keys to our financial security.

I am no fan of Ronald Reagan (though my parents were). After the bleakness and destitution of the 1970s Reagan used the phrase that it was “Morning in America”. He was right. Through the 1980s and 1990s the economy grew and strengthened; the computer revolutionized business, increasing efficiency and corporate balance sheets.

We are currently experiencing our own “Morning in America”, thanks to technology and innovation. This has NOTHING to do with Trump. The internet is the gateway to entrepreneurship for millions that never would have pursued such a course before. It is my belief that this is going to be the Golden Age of Entrepreneurship.

 

But in order to participate, we need to change our ways of thinking. We have to plan differently (think long term, how do I become more independent), we need to set new priorities (education, skills building, saving), we need to identify our strengths and be able to creatively monetize them (create multiple streams of income).

Those who don’t will find themselves left behind; financially, socially, and emotionally.

Let me know your thoughts. I’m happy to chat.

If you want to discuss these issues or learn more please feel free to contact me.

 

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

 

To learn more contact:

James Cox

Cell: 215 768 5883

Email: james_cox@devon-financial.com

Devon Financial Partners 744 W Lancaster Av Suite 235 Wayne, PA 19087

http://jamesacox.com

 

 

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS) 7 Hanover Square, New York, NY 10004. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor, 888-600-4667.

Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Devon Financial Partners, LLC is not an affiliate or subsidiary of PAS or Guardian.

GEAR 2017-45962  Exp. 9/19

economy, new economy, retirement

Management Flaws in Corporate America

The most recent rounds of corporate earnings reports for retail companies has by and large been very disappointing. Many companies are struggling to survive in an environment dominated by a few large ecommerce companies.

 

Disappointing earnings have resulted in lowered outlooks and fallen stock prices of many retail companies.

 

I recently had the opportunity to talk to several people who work in corporate America, particularly retail. What I learned is scary.

 

In addition to focusing on closing stores and reducing costs, many companies are resorting to extreme discounting and price matching strategies in order to draw in more traffic and stimulate sales. However, the net impact of this approach has been to alienate the company’s high value core clients (due to impaired customer service) and to attract a clientele that is focused on lower price and discounts. As a result margins are being squeezed even more than before.

 

When asked about whether local stores are able to use innovative strategies at the store level of management to increase sales, the answer across the board was, “there is no creativity; it has to come from corporate”. In addition the sense among many is that local managers feel safer in their jobs by conforming, rather than innovating.

 

I talked to David Schlueter, a staff sergeant in the US Army with 19years experience and MBA candidate for Organizational Leadership and Change Management, about this issue.

 

I asked David, ‘What are the top 3 things that must be changed from a management perspective in order for failing corporations to turn things around?’

 

“First the leadership team who ever that might be, needs to determine what exactly the cause of the problems are. For example sales are down, but what is causing sales to be down. Once there is an agreement on the cause of the issues then a plan needs to be made that will fix the problems. Then once the plan is in place to fix the problems there needs to be supervision and revision. What I mean by that is the plan needs to be supervised so that the employees don’t fall back in to their old way of doing things. The revision part is to check for any weak points in the plan and then adjust according.”

 

While I agree with all of what David said, there is little proof that this has been successfully accomplished in the past. Most plans fail due to poor execution, poor analysis, and poor internal dynamics.

 

I asked David, ‘What changes would you recommend to improve communications/relations between local managers and corporate offices?’

 

“I think this has to come from the top down. The employee is not going to go to his/her boss without feeling comfortable in doing so. The corporate managers need to show the local managers that they are a valued part of the team and the corporate guys are willing to go out on a limb so to speak for the local managers.

One of the first things I was told in the Army was that bad news doesn’t get better with time. So if their communication issues between these two levels then something needs to be done to fix it.

The first time I was deployed to Iraq my section was out on patrol with the Platoon Sergeant and his crew on a couple of Bradley fighting vehicles. I was in the lead vehicle the Platoon Sergeant and we passed a suspicious looking hole on the side of the road. I drove passed the Platoon Sergeant and his vehicle stayed on the far side. So the Platoon Sergeant called over the radio and told me to check out what was in that hole. I knew I could sent one of the Soldiers that were riding in the back, but I choose to go check it out myself putting my life on the line for my soldiers. Long story short there were 3 155mm artillery rounds wired together to blow up… lucky for me they didn’t. Any way the point of this story was to show that leaders sometimes need to do things their employee should do in order to show those employees that the leader isn’t better than they are. This will help with communication problems between the two levels.”

 

I thought that was very insightful on many levels. The real work gets done in the trenches; leaders can’t lead hiding behind corporate desks and martini lunches.

 

Finally, I asked David, ‘What impact does poor morale have on corporate financial performance (i.e. Sales, revenue)? What do you recommend to improve moral?’

 

“Poor moral can have an effect on any part of a business, but several things can be done. The management might have to look in to the causes of the problems like what I talked about in the first question and figure out a plan of action. Some of the employees may be feeling unappreciated for their work and that can be fixed by some esprit de corps type functions or maybe the managers just need to change their attitudes towards the employees and stop acting like there are better than everybody else. Sometimes the managers need get down in the so called trenches and get dirty with their employees.”

 

The truth is most corporations are focused on quarterly earnings reports and not their employees.

 

I love watching the show “The Profit” with Marcus Lemonis. One of his key pieces of advice… “Value your employees first.” If you don’t, he says the rest of the business is going to fall apart.

 

The sad truth is that companies that do not innovate, do not survive. And the best innovation comes from the trenches.

 

While I understand that it is important for corporations to maintain control over its brand and message, there has to be allowances and even promotion of innovation throughout its management structure.

 

Let me know your thoughts on this subject. I’m happy to chat.

 

 

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

 

To learn more contact:

James Cox

Cell: 215 768 5883

Email: james_cox@devon-financial.com

Devon Financial Partners 744 W Lancaster Av Suite 235 Wayne, PA 19087

http://jamesacox.com

 

This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries.

 

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS) 7 Hanover Square, New York, NY 10004. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor, 888-600-4667.

Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Devon Financial Partners, LLC is not an affiliate or subsidiary of PAS or Guardian.

GEAR 2017-45882 Exp. 9/19

 

 

https://www.bloomberg.com/gadfly/articles/2017-03-07/dick-s-earnings-retail-bankruptcies-don-t-always-help-rivals

 

AI, economy, new economy, retirement

Productivity and Robots

 

For decades the US economy has suffered from stagnant wages and stifled productivity. While the economy has grown in GDP since 1970 growing from $1 trillion to $18.5 trillion in 2016 the American worker has not enjoyed commensurate benefits. Wages have remained flat for decades. 

 

In the past, studies have shown that part of the reason for this was the development of the computer and its influence on businesses improving efficiency. 

 

In a new study from London’s Center for Economic Research, the analysis offered by George Graetz and Guy Michaels of Uppsala University and the London School of Economics, respectively, offers some of the first rigorous macroeconomic research and finds that industrial robots have been a substantial driver of labor productivity and economic growth.

 

“Consider that between 1993 and 2007 (the timeframe studied by Graetz and Michaels) the U.S. increased the number of robots in use as a portion of the total hours of manufacturing work (a standard measure of economic output) by 237%. During the same period the U.S. economy shed 2.2 million manufacturing jobs.

If robots are a substitute for human workers, then one would expect the countries with higher investment rates in automation to have experienced greater employment loss in their manufacturing sectors. For example, Germany deploys over three times as many robots per hour worked than the U.S., according to Graetz and Michaels, largely due to Germany’s robust automotive industry, which is by far the most robot-intensive industry (with over 10 times more robots per worker than the average industry). Sweden has 60% more robots per hours worked than the U.S. thanks to its highly technical metal and chemical industries.

 

Despite the installation of far more robots between 1993 and 2007, Germany lost just 19% of its manufacturing jobs between 1996 and 2012 compared to a 33% drop in the U.S. (We introduce a three-year time lag to allow for robots to influence the labor market and continued with the most recent data, 2012). Korea, France, and Italy also lost fewer manufacturing jobs than the United States, even as they introduced more industrial robots. On the other hand, countries like the United Kingdom and Australia invested less in robots but saw faster declines in their manufacturing sectors.”

 

Fast forward to 2017 and we are seeing the third technological revolution…. the development of AI and robots.  While there has been a great deal of work in this field for decades, things accelerated in 2016.  

 

Most important has been the development of ROS. An open source robotic operating system. This system allows robots to be created and fit out quickly with a standardized operating system. Previously operating systems had to be created anew with each project. This open source operating system also has the benefit of pooled learning… robots can effectively learn from the experiences of other robots. 

 

This is rapidly lowering the cost of robotic installations and improving profitability. More sectors are seeing applications of robotics and AI. This will have a very real impact on corporations and on workers over the next 5 years. 

 

The nature of work is changing, and it is critical that people understand that they need to adapt. They need to learn new jobs skills. They need to be more entrepreneurial. Corporations can replace most human workers, reduce expenses and legacy costs, and improve performance. In such a world people need to be able to build their own businesses… they need to be able to embrace a different way of thinking… one that most are not used to and most are not prepared for. 

 

In a speech on July 17, 2017 President Trump said the following:

“… we must also fight the unfair trade practices that have gutted our industry, and that includes cracking down on the predatory online sales of foreign goods, which is absolutely killing our shoppers and our shopping centers.  If you look at what’s going on with shopping centers and stores and jobs in stores, it’s been very, very tough for them.  They’ve had a very hard time.  Closing at numbers and records that have never been seen before.  So we have to stop that — the online predatory practices.”

 

The only company referenced by retailers as a danger to brick and mortar retail is Amazon, an American company, selling the same goods that brick and mortar retail establishments are selling. Trump’s statement is nothing short of Luddite thinking. Amazon has a superior business model compared to old school businesses. Automation and efficiency, powered by massive data and the internet, will swamp companies that fail to innovate. Wishing it were different won’t make it so. 

 

Technology is advancing quickly and is changing the nature of business, capitalism and the economy. As humans in such an environment, we need to change as well. We need to be more adaptable. We need to protect ourselves, because no one else will… corporate jobs of the past provided health insurance, life and disability insurance, vehicles for retirement savings. 

 

Since the Great Recession a great many people have moved from being w2 employees to being contractors, still working for the same company, but the company no longer obligated to cover such expenses for the employee. 

 

The growth of consulting and contracting in the economy over the past 10 years is a sirens call for what is to come. 

 

William Studdebaker of CIO at ROBO, said in an interview with Bloomberg’s Corey Johnson that “robotics is spreading in every sector, in every country, right now.” As a sign of the real growth in this field in 2016 there were 600 start ups focused on robotics. Since 2005 there have been 1100. That is exponential growth. 

 

It’s clear that the economy is changing. The question is are you financially positioned in your life to manage the transition to this new economy? 

If you want to discuss these issues or learn more please feel free to contact me.

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

 

To learn more contact:

James Cox

Cell: 215 768 5883

Email: james_cox@devon-financial.com

http://jamesacox.com

Devon Financial Partners 744 W Lancaster Av Suite 235 Wayne, PA 19087

This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 7 Hanover Square, New York, NY 100034. 888-600-4667. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Devon Financial Partners, LLC is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. 2017-43732 Exp. 07/19

 

Climate change, economy, new economy, retirement

Global future growth… and Climate Change

A recent Bloomberg article titled “The Global Growth Hotspots of the Future Are Here” discussed an HSBC report which advises that investors need to focus on the growth of cities in the Emerging Markets.

“While wealthier countries are more urbanized today, the proportion of urban to rural dwellers in emerging markets is expected to climb to 63 percent in 2050 from 50 percent now, according to the study, which draws on research by McKinsey and the United Nations

By 2050 some 5 billion people – more than half the world’s population – will live in emerging market cities, and account for more than half of global gross domestic product growth.

That means policy makers will have to balance the upsides of urbanization – economies of scale, better productivity and infrastructure, chance encounters that lead to new ideas, better productivity and infrastructure – with the potential downsides, in the shape of increased crime, pollution and perpetually snarled traffic.  If that doesn’t happen, these ill effects could sap economic potential”, HSBC economist James Pomeroy says.

 

Cities like Dhaka, Karachi and Lagos will be among the world’s 10 most populous cities, according to the study. By 2030, 81 of the world’s 100 most populous cities will be in emerging markets.

While the article cites the growth excitement and upside of Emerging Market investing, i.e. Infrastructure build out, rising wages, developing markets and supply chain feeder businesses, the article ignores completely the elephant in the room… Climate Change risk…

In a study last year in Nature magazine, scientists looked at the effect of rising global temperatures and their effect upon the ability of various populations to be productive economically. What they found is as temperatures rise, human productivity decreases. As productivity decreases, GDP falls.

This study concluded that it is their expectation that the GDP of Emerging Market countries is expected to fall by 75% by 2100. Because Emerging Market countries tend to be equatorial and in higher temperature zones, the impact is greater than the impact is expected to be on the United States and Europe.

Rising temperatures will continue to affect global food supplies, water availability, and social stability, especially in the Emerging Markets. The terrible situation in Syria was driven to a large degree by the drought in 2012 and the effect it had on the social fabric. Anyone who discounts the impact of climate on economic and societal viability going forward is only looking at part of the economic and financial puzzle.

We are reaching the limits economic growth because of the climate and shrinking resources. We need to examine our economic expectations, and adjust accordingly.

https://www.bloomberg.com/news/articles/2017-04-29/the-global-growth-hotspots-of-the-future-are-here

https://www.nature.com/nature/journal/vaop/ncurrent/full/nature15725.html

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

 

To learn more contact:

James Cox

Cell: 215 768 5883

Email: james_cox@devon-financial.com

Devon Financial Partners 744 W Lancaster Av Suite 235 Wayne, PA 19087

This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 7 Hanover Square, New York, NY 100034. 888-600-4667. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Devon Financial Partners, LLC is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

Investing in foreign securities may involve heightened risk including currency fluctuations, less liquid trading markets, greater price volatility, political and economic instability, less publicly available information, and changes in tax or currency laws. Such risks are enhanced in emerging markets. 2017-40029 Exp 05/19