The Great Reopening, Part 2
In last week's analysis of my macro-investment thesis "The Great Reopening," I laid out the events the United States specifically - and the rest of the globe generally - were experiencing in the beginning of the 1920s decade.
Let me quickly remind you what was happening 100 years ago:
End of the Spanish flu pandemic.End of World War I.Emboldened by the Bolshevik Revolution in Russia in 1917, Marxism swept across the West.Social and political unrest (The U.S. Communist Party rioted from coast to coast, burning down city blocks and bombing the opposition.)Social and political liberation: women's suffrage.Cancel culture: Prohibition.A great social flowering with jazz clubs and speakeasies.A technological explosion with mass adoption of electricity, indoor plumbing, airplanes, automobiles, radios, refrigerators, and washing machines.Severe economic contraction: U.S. GDP fell nearly 5%, unemployment rose to 11%, and the Dow dropped 32%.Many of these negatives bottomed out and by 1922, the markets were full of rocket fuel.
The Dow ran up 500%, outpacing the overall economy 10 times (U.S. GDP increased 42% within the decade).
Fast-forward to 2020-2021. Here's what's happening right now in the United States specifically and the rest of the planet generally:
The COVID-19 pandemic is coming to an end.The United States is ending its 20-year war in Afghanistan.Widespread political and social unrest.A yearlong Marxist (antifa and BLM) riot from coast to coast in the United States and a far-right riot on June 6, 2021, at the Capitol.The Dow crashed 36% between February and April 2020.40 million Americans lost their jobs, and 9 million jobs are currently unfilled.GDP contracted 13%.The U.S. savings rate is still at abnormally high levels.A technological explosion of artificial intelligence, telemedicine, mRNA vaccines, mainstream adoption of electric vehicles, 5G, and commercial acceptance of cryptocurrencies.A social flowering with mass acceptance of cannabis for medical and recreational use and psychedelics for medical use.I consider these to be the most important economic factors heading into the rest of this decade. But the factors I consider to be the fuel for an epic bull run in the coming years are massive disposable capital in the form of the current savings rate, low interest rates, the massive amount of unfilled employment positions, and an economy that's restarting at a near-zero baseline.
Let me explain.
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Take a look at this picture:
This is a photo I took of the departures at the airport about a week ago.
My wife and I flew to our vacation home in Longboat Key, Florida, and many flights were canceled because there weren't enough employees to work the flights. Even the restaurants at the airport were closed because of the lack of workers.
However, the airport was the most crowded I'd seen it since before the lockdowns.
We had intended to drive down to Florida (in order to take our dog with us), but we couldn't find a single rental car available anywhere - not a single one.
So we had no choice but to fly.
Summer months in Florida are typically considered "low season." By the end of April, the snowbirds have returned north to their primary homes in Michigan, Wisconsin, New York, and Indiana.
Traffic gets better. Making a reservation at a good restaurant is easy. And at times, you can have the whole beach to yourself.
It's why my wife and I love it so much in Longboat during the summer. We are willing to put up with the heat if it means fewer crowds.
But not today.
My tiny paradise on the Gulf of Mexico is sinking from all the northerners who want a taste of freedom. Florida started reopening in May 2020... and fully reopened in September.
Ever since then, there's been a conga line of northerners buying up Florida real estate and moving down.
One of our favorite restaurants on the island is booked for three weeks out. At this time of year, you can usually just walk in and get seated immediately.
On Sunday we couldn't get off the island at 4 p.m. Both ends were jammed with cars.
Cruise lines in Tampa and Miami are firing up their engines.
There are "hiring" signs everywhere.
Florida's economy is booming, and it will spread to the rest of the nation.
When it does, it will unleash a bull market for the ages.
In March 2021, the U.S. savings rate was above 27%. Total savings in the U.S. is roughly $2.3 trillion. To give you an idea of how staggering that is, it's larger than the GDPs of 205 countries.
Only six nations have higher GDPs than America's savings rate - China, the U.K., Japan, India, Germany, and France.
When that capital starts getting invested and spent, it'll act like a trampoline for the markets.
In fact, it's already happening as you read this...
Which is why my all-star stock picker and visionary Chris DeHaemer has an exclusive presentation on "The Great Reopening."
In it, he lays out the four stocks he sees doing quite well in this environment.
I urge you to listen to Chris' advice. Two of the stocks he recommended right before the COVID lockdowns have returned 352% and 222%, respectively.
You can get his free presentation here.
Profitably yours,
Brian Hicks
Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily and Energy and Capital. Known as the "original bull on America," Brian is also the author of Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century, published in 2008. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox, and countless radio shows. For more on Brian, take a look at his editor's page.