President Trump Could Boost Technological Innovation...

President Trump Could Boost Technological Innovation...

With the media focusing on the Presidents Twitter account, and a list of failed accomplishments over the administrations first 100 days.  This month’s issue of The Samra Report will focus on identifying sectors of growth, as well as areas that have been overlooked as skeptics criticize the president on his campaign promises, while President Trump continues to push his agenda towards policy change.  

The Presidents controversial immigration plan has gained a lot of attention, and although the momentum has slowed, as congressional republicans have little appetite in risking a partial government shutdown, with demands for a border wall,   the White House continues to apply pressure with its demands.  “While more than 400 tech leaders in New York City have come together to speak out against President Donald Trump’s Immigration Plan,” claiming immigration policies could slow innovation.  We have not seen any direct correlation of a slowing of innovation, however, we have seen a window of opportunity arise for robotics and automation in farming.  Many readers will undoubtedly feel it is too soon to measure a correlation between decreasing immigration and that of increased innovation.  However, technology is now moving at a pace where the next big idea could become obsolete, and replaced with more innovative technology, before coming to market.  For instance, companies such as Uber are at risk of becoming obsolete prior to its IPO.  At Samra Wealth Management, it is our view the following sectors within technology are likely to experience above market growth over the next decade:

  • Artificial Intelligence
  • Robotics and Automation
  • 3-D Printing
  • Virtual Reality and Augmented Reality
  • Drones
  • Solar
  • Wearables

As robotics and automation look to replace the vanishing migrant worker, under the Trump Administration.  This unpopular campaign promise could lead to $1 Trillion to be repatriated, all while advancements in Artificial Intelligence continue to drive the need of more powerful microprocessors, sensors and imagining technology.  It should be noted that declines in migrant workers, specifically those from Mexico have seen declines since 2007, and although immigration policy has taken responsibility, it would be incorrect to assume a tighter policy stance is the only factor.  Over the last decade, farmers have decreased their dependence on human capital as they implement more technology into their businesses: more commonly known technology such as programable driverless combine harvesters, as well as lesser known technology such as wearables for cattle and strawberry picking robots.

With the affordable Care Act under continuous attack from house republicans and the White House.  The healthcare sector seems to have gained a lot of unnecessary negative attention, as the media focuses their efforts on the Affordable Care Act effecting hospital systems, they seem to have neglected the most promising areas of healthcare:

  • Emerging Market Healthcare
  • Assisted Living and Nursing Facilities
  • Technology in Medicine

Advancements in medicine have allowed physicians to diagnose, monitor, treat and prolong life to a level never seen before.  These advancements are now impacting emerging markets, as modern medicine crosses into rural areas in developing nations.  Through telephone networks, mobile applications and the training and education of local primary-care clinics, emerging market healthcare has the capacity to overtake medicine in developed nations.  Although it is unlikely we would see a shift of this nature in the near future, with a rapidly growing middle-class, emerging markets such as India and China are already seeing massive investments from some of the largest companies in the Fortune 500.   

As the national averages for assisted living facilities ($43,500/year) and nursing homes ($92,000/year) continues to grow in terms of cost, there is no shortage on demand for these facilities, domestically and internationally.  As modern medicine continues to diagnose, treat and prolong the lives of individuals, we expect this area to see continued growth over the next decade.  “Although it is a negative for Trump’s agenda, the failure to pass health care reform benefits a number of health care providers including hospitals, psych hospitals and physician staffing companies that have benefitted from coverage gains under the Affordable Care Act.”

The next decade will be the age of innovation, as technology looks to cross into a number of other areas.  Healthcare stands to benefit the most from technological innovation, as we enter an age where reality will mimic science fiction, as companies look to develop technologies such as nanotechnology.   Advancements in 3-D imaging and printing are already making their way into the design and manufacturing of prosthetic limbs.  Wearables and applications have created a network for mobile health monitoring.  However, Artificial Intelligence is the area we believe will make the largest impact on the healthcare sector.  As AI deep learning platforms such as IBM Watson Health and Google Brain are getting smarter by the day.  “Deep learning and advanced image processing techniques are being used to automate the reading of radiology scans including MRI, CT, ultrasound and X-rays.”  Helping physicians better diagnose and treat, with the assistance of massive pools of data.  

Financials have experienced a rocky ride so far in 2017, reaching a high of 8.13% in March, dropping into negative territory in April, to close the month up at 1.09%.  As the key beneficiary of rising interest rates, tax cuts and financial deregulation, we believe financials are poised to make strong gains during the remainder of the year, into 2018.  Furthermore, if the President is able to push through his aggressive tax plan, lowering the corporate tax rate to 15% from 39.6%, in the short-term financials would take a financial hit, as banks attempt to write-down their deferred cash assets, positioning them for a stronger 2018. 

 

With the S&P 500 hovering at all-time highs, many investors are concerned about the potential for a bear market, however, investors should note, that new highs are not an indication of new peaks.  Although equities are no longer cheap, they are still inexpensive.  In the near-term, we are not overly concerned about corporate valuations, as fundamentals play a smaller role this far into a bull market.   A corporate tax cut would make domestic firms more competitive in the international environment, and no longer would US firms be the target of potential takeovers.  With less funds set aside for taxes, allowing US firms to repatriate $1 Trillion we would expect GDP to experience 3-4% growth, starting in 2018. However, with technology replacing human capital, and credit card delinquency rate experiencing an uptick, recessionary fears should not be so easily dismissed.  

 

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All information contained herein is derived from sources deemed to be reliable but cannot be guaranteed.  All economic and performance data is historical and not indicative of future results.  All views/opinions expressed herein are solely those of the author and do not reflect the views/opinions held by Advisory Services Network, LLC. The information and material contained herein is of a general nature and is intended for educational purposes only.  This does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Before investing or using any strategy, individuals should consult with their tax, legal, or financial advisor

Samra Wealth Management, A Member of Advisory Services Network, LLC