Trump, Brexit and the Next Civil War

The Greatest Political and Economic Revolution Since Democracy Itself

presented by
Harry S. Dent, Jr.

Forthcoming
Book

(August 2017)
www.dentresearch.com
2nd Wave of Globalization Peaking: 100-Year Cycle?
Global Trade as a Percent of Global GDP
2110-
2145
80% Globalization
Boom #3
70%

2008
60%
Globalization
Boom #2
50%

40%
1912
Globalization WWI
30%
Boom #1
WWII

20% Rail-
roads
Tall
10% Sailing
Steamships Jet Travel
Ships
East India
Trading Company
0%
1500 1550 1600 1650 1700 1750 1800 1850 1900 1950 2000 2050 2100 2150

Source: Estavadeordal, Frantz and Taylor, 2003, Penn World Tables Version 8.1, Klasing and Milionis (2014), World Bank,
https://ourworldindata.org/international-trade, Dent Research www.dentresearch.com
The Good, Bad and Ugly as Globalization Retreats
Exports as a Percent of GDP, 2013-2015 Average

0% 50% 100% 150% 200%

Hong Kong 216%
187%
Vietnam 87%
84% The Ugly: Extreme
Netherlands 83%
73% Exposure
Switzerland 67%
54%
Korea, Rep. 50%
48%
Germany 46%
45%
Saudi Arabia 44%
40% The Bad: Above Average
Norway 38% Exposure
33%
Spain 33%
31%
Greece 31%
30%
Italy 30%
29%
United Kingdom 29%
28%
India 24% The Good: Below Average
24%
Indonesia 23%
20%
Japan 17%
13%
Brazil 12%

Source: The World Bank www.dentresearch.com

500-year Mega Innovation and Inflation Cycle

Information
Revolution
Consumer Prices in Britain: 950-1985

4,000

Capitalist
1,000
Revolution

200 Commercial
Revolution

50
Consumer
Prices

1000 1200 1400 1600 1800 2000

Source: E.H. Phelps Brown & Sheila V. Hopkins www.dentresearch.com

Global Urbanization Has Accelerated Since 1920
Percent of Global Population Residing In Urban Areas

100%
Historic Rate Dent Projection

90%

80%

70%

60% 52%

50%

40%

30%

20%

10%

0%
1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020 2040 2060 2080 2100 2120 2140

Source: United Nations, Dent Research www.dentresearch.com

250-Year Revolution and 84-Year Populist Cycles
Both Cycles Converge in 2017

250-Year Revolutionary Cycle

84-Year Populist Movement Cycle 2150

1900

2185

2101
1650 Trump/Bannon
Hitler Brexit
Great (2017)
Euro Current
Depression
Civil
1765 Wars
(1933) Revolution
American (1849) (2008-2023)
Revolution
(1765-1783)
Protestant
Revolution
(1517-1532)
1500 1600 1700 1800 1900 2000 2100 2200

Source:
Source: Dent
Dent Research
Research www.dentresearch.com
84-Year Populist and 28-Year Financial Crisis Cycles
Both Cycles Converge in 2017

84-Year Populist Movement Cycle

28-Year Financial Crisis Cycle
2073

2045

Trump/Bannon
1989 Brexit
(2017)
1961

Hitler
1905 Great
Depression
1877 (1933)

Euro
1821 Civil
Wars
1793 (1849)
American
Revolution
(1765)
1750 1775 1800 1825 1850 1875 1900 1925 1950 1975 2000 2025 2050

Source:
Source: Dent
Dent Research
Research www.dentresearch.com
The Three Harbingers of Revolution
All Cycles Converge in 2017

250-Year Revolutionary Cycle

84-Year Populist Movement Cycle
28-Year Financial Crisis Cycle

2073

2045

Current
1989 Revolution
(2008-2023)
1961

Hitler
1905 Great
Depression
1877 (1933)

Euro
1821 Civil
Wars
1793 (1849)
American Revolution
(1765-1783)
1750 1775 1800 1825 1850 1875 1900 1925 1950 1975 2000 2025 2050

Source:
Source: Dent
Dent Research
Research www.dentresearch.com
The Global Cultural/Religious Divide
Nine Global Cultures from the World Values Survey

More
Progressive

Less
Progressive

Source: Courtesy of www.worldvaluessurvey.org, Annotations by Dent Research www.dentresearch.com

U.S. Strained by Increasing Political Polarization

1994 2004 2014 2014 Among the

Politically Engaged…
Median Median Median Median Median Median Median Median

Democrat Republican Democrat Republican Democrat Republican Democrat Republican

Consistently Consistently Consistently Consistently Consistently Consistently Consistently Consistently

Liberal Conservative Liberal Conservative Liberal Conservative Liberal Conservative

Source: Political Polarization in the American Public, Pew Research www.dentresearch.com

The Red State/Blue State Divide Is Increasingly Clear
2012 Presidential Election Results

Source: Dent Research www.dentresearch.com

Red State Shifts With Trump
2016 Presidential Election Results

Source: Dent Research www.dentresearch.com

The Red/Blue Divide is More Urban vs. Rural
Belief That Global Warming is Mostly Caused by Human Activities, percent

Source: Howe, Peter D., Matto Mildenberger, Jennifer R. Marlon, and Anthony Leiserwitz (2015), Available online at http://climatecommunication.yale.edu www.dentresearch.com
Europe: The North/South and East Divide
Regional Income per capita, Europe

Source: Eurostat www.dentresearch.com

The Extreme North/South Income Divide in Italy
Regional GDP per capita

Source: Eurostat www.dentresearch.com

Sunni Dominates the Islamic World, except Iran and
Eastern Mid-East

Source: University of Texas Library www.dentresearch.com

Iraq’s Unstable Shia, Sunni and Kurd Divide
Ethnoreligious Groups in Iraq

Kurd
Dominant

Kurd/Sunni
Mix

Sunni
Dominate

Shia
Dominant

Sunni/Shia Mix

Source: University of Texas Library www.dentresearch.com

The Great Income Divide In China: Coastal vs. Inland

Source: https://www.theatlantic.com/china/archive/2013/09/mapping-chinas-income-inequality/279637/ www.dentresearch.com

www.dentresearch.com
www.dentresearch.com
 Trump Is DOA: No Way for 3%-4% Growth
U.S. Workforce vs. GDP Growth

20-year-olds minus 63-year-olds on U.S. Immigration-Adjusted Births, left GDP Growth, Three-year average, right
2,000 12.0%

10.0%

1,500
8.0%

Projections 6.0%
1,000
Thousands

4.0%

500
2.0%

0.0%
0

-2.0%

-500 -4.0%
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

Source: U.S. Census Bureau, National Center for Health Statistics, Dent Research www.dentresearch.com
U.S. Near Full Employment – So How to Grow?
U.S. Unemployment Rate

12%

11%

10%

9%

8%

7%

6%

5%

Full Employment
4%

3%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: St. Louis Federal Reserve www.dentresearch.com
Falling Productivity Since 2004 and More Ahead
Nonfarm Business Output per Hour

6%
Labor Productivity (Annualized Two-Year Moving Average)

5%

4%

3%

2%

1%

0%

-1%
1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019

Source: Bureau of Labor Statistics www.dentresearch.com

Participation Rate Falls to 58% with Retirement Wave
63-year Lag on Immigration-Adjusted Birth Index

Retirement Wave (63-year lag), left Participation Rate, inverted, right

58%
5,000,000 58%

4,500,000 Even Millennial 60%

Boom Will See Low
Participation Rates
4,000,000 62%

3,500,000 64%

3,000,000 66%

2,500,000
67% 68%
1983 1993 2003 2013 2023 2033 2043 2053 2063 2073

www.HarryDent.com www.dentresearch.com
The Third and Final Dow Bubble Will Burst!
Megaphone Pattern, Dow Jones, log scale

E
20,000

16,000
C

A
12,000

8,000

B
D

5,500-6,000

4,000
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Source: Yahoo! Finance www.dentresearch.com

Divergence of ASX From CRB Looks Ominous

7,000 ASX, all ordinaries, left CRB, right 500

450

6,000
400

350
5,000

300

4,000 250

200

3,000
150

100
2,000

50

1,000 0
1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018
Source: Yahoo! Finance www.dentresearch.com
The Next Shoe About to Drop in China
Shanghai Composite

6,500

-21% in
5,500 1.5 Month

4,500 -43% in
2.5 Months Dead Cat
Bounce
3,500

2,500 -49% in
7.5 Months

1,500 -72% in
1 Year

500
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017
Source: Yahoo! Finance www.dentresearch.com
The Greatest Growth Potential is in Emerging Asia

Growth Potential
Workforce Advancement in GDP per Capita Workforce Growth
2020-2035 (Last
Country Growth, 1985- Urbanization Rate, PPP Growth Rate, Projections, 2020-
two columns
2015 1985-2015 1985-2015 2035
added)
Annual Averages
4.74% (6.11% 2005-
India 2.18% 0.28% 1.01% 7.12%
2015 and future)

Myanmar 1.73% 0.33% 5.71% 0.62% 6.33%

Cambodia 2.91% 0.23% 4.06% 1.42% 5.48%

Philippines 2.57% 0.04% 3.20% 1.38% 4.58%

Indonesia 2.03% 0.92% 3.74% 0.76% 4.50%

Vietnam 2.23% 0.47% 4.06% 0.41% 4.47%

Pakistan 2.84% 0.32% 2.05% 1.99% 4.04%

8.94% (4.47% Future

China 1.35% 1.09% -0.54% 3.93%
Expected)

Thailand 1.43% 0.74% 4.29% -0.79% 3.51%

Source: Dent Research, United Nations Population Division, Total Economy Database www.dentresearch.com
10-Year U.S. Treasury Yields – Spike Before Dive?

11%

9%

7%

5%

3.0-3.1%
3%

1%

-1%
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Source: Yahoo! Finance www.dentresearch.com

 Sydney Real Estate Bubble

325

+320% Rise
275
+106% Rise

225
Index= 2000

175
Most Likely
-51%

125
Worst Case
-68%

75

25
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: Australia Bureau of Statistics, Dent Research www.dentresearch.com

Melbourne Real Estate Bubble

400

+130% Rise
350

+469% Rise
300

250
Index= 2000

200
Most Likely
-57%
150

Worst Case
100 -74%

50

0
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: Australia Bureau of Statistics, Dent Research www.dentresearch.com

 Brisbane Real Estate Bubble

400

350 +256% Rise

+71% Rise

300

250
Index= 2000

Most Likely
-41%
200

150

Worst Case -72%

100

50

0
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: Australia Bureau of Statistics, Dent Research www.dentresearch.com

Best Commodities in Last Bubble Into 2008–2011

Risk Factor, Relative Risk Adjusted Return

Average Annual Return,
Commodity Times Gain in Bubble Standard Deviation Index, Returns/STDEV
Bottom to Top
Bottom to Top Bottom to Top

Lead 13.6 (Sept. ‘02-Oct. ‘07) 54.2% 0.94 57.9%

WTI Crude 17.7 (Jan. ‘99-Jun. ‘08) 35.9% 0.65 55.4%
Coal 7.7 (Aug. ‘02-Jul. ‘08) 43.2% 0.92 46.9%
Platinum 10.8 (Jan. ‘01- Feb. ‘08) 28.8% 0.62 46.7%
Nickel 22.1 (Oct. ’01-Apr. ‘07) 56.0% 1.24 45.2%
Gold 6.6 (Mar. ‘01- Aug. ‘11) 19.3% 0.56 34.5%
Tin 12.1 (Sept. ’01-Feb. ‘11) 29.5% 0.86 34.3%
Rubber 12.7 (Dec. ‘01-Feb. ‘11) 31.7% 0.95 33.5%
Iron Ore 11.4 (Dec. ‘04-Feb. ‘11) 47.4% 1.43 33.1%
Uranium 19.2 (Nov. ‘01-Jun. ‘07) 49.4% 1.65 30.0%
Silver 10.8 (Nov. ’01-Apr ‘11) 30.2% 1.03 29.4%
Copper 7.2 (Oct. ’01-Feb. ‘11) 24.6% 0.88 28.0%
Soybean Meal 14.1 (Mar. ’01-Jun. ‘16) 21.3% 0.95 22.5%

Vale 21.0 (Mar. ‘02-May ‘08) 56.9% 1.20 47.6%

BHP Billiton 9.7 (Mar. ‘02-Jun ‘08) 41.0% 0.93 44.2%

Source: Dent Research, Bloomberg www.dentresearch.com

The Greatest Reset In Modern History Likely Ahead
Stock Prices Since 1700

V
100,000
(V)
Grand Supercyle Bear Market and Bull Market 5
5
Annual average Prices, semi log scale 3
10,000
4

31
1,000
2
(III) 4
British U.S.
Stock Stock 1
100 Prices Prices 2

III (I) (IV)

10
(B)
(II)
(A) (C)
1 IV Great Resets

1700 1730 1760 1790 1820 1850 1880 1910 1940 1970 2000 2030

Source: Conquer the Crash by Robert Prechter, pg. 33, Dent Research www.dentresearch.com
Action Steps for Investors

• Sell Stocks on any Near-Term Rallies, especially into Late July

• Sell Non-Strategic Real Estate and Second Homes by Late Summer
• Talk Kids Out of Buying First Home – Wait Until at Least 2020
• If Looking to Downsize Home, Do So Now
• If Looking to Sell Business, Do So ASAP
• Buy Government Bonds/Corp AAA if Yields Spike in the Next 6
Months
• Wait for Major or Minor Crash into Very Early 2020 to Start to Re-
Invest, especially near Dow 5,000 – 5,500, and again by Late 2022 at
3,800 or Lower.
• Buy Australia, India, Southeast Asia, Health Care, Starter Homes,
Vacation Homes and Nursery Homes
• Summary: Have the Patience to Wait for Markets to Go Back to Pre-
Bubble Levels – Late 1994 for Stocks, January 2000 for Real Estate

www.dentresearch.com
Business Strategies

• Cash and cash flow are critical to surviving the shake-out and
having the resources to take advantage of unprecedented bargains
in financial assets in the years ahead; especially between 2017 and
2022.
• Identify segments that you can dominate, and sell off or shut down
others; sell non-dominant product lines or businesses to generate
a cash hoard to take advantage of the downturn ahead.
• Develop a clear definition of your customers and their end results
to give your company direction, purpose and laser focus.
• Be lean and mean, especially in the danger periods from 2016 -
2022; focus on cutting fixed costs and overheads.
• Defer major capital expenditures – plant, warehouses, stores,
major computer systems, real estate or office purchases, until next
crash and much lower costs.
• Know your direct costs and contribution margin and how much
cash flow each sale makes outside of sunk or fixed costs.

www.dentresearch.com
Business Strategies

• Focus on short-term investments that increase high contribution

margin sales or cut short term costs.
• Sell non-strategic real estate and lease instead, ditto for equipment.
• Identify in advance the competitors that you know are the weakest
and the desired assets (customers, employees, products and
systems) that you want to acquire from them or out of bankruptcy if
and when they fail. Be ready to pounce when they go into
bankruptcy, etc.
• Do everything possible to build customer loyalty in these times; it
costs more to acquire a new customer than to keep an existing
one.
• Only hire employees that have a proven track record of creating
results and are oriented towards your customer end-results focus.
• Eliminate unnecessary layers of marketing/distribution and deal
more directly with customers, measuring response and profits at
all levels.

www.dentresearch.com
China Is The Most Ethnically Diverse
Ethnolinguistic Groups in China

Source: University of Texas Library www.dentresearch.com

Is It Over for Gold?... Last Call

$1,950 In our newsletter we gave a major sell signal for 5

gold and silver on April 25, 2011 five months
ahead of the top in gold and at the top in silver.
$1,700

$1,450
Critical
Break
at $1,525
$1,200

3
$950

$700
$700
4

$450 $400-450
1
Bubble
Origin
$200 2
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source: Bloomberg www.dentresearch.com

www.dentresearch.com
30-Year Commodity Cycle: Greatest Surge Ahead
CRB Index (PPI before 1947) 2038-2040
4.38x?
2008-2011
2.10x
500

1980
400 3.15x

300
1949-1951
Peak
2.67x
1920
2.44x Gain
200

100

0
1913
1916
1919
1923
1926
1929
1933
1936
1939
1943
1946
1949
1953
1956
1959
1963
1966
1969
1973
1976
1979
1983
1986
1989
1993
1996
1999
2003
2006
2009
2013
2016
2019
2023
2026
2029
2033
2036
2039
Source: Dent Research, Bloomberg www.dentresearch.com
500-Year Mega Innovation, 250-Year Revolution and 165 East/West Cycles

500-Year Capitalist
Information
Mega Innovation
Cycle

250-Year
Revolutionary Protestant Democracy Network
Cycle

165-Year
West East West East
East-to-West
Cycle

1400 1450 1500 1550 1600 1650 1700 1750 1800 1850 1900 1950 2000 2050 2100 2150

Source: Dent Research www.dentresearch.com

Crude Oil Could Be Down for Years
This Will Finally Kill the $1 Trillion U.S. Fracking Industry

$160

$140
In our January 2014 Boom & Bust newsletter we
said oil would fall, at minimum, to $45 by 2016.
$120

$100

$80

$60

$40

$20

$10
$0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Source: Bloomberg, Dent Research www.dentresearch.com

Median Income Tracks Productivity and Peaks 45-49
U.S. Median Household Income by Age, 2015

$80,000

$70,000

Drops Dramatically After

50-59, Where Peak Baby
$60,000
Boomers Are Headed

$50,000

$40,000

$30,000

$20,000
15-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+

Age
Source: U.S. Census Bureau www.dentresearch.com