The Immigration Fight War Room Slides

The Immigration Fight11 December 2014

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The Immigration Fight

Future of US Immigration

The Immigration Fight

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MARKET UPDATE

Market UpdateCrude Awakening Jobs Explosion

Online retail is Holiday Retail

sources: HiddenLevers, CNN, Financial Times, LA Times, Yahoo Finance

GOP takes Congress

Market Update – Ebola Pandemic

sources: HiddenLevers, Business Insider, Forbes

Macro – geopolitics US + Middle East collude to crush ISIS + Russia

HowOPEC no production cut

US begins exporting oil

Macro Snapshot – Crude Awakening

-45%

Macro – economics USD strongest in 5 years

20% more US production15% less consumption

Millennials + Boomers driving less

+10%

Macro Snapshot

A few more danger signs, including yield curve, Shiller P/E, and bond spreads. The almighty dollar continues to crush all comers – at what point is this bad for US?

Don’t cross the red line

DEMOGRAPHICS SCENARIOSHiddenLevers

healthy population pyramid

US population pyramid (2014)

USA Demographics 101

sources: HiddenLevers, CIA World Factbook, US Census Bureau

GOOD: Successful Immigration Reform

source: HiddenLevers,

GOP + President move to merit system

rhetoric centers on skilled labor

US educated foreigners stay

in US

private job creation increases

short term GDP positively impacted

long term GDP at 90s levels

more fuel for secular bull

market

BAD: Immigration Gridlock

family ties continue as

basis for immigration

polarized society

status quo maintained due to inaction

illegal immigration

doesn’t abate

source: HiddenLevers, US Citizenship and Immigration Services

short term GDP

eeks along

diluting human capital, not building it

Long term GDP

biggest casualty

UGLY: Baby Bust

aging baby boomers are a

headwind

negative labor force growth

negative population growth + GDP decline

mirroringEurope + Japan

source: HiddenLevers, Economist

young people leave for

opportunity elsewhere

Scenario: US Demographic Shift Successful immigration reform builds US human capital, driving GDP growth to 90s level.

Gridlock = status quo, where illegal and family-oriented immigration continues, without major benefit.

If US population begins to backslide like Europe, malaise will set in. As in Japan, QE can’t fix – population growth needed.

GoodSuccessful

Reform

BadGridlock

UglyBaby Bust

HiddenLevers

THE IMMIGRATION FIGHT

$

US Immigration: Global Perspective

sources: World Bank GDP, World Bank Pop, HiddenLevers Analysis

Population growth is positively correlated (+0.3) with GDP growth – it’s difficult to grow GDP when population is dying or leaving

Nigeria

Philippines

United St

ates

China

German

ySp

ain

-2-1012345678

GDP Growth (%)Pop Growth (%)

Population Growth / GDP Impacts:

• Raises consumption• Improves worker /

retiree ratio• Builds human

capital• Global deflation

debunks limits to growth theories

US Immigration: Current Picture

sources: US Dept of Homeland Security, US Census Bureau, TD Economics

2004-20141m new immigrants / year

33% of population increase

60% of labor force growth

Big 5 states receive 60%

CANY FL TXNJ

2014-2024Adult population all be over 55 years old

Fastest growing age segment: 70-74

54% of immigrants are age 25-54

US Immigration: Impact on Economy

Population Growth drives 40% of GDP Growth(1% per year)

Population Group Total Addition

New Immigrants 1 Million

Births to Foreign-Born Women 1 Million

Total Population Growth (2013) 2.3 Million

=> 80% of population growth due to immigrants

sources: Census, CNN, Reuters, Pew Research, Time, St. Louis Fed

Immigration to soon account for 100% of pop growth

US Immigration: Obama Executive Order

sources: Washington Post

Legal reprieve to 3.7 million illegals with US citizen children, must be in USA for 5 years

Immigrants who came as children can apply for deportation deferral. Now immigrants over 30 qualify.

Visa facilitation for who invest in USA

Visa facilitation for anyone pursuing science / tech / engineering / math degrees

NO expansion of HI-B visa program

NO ACA coverage for new legals

NO visas for migrant workers

3.7 million made legal

6.2 million illegals left

HiddenLevers

FUTURE OF US IMMIGRATION

IMMIGRATION: Congressional Action

sources: Migration Policy, Fox News

GOP now has majority, still using minority tactics to stall executive order.

- Homeland Security funding only to Feb 2015, rest of budget is Sept 2015

- Die Hards trying to wage battle now, trying to threaten govt shutdown

- Calling Obama actions unconstitutional – they should have beaten him to it.

1. increases GDP (consumption/production)2. family values agenda3. less govt spending (no enforcement)4. secure the Latin vote

No increase in illegal immigrants since 2010

US 1965 Reform + Global Models for Reform

sources: Center for Immigration Studies, TD Bank, Library of Congress

Canada + Australia + UK: • 60%+ merit-based immigration• Points for education, skills in high

demand areas, language fluency• Less temp visas, more “green” cards

1965 Reform:• Opened non-European

immigration• Prioritized family ties• Allowed for merit consideration

(origins of H1-B and other visas)• 41 million legal immigrants in US

today, highest share since 1920

IMMIGRATION: Deflation Antidote

sources: US Census Bureau

Deflation avoided

Malaise a la EU + Japan

IMMIGRATION: Recap

Domestic fertility rate below replacement level

Obama immigration action will stick

new brain drain = next level GDP boostillegal immigration irrelevant

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