Anthony Scaramucci delivered a history lesson on nationalism to the 75 advisors gathered for a Pershing advisor meeting, with comments on why President Donald Trump's style and substance will be beneficial for the U.S. economy.
While presenting at the inaugural Pershing Advisor Solutions Elite Advisor Summit in Aventura, Florida, the hedge fund manager and Goldman Sachs alumnus also spoke bluntly about the Labor Department's fiduciary rule, which is now in a 60-day review period following President Trump's directive to do so.
Acknowledging that many in the room full of RIAs might disagree with his negative feelings about the DOL rule, Scaramucci told the advisors why he "hates" it.
"You're herding people into low-cost ETFs or indexes," and if "something goes wrong," as is more likely "in periods of high volatility, like we're getting into now" considering the currently rich valuation of the stock market, "they can sue you."
"You've limited the options" for retirement investors with the fiduciary requirement, he argued. Instead, "your clients need 5-15 cents of each dollar" in their portfolios to be invested in alternative investments "that aren't correlated" with the overall market.
(For the latest on the Labor Dept. rule, see ThinkAdvisor's DOL Fiduciary Compliance landing page.)
Scaramucci, who said he has "60 days left" before he finally sells his stake and departs SkyBridge Capital, the hedge fund firm he founded, also warned of a broader global development that will affect the U.S. and the global economy.
"We're watching a 35-year transition in the economy," he said, in which "we're onboarding 3 billion people into the Western capital experience." Our "success" in accommodating that movement is ushering in a "period of disinflation/possible deflation," he said, with serious ramifications, especially for the American middle class which, echoing the statements of Trump, have suffered from globalism. "The interdependence of nations" following the end of World War II "reduced conflicts" among nations, he said, "but it's causing this disinflation" to rear its troubling head.
The decline in "American wages have been a 'disaster,'" Scaramucci said, "to use a Trump word." The president's policies are designed to fix the effects of America's fostering of "uneven" trade agreements meant to rebuild the nations "decimated" by World War II. Those policies, he charged, "had the deleterious side effect of harming the U.S. middle class."
Under NAFTA alone, a favorite target of the president, "we've lost 70,000 factories." That could have been avoided, he suggested, if the U.S. had pushed for the "24-month reviews" that were part of NAFTA but which have never taken place. Trump favors free trade, Scaramucci said, but wants to ensure that it's "fair free trade." Another example of unfair free trade: Despite strong demand for Jeeps in Japan, it was strict Japanese "trade quotas" that forced Chrysler to declare bankruptcy.
