If I had a simple thesis for trading for the next ten years in the foreign exchange market it would be this: Invest in any country that makes it easy to build again.
I spent last week in Dubai and it was amazing. Twenty-five years ago there was not much and there are many skyscrapers, highways, a metro train and some of the most amazing projects in the world. China has done the same in dozens of cities and across the country.
At the same time, the developed world gets stuck in endless bureaucracy when anyone tries to build something, especially infrastructure. If it is built, the costs will be worse than those elsewhere. It wasn't always like this but it has gone on for far too long and I believe the mood is changing; environmental concerns are ongoing.
Take Mark Carney, who I think will be the next Prime Minister of Canada (although maybe only for about six weeks as an election is called immediately). He is trying to use that spirit when he launched his campaign for the leadership of the party.
Now I don't think it hits those notes particularly well but it's early days for the tournament which runs through March. If he goes hard on that subject, I think he responds.
“Good governments empower their citizens to build great things,” Carney says in his campaign ad.
I think it fits everywhere but the problem is that the bureaucracy and the courts are so big that it is very difficult to change. The Canadian system shares power federally, provincially, municipally and increasingly with the indigenous population. That has paralyzed the country and led to a $7 billion pipeline to the west coast costing a balloon in $35 billion.
It is a similar story elsewhere in the developed world and often in the developing world where mines are now becoming more expensive. 10 years to be built
So who will win?
It's hard to bet against the United States. Trump is already trying to use his emergency power for licenses and many states are on board. The US however has high labor costs and real estate is expensive but the US has deep pockets so higher costs can be tolerated better than elsewhere. The Keystone XL pipeline shows all the ways in which a building can be obstructed.
I think the feeling in the UK is strong about this and I hope they can move faster on nuclear, to start with. The problem is that London is such a big part of the economy and there is certainly no consensus to start removing neighborhoods for infrastructure.
Australia is a good place for mining so at least they have that going for it. They have gotten into the LNG game and the proximity to Asia has been beneficial. Real estate is very expensive though.
Europe is probably the biggest opportunity but it is fragmented. It would be great if someone there could break away and really set the tone. The Germans are among the biggest builders but they have fallen as far behind as France is France. Is Italy succeeding with a new government?
I don't have answers right now but I would like to see one of these places go for it – maybe build a planned city or some big projects. I would be a buyer on that but for now I'm a watcher.
