The Great Wall of Something

For something that was for so long considered an awkward joke we are fast approaching the frighteningly real possibility of a Trump presidency. While part of me would like to spend the next few paragraphs speculating on who will be the reality TV star and all round racist’s running mate,  I will instead continue the series (ASX:Trump) that Blue Lake Invest’s very own Cam kicked off earlier this week.

To do so we must look at the policy and find the opportunity. While some political pundits are criticising the lack of policy ‘detail’ I for one struggle to narrow the policy options down to just one. Among some of Trump supporters favourite policies were eroding trade liberalisation and punching terrorists in the face. Now we will no doubt cover those issues later in the series, but today I want to focus on something much bigger, literally speaking.

The Great Wall of something.

One of the first ‘policy’ announcements that the Trump for President Campaign announced was the notion that “A nation without borders is not a nation”. Some might want to argue with that, but I want to focus on the next point. “There must be a wall across the southern border”, ironically the Canada (northern) border doesn’t rate a mention.

What would this great wall cost? So here are the fast facts;

  • The Southern border is approximately 3,220km long.
  • For comparison, the Berlin Wall which was built in 1961 was 155km long, and cost US$200m (adjusted for inflation)
  • Before you reach for your calculator, I have done the math for you. Comparable cost is US$4.15bn
  • But before we move on, most estimates taking into account the terrain and other factors put the estimate at over three times that!

Now you are probably wondering how the US government is going to pay for that. Well fear not, the brilliant minds at Trump HQ have worked that out too.

Mexico will pay. Simple right?

As it is their fault that the drug and immigration problem exists in the first place. It obviously has nothing to do with Americans liking drugs and Mexicans liking opportunity. The likelihood of Mexico paying is unknown however let’s assume for a moment that it will happen.

Who on earth could build a fence like this?

Save your drum roll friends, I will straight up tell you. It is our good friends at Boral (ASX:BLD) of course. Well they might anyway. The local operations at Boral have struggled under pressure from unions and more recently a slowing construction growth. Now while this is happening the US arm will right now be licking their lips. I am only speculating now but I imagine that Boral USA would be refining their fence building technique and preparing their bid.

20% of revenue from ASX:BLD is derived from the US market, which as we speak is experiencing a real estate recovery. For those less interested in Trump, and more interested in Boral 55% of revenue is generated right here in Australia, while 15% comes from Asia. That 20% from the US is quite interesting however.

We are well aware that the US markets, and in particular the housing and construction sectors have struggled away since 2007 where the subprime mortgage crisis came to a head. It also spelled a tough time for ASX:BLD in this market. Boral had not made a profit between FY08 to FY14 inclusive in the US market. With a strong housing sector Boral US returned to black last year.

Now imagine what they could do with a US$15bn wall?

Returning to the ASX:Trump analysis it is worth mentioning the two following points.

  1. Trump is a real estate mogul – it would not be completely out of the realm of possibility that a housing recovery could be a personal objective, and as a result there is every chance that a Trump presidency would accelerate housing sector growth.
  2. For those that believe the hype Trump is promising a 6% growth rate in GDP. Through a range of currently vague policies Trump intends on ‘Making America great again’, which would also accelerate house growth. After all it is the American Dream.

A Trump president offers a world of possibilities, much like those outlined above. Now the cynical part of me tends to believe that the real outcome of such an event is chaos on the market, which will extend through global banking and disrupt global trade (which Australia is heavily reliant on). Regardless, this and the next ASX:Trump articles are food for thought. Now if you want to get more of this delivered into your exclusive email inbox, put your email in the box below!