Testing Friday’s Lows

Investor’s first read – Daily edge before the open
DJIA: 24,601
S&P 500: 2,656
Nasdaq Comp.:6,981
Russell 2000: 1,490
Tuesday, Feb 13,  2018    9:11 a.m.
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Finally an infrastructure plan (see below) ……………………………………………………….
Briefly said: KEY DAY: The market will open lower.  Bulls should be buying after a 12% plunge in prices. If not, a test of Friday’s lows is likely. At this time the market should find support above them around DJIA: 23,995; S&P 500: 2,596; Nasdaq Comp.: 6,848.
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> I think we has seen the top in  the  2009 – 2018 Bull Market,  but bulls and the administration are not going to give up easily, they do not want a major market decline heading into the mid-term election.
>Last week’s 12% freefall was the first of two major corrections I forecast in December for 2018’s market.
>Last week’s drop looks a lot like August 2014 (S&P 500 down 15.8%) and Jan./Feb. 2016 down 17.7%), both in a matter of weeks. Both recovered in following months.  This one will rebound too, but be limited as the topping out process of the bull market sets in.
> Straight down from here ?  No, I think it’s going to take longer with wild swings in prices in coming months.

>  The market will  rebound sharply from Friday’s lows, driven by bargain hunters and excitement about the introduction of an infrastructure plan.
> The market will run into selling at higher levels by investors who feel they missed a chance to raise cash before the Jan./Feb. 12% plunge.

>WILD SWINGS in prices  will be great for traders, but risky for the average investor. 
> An attack on the bull market highs (DJIA: 26,616; S&P 500: 2,872; Nasdaq Comp. 7,505) should develop in coming weeks, but should stall,  roll over and head south again – followed by yet another rally until the market finally yields  to sellers, sliding to new 2018 lows.
> Suddenly, the financial landscape has changed, as the Street’s automatic “buy-at-the-market” mode is now fraught with concern.   Blame algorithms that weren’t programmed for the fact things can only get so good.
>The Fed has made it clear for a year it was going to raise its benchmark federal funds rate. On Monday the 10-year Treasury jumped, reminding the Street, that the era of  low interest rates was over.                                                                        
> The MAJOR reason the bubble was pricked this time,  triggering a flash crash, was the market was obscenely overvalued. The Shiller S&P 500’s price/earnings ratio (P/E), based on average inflation-adjusted earnings over 10 years CAPE)  is now 31.7 vs. a mean of 16.8.  That kind of euphoria can only last for so long until someone breaks ranks and sells in size. It was simply a matter of time.
>
The criteria  for a bear market is one that   drops 20%.  A 20% drop from the January 26 high would take the DJIA to 21,293, the S&P 500 to 2,298, and the Nasdaq Comp. to 6,004. When it happens, I can see a much bigger decline.
> Friday’s Mid-day rebound from the day’s lows  was classic selling climax action. The DJIA was down 12.2% (S&P 500: 11.8%) in 10 days.  It’s rebound is a combination of bargain hunting after an ugly hit to stock prices, as well as some short covering by those fortunate enough to be on the right side of the plunge.
TODAY
       As  expected, the market rebounded sharply yesterday, a normal reaction  after sharp nasty declines.      

       There is a lot of overhead supply (investors waiting to sell on a rebound). That should be encountered at DJIA: 25,075; S&P 500: 2,710; Nasdaq Comp.: 7140.
       Rally failures where the market loses all of a big gain in the same day are deadly, so buying strength can be risky.
       Futures trading indicate a lower market  at the open. This will test the bulls to see if lower prices provided by a 12% drop in recent weeks.
       Unless thee has been a big change in heart, they should be buyers.
       If not, it suggests concerns run deeper.

       The only thing investors can look forward to is  corporate earnings which will be surging sharply this year.  While the market has pretty much priced this
increase in earnings in at current levels, the reports will have a positive impact, the next being April.  This is why I see wide swings in stock prices during the first six months with a final slide starting mid-year.
        
       Higher interest rates will unnerve the Street, but the Fed will soft-talk the prospect, trying to avert another plunge in the market.  If the Fed reverses fields and opts not to raise rates aggressively, it would initially trigger a rally, but signal the Fed feared a sharp downturn in the economy which would also be a problem.
       Of course, there is always the potential for a huge political scandal.  Special Counsel Robert Mueller ramps up indictments in the counsel’s probe.  We may see attempts to prevent the investigation from releasing results (my expectation) either by firing Mueller or  finding a way to strike down the regulation empowering the DOJ to be the only one whom can fire Mueller. Pardoning key people who are at risk of fines, jail time, etc.  would seriously divide America. (See below).      

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SUPPORT “today”:DJIA:23,995; S&P 500:2,596;  Nasdaq Comp.:6,848;
RESISTANCE “today” DJIA:25,075;S&P 500:2,710; Nasdaq Comp.:7,140
 
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SIGNS OF EARLY STAGE BEAR MARKET

  1. The economy can’t get better than this – and won’t.  I see seeds of a recession setting in early 2019.

BEAR MARKETS START AHEAD OF RECESSIONS by a lead time of 3 to 9 months. Commentators and pundits say, don’t worry, the economy is strong. Many prominent money managers would like to say “sell,” but can’t for fear of triggering a PANIC.

  1. This economy and bull market are long in the tooth. The average of 11 economic expansions (1945  – 2009) has been 59 months. This expansion is 103 months old.  The average length of 15 bull markets runs 2.5 years or 30.4 months.  This bull has lasted 107 months. Credit card debt has doubled since 2013, the delinquency rate  is rising sharply.  The Personal Savings rate as a percent of  disposable income is 2.9%, down from 7.1% in July 2012.  This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.
  2. CORRECTION: The Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years)  is now 31 vs.  an average of 16.8, a 94% overvaluation. Over the years, this P/E has ranged between 4.8 and 49.2 for various reasons, none the least of which is investors’ confidence in the stability of our government and its future.
  3. We are faced with the prospect of a Constitutional crisis, the possibility of the disclosure of high crimes in high offices.  That could result in total CHAOS. It may be dragged out into 2019, even 2020.
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    RECENT “INVESTORS FIRST READ. COM”  BLOGS LEADING UP TO THE MARKET’S PLUNGE
    Starting with the DJIA at 26,392 (S&P 500: 2,839)   I wrote:  

     “The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare ! 
      At some point, these think-alike’s  will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
      Friday’s sharp plunges is a warning of things to come if the Street suddenly exits.  The potential exists for a correction of 12% – 16%.”

      I have repeated that  every day for emphasis.
       ON December 27, my annual forecast was “2018; The wildest One in Years,”
stating emphatically, “NO ONE IS BEARISH ! THAT’S BEARISH !
       My initial target for a correction was DJIA down 3,578 points to 22,735 (-13.6%) and for the S&P 500: down 349 points to 2,500 (-12.2%).

        Look, the is classic “Flash Crash,” where the Street, mostly following the same indicators all get a sell signal, or defer purchase signal at the same time,  that’s why I disparage them as “think-alikes.” Best computer is the human brain.

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FINALLY – AN INFRASTRUCTURE  PLAN ?
      The administration has finally  introduced an infrastructure plan. Clearly it is a problem that must be addressed.  Unfortunately debt that will be encountered by way of its approved spending plan and an unjustified massive tax cut that reduced revenues the government will receive by way of the 40% tax cuts for corporations accounting for 9% of  federal receipts each year, there will be fierce debate by the deficit hawks.
     This is a $1.5 trillion proposal that includes$200 billion federal spending that relies on public/private funding. In addition to funding, there will be an effort to reduce the permitting process to expedite projects.
     
The Trump administration will expect the state, local  and private sources to bankroll infrastructure rebuilds via public/private partnerships (expensive), taxes and fees while the Feds  plan to streamline bureaucracy, cutting red tape that presumably has held up projects.
      Three obstacles: How many states have the money, and how long would it take to develop other means to finance projects.  Then there are the politics of the various issues that will arise, none the least of which would be finance projects on the backs of cuts to social programs.
      This is yet another disgraceful blunder.  The Trump administration had a chance to tie tax cuts and especially the repatriation of  trillions of dollars abroad to infrastructure funding.
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       The American Society of Civil Engineers (ASCE) grade  the 16 sectors of  our nation’s infrastructure. As a group, they get D+. Broken down they get: Aviation D, Bridges C+, Dams D, Drinking Water D, Energy D+, Hazardous Waste D+, Inland Waterways D, Levees D, Ports C+, Public Parks D+, Railway B, Roads D, Schools C+, Transit D-, Waste Water D-.
      There are a host of companies that could benefit over time. I have identified as many as 27. If the administration announces a big push, most will jump in price on the hype. This happened  a year ago. The group jumped sharply, then lost momentum and drifted sideways-to-down.  Most of the infrastructure stocks listed below jumped 1% to 2% on the news  
      
Potential beneficiaries: Martin Marietta (MLM), Chicago Bridge (CBI), Cliffs (CLF), Vulcan Materials (VMC), Caterpillar (CAT), Arcelor Mittal (MT), Nucor (NUE), Fluor (FLR), USG (USG), United Rentals (URI), CEMEX (CX), U.S. Concrete (USCR), Jacobs (JEC), AECOM (ACM), Emerson El (EMR), Manitowac (MTW),Tetra Tech (TTEK), KBR (KBR), McDermott (MDR), Quanta Services (PWR), EMCOR (EME), Mastec (MTZ), American Water (AWK), American Tower (AMT), Granite Const’n (GVA, Eagle Materials (EXP), Steel Dynamics (STLD).
      one.
        Go to www.infrastructure report card.org for details on the “problem.”
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POLITICAL/STOCK MARKET
TRUMP refuses to allow Democrat response to Nunes ‘MEMO.”  Even though the Democrat response was run by the FBI and DOJ for vetting, Trump claims it contains “classified and sensitive passages.”
      Yet, more obstruction ?   What is he hiding ?
According to Palmer.com, ranking Democrat on the House Intel Committee, Adam Schiff, could just read it on the House floor or the Committee could resort to “Rule X” and override the Presidents veto (doubtful)
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Number 3 at DOJ, Rachael Brand, resigns at DOJ (see below)

WILL TRUMP FIRE MUELLER ? LOOK FOR THIS  TIP-OFF

      Trump can’t fire Mueller directly, it must be done by the Department of Justice.  Trump would have to find someone to do it.  A new appointment to the DOJ may signal Trump’s intent.
      Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will.  Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but she just announced she is resigning from DOJ (2?9/19)      Trump must find someone in DOJ to fire Mueller if he wants to do it.    

      DOJ’s Dana Bounte’s resignation last October and his recent  appointment by FBI Director Christopher Wray as general Counsel  for the FBI takes him out of the running, though it is doubtful he would have fired Mueller.   He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general  for the National Security Division of DOJ.     
        Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume  Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
      Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and  CIA’s  Mike Pompeo, is a possibility for a post. there.   Attorney General Jeff Sessions has recused himself from the Russian/Trump  “investigation” March 2017.
       REASONS NEEDED TO FIRE MUELLER: Trump would have to have  good reason to fire Mueller.  Grounds must be, misconduct, dereliction of duty, incapacity, conflict of interest, or other good cause, including violation of policies of the Department of Justice, and failure to follow Justice Departments guidelines and violation of applicable canons of ethics.
       CAN TRUMP RESCIND  SPECIAL COUNSEL REGULATION ?  Yes, it’s possible but many legal hurdles  would make it difficult and possibly so time consuming as to make the action worthless. There is no clear cut answer. This would be decided in court, the legal ramifications just very complex.
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        FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom  March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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U.S. Ranking globally and domestically plunging under Trump
      Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year.  Clearly, Trump isn’t making America Great Again in the eyes of all other countries. 
The downside of this is we need the support of those countries.  Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
      Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition  to  R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped.  South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
       Also under Trump, Americans’ trust in institutions (government, companies and the  media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year.  He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues  without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?,  coach ?, employer ?.  IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE

“It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” –   Michael Bloomberg – billionaire business man former mayor NYC

      I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
      Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
      Individual income tax payments comprise 47% of  federal government receipts. At this point, I have no idea how much of an impact  Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
      The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
      That assumption is flawed. For one, why would a corporation  go on a hiring and cap-ex spending spree  with an economic expansion that  is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
      For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
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The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”:  The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:
-of 258 Fortune 500 companies studied, the effective federal income tax rate was 21.5%
18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
83 companies (32%) paid a tax rate less than 17.5%
109 companies (42%)  paid a tax rate between 17.5% and 30%.
66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the  effective tax rate  for corporates will drop to 9.2% as a result of  tax reform.
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STATES NEEDING FED’s HELP THE MOST

       The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine,  Indiana, Arizona, Louisiana.
      The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
  Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).
So why all the whining about the Feds being in their space ?  Want to go it alone ?   Careful
what you wish for   
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The BIG question is, do American morals and respect for our republic  have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
    Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people. 
     The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional  anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
      It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
    
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
       This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.

       This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News)  They want total control.  This is how democratic,  representative republics  perish.
      America is the biggest enchilada on earth.  Why wouldn’t a group of extremists want to wrest permanent control from its people ?  Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My  Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having  advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank.  Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on  meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the runBannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
      In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished  by one regret – he backed the biggest con job in our nation’s history.”

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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin),  are planning to require poverty stricken people on Medicaid  to get jobs  or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children.  Isn’t it bad enough these people are in poverty ? 
      Vox Media reports that 9.8 million Medicaid recipients  don’t have jobs  due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time.  I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
    
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage.  Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
     The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
      Can the Mueller investigation survive Mueller’s firing ?

Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”

1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE:  Not since the Civil War has the spirit and future of our nation been at such great risk, from within.  This  administration, Congress and U.S. Supreme Court is surgically dismembering  efforts over many years to ensure the safety  and well being of “all” Americans.
     The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand  of a  quasi-fascist state.  Ben Franklin was right when asked what kind of government  the Founding Fathers had given us.  “A Republic, if you can keep it,” was his respons.
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TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
    Why not, he dodged military service with 5 deferments  during the Vietnam era (1964 – 1970).
     Reportedly, he has asked advisers about his power to pardon family members and himself  relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor  concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.

REASONS NEEDED TO FIRE MUELLER:  Misconduct,  dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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  “Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr.  and Eric Trump – Wilbur Ross –  Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son)  – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and  Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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     REMOVING TRUMP FROM  OFFICE

Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
      It’s a stretch. 
The key for his removal is ”that he is unable to discharge the powers and duties of his office.”  Section 4 mentions nothing  that he is unfit, delusional, unbalanced, crazy,  impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
      That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent

      It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
      First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
      The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
      However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
       The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress  will act within 21 days where a two-thirds vote would be required to remove  him.  
        However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
     
A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.
      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.

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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WILD Swings In The Market – Traders Only !

Investor’s first read – Daily edge before the open
DJIA: 24,190
S&P 500: 2,616
Nasdaq Comp.: 6,874
Russell 2000: 1,477
Monday, Feb 12,  2018    8:59 a.m.
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Finally an infrastructure plan (see below) ……………………………………………………….
> I think we has seen the top in  the  2009 – 2018 Bull Market,  but bulls and the administration are not going to give up easily, they do not want a major market decline heading into the mid-term election.
>Last week’s 12% freefall was the first of two major corrections I forecast in December for 2018’s market.
>Last week’s drop looks a lot like August 2014 (S&P 500 down 15.8%) and Jan./Feb. 2016 down 17.7%), both in a matter of weeks. Both recovered in following months.  This one will rebound too, but be limited as the topping out process of the bull market sets in.
> Straight down from here ?  No, I think it’s going to take longer with wild swings in prices in coming months.

>  The market will  rebound sharply from Friday’s lows, driven by bargain hunters and excitement about the introduction of an infrastructure plan.
> The market will run into selling at higher levels by investors who feel they missed a chance to raise cash before the Jan./Feb. 12% plunge.

>WILD SWINGS in prices  will be great for traders, but risky for the average investor. 
> An attack on the bull market highs (DJIA: 26,616; S&P 500: 2,872; Nasdaq Comp. 7,505) should develop in coming weeks, but should stall,  roll over and head south again – followed by yet another rally until the market finally yields  to sellers, sliding to new 2018 lows.
> Suddenly, the financial landscape has changed, as the Street’s automatic “buy-at-the-market” mode is now fraught with concern.   Blame algorithms that weren’t programmed for the fact things can only get so good.
>The Fed has made it clear for a year it was going to raise its benchmark federal funds rate. On Monday the 10-year Treasury jumped, reminding the Street, that the era of  low interest rates was over.                                                                        
> The MAJOR reason the bubble was pricked this time,  triggering a flash crash, was the market was obscenely overvalued. The Shiller S&P 500’s price/earnings ratio (P/E), based on average inflation-adjusted earnings over 10 years CAPE)  is now 31.7 vs. a mean of 16.8.  That kind of euphoria can only last for so long until someone breaks ranks and sells in size. It was simply a matter of time.
>
The criteria  for a bear market is one that   drops 20%.  A 20% drop from the January 26 high would take the DJIA to 21,293, the S&P 500 to 2,298, and the Nasdaq Comp. to 6,004. When it happens, I can see a much bigger decline.
> Friday’s Mid-day rebound from the day’s lows  was classic selling climax action. The DJIA was down 12.2% (S&P 500: 11.8%) in 10 days.  It’s rebound is a combination of bargain hunting after an ugly hit to stock prices, as well as some short covering by those fortunate enough to be on the right side of the plunge.
TODAY
      There is a lot of overhead supply (investors waiting to sell on a rebound). That should be encountered at DJIA: 25,075; S&P 500: 2,710; Nasdaq Comp.: 7140.
       Rally failures where the market loses all of a big gain in the same day are deadly.

      What can the Street hang its hat on going forward ?
       Aside from a lot of administration hype, corporate earnings will be surging sharply this year.  While the market has pretty much priced this
increase in earnings in at current levels, the reports will have a positive impact, the next being April.  This is why I see wide swings in stock prices during the first six months with a final slide starting mid-year.
         
       Higher rates will unnerve the Street, but the Fed will soft-talk the prospect, trying to avert another plunge in the market.  If the Fed reverses fields and opts not to raise rates aggressively, it would initially trigger a rally, but signal the Fed feared a sharp downturn in the economy which would also be a problem.
       Of course, there is always the potential for a huge political scandal.  Special Counsel Robert Mueller ramps up indictments in the counsel’s probe.  We may see attempts to prevent the investigation from releasing results (my expectation) either by firing Mueller or  finding a way to strike down the regulation empowering the DOJ to be the only one whom can fire Mueller. Pardoning key people who are at risk of fines, jail time, etc.  would seriously divide America. (See below).      

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RESISTANCE “today” DJIA:5,075;S&P 500:2,710; Nasdaq Comp.:7,140
 
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SIGNS OF EARLY STAGE BEAR MARKET

  1. The economy can’t get better than this – and won’t.  I see seeds of a recession setting in early 2019.

BEAR MARKETS START AHEAD OF RECESSIONS by a lead time of 3 to 9 months. Commentators and pundits say, don’t worry, the economy is strong. Many prominent money managers would like to say “sell,” but can’t for fear of triggering a PANIC.

  1. This economy and bull market are long in the tooth. The average of 11 economic expansions (1945  – 2009) has been 59 months. This expansion is 103 months old.  The average length of 15 bull markets runs 2.5 years or 30.4 months.  This bull has lasted 107 months. Credit card debt has doubled since 2013, the delinquency rate  is rising sharply.  The Personal Savings rate as a percent of  disposable income is 2.9%, down from 7.1% in July 2012.  This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.
  2. CORRECTION: The Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years)  is now 31 vs.  an average of 16.8, a 94% overvaluation. Over the years, this P/E has ranged between 4.8 and 49.2 for various reasons, none the least of which is investors’ confidence in the stability of our government and its future.
  3. We are faced with the prospect of a Constitutional crisis, the possibility of the disclosure of high crimes in high offices.  That could result in total CHAOS. It may be dragged out into 2019, even 2020.
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    RECENT “INVESTORS FIRST READ. COM”  BLOGS LEADING UP TO THE MARKET’S PLUNGE
    Starting with the DJIA at 26,392 (S&P 500: 2,839)   I wrote:  

     “The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare ! 
      At some point, these think-alike’s  will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
      Friday’s sharp plunges is a warning of things to come if the Street suddenly exits.  The potential exists for a correction of 12% – 16%.”

      I have repeated that  every day for emphasis.
       ON December 27, my annual forecast was “2018; The wildest One in Years,”
stating emphatically, “NO ONE IS BEARISH ! THAT’S BEARISH !
       My initial target for a correction was DJIA down 3,578 points to 22,735 (-13.6%) and for the S&P 500: down 349 points to 2,500 (-12.2%).

        Look, the is classic “Flash Crash,” where the Street, mostly following the same indicators all get a sell signal, or defer purchase signal at the same time,  that’s why I disparage them as “think-alikes.” Best computer is the human brain.

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FINALLY – AN INFRASTRUCTURE  PLAN ?
      The administration is finally ready to introduce an infrastructure plan. Clearly it is a problem that must be addressed.  Unfortunately debt that will be encountered by way of its approved spending plan and an unjustified massive tax cut that reduced revenues the government will receive by way of the 40% tax cuts for corporations accounting for 9% of  federal receipts each year, there will be fierce debate by the deficit hawks.
     However, reports out of Newsweek and Politico.com indicate the Federal government won’t be spending $1 trillion on the nation’s infrastructure, but rather $200 billion over 10 years, according to Newsweek and Politico.  The Trump administration will expect the state, local  and private sources to bankroll infrastructure rebuilds via public/private partnerships (expensive), taxes and fees while the Feds  plan to streamline bureaucracy, cutting red tape that presumably has held up projects.
      Three obstacles: How many states have the money, and how long would it take to develop other means to finance projects.  Then there are the politics of the various issues that will arise, none the least of which would be finance projects on the backs of cuts to social programs.
      This is yet another disgraceful blunder.  The Trump administration had a chance to tie tax cuts and especially the repatriation of  trillions of dollars abroad to infrastructure funding.
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       The American Society of Civil Engineers (ASCE) grade  the 16 sectors of  our nation’s infrastructure. As a group, they get D+. Broken down they get: Aviation D, Bridges C+, Dams D, Drinking Water D, Energy D+, Hazardous Waste D+, Inland Waterways D, Levees D, Ports C+, Public Parks D+, Railway B, Roads D, Schools C+, Transit D-, Waste Water D-.
       I ran a series on this need early in the Obama administration thinking it was a sure thing, but healthcare got the nod. It cost the Democrats control of Congress, since the “perception” (not reality) would have been jobs were just around the corner.
               There are a host of companies that could benefit over time. I have identified as many as 27. If the administration announces a big push, most will jump in price on the hype. This happened  a year ago. The group jumped sharply, then lost momentum and drifted sideways-to-down.  Many have already run up, but have room to move up more “IF” the administration opts for a big trillion dollar push over 10 years.
       Potential beneficiaries: Martin Marietta (MLM), Chicago Bridge (CLF), Cliffs (CLF), Vulcan Materials (VMC), Caterpillar (CAT), Arcelor Mittal (MT), Nucor (NUE), Fluor (FLR), USG (USG), United Rentals (URI), CEMEX (CX), U.S. Concrete (USCR), Jacobs (JEC), AECOM (ACM), Emerson El (EMR), Manitowac (MTW),Tetra Tech (TTEK), KBR (KBR), McDermott (MDR), Quanta Services (PWR), EMCOR (EME), Mastec (MTZ), American Water (AWK), American Tower (AMT), Granite Const’n (GVA, Eagle Materials (EXP), Steel Dynamics (STLD).
      one.
        Go to www.infrastructure report card.org for details on the “problem.”
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POLITICAL/STOCK MARKET
TRUMP refuses to allow Democrat response to Nunes ‘MEMO.”  Even though the Democrat response was run by the FBI and DOJ for vetting, Trump claims it contains “classified and sensitive passages.”
      Yet, more obstruction ?   What is he hiding ?
According to Palmer.com, ranking Democrat on the House Intel Committee, Adam Schiff, could just read it on the House floor or the Committee could resort to “Rule X” and override the Presidents veto (doubtful)
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Number 3 at DOJ, Rachael Brand, resigns at DOJ (see below)

WILL TRUMP FIRE MUELLER ? LOOK FOR THIS  TIP-OFF

      Trump can’t fire Mueller directly, it must be done by the Department of Justice.  Trump would have to find someone to do it.  A new appointment to the DOJ may signal Trump’s intent.
      Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will.  Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but she just announced she is resigning from DOJ (2?9/19)      Trump must find someone in DOJ to fire Mueller if he wants to do it.    

      DOJ’s Dana Bounte’s resignation last October and his recent  appointment by FBI Director Christopher Wray as general Counsel  for the FBI takes him out of the running, though it is doubtful he would have fired Mueller.   He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general  for the National Security Division of DOJ.     
        Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume  Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
      Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and  CIA’s  Mike Pompeo, is a possibility for a post. there.   Attorney General Jeff Sessions has recused himself from the Russian/Trump  “investigation” March 2017.
       REASONS NEEDED TO FIRE MUELLER: Trump would have to have  good reason to fire Mueller.  Grounds must be, misconduct, dereliction of duty, incapacity, conflict of interest, or other good cause, including violation of policies of the Department of Justice, and failure to follow Justice Departments guidelines and violation of applicable canons of ethics.
       CAN TRUMP RESCIND  SPECIAL COUNSEL REGULATION ?  Yes, it’s possible but many legal hurdles  would make it difficult and possibly so time consuming as to make the action worthless. There is no clear cut answer. This would be decided in court, the legal ramifications just very complex.
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        FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom  March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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U.S. Ranking globally and domestically plunging under Trump
      Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year.  Clearly, Trump isn’t making America Great Again in the eyes of all other countries. 
The downside of this is we need the support of those countries.  Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
      Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition  to  R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped.  South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
       Also under Trump, Americans’ trust in institutions (government, companies and the  media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year.  He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues  without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?,  coach ?, employer ?.  IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE

“It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” –   Michael Bloomberg – billionaire business man former mayor NYC

      I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
      Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
      Individual income tax payments comprise 47% of  federal government receipts. At this point, I have no idea how much of an impact  Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
      The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
      That assumption is flawed. For one, why would a corporation  go on a hiring and cap-ex spending spree  with an economic expansion that  is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
      For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
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The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”:  The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:
-of 258 Fortune 500 companies studied, the effective federal income tax rate was 21.5%
18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
83 companies (32%) paid a tax rate less than 17.5%
109 companies (42%)  paid a tax rate between 17.5% and 30%.
66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the  effective tax rate  for corporates will drop to 9.2% as a result of  tax reform.
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STATES NEEDING FED’s HELP THE MOST

       The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine,  Indiana, Arizona, Louisiana.
      The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
  Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).
So why all the whining about the Feds being in their space ?  Want to go it alone ?   Careful
what you wish for   
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The BIG question is, do American morals and respect for our republic  have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
    Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people. 
     The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional  anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
      It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
    
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
       This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.

       This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News)  They want total control.  This is how democratic,  representative republics  perish.
      America is the biggest enchilada on earth.  Why wouldn’t a group of extremists want to wrest permanent control from its people ?  Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My  Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having  advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank.  Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on  meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the runBannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
      In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished  by one regret – he backed the biggest con job in our nation’s history.”

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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin),  are planning to require poverty stricken people on Medicaid  to get jobs  or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children.  Isn’t it bad enough these people are in poverty ? 
      Vox Media reports that 9.8 million Medicaid recipients  don’t have jobs  due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time.  I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
    
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage.  Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
     The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
      Can the Mueller investigation survive Mueller’s firing ?

Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”

1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE:  Not since the Civil War has the spirit and future of our nation been at such great risk, from within.  This  administration, Congress and U.S. Supreme Court is surgically dismembering  efforts over many years to ensure the safety  and well being of “all” Americans.
     The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand  of a  quasi-fascist state.  Ben Franklin was right when asked what kind of government  the Founding Fathers had given us.  “A Republic, if you can keep it,” was his respons.
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TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
    Why not, he dodged military service with 5 deferments  during the Vietnam era (1964 – 1970).
     Reportedly, he has asked advisers about his power to pardon family members and himself  relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor  concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.

REASONS NEEDED TO FIRE MUELLER:  Misconduct,  dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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  “Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr.  and Eric Trump – Wilbur Ross –  Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son)  – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and  Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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     REMOVING TRUMP FROM  OFFICE

Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
      It’s a stretch. 
The key for his removal is ”that he is unable to discharge the powers and duties of his office.”  Section 4 mentions nothing  that he is unfit, delusional, unbalanced, crazy,  impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
      That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent

      It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
      First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
      The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
      However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
       The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress  will act within 21 days where a two-thirds vote would be required to remove  him.  
        However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
     
A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.
      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.

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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Absolutely No Room for A Rally Failure

Investor’s first read Daily edge before the open
DJIA: 23,860
S&P 500: 2,581
Nasdaq  Comp.: 6,771
Russell 2000: 1,463
Thursday, Feb 8,  2018    7:57 a.m.
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What To Look For If Trump Plans to Fire Mueller (see below)
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> Odds favor we have seen the top to the  2009 – 2018 Bull Market, but WILD SWINGS in prices  will give bulls and bears a chance to trade.  It is not yet a buy/hold market.  No sooner than an investor has a profit, it can disappear in a day or two.
> Suddenly, the financial landscape has changed.  Instead of  the Street’s automatic buy-at-the—market mode it’s now panic.  Blame algorithms that weren’t programmed for the fact that when all couldn’t get better – it doesn’t.

> Envision 65 toddlers lined up at an Easter egg hunt.  Suddenly, one breaks and runs out before  getting the “GO” signal– then another – then all  63.   
> That’s what happened on Wall Street  Monday, February 5.
>The Fed has made it clear for a year it was going to raise its benchmark federal funds rate. On Monday the 10-year Treasury jumped reminding the Street, that YES ,the era of  low interest rates was over.                                                                        
> In December, I forecast a wild 2018 year with at least two major corrections of 10% to 14%.  We just had the 10-percenter.
>It’s been 11 years since the last recession started.  Obviously, the Street forgot the old adage that  the economy always looks great at tops and horrendous at bottoms, that’s why buying low and selling high is so difficult.
>  WARNING: The Trump administration and Street  bulls do not want a bear market before the mid-term elections and will do anything to hype how great future prospects are. 
> The MAJOR reason the bubble was pricked this time  triggering a flash crash was the market was obscenely overvalued. The Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years)  is now 32.6 vs.  an average of 16.8, a 94% overvaluation
.
> The criteria  for a bear market is one that drops  drops 20%.  A 20% drop from the January 26 high would take the DJIA to 21,293, the S&P 500 to 2,298, and the Nasdaq Comp. to 6,004.
     TODAY

     Futures trading looks like an amped-up yo-yo contest.  Congress has avoided a prolonged shutdown and passed a spending bill removing a major negative from the ownership of stocks and Trump has signed it, all at 8:40 this morning. This rallied the futures from a big deficit.
      The market dropped close to 11% in nine days. It has done this before (Aug. 2015 and Jan./Feb. 2016) and recovered. 
      But the market was not as overvalued then, the Fed was still accommodative and the country was not faced with the possibility that its President could be removed from office in a debilitating political scandal.
      We haven’t heard from the Fed, but expect assurance that it won’t raise rates precipitously. 
       The plunge in prices this week was a reminder that a bear market has started. I expect strong  rallies to develop in coming months in face of a lot of pre-mid-term hype. It is a trader’s market.
        As I have warned so often since the peak on Jan. 26, beware of rally failures,
they indicate sellers are waiting to reduce exposure to the market.
        We should get a nice bounce here, but the big picture is getting ugly.
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RESISTANCE “today” DJIA:24,556; S&P 500:2,647; Nasdaq Comp.:6,951
 
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SIGNS OF EARLY STAGE BEAR MARKET

  1. The economy can’t get better than this – and won’t.  I see seeds of a recession setting in later in the year or early 2019.

BEAR MARKETS START AHEAD OF RECESSIONS by a lead time of 3 to 9 months. Commentators and pundits say, don’t worry, the economy is strong. Many prominent money managers would like to say “sell,” but can’t for fear of triggering a PANIC.

  1. This economy and bull market are long in the tooth. The average of 11 economic expansions (1945  – 2009) has been 59 months. This expansion is 103 months old.  The average length of 15 bull markets runs 2.5 years or 30.4 months.  This bull has lasted 107 months. Credit card debt has doubled since 2013, the delinquency rate  is rising sharply.  The Personal Savings rate as a percent of  disposable income is 2.9%, down from 7.1% in July 2012.  This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.
  2. CORRECTION: The Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years)  is now 32.6 vs.  an average of 16.8, a 94% overvaluation. Over the years, this P/E has ranged between 4.8 and 49.2 for various reasons, none the least of which is investors’ confidence in the stability of our government and its future.
  3. We are faced with the prospect of a Constitutional crisis, the possibility of the disclosure of high crimes in high offices.  That could result in total CHAOS.
    >>>>>>>>>>>>>>>>
    RECENT “INVESTORS FIRST READ. COM”  BLOGS LEADING UP TO THE MARKET’S PLUNGE
    Starting with the DJIA at 26,392 (S&P 500: 2,839)   I wrote:  

     “The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare ! 
      At some point, these think-alike’s  will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
      Friday’s sharp plunges is a warning of things to come if the Street suddenly exits.  The potential exists for a correction of 12% – 16%.”

      I have repeated that  every day for emphasis.
       ON December 27, my annual forecast was “2018; The wildest One in Years,”
stating emphatically, “NO ONE IS BEARISH ! THAT’S BEARISH !
       My initial target for a correction was DJIA down 3,578 points to 22,735 (-13.6%) and for the S&P 500: down 349 points to 2,500 (-12.2%).

        Look, the is classic “Flash Crash,” where the Street, mostly following the same indicators all get a sell signal, or defer purchase signal at the same time,  that’s why I disparage them as “think-alikes.”

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MORE FROM PAST BLOGS
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       I sense a constitutional crisis is imminent with Special Counsel Robert Mueller indicting high level Trump administration officials.  I believe Trump will respond with an attempt to fire Mueller, or find another way to obstruct  the progress of this investigation.
        The key here is, how this will impact the market.  Initially, a brief plunge followed by a sharp rally would be likely, since the Street is tuned-out on political, but as the severity of the constitutional crisis deepens, the market will take a huge hit with the DJIA giving up at least 3,578 to 22,735  (-13.6%)  and the S&P 500 giving up 349 points to 2,500 (-12.2%).
        That’s roughly one-third of what the market gained since the 2016 election. Markets frequently give up one-third of major upmoves.  Obviously if the market gets hit with new negatives after a that pullback, the plunge  would be greater.
        The reason I think a crisis is imminent is because the Republicans have ramped up their efforts to discredit the FBI and  the Mueller probe, and because Trump says he is willing to testify under oath to the Mueller commission.
        Nonsense !  He has no intention to meet with Mueller or he would have done so months ago. He wants to give the impression he is willing to comply to orchestrate support from his base.
        Our republic is being tested like never before.  This is a battle for untethered control by what I view as constitutional anarchists who want to dismantle 75 years of progress toward developing a high quality of life for America as a whole.  Why else would they gerrymander the Hell out of our electorate, make it difficult for people to vote, and stack the judicial system ?
       This is the extremist right wing’s big chance; they know demographics are against them going forward.  I doubt Congress will oust Trump regardless of the severity of his actions before and after talking office.
        But Wall Street, corporate American and the BIG money got their tax cut, they may want to get rid of Trump before he ruins chances of the Republicans hanging on to control of Congress and the White House in 2020.
          Late-stage bull markets offer opportunities to make money easier and faster, simply because speculative fever is ramped up and buyers are jumping on anything that  gets favorable mention by the Street or in the press.
          At some point, the BIG money will have to exit.  They need eager buyers to do so without knocking stocks they are selling down.  With  reportedly $33.2 billion flowing into stocks in  the January 24 week, this is the euphoria they have been waiting for.

  >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 I am keeping the following posted for new readers
 
What is written below will be difficult to believe. It’s just a matter of time before a major correction sets is, and a bear market.
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No one is bearish, and that IS BEARISH !  Odds favor 12% to 18% correction not necessarily today, or this week, maybe not for months, but the market crossed the line above reasonable valuation months ago, and is vulnerable to one of those flash crashes I have prematurely warned about.
      From November 2016 to December 2017, the market was driven by promises of a massive corporate and high-earner tax cut. The passage of the tax cut in December took stock prices an even greater extreme.
      The economic recovery, that started in June 2009 after the Great Recession and 52% bear market decline, continues undeterred.  But stock markets turn down well ahead of the start of  recessions, generally with a lead time of 3 to 9 months.
       I have wrongly warned of risk for the better part of 2017, even issued a Sell on August 29. Realizing I was wrong, I reversed that call two weeks later, headlining, “WRONG READ on timing – But Warning Stands.”
       I  have experienced 14 bull market tops, written about 12, and all came when “least” expected, when a downturn  was dismissed as impossible.
       What might be an extreme of over-valuation (or undervaluation)  in one market, may not rank as one in the next market. Bear market bottoms are easier to read than bull market tops.
       A severe correction, possibly a bear market, is out there. It will take a “trigger” to start it, or a sudden “no show” by the BIG money, followed by panicky selling to get it underway. The Street got its tax cut, what else is there to anticipate ?  Most of the benefits of the tax cut are priced- in the market’s 31% gain in the S&P 500 over 15 months.
       Yes, making money can be easy now, buying just about anything, even junk. 
      Warnings like mine are annoying, even provoke anger. 
      “Who is this jerk, talking about risk when people are making a killing in the market ?” one may ask.
        “Aren’t  there dozens of reports out there hyping what-to-buy after the tax cut ?  Didn’t I just hear about someone making a bundle last year.  Take a hike Brooks, I’m all-in !”
       
I am not alone in seeing risk.
        I have enormous respect for James Stack of  InvesTech Research (1-406-862-777). Stack is also warning of risk and has reduced exposure to the market. His set of economic and stock market indicators are near flawless. What’s startling about his last issue is the extremes to which many of his indicators have reached. While his economic indicators suggest a recession is not imminent, he also warns that  stock markets turn down 6-9 months ahead of recessions. The market has not had a 3% correction in 14.4 months, which has not  happened since stocks plunged in 2008, he writes.
       What’s more, he says, the bearish sentiments of the  Investment Advisors Sentiment Survey tracked by Investors Intelligence,  just hit a 31-year low.  This is a contrary indicator. Advisors are least bearish at market tops when they should be bearish and least bullish at market bottoms – that’s the pattern. Maybe that’s why it is so hard to buy-low/sell-high !  Maybe  it’s just easier for these people to sell greed at market tops and fear at bottoms.
       Then too, the S&P 500 price/earnings ratio based on earnings already reported is 26, well above the historic norm of 17.2, excluding the extremes of the 1990’s technology bubble and 2008-2009  financial crisis.
      Finally, margin debt (borrowing to buy stocks). It has been hitting new highs.  That spells leverage which is fine as long as stocks rise, but  devastating in declines.

        I am as concerned today about what I see, as I was in August 2007 before the Great Recession/Bear Market when I wrote:
 

Perfect Storm  Looms

 

      The perfect storm in our financial markets

is looming….It will take a heroic effort internationally

 to avert a meltdown of  huge magnitude…Trading in

everything may have to be stopped until some sort of

sanity is restored…This can get real ugly…No one has

a handle on the leverage amassed in  derivatives  ..No

one has a true handle on how precarious the situation out

there is, and that uncertainty feeds on itself prompting

increased selling…With few buyers, stocks tank…

Only when a cauldron of fear begins to boil do you have

 a market that is reasonably safe to invest in.

 

George Brooks

August 19, 2007

 

     I was two months early then, more so this time around. Conditions are a bit different now, but the odds that the Street will be blindsided this time are greater. They have blinders on – tunnel vision – in denial.     
       We are approaching perfect storm conditions, and I haven’t even touched on the total dysfunction of the Trump administration and Congress, and its imminent implosion in face of the findings of the Mueller investigation.
       THE NATION’S BIGGEST EVER POLITICAL SCANDAL will hit in coming months, look for multiple constitutional crises, and possibly panic in the stock market.
        SELL EVERYTHING ?  That may work for some people, but the more nimble may be able to stay a while as euphoria takes stocks higher.   For others,  a healthy cash reserve is justified just in case a few of us, and historic precedence are right.
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POLITICAL/STOCK MARKET
WILL TRUMP FIRE MUELLER ? LOOK FOR THIS  TIP-OFF

      Trump can’t fire Mueller directly, it must be done by the Department of Justice.  Trump would have to find someone to do it.  A new appointment to the DOJ may signal Trump’s intent.
     
Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will.  Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but it is doubtful she would tarnish her career by firing Mueller, as did Robert Bork who fired special prosecutor  Archibald Cox  under orders of President Nixon in the Watergate Saturday Night Massacre, October 1973.          
      Trump must find someone in DOJ to fire Mueller if he wants to do it.    

      DOJ’s Dana Bounte’s resignation last October and his recent  appointment by FBI Director Christopher Wray as general Counsel  for the FBI takes him out of the running, though it is doubtful he would have fired Mueller.   He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general  for the National Security Division of DOJ.     
        Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume  Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
      Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and  CIA’s  Mike Pompeo, is a possibility for a post. there.   Attorney General Jeff Sessions has recused himself from the Russian/Trump  “investigation” March 2017.
       REASONS NEEDED TO FIRE MUELLER: Trump would have to have  good reason to fire Mueller.  Grounds must be, misconduct, dereliction of duty, incapacity, conflict of interest, or other good cause, including violation of policies of the Department of Justice, and failure to follow Justice Departments guidelines and violation of applicable canons of ethics.
       CAN TRUMP RESCIND  SPECIAL COUNSEL REGULATION ?  Yes, it’s possible but many legal hurdles  would make it difficult and possibly so time consuming as to make the action worthless. There is no clear cut answer. This would be decided in court, the legal ramifications just very complex.
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        FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom  March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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U.S. Ranking globally and domestically plunging under Trump
      Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year.  Clearly, Trump isn’t making America Great Again in the eyes of all other countries. 
The downside of this is we need the support of those countries.  Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
      Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition  to  R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped.  South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
       Also under Trump, Americans’ trust in institutions (government, companies and the  media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year.  He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues  without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE

“It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” –   Michael Bloomberg – billionaire business man former mayor NYC

      I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
      Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
      Individual income tax payments comprise 47% of  federal government receipts. At this point, I have no idea how much of an impact  Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
      The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
      That assumption is flawed. For one, why would a corporation  go on a hiring and cap-ex spending spree  with an economic expansion that  is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
      For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
>>>>>>>>>>>>>>>
The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”:  The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:

-Of 258 Fortune 500companies studied, the effective federal income tax rate was 21.5%
18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
83 companies (32%) paid a tax rate less than 17.5%
109 companies (42%)  paid a tax rate between 17.5% and 30%.
66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the  effective tax rate  for corporates will drop to 9.2% as a result of  tax reform.

 

      ……………………………………………………
STATES NEEDING FED’s HELP THE MOST
       The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine,  Indiana, Arizona, Louisiana.
      The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
  Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).

  So why all the whining about the Feds being in their space ?  Want to go it alone ?   Careful what you wish for.
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The BIG question is, do American morals and respect for our republic  have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
    Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people. 
     The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional  anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
      It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
    
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
       This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.

       This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News)  They want total control.  This is how democratic,  representative republics  perish.
      America is the biggest enchilada on earth.  Why wouldn’t a group of extremists want to wrest permanent control from its people ?  Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My  Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having  advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank.  Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on  meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the runBannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
      In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished  by one regret – he backed the biggest con job in our nation’s history.”

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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin),  are planning to require poverty stricken people on Medicaid  to get jobs  or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children.  Isn’t it bad enough these people are in poverty ? 
      Vox Media reports that 9.8 million Medicaid recipients  don’t have jobs  due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time.  I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
    
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage.  Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
     The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
      Can the Mueller investigation survive Mueller’s firing ?

Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”

1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE:  Not since the Civil War has the spirit and future of our nation been at such great risk, from within.  This  administration, Congress and U.S. Supreme Court is surgically dismembering  efforts over many years to ensure the safety  and well being of “all” Americans.
     The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand  of a  quasi-fascist state.  Ben Franklin was right when asked what kind of government  the Founding Fathers had given us.  “A Republic, if you can keep it,” was his respons.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?,  coach ?, employer ?.  IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?

       ……………………………………………………………………………
TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
    Why not, he dodged military service with 5 deferments  during the Vietnam era (1964 – 1970).
     Reportedly, he has asked advisers about his power to pardon family members and himself  relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor  concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.

REASONS NEEDED TO FIRE MUELLER:  Misconduct,  dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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  “Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr.  and Eric Trump – Wilbur Ross –  Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son)  – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and  Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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     REMOVING TRUMP FROM  OFFICE

Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
      It’s a stretch. 
The key for his removal is ”that he is unable to discharge the powers and duties of his office.”  Section 4 mentions nothing  that he is unfit, delusional, unbalanced, crazy,  impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
      That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent

      It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
      First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
      The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
      However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
       The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress  will act within 21 days where a two-thirds vote would be required to remove  him.  
        However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
      A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.

      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.

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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Topping Out Process – Extreme Volatility

Investor’s first read – Daily edge before the open
DJIA:24,842
S&P 500: 2681
Nasdaq  Comp.:7,051
Russell 2000: 1508
Thursday, Feb 8,  2018    7:57 a.m.
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What To Look For If Trump Plans to Fire Mueller (see below)
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> Odds favor we have seen the top to the  2009 – 2018 Bull Market, but WILD SWINGS in prices  will give bulls and bears a chance to trade.  It is not a buy/hold market.  No sooner than an investor has a profit, it can disappear in a day or two.
> The market may attack recent all-time highs, fail or even momentarily punch to new highs.  We are in a topping out process.
> The market can plunge  now, or  churn for several months before a sustained plunge.

>A recession  simply does not make sense to most of the press, but it will as we move forward.
> This flash crash had to happen, just a matter of time. Odds of flash crashes increase when the market goes uncorrected for many months like this one with no 3% correction in 14 months.    After that long between corrections, the Street is aware it could happen just so long as no one breaks ranks and sells, the market holds.  Envision 65 toddlers lined up at an Easter egg hunt.  Suddenly, one breaks and runs out before  getting the “GO” signal– then another – then all  63.                                                                             
> In December, I forecast a wild 2018 year with at least two major corrections of 10% to 14%.  We just had the 10-percenter.
> This is a VERY dangerous market.
> The economy always looks great at tops and horrendous at bottoms, that’s why buying low and selling high is so difficult.
> We have seen flash crashes in the past and the market always snapped back. The Trump administration and Street  bulls do not want a bear market before the mid-term elections and will do anything to hype how great future prospects are.  But all that has been priced into the market even at these levels.
>
The criteria  for a bear market is one that drops  drops 20%.  A 20% drop from the January 26 high would take the DJIA to 21,293, the S&P 500 to 2,298, and the Nasdaq Comp. to 6,004.
    But that only erases one year of trading.  I expect this bear market will  TODAY
    
A nice gain yesterday was given back in the last hour of trading, reportedly  due to a spike in the 10-year benchmark Treasury Bond.  That is not good news. 
      Yesterday, I headlined “Any Rally Off Test of Lows Must Hold.
       We got a rally with the DJIA jumping 627 points during the day, BUT the rally failed to hold, suggesting buyers are skittish, and sellers quick to use strength to raise cash.
       Pre-market futures suggest another rally attempt today probably due to avoiding a government shutdown.
       Another rally failure today would  indicate another leg down to test  Tuesday’s lows at DJIA: 23,778; S&P 500:2,593; Nasdaq Comp.: 6,824.
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SUPPORT “today”: DJIA:24:;S&P 500: ;Nasdaq Comp.:
RESISTANCE “today” DJIA:; S&P 500:; Nasdaq Comp.:
 
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SIGNS OF EARLY STAGE BEAR MARKET

  1. The economy can’t get better than this – and won’t.  I see seeds of a recession setting in later in the year or early 2019.

BEAR MARKETS START AHEAD OF RECESSIONS by a lead time of 3 to 9 months. Commentators and pundits say, don’t worry, the economy is strong. Many prominent money managers would like to say “sell,” but can’t for fear of triggering a PANIC.

  1. This economy and bull market are long in the tooth. The average of 11 economic expansions (1945  – 2009) has been 59 months. This expansion is 103 months old.  The average length of 15 bull markets runs 2.5 years or 30.4 months.  This bull has lasted 107 months. Credit card debt has doubled since 2013, the delinquency rate  is rising sharply.  The Personal Savings rate as a percent of  disposable income is 2.9%, down from 7.1% in July 2012.  This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.
  2. CORRECTION: The Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years)  is now 32.6 vs.  an average of 16.8, a 94% overvaluation. Over the years, this P/E has ranged between 4.8 and 49.2 for various reasons, none the least of which is investors’ confidence in the stability of our government and its future.
  3. We are faced with the prospect of a Constitutional crisis, the possibility of the disclosure of high crimes in high offices.  That could result in total CHAOS.
    >>>>>>>>>>>>>>>>
    RECENT “INVESTORS FIRST READ. COM”  BLOGS LEADING UP TO THE MARKET’S PLUNGE
    Starting with the DJIA at 26,392 (S&P 500: 2,839)   I wrote:  

     “The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare ! 
      At some point, these think-alike’s  will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
      Friday’s sharp plunges is a warning of things to come if the Street suddenly exits.  The potential exists for a correction of 12% – 16%.”

      I have repeated that  every day for emphasis.
       ON December 27, my annual forecast was “2018; The wildest One in Years,”
stating emphatically, “NO ONE IS BEARISH ! THAT’S BEARISH !
       My initial target for a correction was DJIA down 3,578 points to 22,735 (-13.6%) and for the S&P 500: down 349 points to 2,500 (-12.2%).

        Look, the is classic “Flash Crash,” where the Street, mostly following the same indicators all get a sell signal, or defer purchase signal at the same time,  that’s why I disparage them as “think-alikes.”

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SUPPORT “today”: DJIA:24:24,401;S&P 500: 2,647;Nasdaq Comp.:6,996
RESISTANCE “today” DJIA:25,097; S&P 500:2,721; Nasdaq Comp.:7,143
 
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I really can’t put it more clearer than what I have been saying:
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       I sense a constitutional crisis is imminent with Special Counsel Robert Mueller indicting high level Trump administration officials.  I believe Trump will respond with an attempt to fire Mueller, or find another way to obstruct  the progress of this investigation.
        The key here is, how this will impact the market.  Initially, a brief plunge followed by a sharp rally would be likely, since the Street is tuned-out on political, but as the severity of the constitutional crisis deepens, the market will take a huge hit with the DJIA giving up at least 3,578 to 22,735  (-13.6%)  and the S&P 500 giving up 349 points to 2,500 (-12.2%).
        That’s roughly one-third of what the market gained since the 2016 election. Markets frequently give up one-third of major upmoves.  Obviously if the market gets hit with new negatives after a that pullback, the plunge  would be greater.
        The reason I think a crisis is imminent is because the Republicans have ramped up their efforts to discredit the FBI and  the Mueller probe, and because Trump says he is willing to testify under oath to the Mueller commission.
        Nonsense !  He has no intention to meet with Mueller or he would have done so months ago. He wants to give the impression he is willing to comply to orchestrate support from his base.
        Our republic is being tested like never before.  This is a battle for untethered control by what I view as constitutional anarchists who want to dismantle 75 years of progress toward developing a high quality of life for America as a whole.  Why else would they gerrymander the Hell out of our electorate, make it difficult for people to vote, and stack the judicial system ?
       This is the extremist right wing’s big chance; they know demographics are against them going forward.  I doubt Congress will oust Trump regardless of the severity of his actions before and after talking office.
        But Wall Street, corporate American and the BIG money got their tax cut, they may want to get rid of Trump before he ruins chances of the Republicans hanging on to control of Congress and the White House in 2020.
          Late-stage bull markets offer opportunities to make money easier and faster, simply because speculative fever is ramped up and buyers are jumping on anything that  gets favorable mention by the Street or in the press.
          At some point, the BIG money will have to exit.  They need eager buyers to do so without knocking stocks they are selling down.  With  reportedly $33.2 billion flowing into stocks in  the January 24 week, this is the euphoria they have been waiting for.

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 I am keeping the following posted for new readers
 
What is written below will be difficult to believe. It’s just a matter of time before a major correction sets is, and a bear market.
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No one is bearish, and that IS BEARISH !  Odds favor 12% to 18% correction not necessarily today, or this week, maybe not for months, but the market crossed the line above reasonable valuation months ago, and is vulnerable to one of those flash crashes I have prematurely warned about.
      From November 2016 to December 2017, the market was driven by promises of a massive corporate and high-earner tax cut. The passage of the tax cut in December took stock prices an even greater extreme.
      The economic recovery, that started in June 2009 after the Great Recession and 52% bear market decline, continues undeterred.  But stock markets turn down well ahead of the start of  recessions, generally with a lead time of 3 to 9 months.
       I have wrongly warned of risk for the better part of 2017, even issued a Sell on August 29. Realizing I was wrong, I reversed that call two weeks later, headlining, “WRONG READ on timing – But Warning Stands.”
       I  have experienced 14 bull market tops, written about 12, and all came when “least” expected, when a downturn  was dismissed as impossible.
       What might be an extreme of over-valuation (or undervaluation)  in one market, may not rank as one in the next market. Bear market bottoms are easier to read than bull market tops.
       A severe correction, possibly a bear market, is out there. It will take a “trigger” to start it, or a sudden “no show” by the BIG money, followed by panicky selling to get it underway. The Street got its tax cut, what else is there to anticipate ?  Most of the benefits of the tax cut are priced- in the market’s 31% gain in the S&P 500 over 15 months.
       Yes, making money can be easy now, buying just about anything, even junk. 
      Warnings like mine are annoying, even provoke anger. 
      “Who is this jerk, talking about risk when people are making a killing in the market ?” one may ask.
        “Aren’t  there dozens of reports out there hyping what-to-buy after the tax cut ?  Didn’t I just hear about someone making a bundle last year.  Take a hike Brooks, I’m all-in !”
       
I am not alone in seeing risk.
        I have enormous respect for James Stack of  InvesTech Research (1-406-862-777). Stack is also warning of risk and has reduced exposure to the market. His set of economic and stock market indicators are near flawless. What’s startling about his last issue is the extremes to which many of his indicators have reached. While his economic indicators suggest a recession is not imminent, he also warns that  stock markets turn down 6-9 months ahead of recessions. The market has not had a 3% correction in 14.4 months, which has not  happened since stocks plunged in 2008, he writes.
       What’s more, he says, the bearish sentiments of the  Investment Advisors Sentiment Survey tracked by Investors Intelligence,  just hit a 31-year low.  This is a contrary indicator. Advisors are least bearish at market tops when they should be bearish and least bullish at market bottoms – that’s the pattern. Maybe that’s why it is so hard to buy-low/sell-high !  Maybe  it’s just easier for these people to sell greed at market tops and fear at bottoms.
       Then too, the S&P 500 price/earnings ratio based on earnings already reported is 26, well above the historic norm of 17.2, excluding the extremes of the 1990’s technology bubble and 2008-2009  financial crisis.
      Finally, margin debt (borrowing to buy stocks). It has been hitting new highs.  That spells leverage which is fine as long as stocks rise, but  devastating in declines.

        I am as concerned today about what I see, as I was in August 2007 before the Great Recession/Bear Market when I wrote:
 

Perfect Storm  Looms

 

      The perfect storm in our financial markets

is looming….It will take a heroic effort internationally

 to avert a meltdown of  huge magnitude…Trading in

everything may have to be stopped until some sort of

sanity is restored…This can get real ugly…No one has

a handle on the leverage amassed in  derivatives  ..No

one has a true handle on how precarious the situation out

there is, and that uncertainty feeds on itself prompting

increased selling…With few buyers, stocks tank…

Only when a cauldron of fear begins to boil do you have

 a market that is reasonably safe to invest in.

 

George Brooks

August 19, 2007

 

     I was two months early then, more so this time around. Conditions are a bit different now, but the odds that the Street will be blindsided this time are greater. They have blinders on – tunnel vision – in denial.     
       We are approaching perfect storm conditions, and I haven’t even touched on the total dysfunction of the Trump administration and Congress, and its imminent implosion in face of the findings of the Mueller investigation.
       THE NATION’S BIGGEST EVER POLITICAL SCANDAL will hit in coming months, look for multiple constitutional crises, and possibly panic in the stock market.
        SELL EVERYTHING ?  That may work for some people, but the more nimble may be able to stay a while as euphoria takes stocks higher.   For others,  a healthy cash reserve is justified just in case a few of us, and historic precedence are right.
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POLITICAL/STOCK MARKET
WILL TRUMP FIRE MUELLER ? LOOK FOR THIS  TIP-OFF

      Trump can’t fire Mueller directly, it must be done by the Department of Justice.  Trump would have to find someone to do it.  A new appointment to the DOJ may signal Trump’s intent.
     
Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will.  Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but it is doubtful she would tarnish her career by firing Mueller, as did Robert Bork who fired special prosecutor  Archibald Cox  under orders of President Nixon in the Watergate Saturday Night Massacre, October 1973.          
      Trump must find someone in DOJ to fire Mueller if he wants to do it.    

      DOJ’s Dana Bounte’s resignation last October and his recent  appointment by FBI Director Christopher Wray as general Counsel  for the FBI takes him out of the running, though it is doubtful he would have fired Mueller.   He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general  for the National Security Division of DOJ.     
        Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume  Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
      Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and  CIA’s  Mike Pompeo, is a possibility for a post. there.   Attorney General Jeff Sessions has recused himself from the Russian/Trump  “investigation” March 2017.
       REASONS NEEDED TO FIRE MUELLER: Trump would have to have  good reason to fire Mueller.  Grounds must be, misconduct, dereliction of duty, incapacity, conflict of interest, or other good cause, including violation of policies of the Department of Justice, and failure to follow Justice Departments guidelines and violation of applicable canons of ethics.
       CAN TRUMP RESCIND  SPECIAL COUNSEL REGULATION ?  Yes, it’s possible but many legal hurdles  would make it difficult and possibly so time consuming as to make the action worthless. There is no clear cut answer. This would be decided in court, the legal ramifications just very complex.
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        FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom  March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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U.S. Ranking globally and domestically plunging under Trump
      Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year.  Clearly, Trump isn’t making America Great Again in the eyes of all other countries. 
The downside of this is we need the support of those countries.  Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
      Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition  to  R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped.  South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
       Also under Trump, Americans’ trust in institutions (government, companies and the  media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year.  He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues  without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE

“It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” –   Michael Bloomberg – billionaire business man former mayor NYC

      I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
      Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
      Individual income tax payments comprise 47% of  federal government receipts. At this point, I have no idea how much of an impact  Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
      The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
      That assumption is flawed. For one, why would a corporation  go on a hiring and cap-ex spending spree  with an economic expansion that  is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
      For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
>>>>>>>>>>>>>>>
The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”:  The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:

-Of 258 Fortune 500companies studied, the effective federal income tax rate was 21.5%
18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
83 companies (32%) paid a tax rate less than 17.5%
109 companies (42%)  paid a tax rate between 17.5% and 30%.
66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the  effective tax rate  for corporates will drop to 9.2% as a result of  tax reform.

 

      ……………………………………………………
STATES NEEDING FED’s HELP THE MOST
       The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine,  Indiana, Arizona, Louisiana.
      The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
  Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).

  So why all the whining about the Feds being in their space ?  Want to go it alone ?   Careful what you wish for.
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The BIG question is, do American morals and respect for our republic  have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
    Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people. 
     The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional  anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
      It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
    
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
       This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.

       This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News)  They want total control.  This is how democratic,  representative republics  perish.
      America is the biggest enchilada on earth.  Why wouldn’t a group of extremists want to wrest permanent control from its people ?  Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My  Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having  advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank.  Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on  meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the runBannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
      In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished  by one regret – he backed the biggest con job in our nation’s history.”

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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin),  are planning to require poverty stricken people on Medicaid  to get jobs  or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children.  Isn’t it bad enough these people are in poverty ? 
      Vox Media reports that 9.8 million Medicaid recipients  don’t have jobs  due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time.  I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
    
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage.  Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
     The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
      Can the Mueller investigation survive Mueller’s firing ?

Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”

1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE:  Not since the Civil War has the spirit and future of our nation been at such great risk, from within.  This  administration, Congress and U.S. Supreme Court is surgically dismembering  efforts over many years to ensure the safety  and well being of “all” Americans.
     The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand  of a  quasi-fascist state.  Ben Franklin was right when asked what kind of government  the Founding Fathers had given us.  “A Republic, if you can keep it,” was his respons.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?,  coach ?, employer ?.  IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?

       ……………………………………………………………………………
TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
    Why not, he dodged military service with 5 deferments  during the Vietnam era (1964 – 1970).
     Reportedly, he has asked advisers about his power to pardon family members and himself  relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor  concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.

REASONS NEEDED TO FIRE MUELLER:  Misconduct,  dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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  “Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr.  and Eric Trump – Wilbur Ross –  Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son)  – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and  Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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     REMOVING TRUMP FROM  OFFICE

Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
      It’s a stretch. 
The key for his removal is ”that he is unable to discharge the powers and duties of his office.”  Section 4 mentions nothing  that he is unfit, delusional, unbalanced, crazy,  impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
      That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent

      It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
      First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
      The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
      However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
       The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress  will act within 21 days where a two-thirds vote would be required to remove  him.  
        However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
      A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.

      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.

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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Any Rally Off Test Of Lows Must Hold

Investor’s first read – Daily edge before the open
DJIA:24,912
S&P 500: 2,695
Nasdaq  Comp.:7,115
Russell 2000: 1,507
Wednesday, Feb 7,  2018    9:11a.m.
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What To Look For If Trump Plans to Fire Mueller (see below)
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> Odds favor we have seen the top to the  2009 – 2018 Bull Market, but WILD SWINGS in prices  will give bulls and bears a chance to trade.  It is not a buy/hold market.  No sooner than an investor has a profit, it can disappear in the next downswing.
> The market may attack recent all-time highs, but fail.
>A recession  simply does not make sense to most of the press, but it will as we move forward.
> This flash crash had to happen, just a matter of time. Odds of flash crashes increase when the market goes uncorrected for many months like this one with no 3% correction in 14 months.    After that long between corrections, the Street is aware it could happen just so long as no one breaks ranks and sells, the market holds.  Envision 65 toddlers lined up at an Easter egg hunt.  Suddenly, one breaks and runs out before  getting the “GO” signal– then another – then all  63.                                                                             
> In December, I forecast a wild 2018 year with at least two major corrections of 10% to 14%.  We just had the 10-percenter.
> This is a VERY dangerous market.
> The economy always looks great at tops and horrendous at bottoms, that’s why buying low and selling high is so difficult.
> We have seen flash crashes in the past and the market always snapped back. The Trump administration and Street  bulls do not want a bear market before the mid-term elections and will do anything to hype how great future prospects are.  But all that has been priced into the market even at these levels.
>
The criteria  for a bear market is one that drops  drops 20%.  A 20% drop from the January 26 high would take the DJIA to 21,293, the S&P 500 to 2,298, and the Nasdaq Comp. to 6,004.
    But that only erases one year of trading.  I expect this bear market will decline at least 30% to DJIA 18,500, S&P 500: 2,000, Nasdaq Comp.:5,200.
TODAY
     Look for a sell off at the open to the levels. This will be a test of yesterday’s lows (DJIA: 23,778; S&P 500: 2,593; Nasdaq Comp.: 6,824.  (see below – “Support’).
     For now, that support should hold and the market rise to my “Resistant levels (below).
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SUPPORT “today”: DJIA:24:24,401;S&P 500: 2,647;Nasdaq Comp.:6,996
RESISTANCE “today” DJIA:25,097; S&P 500:2,721; Nasdaq Comp.:7,143
 
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SIGNS OF EARLY STAGE BEAR MARKET

  1. The economy can’t get better than this – and won’t.  I see seeds of a recession setting in later in the year or early 2019.

BEAR MARKETS START AHEAD OF RECESSIONS by a lead time of 3 to 9 months. Commentators and pundits say, don’t worry, the economy is strong. Many prominent money managers would like to say “sell,” but can’t for fear of triggering a PANIC.

  1. This economy and bull market are long in the tooth. The average of 11 economic expansions (1945  – 2009) has been 59 months. This expansion is 103 months old.  The average length of 15 bull markets runs 2.5 years or 30.4 months.  This bull has lasted 107 months. Credit card debt has doubled since 2013, the delinquency rate  is rising sharply.  The Personal Savings rate as a percent of  disposable income is 2.9%, down from 7.1% in July 2012.  This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.
  2. CORRECTION: The Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years)  is now 32.6 vs.  an average of 16.8, a 94% overvaluation. Over the years, this P/E has ranged between 4.8 and 49.2 for various reasons, none the least of which is investors’ confidence in the stability of our government and its future.
  3. We are faced with the prospect of a Constitutional crisis, the possibility of the disclosure of high crimes in high offices.  That could result in total CHAOS.
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    RECENT INVESTORS FIRST READ BLOGS LEADING UP TO MARKET PLUNGE
    Starting with the DJIA at 26,392 (S&P 500: 2,839)   I wrote:  

     “The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare ! 
      At some point, these think-alike’s  will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
      Friday’s sharp plunges is a warning of things to come if the Street suddenly exits.  The potential exists for a correction of 12% – 16%.”

      I have repeated that  every day for emphasis.
       ON December 27, my annual forecast was “2018; The wildest One in Years,”
stating emphatically, “NO ONE IS BEARISH ! THAT’S BEARISH !
       My initial target for a correction was DJIA down 3,578 points to 22,735 (-13.6%) and for the S&P 500: down 349 points to 2,500 (-12.2%).

        Look, the is classic “Flash Crash,” where the Street, mostly following the same indicators all get a sell signal, or defer purchase signal at the same time,  that’s why I disparage them as “think-alikes.”

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SUPPORT “today”: DJIA:24:24,401;S&P 500: 2,647;Nasdaq Comp.:6,996
RESISTANCE “today” DJIA:25,097; S&P 500:2,721; Nasdaq Comp.:7,143
 
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I really can’t put it more clearer than what I have been saying:
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       I sense a constitutional crisis is imminent with Special Counsel Robert Mueller indicting high level Trump administration officials.  I believe Trump will respond with an attempt to fire Mueller, or find another way to obstruct  the progress of this investigation.
        The key here is, how this will impact the market.  Initially, a brief plunge followed by a sharp rally would be likely, since the Street is tuned-out on political, but as the severity of the constitutional crisis deepens, the market will take a huge hit with the DJIA giving up at least 3,578 to 22,735  (-13.6%)  and the S&P 500 giving up 349 points to 2,500 (-12.2%).
        That’s roughly one-third of what the market gained since the 2016 election. Markets frequently give up one-third of major upmoves.  Obviously if the market gets hit with new negatives after a that pullback, the plunge  would be greater.
        The reason I think a crisis is imminent is because the Republicans have ramped up their efforts to discredit the FBI and  the Mueller probe, and because Trump says he is willing to testify under oath to the Mueller commission.
        Nonsense !  He has no intention to meet with Mueller or he would have done so months ago. He wants to give the impression he is willing to comply to orchestrate support from his base.
        Our republic is being tested like never before.  This is a battle for untethered control by what I view as constitutional anarchists who want to dismantle 75 years of progress toward developing a high quality of life for America as a whole.  Why else would they gerrymander the Hell out of our electorate, make it difficult for people to vote, and stack the judicial system ?
       This is the extremist right wing’s big chance; they know demographics are against them going forward.  I doubt Congress will oust Trump regardless of the severity of his actions before and after talking office.
        But Wall Street, corporate American and the BIG money got their tax cut, they may want to get rid of Trump before he ruins chances of the Republicans hanging on to control of Congress and the White House in 2020.
          Late-stage bull markets offer opportunities to make money easier and faster, simply because speculative fever is ramped up and buyers are jumping on anything that  gets favorable mention by the Street or in the press.
          At some point, the BIG money will have to exit.  They need eager buyers to do so without knocking stocks they are selling down.  With  reportedly $33.2 billion flowing into stocks in  the January 24 week, this is the euphoria they have been waiting for.

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 I am keeping the following posted for new readers
 
What is written below will be difficult to believe. It’s just a matter of time before a major correction sets is, and a bear market.
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No one is bearish, and that IS BEARISH !  Odds favor 12% to 18% correction not necessarily today, or this week, maybe not for months, but the market crossed the line above reasonable valuation months ago, and is vulnerable to one of those flash crashes I have prematurely warned about.
      From November 2016 to December 2017, the market was driven by promises of a massive corporate and high-earner tax cut. The passage of the tax cut in December took stock prices an even greater extreme.
      The economic recovery, that started in June 2009 after the Great Recession and 52% bear market decline, continues undeterred.  But stock markets turn down well ahead of the start of  recessions, generally with a lead time of 3 to 9 months.
       I have wrongly warned of risk for the better part of 2017, even issued a Sell on August 29. Realizing I was wrong, I reversed that call two weeks later, headlining, “WRONG READ on timing – But Warning Stands.”
       I  have experienced 14 bull market tops, written about 12, and all came when “least” expected, when a downturn  was dismissed as impossible.
       What might be an extreme of over-valuation (or undervaluation)  in one market, may not rank as one in the next market. Bear market bottoms are easier to read than bull market tops.
       A severe correction, possibly a bear market, is out there. It will take a “trigger” to start it, or a sudden “no show” by the BIG money, followed by panicky selling to get it underway. The Street got its tax cut, what else is there to anticipate ?  Most of the benefits of the tax cut are priced- in the market’s 31% gain in the S&P 500 over 15 months.
       Yes, making money can be easy now, buying just about anything, even junk. 
      Warnings like mine are annoying, even provoke anger. 
      “Who is this jerk, talking about risk when people are making a killing in the market ?” one may ask.
        “Aren’t  there dozens of reports out there hyping what-to-buy after the tax cut ?  Didn’t I just hear about someone making a bundle last year.  Take a hike Brooks, I’m all-in !”
       
I am not alone in seeing risk.
        I have enormous respect for James Stack of  InvesTech Research (1-406-862-777). Stack is also warning of risk and has reduced exposure to the market. His set of economic and stock market indicators are near flawless. What’s startling about his last issue is the extremes to which many of his indicators have reached. While his economic indicators suggest a recession is not imminent, he also warns that  stock markets turn down 6-9 months ahead of recessions. The market has not had a 3% correction in 14.4 months, which has not  happened since stocks plunged in 2008, he writes.
       What’s more, he says, the bearish sentiments of the  Investment Advisors Sentiment Survey tracked by Investors Intelligence,  just hit a 31-year low.  This is a contrary indicator. Advisors are least bearish at market tops when they should be bearish and least bullish at market bottoms – that’s the pattern. Maybe that’s why it is so hard to buy-low/sell-high !  Maybe  it’s just easier for these people to sell greed at market tops and fear at bottoms.
       Then too, the S&P 500 price/earnings ratio based on earnings already reported is 26, well above the historic norm of 17.2, excluding the extremes of the 1990’s technology bubble and 2008-2009  financial crisis.
      Finally, margin debt (borrowing to buy stocks). It has been hitting new highs.  That spells leverage which is fine as long as stocks rise, but  devastating in declines.

        I am as concerned today about what I see, as I was in August 2007 before the Great Recession/Bear Market when I wrote:
 

Perfect Storm  Looms

 

      The perfect storm in our financial markets

is looming….It will take a heroic effort internationally

 to avert a meltdown of  huge magnitude…Trading in

everything may have to be stopped until some sort of

sanity is restored…This can get real ugly…No one has

a handle on the leverage amassed in  derivatives  ..No

one has a true handle on how precarious the situation out

there is, and that uncertainty feeds on itself prompting

increased selling…With few buyers, stocks tank…

Only when a cauldron of fear begins to boil do you have

 a market that is reasonably safe to invest in.

 

George Brooks

August 19, 2007

 

     I was two months early then, more so this time around. Conditions are a bit different now, but the odds that the Street will be blindsided this time are greater. They have blinders on – tunnel vision – in denial.     
       We are approaching perfect storm conditions, and I haven’t even touched on the total dysfunction of the Trump administration and Congress, and its imminent implosion in face of the findings of the Mueller investigation.
       THE NATION’S BIGGEST EVER POLITICAL SCANDAL will hit in coming months, look for multiple constitutional crises, and possibly panic in the stock market.
        SELL EVERYTHING ?  That may work for some people, but the more nimble may be able to stay a while as euphoria takes stocks higher.   For others,  a healthy cash reserve is justified just in case a few of us, and historic precedence are right.
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POLITICAL/STOCK MARKET
WILL TRUMP FIRE MUELLER ? LOOK FOR THIS  TIP-OFF

      Trump can’t fire Mueller directly, it must be done by the Department of Justice.  Trump would have to find someone to do it.  A new appointment to the DOJ may signal Trump’s intent.
     
Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will.  Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but it is doubtful she would tarnish her career by firing Mueller, as did Robert Bork who fired special prosecutor  Archibald Cox  under orders of President Nixon in the Watergate Saturday Night Massacre, October 1973.          
      Trump must find someone in DOJ to fire Mueller if he wants to do it.    

      DOJ’s Dana Bounte’s resignation last October and his recent  appointment by FBI Director Christopher Wray as general Counsel  for the FBI takes him out of the running, though it is doubtful he would have fired Mueller.   He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general  for the National Security Division of DOJ.     
        Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume  Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
      Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and  CIA’s  Mike Pompeo, is a possibility for a post. there.   Attorney General Jeff Sessions has recused himself from the Russian/Trump  “investigation” March 2017.
       REASONS NEEDED TO FIRE MUELLER: Trump would have to have  good reason to fire Mueller.  Grounds must be, misconduct, dereliction of duty, incapacity, conflict of interest, or other good cause, including violation of policies of the Department of Justice, and failure to follow Justice Departments guidelines and violation of applicable canons of ethics.
       CAN TRUMP RESCIND  SPECIAL COUNSEL REGULATION ?  Yes, it’s possible but many legal hurdles  would make it difficult and possibly so time consuming as to make the action worthless. There is no clear cut answer. This would be decided in court, the legal ramifications just very complex.
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        FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom  March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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U.S. Ranking globally and domestically plunging under Trump
      Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year.  Clearly, Trump isn’t making America Great Again in the eyes of all other countries. 
The downside of this is we need the support of those countries.  Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
      Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition  to  R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped.  South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
       Also under Trump, Americans’ trust in institutions (government, companies and the  media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year.  He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues  without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE

“It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” –   Michael Bloomberg – billionaire business man former mayor NYC

      I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
      Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
      Individual income tax payments comprise 47% of  federal government receipts. At this point, I have no idea how much of an impact  Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
      The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
      That assumption is flawed. For one, why would a corporation  go on a hiring and cap-ex spending spree  with an economic expansion that  is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
      For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
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The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”:  The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:

-Of 258 Fortune 500companies studied, the effective federal income tax rate was 21.5%
18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
83 companies (32%) paid a tax rate less than 17.5%
109 companies (42%)  paid a tax rate between 17.5% and 30%.
66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the  effective tax rate  for corporates will drop to 9.2% as a result of  tax reform.

 

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STATES NEEDING FED’s HELP THE MOST
       The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine,  Indiana, Arizona, Louisiana.
      The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
  Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).

  So why all the whining about the Feds being in their space ?  Want to go it alone ?   Careful what you wish for.
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The BIG question is, do American morals and respect for our republic  have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
    Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people. 
     The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional  anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
      It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
    
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
       This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.

       This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News)  They want total control.  This is how democratic,  representative republics  perish.
      America is the biggest enchilada on earth.  Why wouldn’t a group of extremists want to wrest permanent control from its people ?  Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My  Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having  advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank.  Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on  meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the runBannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
      In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished  by one regret – he backed the biggest con job in our nation’s history.”

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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin),  are planning to require poverty stricken people on Medicaid  to get jobs  or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children.  Isn’t it bad enough these people are in poverty ? 
      Vox Media reports that 9.8 million Medicaid recipients  don’t have jobs  due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time.  I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
    
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage.  Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
     The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
      Can the Mueller investigation survive Mueller’s firing ?

Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”

1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE:  Not since the Civil War has the spirit and future of our nation been at such great risk, from within.  This  administration, Congress and U.S. Supreme Court is surgically dismembering  efforts over many years to ensure the safety  and well being of “all” Americans.
     The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand  of a  quasi-fascist state.  Ben Franklin was right when asked what kind of government  the Founding Fathers had given us.  “A Republic, if you can keep it,” was his respons.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?,  coach ?, employer ?.  IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?

       ……………………………………………………………………………
TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
    Why not, he dodged military service with 5 deferments  during the Vietnam era (1964 – 1970).
     Reportedly, he has asked advisers about his power to pardon family members and himself  relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor  concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.

REASONS NEEDED TO FIRE MUELLER:  Misconduct,  dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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  “Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr.  and Eric Trump – Wilbur Ross –  Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son)  – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and  Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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     REMOVING TRUMP FROM  OFFICE

Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
      It’s a stretch. 
The key for his removal is ”that he is unable to discharge the powers and duties of his office.”  Section 4 mentions nothing  that he is unfit, delusional, unbalanced, crazy,  impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
      That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent

      It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
      First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
      The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
      However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
       The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress  will act within 21 days where a two-thirds vote would be required to remove  him.  
        However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
      A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.

      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.

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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Early Stage Bear Market With Great Trading Opportunities

Investor’s first read – Daily edge before the open
DJIA:24,345
S&P 500: 2,648
Nasdaq  Comp.:6,967
Russell 2000: 1,491
Tuesday, Feb 6,  2018    9:11a.m.
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What To Look For If Trump Plans to Fire Mueller (see below)
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TODAY

>Odds favor we have seen the top to the  2009 – 2018 Bull Market.
>In December, I forecast a wild 2018 year with at least two major corrections.
>A BIG HIT AT THE OPEN will offer a nice trading opportunity, but risks are high.
>Savvy investors/traders with cash reserve in line with their tolerance for risk,
can play the swings, just be aware this year will be extremely volatile.
>Commentators will say there is no worry, that  the economy is strong and corporations are expected to post huge earnings increases.
>The economy always looks great at tops and horrendous at bottoms, that’s why buying low and selling high is so difficult.
BEAR MARKET ? 
      This is the first correction in the early stages of a very volatile bear market. We have seen flash crashes in the past and the market always snapped back. The Trump administration and Street  bulls do not want a bear market before the mid-term elections and will do anything to hype how great future prospects are.  But all that has been priced into the market even at these levels.
        EXPECT WILD SWINGS, THE MARKET MAY ATTACK OLD HIGHS BUT FAIL. IF YOU HAVEN’T HEEDED MY WARNINGS BEFORE, USE A BIG RALLY TO RAISE CASH.
        
Huge swings can be a trader’s dream, we will see that happen in coming months.
        The Street calls it a bear if the market drops 20%.  A 20% drop from the January 26 high would take the DJIA to 21,293, the S&P 500 to 2,298, and the Nasdaq Comp. to 6,004.
SIGNS OF EARLY STAGE BEAR MARKET

  1. The economy couldn’t get better than this – and won’t.  I see seeds of a recession setting in later in the year or early 2019.  Bear markets start ahead of recessions by a lead time of 3 to 9 months. Commentators and pundits say, don’t worry, the economy is strong. Many prominent money managers would like to say “sell,” but can’t for fear of triggering a PANIC.
  2. This economy and bull market are long in the tooth. The average of 11 economic expansions (1945  – 20019) has been 59 months. This expansion is 103 months old.  The average length of 15 bull markets runs 2.5 years or 30.4 months.  This bull has lasted 107 months. Credit card debt has doubled since 2013, the delinquency rate  is rising sharply.  The Personal Savings rate as a percent of  disposable income is 2.9%, down from 7.1% in July 2012.  This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.
  3. Since 1975, the Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years)  is now 26.4 vs.  an average of 15.7, a 68% overvaluation. Over the years, this PE has ranged between 8.3 and 46.2 for various reasons, none the least of which is investors’ confidence in the stability of our government and its future.
  4. We are faced with the prospect of a Constitutional crisis, the possibility of the disclosure of high crimes in high offices.  That could result in total CHAOS.
    >>>>>>>>>>>>>>>>>
    Starting with the DJIA at 26,392 (S&P 500: 2,839)   I wrote:  

     “The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare ! 
      At some point, these think-alike’s  will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
      Friday’s sharp plunge, is a warning of things to come if the Street suddenly exits.  The potential exists for a correction of 12% – 16%.”

      I have repeated that  every day for emphasis.
       ON December 27, my annual forecast was “2018; The wildest One in Years,”
stating emphatically, “NO ONE IS BEARISH ! THAT’S BEARISH !
       My initial target for a correction was DJIA down 3,578 points to 22,735 (-13.6%) and for the S&P 500: down 349 points to 2,500 (-12.2%).

        Look, the is classic “Flash Crash,” where the Street, mostly following the same indicators all get a sell signal, or defer purchase signal at the same time,  that’s why I disparage them as “think-alikes.”

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SUPPORT “today”: DJIA:24,609;S&P 500:2,634;Nasdaq Comp.:6,968
RESISTANCE “today” DJIA:24,673; S&P 500:2,682; Nasdaq Comp.:7,334; (where a rally would stop)
 
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I really can’t put it more clearer than I have been saying:
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       I sense a constitutional crisis is imminent with Special Counsel Robert Mueller indicting high level Trump administration officials.  I believe Trump will respond with an attempt to fire Mueller, or find another way to obstruct  the progress of this investigation.
        The key here is, how this will impact the market.  Initially, a brief plunge followed by a sharp rally would be likely, since the Street is tuned-out on political, but as the severity of the constitutional crisis deepens, the market will take a huge hit with the DJIA giving up at least 3,578 to 22,735  (-13.6%)  and the S&P 500 giving up 349 points to 2,500 (-12.2%).
        That’s roughly one-third of what the market gained since the 2016 election. Markets frequently give up one-third of major upmoves.  Obviously if the market gets hit with new negatives after a that pullback, the plunge  would be greater.
        The reason I think a crisis is imminent is because the Republicans have ramped up their efforts to discredit the FBI and  the Mueller probe, and because Trump says he is willing to testify under oath to the Mueller commission.
        Nonsense !  He has no intention to meet with Mueller or he would have done so months ago. He wants to give the impression he is willing to comply to orchestrate support from his base.
        Our republic is being tested like never before.  This is a battle for untethered control by what I view as constitutional anarchists who want to dismantle 75 years of progress toward developing a high quality of life for America as a whole.  Why else would they gerrymander the Hell out of our electorate, make it difficult for people to vote, and stack the judicial system ?
       This is the extremist right wing’s big chance; they know demographics are against them going forward.  I doubt Congress will oust Trump regardless of the severity of his actions before and after talking office.
        But Wall Street, corporate American and the BIG money got their tax cut, they may want to get rid of Trump before he ruins chances of the Republicans hanging on to control of Congress and the White House in 2020.
          Late-stage bull markets offer opportunities to make money easier and faster, simply because speculative fever is ramped up and buyers are jumping on anything that  gets favorable mention by the Street or in the press.
          At some point, the BIG money will have to exit.  They need eager buyers to do so without knocking stocks they are selling down.  With  reportedly $33.2 billion flowing into stocks in  the January 24 week, this is the euphoria they have been waiting for.

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 I am keeping the following posted for new readers
 
What is written below will be difficult to believe. It’s just a matter of time before a major correction sets is, and a bear market.
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No one is bearish, and that IS BEARISH !  Odds favor 12% to 18% correction not necessarily today, or this week, maybe not for months, but the market crossed the line above reasonable valuation months ago, and is vulnerable to one of those flash crashes I have prematurely warned about.
      From November 2016 to December 2017, the market was driven by promises of a massive corporate and high-earner tax cut. The passage of the tax cut in December took stock prices an even greater extreme.
      The economic recovery, that started in June 2009 after the Great Recession and 52% bear market decline, continues undeterred.  But stock markets turn down well ahead of the start of  recessions, generally with a lead time of 3 to 9 months.
       I have wrongly warned of risk for the better part of 2017, even issued a Sell on August 29. Realizing I was wrong, I reversed that call two weeks later, headlining, “WRONG READ on timing – But Warning Stands.”
       I  have experienced 14 bull market tops, written about 12, and all came when “least” expected, when a downturn  was dismissed as impossible.
       What might be an extreme of over-valuation (or undervaluation)  in one market, may not rank as one in the next market. Bear market bottoms are easier to read than bull market tops.
       A severe correction, possibly a bear market, is out there. It will take a “trigger” to start it, or a sudden “no show” by the BIG money, followed by panicky selling to get it underway. The Street got its tax cut, what else is there to anticipate ?  Most of the benefits of the tax cut are priced- in the market’s 31% gain in the S&P 500 over 15 months.
       Yes, making money can be easy now, buying just about anything, even junk. 
      Warnings like mine are annoying, even provoke anger. 
      “Who is this jerk, talking about risk when people are making a killing in the market ?” one may ask.
        “Aren’t  there dozens of reports out there hyping what-to-buy after the tax cut ?  Didn’t I just hear about someone making a bundle last year.  Take a hike Brooks, I’m all-in !”
       
I am not alone in seeing risk.
        I have enormous respect for James Stack of  InvesTech Research (1-406-862-777). Stack is also warning of risk and has reduced exposure to the market. His set of economic and stock market indicators are near flawless. What’s startling about his last issue is the extremes to which many of his indicators have reached. While his economic indicators suggest a recession is not imminent, he also warns that  stock markets turn down 6-9 months ahead of recessions. The market has not had a 3% correction in 14.4 months, which has not  happened since stocks plunged in 2008, he writes.
       What’s more, he says, the bearish sentiments of the  Investment Advisors Sentiment Survey tracked by Investors Intelligence,  just hit a 31-year low.  This is a contrary indicator. Advisors are least bearish at market tops when they should be bearish and least bullish at market bottoms – that’s the pattern. Maybe that’s why it is so hard to buy-low/sell-high !  Maybe  it’s just easier for these people to sell greed at market tops and fear at bottoms.
       Then too, the S&P 500 price/earnings ratio based on earnings already reported is 26, well above the historic norm of 17.2, excluding the extremes of the 1990’s technology bubble and 2008-2009  financial crisis.
      Finally, margin debt (borrowing to buy stocks). It has been hitting new highs.  That spells leverage which is fine as long as stocks rise, but  devastating in declines.

        I am as concerned today about what I see, as I was in August 2007 before the Great Recession/Bear Market when I wrote:
 

Perfect Storm  Looms

 

      The perfect storm in our financial markets

is looming….It will take a heroic effort internationally

 to avert a meltdown of  huge magnitude…Trading in

everything may have to be stopped until some sort of

sanity is restored…This can get real ugly…No one has

a handle on the leverage amassed in  derivatives  ..No

one has a true handle on how precarious the situation out

there is, and that uncertainty feeds on itself prompting

increased selling…With few buyers, stocks tank…

Only when a cauldron of fear begins to boil do you have

 a market that is reasonably safe to invest in.

 

George Brooks

August 19, 2007

 

     I was two months early then, more so this time around. Conditions are a bit different now, but the odds that the Street will be blindsided this time are greater. They have blinders on – tunnel vision – in denial.     
       We are approaching perfect storm conditions, and I haven’t even touched on the total dysfunction of the Trump administration and Congress, and its imminent implosion in face of the findings of the Mueller investigation.
       THE NATION’S BIGGEST EVER POLITICAL SCANDAL will hit in coming months, look for multiple constitutional crises, and possibly panic in the stock market.
        SELL EVERYTHING ?  That may work for some people, but the more nimble may be able to stay a while as euphoria takes stocks higher.   For others,  a healthy cash reserve is justified just in case a few of us, and historic precedence are right.
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POLITICAL/STOCK MARKET
WILL TRUMP FIRE MUELLER ? LOOK FOR THIS  TIP-OFF

      Trump can’t fire Mueller directly, it must be done by the Department of Justice.  Trump would have to find someone to do it.  A new appointment to the DOJ may signal Trump’s intent.
     
Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will.  Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but it is doubtful she would tarnish her career by firing Mueller, as did Robert Bork who fired special prosecutor  Archibald Cox  under orders of President Nixon in the Watergate Saturday Night Massacre, October 1973.          
      Trump must find someone in DOJ to fire Mueller if he wants to do it.    

      DOJ’s Dana Bounte’s resignation last October and his recent  appointment by FBI Director Christopher Wray as general Counsel  for the FBI takes him out of the running, though it is doubtful he would have fired Mueller.   He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general  for the National Security Division of DOJ.     
        Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume  Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
      Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and  CIA’s  Mike Pompeo, is a possibility for a post. there.   Attorney General Jeff Sessions has recused himself from the Russian/Trump  “investigation” March 2017.
       REASONS NEEDED TO FIRE MUELLER: Trump would have to have  good reason to fire Mueller.  Grounds must be, misconduct, dereliction of duty, incapacity, conflict of interest, or other good cause, including violation of policies of the Department of Justice, and failure to follow Justice Departments guidelines and violation of applicable canons of ethics.
       CAN TRUMP RESCIND  SPECIAL COUNSEL REGULATION ?  Yes, it’s possible but many legal hurdles  would make it difficult and possibly so time consuming as to make the action worthless. There is no clear cut answer. This would be decided in court, the legal ramifications just very complex.
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        FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom  March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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U.S. Ranking globally and domestically plunging under Trump
      Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year.  Clearly, Trump isn’t making America Great Again in the eyes of all other countries. 
The downside of this is we need the support of those countries.  Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
      Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition  to  R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped.  South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
       Also under Trump, Americans’ trust in institutions (government, companies and the  media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year.  He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues  without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE

“It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” –   Michael Bloomberg – billionaire business man former mayor NYC

      I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
      Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
      Individual income tax payments comprise 47% of  federal government receipts. At this point, I have no idea how much of an impact  Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
      The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
      That assumption is flawed. For one, why would a corporation  go on a hiring and cap-ex spending spree  with an economic expansion that  is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
      For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
>>>>>>>>>>>>>>>
The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”:  The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:

-Of 258 Fortune 500companies studied, the effective federal income tax rate was 21.5%
18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
83 companies (32%) paid a tax rate less than 17.5%
109 companies (42%)  paid a tax rate between 17.5% and 30%.
66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the  effective tax rate  for corporates will drop to 9.2% as a result of  tax reform.

 

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STATES NEEDING FED’s HELP THE MOST
       The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine,  Indiana, Arizona, Louisiana.
      The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
  Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).

  So why all the whining about the Feds being in their space ?  Want to go it alone ?   Careful what you wish for.
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The BIG question is, do American morals and respect for our republic  have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
    Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people. 
     The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional  anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
      It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
    
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
       This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.

       This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News)  They want total control.  This is how democratic,  representative republics  perish.
      America is the biggest enchilada on earth.  Why wouldn’t a group of extremists want to wrest permanent control from its people ?  Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My  Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having  advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank.  Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on  meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the runBannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
      In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished  by one regret – he backed the biggest con job in our nation’s history.”

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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin),  are planning to require poverty stricken people on Medicaid  to get jobs  or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children.  Isn’t it bad enough these people are in poverty ? 
      Vox Media reports that 9.8 million Medicaid recipients  don’t have jobs  due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time.  I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
    
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage.  Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
     The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
      Can the Mueller investigation survive Mueller’s firing ?

Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”

1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE:  Not since the Civil War has the spirit and future of our nation been at such great risk, from within.  This  administration, Congress and U.S. Supreme Court is surgically dismembering  efforts over many years to ensure the safety  and well being of “all” Americans.
     The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand  of a  quasi-fascist state.  Ben Franklin was right when asked what kind of government  the Founding Fathers had given us.  “A Republic, if you can keep it,” was his respons.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?,  coach ?, employer ?.  IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?

       ……………………………………………………………………………
TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
    Why not, he dodged military service with 5 deferments  during the Vietnam era (1964 – 1970).
     Reportedly, he has asked advisers about his power to pardon family members and himself  relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor  concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.

REASONS NEEDED TO FIRE MUELLER:  Misconduct,  dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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  “Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr.  and Eric Trump – Wilbur Ross –  Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son)  – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and  Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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     REMOVING TRUMP FROM  OFFICE

Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
      It’s a stretch. 
The key for his removal is ”that he is unable to discharge the powers and duties of his office.”  Section 4 mentions nothing  that he is unfit, delusional, unbalanced, crazy,  impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
      That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent

      It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
      First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
      The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
      However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
       The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress  will act within 21 days where a two-thirds vote would be required to remove  him.  
        However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
      A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.

      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.

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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Any Rally From Here MUST Hold

Investor’s first read – Daily edge before the open
DJIA:25,520
S&P 500: 2,762
Nasdaq  Comp.:7,240
Russell 2000: 1,547
Monday, Feb 5,  2018    9:11a.m.
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What To Look For If Trump Plans to Fire Mueller (see below)
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TODAY    

     CONFIDENCE has always been the big driver of stock prices.  Its return after a crushing bear market sustains rebounds from bear market bottoms, and its gradual  disappearance  after bull market tops saps the eroding buying support for the market as a downturn accelerates.
      Has a bear market begun ?
      It already is the first major correction  in 14 months.
      Many institutions will be buyers today, jumping on price concessions in stocks they were paying up for weeks ago.
      What’s more, the economic expansion started 8 ½ years ago is still humming with the impact yet to be seen from corporations spending the free money received in the tax bill.

        But most of all that has been priced-in the level of stock prices, which are overvalued based on historical benchmarks.
        Since 1975, the Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years)  is now 26.4 vs.  an average of 15.7, a 68% overvaluation. Over the years, this PE has ranged between 8.3 and 46.2 for various reasons, none the least of which is investors’ confidence in the stability of our government and its future.
      The economy is currently stable, and may even get one more burst of strength.
       But, the CONSUMER is beginning to get tapped out even with a tax cut, and that’s bad news. Credit card debt
has doubled since 2013, the delinquency rate  is rising sharply.
       The Personal Savings rate as a percent of  disposable income is 2.9%, down from 7.1% in July 2012.  This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.
        The Street will milk this bull market for every cent it can squeeze out of highly leveraged positions just so long as everyone holds tough. A break in ranks to sell by some big hitters could trigger  a panic. With fewer buyers and an increasing number of sellers a bear market is quite possible.

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          The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare ! 
      At some point, these think-alike’s  will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
      Friday’s sharp plunge, is a warning of things to come if the Street suddenly exits.
      The potential exists for a correction of 12% – 16%.         

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SUPPORT “today”: DJIA:25,329;S&P 500:2,741;Nasdaq Comp.:7,185
RESISTANCE “today” DJIA:25,647; S&P 500:2,776; Nasdaq Comp.:7,276;
 
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        FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom  March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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INFRASTRUCTURE: Little was said Tuesday night in the SOTU. I’ll run  the piece again if appropriate.
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I really can’t say it any better than the following
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       I sense a constitutional crisis is imminent with Special Counsel Robert Mueller indicting high level Trump administration officials.  I believe Trump will respond with an attempt to fire Mueller, or find another way to obstruct  the progress of this investigation.
        The key here is, how this will impact the market.  Initially, a brief plunge followed by a sharp rally would be likely, since the Street is tuned-out on political, but as the severity of the constitutional crisis deepens, the market will take a huge hit with the DJIA giving up at least 3,578 to 22,735  (-13.6%)  and the S&P 500 giving up 349 points to 2,500 (-12.2%).
        That’s roughly one-third of what the market gained since the 2016 election. Markets frequently give up one-third of major upmoves.  Obviously if the market gets hit with new negatives after a that pullback, the plunge  would be greater.
        The reason I think a crisis is imminent is because the Republicans have ramped up their efforts to discredit the FBI and  the Mueller probe, and because Trump says he is willing to testify under oath to the Mueller commission.
        Nonsense !  He has no intention to meet with Mueller or he would have done so months ago. He wants to give the impression he is willing to comply to orchestrate support from his base.
        Our republic is being tested like never before.  This is a battle for untethered control by what I view as constitutional anarchists who want to dismantle 75 years of progress toward developing a high quality of life for America as a whole.  Why else would they gerrymander the Hell out of our electorate, make it difficult for people to vote, and stack the judicial system ?
       This is the extremist right wing’s big chance; they know demographics are against them going forward.  I doubt Congress will oust Trump regardless of the severity of his actions before and after talking office.
        But Wall Street, corporate American and the BIG money got their tax cut, they may want to get rid of Trump before he ruins chances of the Republicans hanging on to control of Congress and the White House in 2020.
          Late-stage bull markets offer opportunities to make money easier and faster, simply because speculative fever is ramped up and buyers are jumping on anything that  gets favorable mention by the Street or in the press.
          At some point, the BIG money will have to exit.  They need eager buyers to do so without knocking stocks they are selling down.  With  reportedly $33.2 billion flowing into stocks in  the January 24 week, this is the euphoria they have been waiting for.

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 I am keeping the following posted for new readers
 
What is written below will be difficult to believe. It’s just a matter of time before a major correction sets is, and a bear market.
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No one is bearish, and that IS BEARISH !  Odds favor 12% to 18% correction not necessarily today, or this week, maybe not for months, but the market crossed the line above reasonable valuation months ago, and is vulnerable to one of those flash crashes I have prematurely warned about.
      From November 2016 to December 2017, the market was driven by promises of a massive corporate and high-earner tax cut. The passage of the tax cut in December took stock prices an even greater extreme.
      The economic recovery, that started in June 2009 after the Great Recession and 52% bear market decline, continues undeterred.  But stock markets turn down well ahead of the start of  recessions, generally with a lead time of 3 to 9 months.
       I have wrongly warned of risk for the better part of 2017, even issued a Sell on August 29. Realizing I was wrong, I reversed that call two weeks later, headlining, “WRONG READ on timing – But Warning Stands.”
       I  have experienced 14 bull market tops, written about 12, and all came when “least” expected, when a downturn  was dismissed as impossible.
       What might be an extreme of over-valuation (or undervaluation)  in one market, may not rank as one in the next market. Bear market bottoms are easier to read than bull market tops.
       A severe correction, possibly a bear market, is out there. It will take a “trigger” to start it, or a sudden “no show” by the BIG money, followed by panicky selling to get it underway. The Street got its tax cut, what else is there to anticipate ?  Most of the benefits of the tax cut are priced- in the market’s 31% gain in the S&P 500 over 15 months.
       Yes, making money can be easy now, buying just about anything, even junk. 
      Warnings like mine are annoying, even provoke anger. 
      “Who is this jerk, talking about risk when people are making a killing in the market ?” one may ask.
        “Aren’t  there dozens of reports out there hyping what-to-buy after the tax cut ?  Didn’t I just hear about someone making a bundle last year.  Take a hike Brooks, I’m all-in !”
       
I am not alone in seeing risk.
        I have enormous respect for James Stack of  InvesTech Research (1-406-862-777). Stack is also warning of risk and has reduced exposure to the market. His set of economic and stock market indicators are near flawless. What’s startling about his last issue is the extremes to which many of his indicators have reached. While his economic indicators suggest a recession is not imminent, he also warns that  stock markets turn down 6-9 months ahead of recessions. The market has not had a 3% correction in 14.4 months, which has not  happened since stocks plunged in 2008, he writes.
       What’s more, he says, the bearish sentiments of the  Investment Advisors Sentiment Survey tracked by Investors Intelligence,  just hit a 31-year low.  This is a contrary indicator. Advisors are least bearish at market tops when they should be bearish and least bullish at market bottoms – that’s the pattern. Maybe that’s why it is so hard to buy-low/sell-high !  Maybe  it’s just easier for these people to sell greed at market tops and fear at bottoms.
       Then too, the S&P 500 price/earnings ratio based on earnings already reported is 26, well above the historic norm of 17.2, excluding the extremes of the 1990’s technology bubble and 2008-2009  financial crisis.
      Finally, margin debt (borrowing to buy stocks). It has been hitting new highs.  That spells leverage which is fine as long as stocks rise, but  devastating in declines.

        I am as concerned today about what I see, as I was in August 2007 before the Great Recession/Bear Market when I wrote:
 

Perfect Storm  Looms

 

      The perfect storm in our financial markets

is looming….It will take a heroic effort internationally

 to avert a meltdown of  huge magnitude…Trading in

everything may have to be stopped until some sort of

sanity is restored…This can get real ugly…No one has

a handle on the leverage amassed in  derivatives  ..No

one has a true handle on how precarious the situation out

there is, and that uncertainty feeds on itself prompting

increased selling…With few buyers, stocks tank…

Only when a cauldron of fear begins to boil do you have

 a market that is reasonably safe to invest in.

 

George Brooks

August 19, 2007

 

     I was two months early then, more so this time around. Conditions are a bit different now, but the odds that the Street will be blindsided this time are greater. They have blinders on – tunnel vision – in denial.     
       We are approaching perfect storm conditions, and I haven’t even touched on the total dysfunction of the Trump administration and Congress, and its imminent implosion in face of the findings of the Mueller investigation.
       THE NATION’S BIGGEST EVER POLITICAL SCANDAL will hit in coming months, look for multiple constitutional crises, and possibly panic in the stock market.
        SELL EVERYTHING ?  That may work for some people, but the more nimble may be able to stay a while as euphoria takes stocks higher.   For others,  a healthy cash reserve is justified just in case a few of us, and historic precedence are right.
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POLITICAL/STOCK MARKET
WILL TRUMP FIRE MUELLER ? LOOK FOR THIS  TIP-OFF

      Trump can’t fire Mueller directly, it must be done by the Department of Justice.  Trump would have to find someone to do it.  A new appointment to the DOJ may signal Trump’s intent.
     
Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will.  Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but it is doubtful she would tarnish her career by firing Mueller, as did Robert Bork who fired special prosecutor  Archibald Cox  under orders of President Nixon in the Watergate Saturday Night Massacre, October 1973.          
      Trump must find someone in DOJ to fire Mueller if he wants to do it.    

      DOJ’s Dana Bounte’s resignation last October and his recent  appointment by FBI Director Christopher Wray as general Counsel  for the FBI takes him out of the running, though it is doubtful he would have fired Mueller.   He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general  for the National Security Division of DOJ.     
        Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume  Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
      Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and  CIA’s  Mike Pompeo, is a possibility for a post. there.   Attorney General Jeff Sessions has recused himself from the Russian/Trump  “investigation” March 2017.
       REASONS NEEDED TO FIRE MUELLER: Trump would have to have  good reason to fire Mueller.  Grounds must be, misconduct, dereliction of duty, incapacity, conflict of interest, or other good cause, including violation of policies of the Department of Justice, and failure to follow Justice Departments guidelines and violation of applicable canons of ethics.
       CAN TRUMP RESCIND  SPECIAL COUNSEL REGULATION ?  Yes, it’s possible but many legal hurdles  would make it difficult and possibly so time consuming as to make the action worthless. There is no clear cut answer. This would be decided in court, the legal ramifications just very complex.
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U.S. Ranking globally and domestically plunging under Trump
      Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year.  Clearly, Trump isn’t making America Great Again in the eyes of all other countries. 
The downside of this is we need the support of those countries.  Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
      Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition  to  R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped.  South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
       Also under Trump, Americans’ trust in institutions (government, companies and the  media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year.  He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues  without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE

“It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” –   Michael Bloomberg – billionaire business man former mayor NYC

      I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
      Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
      Individual income tax payments comprise 47% of  federal government receipts. At this point, I have no idea how much of an impact  Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
      The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
      That assumption is flawed. For one, why would a corporation  go on a hiring and cap-ex spending spree  with an economic expansion that  is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
      For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
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The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”:  The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:

-Of 258 Fortune 500companies studied, the effective federal income tax rate was 21.5%
18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
83 companies (32%) paid a tax rate less than 17.5%
109 companies (42%)  paid a tax rate between 17.5% and 30%.
66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the  effective tax rate  for corporates will drop to 9.2% as a result of  tax reform.

 

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STATES NEEDING FED’s HELP THE MOST
       The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine,  Indiana, Arizona, Louisiana.
      The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
  Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).

  So why all the whining about the Feds being in their space ?  Want to go it alone ?   Careful what you wish for.
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The BIG question is, do American morals and respect for our republic  have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
    Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people. 
     The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional  anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
      It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
    
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
       This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.

       This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News)  They want total control.  This is how democratic,  representative republics  perish.
      America is the biggest enchilada on earth.  Why wouldn’t a group of extremists want to wrest permanent control from its people ?  Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My  Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having  advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank.  Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on  meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the runBannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
      In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished  by one regret – he backed the biggest con job in our nation’s history.”

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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin),  are planning to require poverty stricken people on Medicaid  to get jobs  or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children.  Isn’t it bad enough these people are in poverty ? 
      Vox Media reports that 9.8 million Medicaid recipients  don’t have jobs  due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time.  I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
    
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage.  Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
     The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
      Can the Mueller investigation survive Mueller’s firing ?

Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”

1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE:  Not since the Civil War has the spirit and future of our nation been at such great risk, from within.  This  administration, Congress and U.S. Supreme Court is surgically dismembering  efforts over many years to ensure the safety  and well being of “all” Americans.
     The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand  of a  quasi-fascist state.  Ben Franklin was right when asked what kind of government  the Founding Fathers had given us.  “A Republic, if you can keep it,” was his respons.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?,  coach ?, employer ?.  IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?

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TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
    Why not, he dodged military service with 5 deferments  during the Vietnam era (1964 – 1970).
     Reportedly, he has asked advisers about his power to pardon family members and himself  relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor  concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.

REASONS NEEDED TO FIRE MUELLER:  Misconduct,  dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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  “Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr.  and Eric Trump – Wilbur Ross –  Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son)  – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and  Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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     REMOVING TRUMP FROM  OFFICE

Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
      It’s a stretch. 
The key for his removal is ”that he is unable to discharge the powers and duties of his office.”  Section 4 mentions nothing  that he is unfit, delusional, unbalanced, crazy,  impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
      That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent

      It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
      First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
      The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
      However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
       The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress  will act within 21 days where a two-thirds vote would be required to remove  him.  
        However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
      A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.

      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.

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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Constitutional Anarchy – Bad News For the Market

Investor’s first read Daily edge before the open
DJIA:26,186
S&P 500: 2,821
Nasdaq  Comp.:7,385
Russell 2000: 1,579
Friday, Feb 2,  2018    9:11a.m.
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What To Look For If Trump Plans to Fire Mueller (see below)
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TODAY
    
So, for a market that is historically vastly overvalued, what happens when trust in our government evaporates ?
     Looking back over all bear markets since 1945, CONFIDENCE in our republic has been a major part of the pricing of stocks.
      Since 1975, the Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years)  is now 26.4 vs.  an average of 15.7, a 68% overvaluation. This PE has ranged between 8.3 and 46.2 for various reasons, none the least of which is investors’ confidence in the stability of our government and its future.
      The economy is currently stable, and may even get one more burst of strength before the consumer brings it down.  Corporations got a massive tax cut, but it will deprive the federal government of the ability to pay its bills 5 years from now, which will require huge cuts to government programs. That’s  a negative  going forward.
       What do you have left ? an intangible – confidence.
       Perhaps Trump’s base is confident, but most of them are insignificant in terms of market clout.
       As I see it, the Trump administration and a major part of the Republican Congress are imploding piece by piece.

       Our government is in chaos.  The FBI and Democratic Congress will pick the so-called Trump/Republican “MEMO” to pieces when it is released.
        What’s the tipping point ?   A constitutional crisis……..and that will be a huge drain on confidence, because it’s a long way until November and even longer way until 2020.
         These are not Republicans, who jousted with Democrats prior to 1994 but always compromised in the best interests of our country, these are extremists who want to tear everything down and rebuild it their way, a quasi-fascist state.
          They will stop at nothing, absolutely NOTHING to survive.
           THAT WILL DESTROY CONFIDENCE, and that will adversely impact the stock market and the economy.
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          The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare ! 
      At some point, these think-alike’s  will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
      Yesterday’s sharp plunge was a warning.  When the Street begins to sell, it will be straight down.
       The major FLAW in the Republican’s economic game plan, which was touted to justify a massive, excessive corporate tax cut, is that  no consideration has been made  for the adverse impact of a recession.
       The consumer is nearly tapped out. Credit card debt has doubled since 2013, the delinquency rate  is rising sharply.
       The Personal Savings rate as a percent of  disposable income is 2.9%, down from 7.1% in July 2012.  This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.

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SUPPORT “today”: DJIA:26,001;S&P 500:2,801; Nasdaq Comp.:7,333
RESISTANCE “today” DJIA:26,203; S&P 500:2,823; Nasdaq Comp.:7,387;
 
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        FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom  March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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INFRASTRUCTURE: Little was said Tuesday night in the SOTU. I’ll run  the piece again if appropriate.
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I really can’t say it any better than the following
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       I sense a constitutional crisis is imminent with Special Counsel Robert Mueller indicting high level Trump administration officials.  I believe Trump will respond with an attempt to fire Mueller, or find another way to obstruct  the progress of this investigation.
        The key here is, how this will impact the market.  Initially, a brief plunge followed by a sharp rally would be likely, since the Street is tuned-out on political, but as the severity of the constitutional crisis deepens, the market will take a huge hit with the DJIA giving up at least 3,578 to 22,735  (-13.6%)  and the S&P 500 giving up 349 points to 2,500 (-12.2%).
        That’s roughly one-third of what the market gained since the 2016 election. Markets frequently give up one-third of major upmoves.  Obviously if the market gets hit with new negatives after a that pullback, the plunge  would be greater.
        The reason I think a crisis is imminent is because the Republicans have ramped up their efforts to discredit the FBI and  the Mueller probe, and because Trump says he is willing to testify under oath to the Mueller commission.
        Nonsense !  He has no intention to meet with Mueller or he would have done so months ago. He wants to give the impression he is willing to comply to orchestrate support from his base.
        Our republic is being tested like never before.  This is a battle for untethered control by what I view as constitutional anarchists who want to dismantle 75 years of progress toward developing a high quality of life for America as a whole.  Why else would they gerrymander the Hell out of our electorate, make it difficult for people to vote, and stack the judicial system ?
       This is the extremist right wing’s big chance; they know demographics are against them going forward.  I doubt Congress will oust Trump regardless of the severity of his actions before and after talking office.
        But Wall Street, corporate American and the BIG money got their tax cut, they may want to get rid of Trump before he ruins chances of the Republicans hanging on to control of Congress and the White House in 2020.
          Late-stage bull markets offer opportunities to make money easier and faster, simply because speculative fever is ramped up and buyers are jumping on anything that  gets favorable mention by the Street or in the press.
          At some point, the BIG money will have to exit.  They need eager buyers to do so without knocking stocks they are selling down.  With  reportedly $33.2 billion flowing into stocks in  the January 24 week, this is the euphoria they have been waiting for.

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 I am keeping the following posted for new readers
 
What is written below will be difficult to believe. It’s just a matter of time before a major correction sets is, and a bear market.
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No one is bearish, and that IS BEARISH !  Odds favor 12% to 18% correction not necessarily today, or this week, maybe not for months, but the market crossed the line above reasonable valuation months ago, and is vulnerable to one of those flash crashes I have prematurely warned about.
      From November 2016 to December 2017, the market was driven by promises of a massive corporate and high-earner tax cut. The passage of the tax cut in December took stock prices an even greater extreme.
      The economic recovery, that started in June 2009 after the Great Recession and 52% bear market decline, continues undeterred.  But stock markets turn down well ahead of the start of  recessions, generally with a lead time of 3 to 9 months.
       I have wrongly warned of risk for the better part of 2017, even issued a Sell on August 29. Realizing I was wrong, I reversed that call two weeks later, headlining, “WRONG READ on timing – But Warning Stands.”
       I  have experienced 14 bull market tops, written about 12, and all came when “least” expected, when a downturn  was dismissed as impossible.
       What might be an extreme of over-valuation (or undervaluation)  in one market, may not rank as one in the next market. Bear market bottoms are easier to read than bull market tops.
       A severe correction, possibly a bear market, is out there. It will take a “trigger” to start it, or a sudden “no show” by the BIG money, followed by panicky selling to get it underway. The Street got its tax cut, what else is there to anticipate ?  Most of the benefits of the tax cut are priced- in the market’s 31% gain in the S&P 500 over 15 months.
       Yes, making money can be easy now, buying just about anything, even junk. 
      Warnings like mine are annoying, even provoke anger. 
      “Who is this jerk, talking about risk when people are making a killing in the market ?” one may ask.
        “Aren’t  there dozens of reports out there hyping what-to-buy after the tax cut ?  Didn’t I just hear about someone making a bundle last year.  Take a hike Brooks, I’m all-in !”
       
I am not alone in seeing risk.
        I have enormous respect for James Stack of  InvesTech Research (1-406-862-777). Stack is also warning of risk and has reduced exposure to the market. His set of economic and stock market indicators are near flawless. What’s startling about his last issue is the extremes to which many of his indicators have reached. While his economic indicators suggest a recession is not imminent, he also warns that  stock markets turn down 6-9 months ahead of recessions. The market has not had a 3% correction in 14.4 months, which has not  happened since stocks plunged in 2008, he writes.
       What’s more, he says, the bearish sentiments of the  Investment Advisors Sentiment Survey tracked by Investors Intelligence,  just hit a 31-year low.  This is a contrary indicator. Advisors are least bearish at market tops when they should be bearish and least bullish at market bottoms – that’s the pattern. Maybe that’s why it is so hard to buy-low/sell-high !  Maybe  it’s just easier for these people to sell greed at market tops and fear at bottoms.
       Then too, the S&P 500 price/earnings ratio based on earnings already reported is 26, well above the historic norm of 17.2, excluding the extremes of the 1990’s technology bubble and 2008-2009  financial crisis.
      Finally, margin debt (borrowing to buy stocks). It has been hitting new highs.  That spells leverage which is fine as long as stocks rise, but  devastating in declines.

        I am as concerned today about what I see, as I was in August 2007 before the Great Recession/Bear Market when I wrote:
 

Perfect Storm  Looms

 

      The perfect storm in our financial markets

is looming….It will take a heroic effort internationally

 to avert a meltdown of  huge magnitude…Trading in

everything may have to be stopped until some sort of

sanity is restored…This can get real ugly…No one has

a handle on the leverage amassed in  derivatives  ..No

one has a true handle on how precarious the situation out

there is, and that uncertainty feeds on itself prompting

increased selling…With few buyers, stocks tank…

Only when a cauldron of fear begins to boil do you have

 a market that is reasonably safe to invest in.

 

George Brooks

August 19, 2007

 

     I was two months early then, more so this time around. Conditions are a bit different now, but the odds that the Street will be blindsided this time are greater. They have blinders on – tunnel vision – in denial.     
       We are approaching perfect storm conditions, and I haven’t even touched on the total dysfunction of the Trump administration and Congress, and its imminent implosion in face of the findings of the Mueller investigation.
       THE NATION’S BIGGEST EVER POLITICAL SCANDAL will hit in coming months, look for multiple constitutional crises, and possibly panic in the stock market.
        SELL EVERYTHING ?  That may work for some people, but the more nimble may be able to stay a while as euphoria takes stocks higher.   For others,  a healthy cash reserve is justified just in case a few of us, and historic precedence are right.
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POLITICAL/STOCK MARKET
WILL TRUMP FIRE MUELLER ? LOOK FOR THIS  TIP-OFF

      Trump can’t fire Mueller directly, it must be done by the Department of Justice.  Trump would have to find someone to do it.  A new appointment to the DOJ may signal Trump’s intent.
     
Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will.  Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but it is doubtful she would tarnish her career by firing Mueller, as did Robert Bork who fired special prosecutor  Archibald Cox  under orders of President Nixon in the Watergate Saturday Night Massacare, October 1973.          
      Trump must find someone in DOJ to fire Mueller if he wants to do it.    

      Until Dana Bounte’s resignation last October and recent  appointment as general Counsel  for the FBI by Director Christopher Wray, Boente would be in line. He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general  for the National Security Division of DOJ.     
        Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume  Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
      Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and  CIA’s  Mike Pompeo, is a possibility for a post. there.        

       Attorney General Jeff Sessions recused himself from the Russian/Trump  “investigation” March 2017.
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U.S. Ranking globally and domestically plunging under Trump
      Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year.  Clearly, Trump isn’t making America Great Again in the eyes of all other countries. 
The downside of this is we need the support of those countries.  Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
      Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition  to  R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped.  South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
       Also under Trump, Americans’ trust in institutions (government, companies and the  media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year.  He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues  without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE

“It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” –   Michael Bloomberg – billionaire business man former mayor NYC

      I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
      Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
      Individual income tax payments comprise 47% of  federal government receipts. At this point, I have no idea how much of an impact  Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
      The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
      That assumption is flawed. For one, why would a corporation  go on a hiring and cap-ex spending spree  with an economic expansion that  is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
      For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
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The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”:  The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:

-Of 258 Fortune 500companies studied, the effective federal income tax rate was 21.5%
18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
83 companies (32%) paid a tax rate less than 17.5%
109 companies (42%)  paid a tax rate between 17.5% and 30%.
66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the  effective tax rate  for corporates will drop to 9.2% as a result of  tax reform.

 

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STATES NEEDING FED’s HELP THE MOST
       The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine,  Indiana, Arizona, Louisiana.
      The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
  Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).

  So why all the whining about the Feds being in their space ?  Want to go it alone ?   Careful what you wish for.
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The BIG question is, do American morals and respect for our republic  have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
    Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people. 
     The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional  anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
      It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
    
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
       This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.

       This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News)  They want total control.  This is how democratic,  representative republics  perish.
      America is the biggest enchilada on earth.  Why wouldn’t a group of extremists want to wrest permanent control from its people ?  Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My  Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having  advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank.  Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on  meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the runBannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
      In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished  by one regret – he backed the biggest con job in our nation’s history.”

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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin),  are planning to require poverty stricken people on Medicaid  to get jobs  or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children.  Isn’t it bad enough these people are in poverty ? 
      Vox Media reports that 9.8 million Medicaid recipients  don’t have jobs  due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time.  I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
    
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage.  Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
     The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
      Can the Mueller investigation survive Mueller’s firing ?

Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”

1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE:  Not since the Civil War has the spirit and future of our nation been at such great risk, from within.  This  administration, Congress and U.S. Supreme Court is surgically dismembering  efforts over many years to ensure the safety  and well being of “all” Americans.
     The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand  of a  quasi-fascist state.  Ben Franklin was right when asked what kind of government  the Founding Fathers had given us.  “A Republic, if you can keep it,” was his respons.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?,  coach ?, employer ?.  IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?

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TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
    Why not, he dodged military service with 5 deferments  during the Vietnam era (1964 – 1970).
     Reportedly, he has asked advisers about his power to pardon family members and himself  relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor  concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.

REASONS NEEDED TO FIRE MUELLER:  Misconduct,  dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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  “Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr.  and Eric Trump – Wilbur Ross –  Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son)  – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and  Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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     REMOVING TRUMP FROM  OFFICE

Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
      It’s a stretch. 
The key for his removal is ”that he is unable to discharge the powers and duties of his office.”  Section 4 mentions nothing  that he is unfit, delusional, unbalanced, crazy,  impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
      That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent

      It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
      First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
      The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
      However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
       The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress  will act within 21 days where a two-thirds vote would be required to remove  him.  
        However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
      A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.

      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.

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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Constitutional Anarchy – Bad News For the Market

Constitutional Anarchy – Bad News For the Market
Investor’s first read – Daily edge before the open
DJIA:26,186
S&P 500: 2,821
Nasdaq Comp.:7,385
Russell 2000: 1,579
Friday, Feb 2, 2018 9:11a.m.
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What To Look For If Trump Plans to Fire Mueller (see below)
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TODAY
So, for a market that is historically vastly overvalued, what happens when trust in our government evaporates ?
Looking back over all bear markets since 1945, CONFIDENCE in our republic has been a major part of the pricing of stocks.
Since 1975, the Shiller S&P 500’s price/earnings ratio (earnings averaged over 10 years) is now 26.4 vs. an average of 15.7, a 68% overvaluation. This PE has ranged between 8.3 and 46.2 for various reasons, none the least of which is investors’ confidence in the stability of our government and its future.
The economy is currently stable, and may even get one more burst of strength before the consumer brings it down. Corporations got a massive tax cut, but it will deprive the federal government of the ability to pay its bills 5 years from now, which will require huge cuts to government programs. That’s a negative going forward.
What do you have left ? an intangible – confidence.
Perhaps Trump’s base is confident, but most of them are insignificant in terms of market clout.
As I see it, the Trump administration and a major part of the Republican Congress are imploding piece by piece.
Our government is in chaos. The FBI and Democratic Congress will pick the so-called Trump/Republican “MEMO” to pieces when it is released.
What’s the tipping point ? A constitutional crisis……..and that will be a huge drain on confidence, because it’s a long way until November and even longer way until 2020.
These are not Republicans, who jousted with Democrats prior to 1994 but always compromised in the best interests of our country, these are extremists who want to tear everything down and rebuild it their way, a quasi-fascist state.
They will stop at nothing, absolutely NOTHING to survive.
THAT WILL DESTROY CONFIDENCE, and that will adversely impact the stock market and the economy.
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The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare !
At some point, these think-alike’s will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
Yesterday’s sharp plunge was a warning. When the Street begins to sell, it will be straight down.
The major FLAW in the Republican’s economic game plan, which was touted to justify a massive, excessive corporate tax cut, is that no consideration has been made for the adverse impact of a recession.
The consumer is nearly tapped out. Credit card debt has doubled since 2013, the delinquency rate is rising sharply.
The Personal Savings rate as a percent of disposable income is 2.9%, down from 7.1% in July 2012. This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.
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SUPPORT “today”: DJIA:26,001;S&P 500:2,801; Nasdaq Comp.:7,333
RESISTANCE “today” DJIA:26,203; S&P 500:2,823; Nasdaq Comp.:7,387;
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FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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INFRASTRUCTURE: Little was said Tuesday night in the SOTU. I’ll run the piece again if appropriate.
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I really can’t say it any better than the following
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I sense a constitutional crisis is imminent with Special Counsel Robert Mueller indicting high level Trump administration officials. I believe Trump will respond with an attempt to fire Mueller, or find another way to obstruct the progress of this investigation.
The key here is, how this will impact the market. Initially, a brief plunge followed by a sharp rally would be likely, since the Street is tuned-out on political, but as the severity of the constitutional crisis deepens, the market will take a huge hit with the DJIA giving up at least 3,578 to 22,735 (-13.6%) and the S&P 500 giving up 349 points to 2,500 (-12.2%).
That’s roughly one-third of what the market gained since the 2016 election. Markets frequently give up one-third of major upmoves. Obviously if the market gets hit with new negatives after a that pullback, the plunge would be greater.
The reason I think a crisis is imminent is because the Republicans have ramped up their efforts to discredit the FBI and the Mueller probe, and because Trump says he is willing to testify under oath to the Mueller commission.
Nonsense ! He has no intention to meet with Mueller or he would have done so months ago. He wants to give the impression he is willing to comply to orchestrate support from his base.
Our republic is being tested like never before. This is a battle for untethered control by what I view as constitutional anarchists who want to dismantle 75 years of progress toward developing a high quality of life for America as a whole. Why else would they gerrymander the Hell out of our electorate, make it difficult for people to vote, and stack the judicial system ?
This is the extremist right wing’s big chance; they know demographics are against them going forward. I doubt Congress will oust Trump regardless of the severity of his actions before and after talking office.
But Wall Street, corporate American and the BIG money got their tax cut, they may want to get rid of Trump before he ruins chances of the Republicans hanging on to control of Congress and the White House in 2020.
Late-stage bull markets offer opportunities to make money easier and faster, simply because speculative fever is ramped up and buyers are jumping on anything that gets favorable mention by the Street or in the press.
At some point, the BIG money will have to exit. They need eager buyers to do so without knocking stocks they are selling down. With reportedly $33.2 billion flowing into stocks in the January 24 week, this is the euphoria they have been waiting for.
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I am keeping the following posted for new readers
What is written below will be difficult to believe. It’s just a matter of time before a major correction sets is, and a bear market.
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No one is bearish, and that IS BEARISH ! Odds favor 12% to 18% correction not necessarily today, or this week, maybe not for months, but the market crossed the line above reasonable valuation months ago, and is vulnerable to one of those flash crashes I have prematurely warned about.
From November 2016 to December 2017, the market was driven by promises of a massive corporate and high-earner tax cut. The passage of the tax cut in December took stock prices an even greater extreme.
The economic recovery, that started in June 2009 after the Great Recession and 52% bear market decline, continues undeterred. But stock markets turn down well ahead of the start of recessions, generally with a lead time of 3 to 9 months.
I have wrongly warned of risk for the better part of 2017, even issued a Sell on August 29. Realizing I was wrong, I reversed that call two weeks later, headlining, “WRONG READ on timing – But Warning Stands.”
I have experienced 14 bull market tops, written about 12, and all came when “least” expected, when a downturn was dismissed as impossible.
What might be an extreme of over-valuation (or undervaluation) in one market, may not rank as one in the next market. Bear market bottoms are easier to read than bull market tops.
A severe correction, possibly a bear market, is out there. It will take a “trigger” to start it, or a sudden “no show” by the BIG money, followed by panicky selling to get it underway. The Street got its tax cut, what else is there to anticipate ? Most of the benefits of the tax cut are priced- in the market’s 31% gain in the S&P 500 over 15 months.
Yes, making money can be easy now, buying just about anything, even junk.
Warnings like mine are annoying, even provoke anger.
“Who is this jerk, talking about risk when people are making a killing in the market ?” one may ask.
“Aren’t there dozens of reports out there hyping what-to-buy after the tax cut ? Didn’t I just hear about someone making a bundle last year. Take a hike Brooks, I’m all-in !”
I am not alone in seeing risk.
I have enormous respect for James Stack of InvesTech Research (1-406-862-777). Stack is also warning of risk and has reduced exposure to the market. His set of economic and stock market indicators are near flawless. What’s startling about his last issue is the extremes to which many of his indicators have reached. While his economic indicators suggest a recession is not imminent, he also warns that stock markets turn down 6-9 months ahead of recessions. The market has not had a 3% correction in 14.4 months, which has not happened since stocks plunged in 2008, he writes.
What’s more, he says, the bearish sentiments of the Investment Advisors Sentiment Survey tracked by Investors Intelligence, just hit a 31-year low. This is a contrary indicator. Advisors are least bearish at market tops when they should be bearish and least bullish at market bottoms – that’s the pattern. Maybe that’s why it is so hard to buy-low/sell-high ! Maybe it’s just easier for these people to sell greed at market tops and fear at bottoms.
Then too, the S&P 500 price/earnings ratio based on earnings already reported is 26, well above the historic norm of 17.2, excluding the extremes of the 1990’s technology bubble and 2008-2009 financial crisis.
Finally, margin debt (borrowing to buy stocks). It has been hitting new highs. That spells leverage which is fine as long as stocks rise, but devastating in declines.
I am as concerned today about what I see, as I was in August 2007 before the Great Recession/Bear Market when I wrote:

Perfect Storm Looms

The perfect storm in our financial markets
is looming….It will take a heroic effort internationally
to avert a meltdown of huge magnitude…Trading in
everything may have to be stopped until some sort of
sanity is restored…This can get real ugly…No one has
a handle on the leverage amassed in derivatives ..No
one has a true handle on how precarious the situation out
there is, and that uncertainty feeds on itself prompting
increased selling…With few buyers, stocks tank…
Only when a cauldron of fear begins to boil do you have
a market that is reasonably safe to invest in.

George Brooks
August 19, 2007

I was two months early then, more so this time around. Conditions are a bit different now, but the odds that the Street will be blindsided this time are greater. They have blinders on – tunnel vision – in denial.
We are approaching perfect storm conditions, and I haven’t even touched on the total dysfunction of the Trump administration and Congress, and its imminent implosion in face of the findings of the Mueller investigation.
THE NATION’S BIGGEST EVER POLITICAL SCANDAL will hit in coming months, look for multiple constitutional crises, and possibly panic in the stock market.
SELL EVERYTHING ? That may work for some people, but the more nimble may be able to stay a while as euphoria takes stocks higher. For others, a healthy cash reserve is justified just in case a few of us, and historic precedence are right.
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POLITICAL/STOCK MARKET
WILL TRUMP FIRE MUELLER ? LOOK FOR THIS TIP-OFF
Trump can’t fire Mueller directly, it must be done by the Department of Justice. Trump would have to find someone to do it. A new appointment to the DOJ may signal Trump’s intent.
Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will. Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but it is doubtful she would tarnish her career by firing Mueller, as did Robert Bork who fired special prosecutor Archibald Cox under orders of President Nixon in the Watergate Saturday Night Massacare, October 1973.
Trump must find someone in DOJ to fire Mueller if he wants to do it.
Until Dana Bounte’s resignation last October and recent appointment as general Counsel for the FBI by Director Christopher Wray, Boente would be in line. He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general for the National Security Division of DOJ.
Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and CIA’s Mike Pompeo, is a possibility for a post. there.
Attorney General Jeff Sessions recused himself from the Russian/Trump “investigation” March 2017.
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U.S. Ranking globally and domestically plunging under Trump
Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year. Clearly, Trump isn’t making America Great Again in the eyes of all other countries. The downside of this is we need the support of those countries. Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition to R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped. South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
Also under Trump, Americans’ trust in institutions (government, companies and the media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year. He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE
“It’s pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” – Michael Bloomberg – billionaire business man former mayor NYC
I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
Individual income tax payments comprise 47% of federal government receipts. At this point, I have no idea how much of an impact Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
That assumption is flawed. For one, why would a corporation go on a hiring and cap-ex spending spree with an economic expansion that is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
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The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”: The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:
-Of 258 Fortune 500companies studied, the effective federal income tax rate was 21.5%
-18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
-83 companies (32%) paid a tax rate less than 17.5%
-109 companies (42%) paid a tax rate between 17.5% and 30%.
-66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the effective tax rate for corporates will drop to 9.2% as a result of tax reform.

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STATES NEEDING FED’s HELP THE MOST
The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine, Indiana, Arizona, Louisiana.
The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).
So why all the whining about the Feds being in their space ? Want to go it alone ? Careful what you wish for.
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The BIG question is, do American morals and respect for our republic have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people.
The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.
This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News) They want total control. This is how democratic, representative republics perish.
America is the biggest enchilada on earth. Why wouldn’t a group of extremists want to wrest permanent control from its people ? Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank. Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the run ? Bannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished by one regret – he backed the biggest con job in our nation’s history.”
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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin), are planning to require poverty stricken people on Medicaid to get jobs or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children. Isn’t it bad enough these people are in poverty ?
Vox Media reports that 9.8 million Medicaid recipients don’t have jobs due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time. I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage. Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
Can the Mueller investigation survive Mueller’s firing ?
Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”
1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE: Not since the Civil War has the spirit and future of our nation been at such great risk, from within. This administration, Congress and U.S. Supreme Court is surgically dismembering efforts over many years to ensure the safety and well being of “all” Americans.
The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand of a quasi-fascist state. Ben Franklin was right when asked what kind of government the Founding Fathers had given us. “A Republic, if you can keep it,” was his respons.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?, coach ?, employer ?. IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?
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TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
Why not, he dodged military service with 5 deferments during the Vietnam era (1964 – 1970).
Reportedly, he has asked advisers about his power to pardon family members and himself relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.
REASONS NEEDED TO FIRE MUELLER: Misconduct, dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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“Connect the Dots.” This investigation is open-ended
Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr. and Eric Trump – Wilbur Ross – Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son) – JD Gordon – Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis – Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov – Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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REMOVING TRUMP FROM OFFICE
Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
It’s a stretch. The key for his removal is ”that he is unable to discharge the powers and duties of his office.” Section 4 mentions nothing that he is unfit, delusional, unbalanced, crazy, impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent
It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress will act within 21 days where a two-thirds vote would be required to remove him.
However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
A Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.
The U.S. Constitution enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached. BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.
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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

Possible Constitutional Crisis, Rising Interest Rates Spook Market

Investor’s first read – Daily edge before the open
DJIA:26,149
S&P 500: 2,8222,823
Nasdaq Comp.:7,441
Russell 2000: 1,574
Thursday, Feb 1, 2018 9:11a.m.
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What To Look For If Trump Plans to Fire Mueller (see below)
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TODAY
The market gave back most of a 189 point Dow gain yesterday, not a good sign. While the Dow closed up 70 points, it would have been down 44 points if Boeing’s stock didn’t gain 16.66 points. this is one of the fallacies in the construction of the DJIA. It is price based, not market value based like the other major market averages. One stock can distort the average.
The S&P 500 and Nasdaq were flat, the smaller company average, Russell 2000, took a hit.
It is not a good sign if the market loses all of a big prior day’s gain.
We need to see if there is a follow-through today. It will open lower, but the key is, will buyers be there ?
I warned yesterday, “Rally Must Hold…..or Straight Down.
The computer algos on the Street have been in cruise control buy mode for over a year, which is why the market has not had a 3% correction in more than 14 months. This is rare !
At some point, these think-alike’s will all get a sell signal at the same time, and then it will be straight down. This is why a cash reserve is necessary.
Yesterday’s sharp plunge was a warning. When the Street begins to sell, it will be straight down.
The major FLAW in the Republican’s economic game plan, which was touted to justify a massive, excessive corporate tax cut, is that no consideration has been made for the adverse impact of a recession.
The consumer is nearly tapped out. Credit card debt has doubled since 2013, the delinquency rate is rising sharply.
The Personal Savings rate as a percent of disposable income is 2.9%, down from 7.1% in July 2012. This rate tends to drop sharply prior to recessions. The lowest level of savings over the last 71 years was 2.7% in 2005.
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SUPPORT “today”: DJIA:26,076;S&P 500:2,821; Nasdaq Comp.:7,401
RESISTANCE “today” DJIA:26,217; S&P 500:2,833; Nasdaq Comp.7,7,427;
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FYI: The S&P 500 gained 36.6% in Obama’s first year, but only 23.7% under Trump. Obama inherited the worst bear market since the 1930’s, Trump inherited an accelerating bull market supported by a stable economy. If Obama’s first year gain is calculated from the Bear market bottom March 6, 2009 shortly after he assumed office, the gain would be 74.2%.
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INFRASTRUCTURE: Little was said Tuesday night in the SOTU. I’ll run the piece again if appropriate.
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I really can’t say it any better than the following
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I sense a constitutional crisis is imminent with Special Counsel Robert Mueller indicting high level Trump administration officials. I believe Trump will respond with an attempt to fire Mueller, or find another way to obstruct the progress of this investigation.
The key here is, how this will impact the market. Initially, a brief plunge followed by a sharp rally would be likely, since the Street is tuned-out on political, but as the severity of the constitutional crisis deepens, the market will take a huge hit with the DJIA giving up at least 3,578 to 22,735 (-13.6%) and the S&P 500 giving up 349 points to 2,500 (-12.2%).
That’s roughly one-third of what the market gained since the 2016 election. Markets frequently give up one-third of major upmoves. Obviously if the market gets hit with new negatives after a that pullback, the plunge would be greater.
The reason I think a crisis is imminent is because the Republicans have ramped up their efforts to discredit the FBI and the Mueller probe, and because Trump says he is willing to testify under oath to the Mueller commission.
Nonsense ! He has no intention to meet with Mueller or he would have done so months ago. He wants to give the impression he is willing to comply to orchestrate support from his base.
Our republic is being tested like never before. This is a battle for untethered control by what I view as constitutional anarchists who want to dismantle 75 years of progress toward developing a high quality of life for America as a whole. Why else would they gerrymander the Hell out of our electorate, make it difficult for people to vote, and stack the judicial system ?
This is the extremist right wing’s big chance; they know demographics are against them going forward. I doubt Congress will oust Trump regardless of the severity of his actions before and after talking office.
But Wall Street, corporate American and the BIG money got their tax cut, they may want to get rid of Trump before he ruins chances of the Republicans hanging on to control of Congress and the White House in 2020.
Late-stage bull markets offer opportunities to make money easier and faster, simply because speculative fever is ramped up and buyers are jumping on anything that gets favorable mention by the Street or in the press.
At some point, the BIG money will have to exit. They need eager buyers to do so without knocking stocks they are selling down. With reportedly $33.2 billion flowing into stocks in the January 24 week, this is the euphoria they have been waiting for.
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I am keeping the following posted for new readers
What is written below will be difficult to believe. It’s just a matter of time before a major correction sets is, and a bear market.
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No one is bearish, and that IS BEARISH ! Odds favor 12% to 18% correction not necessarily today, or this week, maybe not for months, but the market crossed the line above reasonable valuation months ago, and is vulnerable to one of those flash crashes I have prematurely warned about.
From November 2016 to December 2017, the market was driven by promises of a massive corporate and high-earner tax cut. The passage of the tax cut in December took stock prices an even greater extreme.
The economic recovery, that started in June 2009 after the Great Recession and 52% bear market decline, continues undeterred. But stock markets turn down well ahead of the start of recessions, generally with a lead time of 3 to 9 months.
I have wrongly warned of risk for the better part of 2017, even issued a Sell on August 29. Realizing I was wrong, I reversed that call two weeks later, headlining, “WRONG READ on timing – But Warning Stands.”
I have experienced 14 bull market tops, written about 12, and all came when “least” expected, when a downturn was dismissed as impossible.
What might be an extreme of over-valuation (or undervaluation) in one market, may not rank as one in the next market. Bear market bottoms are easier to read than bull market tops.
A severe correction, possibly a bear market, is out there. It will take a “trigger” to start it, or a sudden “no show” by the BIG money, followed by panicky selling to get it underway. The Street got its tax cut, what else is there to anticipate ? Most of the benefits of the tax cut are priced- in the market’s 31% gain in the S&P 500 over 15 months.
Yes, making money can be easy now, buying just about anything, even junk.
Warnings like mine are annoying, even provoke anger.
“Who is this jerk, talking about risk when people are making a killing in the market ?” one may ask.
“Aren’t there dozens of reports out there hyping what-to-buy after the tax cut ? Didn’t I just hear about someone making a bundle last year. Take a hike Brooks, I’m all-in !”
I am not alone in seeing risk.
I have enormous respect for James Stack of InvesTech Research (1-406-862-777). Stack is also warning of risk and has reduced exposure to the market. His set of economic and stock market indicators are near flawless. What’s startling about his last issue is the extremes to which many of his indicators have reached. While his economic indicators suggest a recession is not imminent, he also warns that stock markets turn down 6-9 months ahead of recessions. The market has not had a 3% correction in 14.4 months, which has not happened since stocks plunged in 2008, he writes.
What’s more, he says, the bearish sentiments of the Investment Advisors Sentiment Survey tracked by Investors Intelligence, just hit a 31-year low. This is a contrary indicator. Advisors are least bearish at market tops when they should be bearish and least bullish at market bottoms – that’s the pattern. Maybe that’s why it is so hard to buy-low/sell-high ! Maybe it’s just easier for these people to sell greed at market tops and fear at bottoms.
Then too, the S&P 500 price/earnings ratio based on earnings already reported is 26, well above the historic norm of 17.2, excluding the extremes of the 1990’s technology bubble and 2008-2009 financial crisis.
Finally, margin debt (borrowing to buy stocks). It has been hitting new highs. That spells leverage which is fine as long as stocks rise, but devastating in declines.
I am as concerned today about what I see, as I was in August 2007 before the Great Recession/Bear Market when I wrote:

Perfect Storm Looms

The perfect storm in our financial markets
is looming….It will take a heroic effort internationally
to avert a meltdown of huge magnitude…Trading in
everything may have to be stopped until some sort of
sanity is restored…This can get real ugly…No one has
a handle on the leverage amassed in derivatives ..No
one has a true handle on how precarious the situation out
there is, and that uncertainty feeds on itself prompting
increased selling…With few buyers, stocks tank…
Only when a cauldron of fear begins to boil do you have
a market that is reasonably safe to invest in.

George Brooks
August 19, 2007

I was two months early then, more so this time around. Conditions are a bit different now, but the odds that the Street will be blindsided this time are greater. They have blinders on – tunnel vision – in denial.
We are approaching perfect storm conditions, and I haven’t even touched on the total dysfunction of the Trump administration and Congress, and its imminent implosion in face of the findings of the Mueller investigation.
THE NATION’S BIGGEST EVER POLITICAL SCANDAL will hit in coming months, look for multiple constitutional crises, and possibly panic in the stock market.
SELL EVERYTHING ? That may work for some people, but the more nimble may be able to stay a while as euphoria takes stocks higher. For others, a healthy cash reserve is justified just in case a few of us, and historic precedence are right.
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POLITICAL/STOCK MARKET
WILL TRUMP FIRE MUELLER ? LOOK FOR THIS TIP-OFF
Trump can’t fire Mueller directly, it must be done by the Department of Justice. Trump would have to find someone to do it. A new appointment to the DOJ may signal Trump’s intent.
Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ who will. Rachel Brand, a conservative who supported Sen. Cruz in 2017 would be in line to take over from Rosenstein, but it is doubtful she would tarnish her career by firing Mueller, as did Robert Bork who fired special prosecutor Archibald Cox under orders of President Nixon in the Watergate Saturday Night Massacare, October 1973.
Trump must find someone in DOJ to fire Mueller if he wants to do it.
Until Dana Bounte’s resignation last October and recent appointment as general Counsel for the FBI by Director Christopher Wray, Boente would be in line. He served as the U.S. Attorney General from the Eastern Dist. of Virginia, as well as, acting assistant attorney general for the National Security Division of DOJ.
Trump has appointed (pending confirmation) former Boeing General Counsel, John Demers, to assume Boente’s position as U.S. attorney in the Eastern District of Virginia. He could do it, but he has promised to support the Mueller investigation.
Unconfirmed rumors are that EPA’s Scott Pruit has shown an interest in the DOJ, and CIA’s Mike Pompeo, is a possibility for a post. there.
Attorney General Jeff Sessions recused himself from the Russian/Trump “investigation” March 2017.
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U.S. Ranking globally and domestically plunging under Trump
Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year. Clearly, Trump isn’t making America Great Again in the eyes of all other countries. The downside of this is we need the support of those countries. Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition to R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped. South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
Also under Trump, Americans’ trust in institutions (government, companies and the media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year. He is a human wrecking ball.
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SOLUTION for our nation’s problems: Deport Trump’s base. Not the Republicans who vote their party because they are genuinely conservative, but the racist, violent, abusive element that opts for dumbing down solutions for issues because experienced and intelligent people remind them how incapable they are of emotionally and mentally developing rational, unbiased conclusions for issues without bias that serve the best interests of all Americans.
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According to the Washington Post, Trump’s false or misleading statements (lies) now exceed 2,000 after his first year.
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Trump ABANDONS voter fraud panel, but hands it off the Homeland Security where all the snooping can be done out of sight
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CORPORATE TAX CUT IRRESPONSIBLE
“It’s pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” – Michael Bloomberg – billionaire business man former mayor NYC
I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
Individual income tax payments comprise 47% of federal government receipts. At this point, I have no idea how much of an impact Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
That assumption is flawed. For one, why would a corporation go on a hiring and cap-ex spending spree with an economic expansion that is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
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The Institute on Taxation and Economic Policy released a study on “Corporate Tax Avoidance by Fortune 500 Companies”: The report includes 258 corporations that were consistently profitable over an eight-year period between 2008 and 2015. Some conclusions:
-Of 258 Fortune 500companies studied, the effective federal income tax rate was 21.5%
-18 of the 258 paid no income tax and 48 paid an effective tax rate of 10%.
-83 companies (32%) paid a tax rate less than 17.5%
-109 companies (42%) paid a tax rate between 17.5% and 30%.
-66 companies (26%) paid a tax rate greater than 30%
NOTE: The University of Pennsylvania’s Wharton School estimates the effective tax rate for corporates will drop to 9.2% as a result of tax reform.

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STATES NEEDING FED’s HELP THE MOST
The twelve most federally dependent states are Kentucky, Mississippi, New Mexico, Alabama, West Virginia, South Carolina, Montana, Tennessee, Maine, Indiana, Arizona, Louisiana.
The twelve least federally dependent states are Delaware, Minnesota, New Jersey, Illinois, California, Kansas, Nevada, Massachusetts, Connecticut, New Hampshire, and Utah, and Nebraska.
Red states (Republican) are 67% more dependent on federal government aid than Blue States (Democratic).
So why all the whining about the Feds being in their space ? Want to go it alone ? Careful what you wish for.
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The BIG question is, do American morals and respect for our republic have to hit bottom before Congress and the American voter opts for decency, honesty, integrity and a moral compass ?
Currently, odds favor neither will have a change of heart even if the findings of the Mueller probe uncover untold crimes against the constitution and American people.
The current extremist Republican Party is morally bankrupt, as are many of its supporters. Much of the Republican Congress is comprised congressional anarchists, determined to raze time-tested checks and balances, and oppose any and all new proposals that do not pass their muster.
It wasn’t enough that they obstructed progress for eight years of the Obama administration, they are now dismantling the things he did accomplish. Our republic is being mugged in plain sight.
There are a lot of very fine Republicans out there, but someone needs to tell them someone hijacked their party.
This isn’t Reagan, this isn’t anything close to the Republican Party I grew up with.
This is what the right wing has been waiting for – total control of the presidency, both Houses, and the Supreme Court. (and Fox News) They want total control. This is how democratic, representative republics perish.
America is the biggest enchilada on earth. Why wouldn’t a group of extremists want to wrest permanent control from its people ? Americans must stop multitasking, and have the guts to endure the day-to-day angst that accompanies being well informed. They need to return to values.
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Brian Benczkowski was nominated by President Trump in June to be U.S. Assistant Attorney General for the Criminal Division. My Sept. 15 post called attention to this since he previously represented one of Russia’s largest banks Russia’s Alfa Bank. Having advanced out of the Senate Judiciary Committee, his nomination is pending full Senate confirmation. He once served under Jeff Sessions. If confirmed, he pledged independence, recusing himself for two years from any dealings with alfa Bank. Sen. Feinstein voted against Benczkowski concerned that he never served as a federal prosecutor and the fact he would sit in on meetings with special counsel Robert Mueller with Russia probe. Sen. Sheldon Whitehouse, D-R.I., was concerned his major qualification was his connection with Sessions.
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Mercer on the run ? Bannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished by one regret – he backed the biggest con job in our nation’s history.”
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IT’S NEVER THE GUNS !
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Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin), are planning to require poverty stricken people on Medicaid to get jobs or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children. Isn’t it bad enough these people are in poverty ?
Vox Media reports that 9.8 million Medicaid recipients don’t have jobs due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time. I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage. Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
Can the Mueller investigation survive Mueller’s firing ?
Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”
1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE: Not since the Civil War has the spirit and future of our nation been at such great risk, from within. This administration, Congress and U.S. Supreme Court is surgically dismembering efforts over many years to ensure the safety and well being of “all” Americans.
The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand of a quasi-fascist state. Ben Franklin was right when asked what kind of government the Founding Fathers had given us. “A Republic, if you can keep it,” was his respons.
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WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?, coach ?, employer ?. IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day, 1,000 lies since his inauguration on January 20 ?
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TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
Why not, he dodged military service with 5 deferments during the Vietnam era (1964 – 1970).
Reportedly, he has asked advisers about his power to pardon family members and himself relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.
REASONS NEEDED TO FIRE MUELLER: Misconduct, dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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“Connect the Dots.” This investigation is open-ended
Nigel Farage – President Trump- Hope Hicks, Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald, Jr. and Eric Trump – Wilbur Ross – Michael Cohen – Ezra Cohen Watnick – Michael T. Flynn – Michael G. Flynn ( son) – JD Gordon – Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis – Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Boris Epshteyn, Ike Kaveladze, and Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov – Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
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REMOVING TRUMP FROM OFFICE
Can Section 4 of the 25th Amendment, U.S. Constitution – Remove Trump ?
It’s a stretch. The key for his removal is ”that he is unable to discharge the powers and duties of his office.” Section 4 mentions nothing that he is unfit, delusional, unbalanced, crazy, impulsive, irrational, impaired, sociopathic, psychopathic, narcissistic.
That would be the threshold that would have to be crossed if Trump is removed from office via Section 4 of the 25th Amendment of the U.S. Constitution. There is no precedent
It isn’t just Democrats, liberals, moderates and reasonable people who find Trump caustic, and dangerous, conservatives like George Will, David Brooks and Ross Douthart are also urging his removal.
First, there are four ways to get rid of Trump – death, resignation, impeachment and Section 4 of the 25th Amendment.
The procedure employing the 25th Amendment requires the Vice President and the majority of the cabinet of 15 (8) to vote to remove the president. They would submit their declaration in writing to the President pro tempore ( Sen. Orrin Hatch) and Speaker of the House (Paul Ryan) that the president is unable to discharge the powers and duties of his office, and the Vice President will immediately assume to office as acting president.
However, the president may contend the move by submitting his own letter to the President pro tempore and Speaker of the House, that he believes he is capable of performing his duties, in which case he will resume the office of presidency.
The Vice President and Cabinet members may then resubmit their declaration at which point Congress would vote within 48 hours if in session. If not, Congress will act within 21 days where a two-thirds vote would be required to remove him.
However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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IMPEACHMENT
A Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.
The U.S. Constitution enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Initially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached. BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.
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Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.