December Retail Sales So Bad It Must Be An ERROR

INVESTORS first read.com – Daily edge before the open deal 
DJIA:25,439
S&P 500: 2,745
Nasdaq Comp.:7,426
Russell 2000:1,545
Friday, February 15
, 2019    7:31 a.m.
……………………..
gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

…………………………………………………………………….
TODAY:
Meanwhile economic indicators continue to soften, which is why the Fed panicked in January, reversing its QT policy of raising rates. December retail sales plunged 1.2%, the worst  since 2009 shortly after the recession ended.
Analysts think the number is so big, there must be a reason not rerlated to the economy.
I feel very uncomfortable with the Fed micromanaging the economy and stock market. Essentially, since  they are sending the  a message to the Street that it is safe to load up on stocks knowing, but not publicly acknowledging, the economy at risk.
If a recession develops late this year or early next, the market will plunge from the lofty levels the Fed created with its abrupt 180-degree reversal in January.
The potential is here for the unexpected. The potential is also present for a blow up of the entire Trump administration.
An astute group I met with yesterday (mostly former Republicans) raised an interesting point.  What would happen if we are confronted with a huge global crisis ? Is our government staffed to meet the challenge ?
Worth noting, recessions followed decisions by the Fed to stop raising rates, and especially force them down.
      Also worth noting. Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.  The unemployment rate hit a low of 3.7 percent in November, jumped to 3.9 percent in December and to 4.0 percent in January. Now, averages include months below and above 3.8. What’s more, we won’t know when the current recession if we have one begins because that conclusion is.reached by the Nat’l Bureau of Economic Research (NBER) long after the fact.
I think  we are in the early stages of a recession, that the Fed sees it and panicked last  month by abruptly abandoning its QT policy of raising rates in favor of wait and see.  Whether it can salvage this 9 year/8 month economic expansion is the question of the day.
The Street believes the Fed has its back, that any decline will be stopped by some action by the Fed.  We have had three bear markets in the S&P 500 exceeding 50% since 1974, so lot’s of luck on that one.
What if 10 years of bull market has drawn the Street into a false sense of security, a cult-like confidence that significant facts can be overlooked/ignored, that there is nothing to worry about, that any dip in prices, even a 20% correction is a buying opportunity ?
Economist, A. Gary Shilling’s INSIGHT refers to a Duke University survey that finds nearly half the CFOs polled expect a recession by year-end.  One-quarter of the economists polled by the Wall Street Journal in January see a recession this year, up from 13% a year ago.
While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
The Street may be looking beyond 2019 to 2020 when it sees a rebound in earnings.  That’s sheer insanity.    By then, a recession will be underway.  When the Street sees its folly, it will slash 2020 earnings like it is slashing this year’s.
BOTTOM LINE:

 The Fed is running scared for a reason.  Respect that !
Savvy, nimble investors can  hit ‘n run as the Street fires out its latest “buy” recommendations, new accounts open, existing accounts are harvested, and commissions roll in.  The Street thinks it’s back in a cruise control, algorithm buy-and-fret-not-market.   Fever festers.  Careful !
………………………………………………..
TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387
These where I expect resistance to begin to impede further advances. This has become a news sensitive market, with hopes and expectations about a government shutdown and progress on tariffs can have an impact.
…………………………………
As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     ON A BRIGHTER SIDE:
January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
……………………………………
TRUMP  – Agent, Asset, or Facilitator ?
      IMHO, Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
………………………………………….
Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have recovered after the Fed opted out of further increases in interest rates.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF is still down 17% from its January 2018 high of 41.48. Not only is the industry a major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
>  in 2018, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Last year former Fed Chair, Ben Bernanke, economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending. He has not indicated he has changed his mind.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

 

 

 

 

Fed Policy Change Drives Speculative Frenzy

INVESTORS first read.com – Daily edge before the open deal 
DJIA:25,543
S&P 500: 2,753
Nasdaq Comp.:7,426
Russell 2000:1,542
Thursday, February 14
, 2019    7:31 a.m.
……………………..
gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

…………………………………………………………………….
TODAY:
Stocks continued their upward march yesterday responding to the prospects that the government won’t be shut down, that progress is being made on trade, and the Street is now confident the Fed will step in if the market heads south again.
Meanwhile economic indicators continue to soften, which is why the Fed panicked in January, reversing its QT policy of raising rates.
I feel very uncomfortable with the Fed micromanaging the economy and stock market. Essentially, they are sending the Street a message it is safe to load up on stocks knowing, but not publicly acknowledging, the economy at risk.
If a recession develops late this year or early next the market will plunge from the lofty levels the Fed created with its abrupt 180-degree reversal in January.
Markets should be left to find their own comfort level. That way unexpected developments don’t have a chilling effect (flash crash).
Worth noting, recessions followed decisions by the Fed to stop raising rates, and especially force them down.
Economist, A. Gary Shilling’s INSIGHT refers to a Duke University survey that finds nearly half the CFOs polled expect a recession by year-end.  One-quarter of the economists polled by the Wall Street Journal in January see a recession this year, up from 13% a year ago.
While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
The Street may be looking beyond 2019 to 2020 when it sees a rebound in earnings.  That’s sheer insanity.    By then, a recession will be underway.  When the Street sees its folly, it will slash 2020 earnings like it is slashing this year’s.
BOTTOM LINE:

 The Fed is running scared for a reason.  Respect that !
Savvy, nimble investors can  hit ‘n run as the Street fires out its latest “buy” recommendations, new accounts open, existing accounts are harvested, and commissions roll in.  The Street thinks it’s back in a cruise control, algorithm buy-and-fret-not-market.   Fever festers.  Careful !
………………………………………………..
TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387
These where I expect resistance to begin to impede further advances. This has become a news sensitive market, with hopes and expectations about a government shutdown and progress on tariffs can have an impact.
…………………………………
As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     ON A BRIGHTER SIDE:
January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
……………………………………
TRUMP  – Agent, Asset, or Facilitator ?
      IMHO, Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
………………………………………….
Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have recovered after the Fed opted out of further increases in interest rates.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF is still down 17% from its January 2018 high of 41.48. Not only is the industry a major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
>  in 2018, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Last year former Fed Chair, Ben Bernanke, economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending. He has not indicated he has changed his mind.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

 

 

 

S&P 500 Has Recouped Two-Thirds of Oct./Dec. Loss

INVESTORS first read.com – Daily edge before the open deal 
DJIA:25,425
S&P 500: 2,744
Nasdaq Comp.:7,414
Russell 2000:1,538
Tuesday, February 13
, 2019    9:07 a.m.
……………………..
gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

…………………………………………………………………….
TODAY: A tentative agreement was reached by Congressional negotiators yesterday to avert another government shutdown.  While the amount allocated for a “wall” falls short of Trump’s demands, coming in at $1.4 billion vs. $5.7 billion, Trump will either press for changes, accept a deal, or opt for a continuing resolution (CR), keep the government open, and keep negotiating..
The news sent stock’s soaring, but for two other reasons. Fed policy is positive for stocks and the Street expects progress on trade negotiations.
     Speculative fever is beginning to fester again.  That’s great if you are a nimble trader quick to exit if you see trouble.
IMHO, the Fed blew it, or put another way, screwed investors.
If the economy heats up, the Fed will start raising interest rates again and down will go stocks (from a lofty level).
If the increasing signs of economic weakness begin to bite and the Street sees a recession, the market will plunge.
The Fed should have acknowledged the weakness in housing, manufacturing, consumer confidence/sentiment and small business’ bearishness instead of saying the economic outlook was “rosy.”
The stock market would not have risen as much, maybe declined, but it would have found a level that more realistically reflects actual and potential economic conditions.
     Economist, A. Gary Shilling’s INSIGHT refers to a Duke University survey that finds nearly half the CFOs polled expect a recession by year-end.  One-quarter of the economists polled by the Wall Street Journal in January see a recession this year, up from 13% a year ago.
While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
The Street may be looking beyond 2019 to 2020 when it sees a rebound in earnings.  That’s sheer insanity.    By then, a recession will be underway.  When the Street sees its folly, it will slash 2020 earnings like it is slashing this year’s.
BOTTOM LINE:

 The Fed is running scared for a reason.  Respect that !
Savvy, nimble investors can  hit ‘n run as the Street fires out its latest “buy” recommendations, new accounts open, existing accounts are harvested, and commissions roll in.  Fever festers.  Careful !
………………………………………………..
TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387
      …………………………………
Progress on U.S./China trade talks and an agreement on keeping the government open would
 push stock prices back up from overvalued levels to extremely overvalued levels.
Progress is being made. Both the U.S. and China are hurting from this nonsense.
As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     As I have emphasized so many times, the Street’s algos pretty much track the same stuff, but are  still programmed with  a bullish bias.
At some point, the Street will all bail at the same time. We saw this flash crash mentality in April/May 2010 (-13%); Aug.2011 (-16%); Jul./Aug. 2015 (-11.5%); Dec./Jan. 2016 (-13%); Jan./Feb. 2018 (-11.8%), and Jan. 2019 (-16.4%). Next time will be worse.
The big loser here is the person who needs a return on a fixed income investment.
ON A BRIGHTER SIDE:

January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
……………………………………
TRUMP  – Agent, Asset, or Facilitator ?
      IMHO, Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
>The yield curve is flattening as short-term treasuries rise faster than long-tern governments just another warning sign of impending recession.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
………………………………………….
Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have been in a prolonged slump since January.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF has dropped 30.5%, as interest rates rise. Not only is it  major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Jamie Dimon, CEO J.P. Morgan Chase,  thinks the benchmark  10-yearTreasury note , now 2.95%, should be 5%. The rate impacts lending for autos, mortgages and businesses.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
> Recently, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Former Fed Chair, Ben Bernanke, says economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POLITICAL/STOCK MARKET
I have decided to publish my political comments in a separate publication under a different LOGO and structure it differently, publishing a commentary a couple times a week, sometimes more, then publish the commentary history one day a week.
This will make easier for the reader and enable me to concentrate more on items.  What’s more, I will be able to refer readers to web sites where they can get additional information.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

 

 

Easy Does It !

INVESTORS first read.com – Daily edge before the open        
DJIA:25,052
S&P 500: 2,709
Nasdaq Comp.:7,307
Russell 2000:1,518
Monday, February 12
, 2019    9:07 a.m.
……………………..
gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

……………………………………………..
SPECIAL RECOMMENDATION: Serious investors and students of the stock market should all own the “Stock Trader’s Almanac.”  No single source is packed with more valuable statistics, and stock market behavioral information, present and past, than this annual publication in its 51st year.
Call: 845-875-9582 or email: info@stocktradersalmanac.com
…………………………………………………………………….
TODAY: A tentative agreement has been reached by Congressional negotiators to avert another government shutdown, but the amount allocated for a “wall” falls short of Trump’s demands, coming in at $1.4 billion vs. $5.7 billion.
Futures trading indicates the Street thinks Trump will accept the deal with an indication of a 200-point open in the DJIA.  I think that will fade as we get closer to the open.  There has to be wiggle room here for Trump to save face, otherwise he will reject it. The recent shutdown lasted 35 days, the longest ever, and cost at least $11 billion, not factoring in losses by government contractors – disgraceful, utterly disgraceful !
TECHNICAL
In light of looming uncertainties, we are now in high risk territory (thanks to the Fed) where one or a couple of  negatives can tank the market again.
The market is assuming positive outcomes of the following:
> news of Trump administration officials’ indictments
> a trade deal with China
> another government shutdown
>new economic negatives
>talk of a recession
>further downgrades in projections for 2019 corporate earnings
      The 20% drop in the S&P 500 in Q4 was a warning.
………………………………………………………..
      The Street is ignoring  a gradual weakening in the economy, which is likely the reason for the Fed’s about face on rate increases.
In addition to the problems in the housing industry, unfilled factory orders are down, unit sales vs dollar sales of vehicles are down,   weakness in PMI and ISM non-manufacturing sales persists, consumer confidence and sentiment are falling and the Small Business Optimism Index was reported today to  drop 2.9% in January.
Gary Shilling’s INSIGHT refers to a Duke University survey that finds nearly half the CFOs polled expect a recession by year-end.  One-quarter of the economists polled by the Wall Street Journal in January see a recession this year, up from 13% a year ago.
While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
The Street may be looking beyond 2019 to 2020 when it sees a rebound in earnings.  That’s sheer insanity.    By then, a recession will be underway.  When the Street sees its folly, it will slash 2020 earnings like it is slashing this years.
A buying  panic followed Fed Chief Jerome Powell’s announcement of the FOMC’s 180-degree policy change, one of systematically raising its benchmark fed funds rate to a wait and see policy that may put rates on hold indefinitely.
The decision came at its January 30, FOMC meeting and after the market had rebounded sharply from a 20% October/December sell off. Horrible Timing !
     Powell soft pedaled the fact that the U.S. economy is showing serious signs of weakness with the housing industry in a bear market, manufacturing struggling and both consumer confidence and consumer sentiment  plunging.
Worse yet, he characterized the U.S. economic outlook as “Rosy.”
I think he misspoke. It isn’t rosy, it’s risky.     The S&P 500 has recovered about two-thirds of the 20% it lost between October 8 and December 26.
BOTTOM LINE:
A tentative deal on avoiding another devastating shutdown was announced today. The market will open on the upside, but stands to stall as the Street awaits Trump’s response.   There is room for some give and take before Friday.
The Street cannot ignore what is happening. We have the potential for a constitutional crisis, and a host of other serious negatives developing that could impact stock prices.
I think the great bull market that started in Q4 last year is over, and that a bear market started with the Oct./Dec., 20% plunge in the S&&P 500.
     The Fed is running scared for a reason.  Respect that !
………………………………………………..
TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387
      I have technically analyzed each of the 30 Dow industrials, converted the results to the DJIA using the Dow’s “divisor 0.14748, and arrived at support and resistance levels on  short-term basis and concluded:
Support: 23,955
Resistance: 25,379
16 of the 30 Dow stocks had positive patterns with some upside potential, 11 had unattractive patterns, and 3 were neutral.
Any major jolt at these levels will trigger the “trapdoor’ effect, where stocks simply  plunge like they did in October/November (S&P 500 down 20%).
…………………………………
Progress on U.S./China trade talks and an agreement on keeping the government open would
 push stock prices back up from overvalued levels to extremely overvalued levels.
Progress is being made. Both the U.S. and China are hurting from this nonsense.
As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     As I have emphasized so many times, the Street’s algos pretty much track the same stuff, but are  still programmed with  a bullish bias.
At some point, the Street will all bail at the same time. We saw this flash crash mentality in April/May 2010 (-13%); Aug.2011 (-16%); Jul./Aug. 2015 (-11.5%); Dec./Jan. 2016 (-13%); Jan./Feb. 2018 (-11.8%), and Jan. 2019 (-16.4%). Next time will be worse.
The big loser here is the person who needs a return on a fixed income investment.
ON A BRIGHTER SIDE:

January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
……………………………………
TRUMP  – Agent, Asset, or Facilitator ?
      IMHO, Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
>The yield curve is flattening as short-term treasuries rise faster than long-tern governments just another warning sign of impending recession.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
………………………………………….
Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have been in a prolonged slump since January.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF has dropped 30.5%, as interest rates rise. Not only is it  major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Jamie Dimon, CEO J.P. Morgan Chase,  thinks the benchmark  10-yearTreasury note , now 2.95%, should be 5%. The rate impacts lending for autos, mortgages and businesses.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
> Recently, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Former Fed Chair, Ben Bernanke, says economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POLITICAL/STOCK MARKET
I have decided to publish my political comments in a separate publication under a different LOGO and structure it differently, publishing a commentary a couple times a week, sometimes more, then publish the commentary history one day a week.
This will make easier for the reader and enable me to concentrate more on items.  What’s more, I will be able to refer readers to web sites where they can get additional information.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

 

Fed Playing Dangerous Game

INVESTORS first read.com – Daily edge before the open        
DJIA:25,106
S&P 500: 2,707
Nasdaq Comp.:7,298
Russell 2000:1,506
Monday, February 11
, 2019    8:50 a.m.
……………………..
gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

……………………………………………..
SPECIAL RECOMMENDATION: Serious investors and students of the stock market should all own the “Stock Trader’s Almanac.”  No single source is packed with more valuable statistics, and stock market behavioral information, present and past, than this annual publication in its 51st year.
Call: 845-875-9582 or email: info@stocktradersalmanac.com
…………………………………………………………………….
TECHNICAL
The S&P 500’s 3.3% rise since the Fed suddenly opted out of its Quantitative Tightening policy of raising its benchmark federal funds rate came on top of a 15.4% rebound from the December 26 correction lows.
This brings the market back  to levels from which it plunged in October.
In light of looming uncertainties, we are now in high risk territory where one or a couple of  negatives can tank the market again.
The market is assuming positive outcomes of the following:

> news of Trump administration officials’ indictments
> a trade deal with China
> another government shutdown
>new economic negatives
>talk of a recession
>further downgrades in projections for 2019 corporate earnings
      The 20% drop in the S&P 500 in Q4 was a warning.
………………………………………………………..
      A buying  panic followed Fed Chief Jerome Powell’s announcement of the FOMC’s 180-degree policy change, one of systematically raising its benchmark fed funds rate to a wait and see policy that may put rates on hold indefinitely.
The decision came at its January 30, FOMC meeting and after the market had rebounded sharply from a 20% October/December sell off. Horrible Timing !
     Powell soft pedaled the fact that the U.S. economy is showing serious signs of weakness with the housing industry in a bear market, manufacturing struggling and both consumer confidence and consumer sentiment  plunging.
Worse yet, he characterized the U.S. economic outlook as “Rosy.”
I think he misspoke. It isn’t rosy, it’s risky.     The S&P 500 has recovered about two-thirds of the 20% it lost between October 8 and December 26.
There are early signs of a recession here and abroad.  Gary Shilling’s INSIGHT refers to a Duke University survey that finds nearly half the CFOs polled expect a recession by year-end.  One-quarter of the economists polled by the Wall Street Journal in January see a recession this year, up from 13% a year ago.
Q4 corporate profits are very impressive, but analysts are dramatically slashing estimates for 2019. On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
BOTTOM LINE: The Street cannot ignore what is happening. We have the potential for a constitutional crisis, and a host of other serious negatives developing that could impact stock prices.
I think the great bull market that started in Q4 last year is over, and that a bear market started with the Oct./Dec., 20% plunge in the S&&P 500.
     The Fed is running scared for a reason.  Respect that !
………………………………………………..
TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387
      I have technically analyzed each of the 30 Dow industrials, converted the results to the DJIA using the Dow’s “divisor 0.14748, and arrived at support and resistance levels on  short-term basis and concluded:
Support: 23,955
Resistance: 25,379
16 of the 30 Dow stocks had positive patterns with some upside potential, 11 had unattractive patterns, and 3 were neutral.
Any major jolt at these levels will trigger the “trapdoor’ effect, where stocks simply  plunge like they did in October/November (S&P 500 down 20%).
…………………………………
Progress on U.S./China trade talks and an agreement on keeping the government open would
 push stock prices back up from overvalued levels to extremely overvalued levels.
Progress is being made. Both the U.S. and China are hurting from this nonsense.
As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     As I have emphasized so many times, the Street’s algos pretty much track the same stuff, but are  still programmed with  a bullish bias.
At some point, the Street will all bail at the same time. We saw this flash crash mentality in April/May 2010 (-13%); Aug.2011 (-16%); Jul./Aug. 2015 (-11.5%); Dec./Jan. 2016 (-13%); Jan./Feb. 2018 (-11.8%), and Jan. 2019 (-16.4%). Next time will be worse.
The big loser here is the person who needs a return on a fixed income investment.
ON A BRIGHTER SIDE:

January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
SHUTDOWN

President Trump is threatening another shutdown, odds are that won’t happen. That doesn’t mean the market gets a pass between now and the Feb. 15 deadline when Trump and Congress have to make a decision on keeping the government open.  I can see a two-day shutdown, at worst, but a week or more, is not going to happen.  Great in-out trader’s buy/sell. The CBO reports this shutdown cost $11 billion, $3 billion of which will never be recovered.
Is this untethered stupidity really happening ? If it was a flick, we’d be laughing, but is smacks of a government out of control, That spells SELL.       >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> RESSTIME:
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
……………………………………
TRUMP  – Agent, Asset, or Facilitator ?
      IMHO, Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
>The yield curve is flattening as short-term treasuries rise faster than long-tern governments just another warning sign of impending recession.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
………………………………………….
Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have been in a prolonged slump since January.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF has dropped 30.5%, as interest rates rise. Not only is it  major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Jamie Dimon, CEO J.P. Morgan Chase,  thinks the benchmark  10-yearTreasury note , now 2.95%, should be 5%. The rate impacts lending for autos, mortgages and businesses.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
> Recently, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Former Fed Chair, Ben Bernanke, says economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POLITICAL/STOCK MARKET
I have decided to publish my political comments in a separate publication under a different LOGO and structure it differently, publishing a commentary a couple times a week, sometimes more, then publish the commentary history one day a week.
This will make easier for the reader and enable me to concentrate more on items.  What’s more, I will be able to refer readers to web sites where they can get additional information.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

Bear Market Bottom in October ?

INVESTORS first read.com – Daily edge before the open        
DJIA:25,169
S&P 500: 2,706
Nasdaq Comp.:7,288
Russell 2000:1,505
Friday, February 8
, 2019    9:08 a.m.
……………………..
gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

……………………………………………..
SPECIAL RECOMMENDATION: Serious investors and students of the stock market should all own the “Stock Trader’s Almanac.”  No single source is packed with more valuable statistics, and stock market behavioral information, present and past, than this annual publication in its 51st year.
Call: 845-875-9582 or email: info@stocktradersalmanac.com
…………………………………………………………………….
TECHNICAL
The next three months will be wild with huge swings up and down as the market is buffeted by
> news of Trump administration officials indictments
> a trade deal that may or may not happen, or happens but disappoints
> another government shutdown or the Congressional angst that follows Trump’s threat of declaring a national emergency to get funding for his wall.
>new economic negatives will show up, and if they don’t and the economy overheats, the Fed will have to  return to Quantitative Tightening (QT).
>talk of a recession
>further downgrades in projections for 2019 corporate earnings
        The 20% drop in the S&P 500 in Q4 was a warning.
………………………………………………………..
      A buying  panic followed Fed Chief Jerome Powell’s announcement of the FOMC’s 180-degree policy change, one of systematically raising its benchmark fed funds rate to a wait and see policy that may put rates on hold indefinitely.
The decision came at its January 30, FOMC meeting and after the market had rebounded sharply from a 20% October/December sell off. Horrible Timing !
     Powell soft pedaled the fact that the U.S. economy is showing serious signs of weakness with the housing industry in a bear market, manufacturing struggling and both consumer confidence and consumer sentiment  plunging.
Worse yet, he characterized the U.S. economic outlook as “Rosy.”
I think he misspoke. It isn’t rosy, it’s risky. It is teetering on the edge of a recession. By halting its policy of raising Rates, Quantitative Tightening (QT), the Fed may head off a recession, or delay one, but I think “RISKY” better defines the economy than “ROSY.”
The S&P 500 has recovered about two-thirds of the 20% it lost between October 8 and December 26.
We are back to a level where it is much riskier to buy stocks. If the Fed changes its policy again and raises rates, or if the economy continues to deteriorate, the market will head south.
There are early signs of a recession here and abroad.  Gary Shilling’s INSIGHT refers to a Duke University survey that finds nearly half the CFOs polled expect a recession by year-end.  One-quarter of the economists polled by the Wall Street Journal in January see a recession this year, up from 13% a year ago.
Q4 corporate profits are very impressive, but analysts are dramatically slashing estimates for 2019. On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
BOTTOM LINE: The Street cannot ignore what is happening. We have the potential for a constitutional crisis, and a host of other serious negatives developing that could impact stock prices.
I think the great bull market that started in Q4 last year is over, and that a bear market started with the Oct./Dec., 20% plunge in the S&&P 500.
        January’s policy pause by the Fed  stands to delay the severity of a bear market, but it will happen.  All it takes is for the Street to PANIC ON THE SELL SIDE. Suddenly, everyone is bullish, encouraged by what they think is the Fed coming to the rescue. That can change with a bear market bottom this spring, but most likely in October.
.       Savvy and nimble traders can play. However, indications of serious cracks in the economy suggest a major cash reserve is necessary.  The Fed is running scared for a reason.  Respect that !
………………………………………………..
TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387
      I have technically analyzed each of the 30 Dow industrials, converted the results to the DJIA using the Dow’s “divisor 0.14748, and arrived at support and resistance levels on  short-term basis and concluded:
Support: 23,955
Resistance: 25,379
16 of the 30 Dow stocks had positive patterns with some upside potential, 11 had unattractive patterns, and 3 were neutral.
Market timing is key. An investor does not want to buy a stock when it is hitting resistance or sell it when it is close to a bounce.
February stands to be a month of consolidation at, or a  bit above current levels. Investors are once again faced with tough decisions regarding the impact of the Mueller investigation, additional economic news, confusion about Fed policy, China, a shutdown and the possible demise of the Trump presidency.
Any major jolt at these levels will trigger the “trapdoor’ effect, where stocks simply  plunge like they did in October/November (S&P 500 down 20%).
…………………………………
Progress on U.S./China trade talks and an agreement on keeping the government open would
 push stock prices back up from overvalued levels to extremely overvalued levels.
Progress is being made. Both the U.S. and China are hurting from this nonsense. A deal will be on again-off again this month running the market up, then down, but progress, even a deal, will result.
The best way for Trump to handle the shutdown is to hand it over to Congress. That way if he doesn’t get his wall, he can blame Congress and save face.
The Shiller P/E is 29.8 vs an average of 16.6.
Unless the Fed hammers interest rates down, the victims of its QT policy (housing, borrowers) will continue to suffer.
          As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     As I have emphasized so many times, the Street’s algos pretty much track the same stuff, but are  still programmed with  a bullish bias.
At some point, the Street will all bail at the same time. We saw this flash crash mentality in April/May 2010 (-13%); Aug.2011 (-16%); Jul./Aug. 2015 (-11.5%); Dec./Jan. 2016 (-13%); Jan./Feb. 2018 (-11.8%), and Jan. 2019 (-16.4%). Next time will be worse.
The big loser here is the person who needs a return on a fixed income investment.
ON A BRIGHTER SIDE:

January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
SHUTDOWN

President Trump is threatening another shutdown, odds are that won’t happen. That doesn’t mean the market gets a pass between now and the Feb. 15 deadline when Trump and Congress have to make a decision on keeping the government open.  I can see a two-day shutdown, at worst, but a week or more, is not going to happen.  Great in-out trader’s buy/sell. The CBO reports this shutdown cost $11 billion, $3 billion of which will never be recovered.
Is this untethered stupidity really happening ? If it was a flick, we’d be laughing, but is smacks of a government out of control, That spells SELL.       >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> RESSTIME:
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
……………………………………
TRUMP  – Agent, Asset, or Facilitator ?
      IMHO, Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
>The yield curve is flattening as short-term treasuries rise faster than long-tern governments just another warning sign of impending recession.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
………………………………………….
Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have been in a prolonged slump since January.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF has dropped 30.5%, as interest rates rise. Not only is it  major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Jamie Dimon, CEO J.P. Morgan Chase,  thinks the benchmark  10-yearTreasury note , now 2.95%, should be 5%. The rate impacts lending for autos, mortgages and businesses.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
> Recently, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Former Fed Chair, Ben Bernanke, says economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POLITICAL/STOCK MARKET
I have decided to publish my political comments in a separate publication under a different LOGO and structure it differently, publishing a commentary a couple times a week, sometimes more, then publish the commentary history one day a week.
This will make easier for the reader and enable me to concentrate more on items.  What’s more, I will be able to refer readers to web sites where they can get additional information.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

A Constitutional Crisis Getting Closer

INVESTORS first read.com – Daily edge before the open        
DJIA:25,390
S&P 500: 2,731
Nasdaq Comp.:7,375
Russell 2000:1,518
Thursday, February 7
, 2019    9:10 a.m.
……………………..
gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

……………………………………………..
SPECIAL RECOMMENDATION: Serious investors and students of the stock market should all own the “Stock Trader’s Almanac.”  No single source is packed with more valuable statistics, and stock market behavioral information, present and past, than this annual publication in its 51st year.
Call: 845-875-9582 or email: info@stocktradersalmanac.com
…………………………………………………………………….
TECHNICAL
Nothing has changed from yesterday except I sense the Trump administration, its presidential campaign committee and people close to Trump including family members are about to be charged with violations on a host of issues.
So far, the Street doesn’t care. That’s an arrogant and naïve attitude, since it will result in a constitutional crisis and unprecedented uncertainty.

With the market approaching all-time high territory and the prospect of sharply lower corporate earnings and a recession starting within the year, common sense strongly suggests a healthy cash reserve if any one of these issues develops and clearly if all three.
The 20% drop in the S&P 500 in Q4 was a warning.
………………………………………………………..
      The Street is beginning to panic following Fed Chief Jerome Powell’s announcement of the FOMC’s 180-degree policy change, one of systematically raising its benchmark fed funds rate to a wait and see policy that may put rates on hold indefinitely.
The decision came at its January 30, FOMC meeting and after the market had rebounded sharply from a 20% October/December sell off.
Powell soft pedaled the fact that the U.S. economy is showing serious signs of weakness with the housing industry in a bear market, manufacturing struggling and both consumer confidence and consumer sentiment  plunging.
Worse yet, he characterized the U.S. economic outlook as “Rosy.”
I think he misspoke. It isn’t rosy. It is teetering on the edge of a recession. By halting its policy of raising Rates, Quantitative Tightening (QT), the Fed may head off a recession, or delay one, but I think “RISKY” better defines the economy than “ROSY.”
The market must be allowed to find a level that truly reflects current and foreseeable  positives and negatives.  Hype hurts.
      The S&P 500 has recovered about two-thirds of the 20% it lost between October 8 and December 26.
We are back to a level where it is much riskier to buy stocks. If the Fed changes its policy again and raises rates, or if the economy continues to deteriorate, the market will head south.
There are early signs of a recession here and abroad.  Gary Shilling’s INSIGHT refers to a Duke University survey that finds nearly half the CFOs polled expect a recession by year-end.  One-quarter of the economists polled by the Wall Street Journal in January see a recession this year, up from 13% a year ago.
Q4 corporate profits are very impressive, but analysts are dramatically slashing estimates for 2019. On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
BOTTOM LINE: The market can rise from here, simply because the Fed changed its policy, but the risks are very, very  high.
Savvy and nimble traders can play. However, indications of serious cracks in the economy suggest a major cash reserve is necessary.  The Fed is running scared for a reason.  Respect that !
………………………………………………..
TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387  (has exceeded my projection with a close at 7,402)
      I have technically analyzed each of the 30 Dow industrials, converted the results to the DJIA using the Dow’s “divisor 0.14748, and arrived at support and resistance levels on  short-term basis and concluded:
Support: 23,955
Resistance: 25,379 (has exceeded my projection with a close at 25,411)
16 of the 30 Dow stocks had positive patterns with some upside potential, 11 had unattractive patterns, and 3 were neutral.
Market timing is key. An investor does not want to buy a stock when it is hitting resistance or sell it when it is close to a bounce.
February stands to be a month of consolidation at, or a  bit above current levels. Investors are once again faced with tough decisions regarding the impact of the Mueller investigation, additional economic news, confusion about Fed policy, China, a shutdown and the possible demise of the Trump presidency.
Any major jolt at these levels will trigger the “trapdoor’ effect, where stocks simply  plunge like they did in October/November (S&P 500 down 20%).
…………………………………
Progress on U.S./China trade talks and an agreement on keeping the government open would
 push stock prices back up from overvalued levels to extremely overvalued levels.
Progress is being made. Both the U.S. and China are hurting from this nonsense. A deal will be on again-off again this month running the market up, then down, but progress, even a deal, will result.
The best way for Trump to handle the shutdown is to hand it over to Congress. That way if he doesn’t get his wall, he can blame Congress and save face.
The Shiller P/E is 29.8 vs an average of 16.6.
Unless the Fed hammers interest rates down, the victims of its QT policy (housing, borrowers) will continue to suffer.
          As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     As I have emphasized so many times, the Street’s algos pretty much track the same stuff, but are  still programmed with  a bullish bias.
At some point, the Street will all bail at the same time. We saw this flash crash mentality in April/May 2010 (-13%); Aug.2011 (-16%); Jul./Aug. 2015 (-11.5%); Dec./Jan. 2016 (-13%); Jan./Feb. 2018 (-11.8%), and Jan. 2019 (-16.4%). Next time will be worse.
The big loser here is the person who needs a return on a fixed income investment.
ON A BRIGHTER SIDE:

January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
SHUTDOWN

President Trump is threatening another shutdown, odds are that won’t happen. That doesn’t mean the market gets a pass between now and the Feb. 15 deadline when Trump and Congress have to make a decision on keeping the government open.  I can see a two-day shutdown, at worst, but a week or more, is not going to happen.  Great in-out trader’s buy/sell. The CBO reports this shutdown cost $11 billion, $3 billion of which will never be recovered.
Is this untethered stupidity really happening ? If it was a flick, we’d be laughing, but is smacks of a government out of control, That spells SELL.       >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> RESSTIME:
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
……………………………………
TRUMP  – Agent, Asset, or Facilitator ?
      IMHO, Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
>The yield curve is flattening as short-term treasuries rise faster than long-tern governments just another warning sign of impending recession.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
………………………………………….
Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have been in a prolonged slump since January.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF has dropped 30.5%, as interest rates rise. Not only is it  major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Jamie Dimon, CEO J.P. Morgan Chase,  thinks the benchmark  10-yearTreasury note , now 2.95%, should be 5%. The rate impacts lending for autos, mortgages and businesses.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
> Recently, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Former Fed Chair, Ben Bernanke, says economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POLITICAL/STOCK MARKET
I have decided to publish my political comments in a separate publication under a different LOGO and structure it differently, publishing a commentary a couple times a week, sometimes more, then publish the commentary history one day a week.
This will make easier for the reader and enable me to concentrate more on items.  What’s more, I will be able to refer readers to web sites where they can get additional information.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

Economy: More “Risky” Than “Rosy”

INVESTORS first read.com – Daily edge before the open        
DJIA:25,239
S&P 500: 2,724
Nasdaq Comp.:7,347
Russell 2000:1,517
Wednesday, February 6
, 2019    8:35 a.m.
……………………..
gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

……………………………………………..
SPECIAL RECOMMENDATION: Serious investors and students of the stock market should all own the “Stock Trader’s Almanac.”  No single source is packed with more valuable statistics, and stock market behavioral information, present and past, than this annual publication in its 51st year.
Call: 845-875-9582 or email: info@stocktradersalmanac.com
…………………………………………………………………….
TECHNICAL
      The Street is beginning to panic following Fed Chief Jerome Powell’s announcement of the FOMC’s 180-degree policy change, one of systematically raising its benchmark fed funds rate to a wait and see policy that may put rates on hold indefinitely.
The decision came at its January 30, FOMC meeting and after the market had rebounded sharply from a 20% October/December sell off.
Powell soft pedaled the fact that the U.S. economy is showing serious signs of weakness with the housing industry in a bear market, manufacturing struggling and both consumer confidence and consumer sentiment  plunging.
Worse yet, he characterized the U.S. economic outlook as “Rosy.”
I think he misspoke. It isn’t rosy. It is teetering on the edge of a recession. By halting its policy of raising Rates, Quantitative Tightening (QT), the Fed may head off a recession, or delay one, but I think “RISKY” better defines the economy than “ROSY.”
The market must be allowed to find a level that truly reflects current and foreseeable  positives and negatives.  Hype hurts.
      The S&P 500 has recovered about two-thirds of the 20% it lost between October 8 and December 26.
We are back to a level where it is much riskier to buy stocks. If the Fed changes its policy again and raises rates, or if the economy continues to deteriorate, the market will head south.
There are early signs of a recession here and abroad.  Gary Shilling’s INSIGHT refers to a Duke University survey that finds nearly half the CFOs polled expect a recession by year-end.  One-quarter of the economists polled by the Wall Street Journal in January see a recession this year, up from 13% a year ago.
Q4 corporate profits are very impressive, but analysts are dramatically slashing estimates for 2019. On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
BOTTOM LINE: The market can rise from here, simply because the Fed changed its policy, but the risks are very, very  high.
Savvy and nimble traders can play. However, indications of serious cracks in the economy suggest a major cash reserve is necessary.  The Fed is running scared for a reason.  Respect that !
………………………………………………..
TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387  (has exceeded my projection with a close at 7,402)
      I have technically analyzed each of the 30 Dow industrials, converted the results to the DJIA using the Dow’s “divisor 0.14748, and arrived at support and resistance levels on  short-term basis and concluded:
Support: 23,955
Resistance: 25,379 (has exceeded my projection with a close at 25,411)
16 of the 30 Dow stocks had positive patterns with some upside potential, 11 had unattractive patterns, and 3 were neutral.
Market timing is key. An investor does not want to buy a stock when it is hitting resistance or sell it when it is close to a bounce.
February stands to be a month of consolidation at, or a  bit above current levels. Investors are once again faced with tough decisions regarding the impact of the Mueller investigation, additional economic news, confusion about Fed policy, China, a shutdown and the possible demise of the Trump presidency.
Any major jolt at these levels will trigger the “trapdoor’ effect, where stocks simply  plunge like they did in October/November (S&P 500 down 20%).
…………………………………
Progress on U.S./China trade talks and an agreement on keeping the government open would
 push stock prices back up from overvalued levels to extremely overvalued levels.
Progress is being made. Both the U.S. and China are hurting from this nonsense. A deal will be on again-off again this month running the market up, then down, but progress, even a deal, will result.
The best way for Trump to handle the shutdown is to hand it over to Congress. That way if he doesn’t get his wall, he can blame Congress and save face.
The Shiller P/E is 29.8 vs an average of 16.6.
Unless the Fed hammers interest rates down, the victims of its QT policy (housing, borrowers) will continue to suffer.
          As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     As I have emphasized so many times, the Street’s algos pretty much track the same stuff, but are  still programmed with  a bullish bias.
At some point, the Street will all bail at the same time. We saw this flash crash mentality in April/May 2010 (-13%); Aug.2011 (-16%); Jul./Aug. 2015 (-11.5%); Dec./Jan. 2016 (-13%); Jan./Feb. 2018 (-11.8%), and Jan. 2019 (-16.4%). Next time will be worse.
The big loser here is the person who needs a return on a fixed income investment.
ON A BRIGHTER SIDE:

January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
SHUTDOWN

President Trump is threatening another shutdown, odds are that won’t happen. That doesn’t mean the market gets a pass between now and the Feb. 15 deadline when Trump and Congress have to make a decision on keeping the government open.  I can see a two-day shutdown, at worst, but a week or more, is not going to happen.  Great in-out trader’s buy/sell. The CBO reports this shutdown cost $11 billion, $3 billion of which will never be recovered.
Is this untethered stupidity really happening ? If it was a flick, we’d be laughing, but is smacks of a government out of control, That spells SELL.       >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> RESSTIME:
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
……………………………………
TRUMP  – Agent, Asset, or Facilitator ?
      IMHO, Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
>The yield curve is flattening as short-term treasuries rise faster than long-tern governments just another warning sign of impending recession.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
………………………………………….
Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have been in a prolonged slump since January.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF has dropped 30.5%, as interest rates rise. Not only is it  major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Jamie Dimon, CEO J.P. Morgan Chase,  thinks the benchmark  10-yearTreasury note , now 2.95%, should be 5%. The rate impacts lending for autos, mortgages and businesses.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
> Recently, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Former Fed Chair, Ben Bernanke, says economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POLITICAL/STOCK MARKET
I have decided to publish my political comments in a separate publication under a different LOGO and structure it differently, publishing a commentary a couple times a week, sometimes more, then publish the commentary history one day a week.
This will make easier for the reader and enable me to concentrate more on items.  What’s more, I will be able to refer readers to web sites where they can get additional information.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

S&P 500 Has Recouped Two-Thirds of Oct./Dec. Loss

INVESTORS first read.com – Daily edge before the open        
DJIA:25,239
S&P 500: 2,724
Nasdaq Comp.:7,347
Russell 2000:1,517
Tuesday, February 5
, 2019    8:35 a.m.
……………………..
gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

……………………………………………..
SPECIAL RECOMMENDATION: Serious investors and students of the stock market should all own the “Stock Trader’s Almanac.”  No single source is packed with more valuable statistics, and stock market behavioral information, present and past, than this annual publication in its 51st year.
Call: 845-875-9582 or email: info@stocktradersalmanac.com
…………………………………………………………………….
TECHNICAL
       Little has changed since yesterday. Investors are panicking to buy with each uptick in the market, all because the Fed has reversed its policy from a steady pattern of raising interest rates to one of “wait and see.”
While this panic can press stocks higher, there is a reason the Fed so abruptly changed its policy – early signs of a recession here and abroad.  Shilling’s INSIGHT reports That a Duke University survey finds nearly half the CFOs polled expect a recession by year-end.  One-quarter of the economists polled by the Wall Street Journal in January see a recession this year, up from 13% a year ago.
Q4 corporate profits are very impressive, but analysts are dramatically slashing estimates for 2019.
This is the kind of mounting fear of missing the boat that can be irresistible to investors who will surely invest a good bit of the cash reserve they have on paying up for stocks.
The panic was triggered last week by Fed Chief Jerome Powell who announced a 180-degree change in Fed policy from restraint to ease, but then strangely characterized the U.S. economy as  “ROSY”.     Wall Street and  President Trump loved it. Trump has been especially critical of the Fed, which has been raising its fed funds rate since December 2015.
This begs the question of why has the Fed done a 180-degree about-face in 6 weeks ?
The S&P 500 has recovered about two-thirds of the 20% it lost between October 8 and December 26.
We are back to a level where it is much riskier to buy stocks
. If the Fed changes its policy again and raises rates, or if the economy continues to deteriorate, the market will head south big time.
BOTTOM LINE: The market can rise from here, simply because the Fed changed its policy, but the risks are very, very  high.
Savvy and nimble traders can play. However, indications of serious cracks in the economy suggest a major cash reserve is necessary.  The Fed is running scared for a reason.  Respect that !
Little attention has been given to how sharply 2019 earnings are being revised downward.
On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
The economy is showing serious signs of  weakness in housing, consumer confidence and sentiment are plunging.
………………………………………………..
TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387
      I have technically analyzed each of the 30 Dow industrials, converted the results to the DJIA using the Dow’s “divisor 0.14748, and arrived at support and resistance levels on  short-term basis and concluded:
Support: 23,955
Resistance: 25,379
16 of the 30 Dow stocks had positive patterns with some upside potential, 11 had unattractive patterns, and 3 were neutral.
Market timing is key. An investor does not want to buy a stock when it is hitting resistance or sell it when it is close to a bounce.
…………………………………
Progress on U.S./China trade talks and an agreement on keeping the government open would
 push stock prices back up from overvalued levels to extremely overvalued levels.
Progress is being made. Both the U.S. and China are hurting from this nonsense. A deal will be on again-off again this month running the market up, then down, but progress, even a deal, will result.
The best way for Trump to handle the shutdown is to hand it over to Congress. That way if he doesn’t get his wall, he can blame Congress and save face.
The Shiller P/E is 29.8 vs an average of 16.6.
Unless the Fed hammers interest rates down, the victims of its QT policy (housing, borrowers) will continue to suffer.
          As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     As I have emphasized so many times, the Street’s algos pretty much track the same stuff, but are  still programmed with  a bullish bias.
At some point, the Street will all bail at the same time. We saw this flash crash mentality in April/May 2010 (-13%); Aug.2011 (-16%); Jul./Aug. 2015 (-11.5%); Dec./Jan. 2016 (-13%); Jan./Feb. 2018 (-11.8%), and Jan. 2019 (-16.4%). Next time will be worse.
The big loser here is the person who needs a return on a fixed income investment.
ON A BRIGHTER SIDE:

January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
SHUTDOWN

President Trump is threatening another shutdown, odds are that won’t happen. That doesn’t mean the market gets a pass between now and the Feb. 15 deadline when Trump and Congress have to make a decision on keeping the government open.  I can see a two-day shutdown, at worst, but a week or more, is not going to happen.  Great in-out trader’s buy/sell. The CBO reports this shutdown cost $11 billion, $3 billion of which will never be recovered.
Is this untethered stupidity really happening ? If it was a flick, we’d be laughing, but is smacks of a government out of control, That spells SELL.       >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> RESSTIME:
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
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TRUMP  – Agent, Asset, or Facilitator ?
      Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
>The yield curve is flattening as short-term treasuries rise faster than long-tern governments just another warning sign of impending recession.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
………………………………………….
Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have been in a prolonged slump since January.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF has dropped 30.5%, as interest rates rise. Not only is it  major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Jamie Dimon, CEO J.P. Morgan Chase,  thinks the benchmark  10-yearTreasury note , now 2.95%, should be 5%. The rate impacts lending for autos, mortgages and businesses.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
> Recently, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Former Fed Chair, Ben Bernanke, says economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
POLITICAL/STOCK MARKET
I have decided to publish my political comments in a separate publication under a different LOGO and structure it differently, publishing a commentary couple times a week, sometimes more, then publish the commentary history one day a week.
This will make easier for the reader and enable me to concentrate more on items.  What’s more, I will be able to refer readers to web sites where they can get additional information.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
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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.

 

 

 

S&P 500’s 2019 Earnings Projections Plunging

INVESTORS first read.com – Daily edge before the open        
DJIA:25,063
S&P 500: 2,706
Nasdaq Comp.:7,263
Russell 2000:1,506
Monday, February 4
, 2019    9:15 a.m.
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gbifr79@gmail.com
…………………….
Sept. 21, 2018 : Raise cash to 50% (DJIA: 26,656)
Nov. 8, 2018: Raise cash to 75% (DJIA: 26,180)
Dec. 26, 2018 Doom Thick Enough for a Rally (DJIA:  21,792)

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SPECIAL RECOMMENDATION: Serious investors and students of the stock market should all own the “Stock Trader’s Almanac.”  No single source is packed with more valuable statistics, and stock market behavioral information, present and past, than this annual publication in its 51st year.
Call: 845-875-9582 or email: info@stocktradersalmanac.com
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TECHNICAL
     Fed Chief Jerome Powell  just  signaled to Wall Street  it was safe to jump back in the market, by hinting there are not any more increases in its federal funds rate planned unless “data” justifies it.
Looks like we are back on the bad news is good news cycle.
In his press conference last week,  Powell characterized the condition of the U.S. economy as  “ROSY”, failing to mention serious weakness in housing and a plunge in consumer confidence and sentiment.
Wall Street and  President Trump loved it. Trump has been especially critical of the Fed which has been raising its fed funds rate since December 2015.
This begs the question of why has the Fed done a 180-degree about-face in 6 weeks ?
The Fed gave investors a green light to buy, which they did last Wednesday pushing the DJIA up 434 points.
We are back to a level where it is much riskier to buy stocks
. The Fed’s announcement came after the S&P 500 recovered two-thirds of the 20% it lost between October and December 26.

If the Fed changes its policy and raises rates, or if the economy continues to deteriorate, the market will head south big time.
BOTTOM LINE: The market can rise from here, simply because the Fed changed its policy, but the risks are very, very  high.
Savvy and nimble traders can play. However, indications of serious cracks in the economy suggest a major cash reserve is necessary.  The Fed is running scared for a reason.  Respect that !
Little attention has been given to how sharply 2019 earnings are being revised downward.
On December 10, 2018, Thomson Reuters was projecting Q1 2019 S&P 500 earnings growth of  +7.3%. As of February 1, it has slashed growth for Q1 2019 to +0.7% with significant cuts for the rest of 2019.
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TIMING
 is EVERYTHING !
MAJOR RESISTANCE FOR THE MARKET AVERAGES STARTS AT:
DJIA: 25,507
S&P 500: 2,756
Nasdaq Comp.: 7,387
      I have technically analyzed each of the 30 Dow industrials, converted the results to the DJIA using the Dow’s “divisor -.14748, and arrived at support and resistance levels on  short-term basis and concluded:
Support: 23,955
Resistance: 25,379
16 of the 30 Dow stocks had positive patterns with some upside potential, 11 had unattractive patterns, and 3 were neutral.
Market timing is key. An investor does not want to buy a stock when it is hitting resistance or sell it when it is close to a bounce.
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Progress on U.S./China trade talks and an agreement on keeping the government open would
 push stock prices back up from overvalued levels to extremely overvalued levels.
Progress is being made. Both the U.S. and China are hurting from this nonsense. A deal will be on again-off again this month running the market up, then down, but progress, even a deal, will result.
The best way for Trump to handle the shutdown is to hand it over to Congress. That way if he doesn’t get his wall, he can blame Congress and save face.
Q4 earnings are gangbusters, but 2019 will be a different story.  Right now, earnings projections are being slashed dramatically. Thomson Reuters.com and FactSet.com have been slashing 2019 earnings estimates with this year coming in so far  around plus 5.9%.  The Shiller P/E is 29.8 vs an average of 16.6.
Unless the Fed hammers interest rates down, the victims of its QT policy (housing, borrowers) will continue to suffer.
     The Fed’s abrupt policy change is a short-term positive. Traders and money managers will feel safe to load up, and while it is a stretch, the market could attack the old highs (DJIA:26,951; S&P 500:2,940; Nasdaq Comp.: 8,133), but I doubt it.
As  noted below under “Bearish Case”, odds are good we are in the early stages of a recession. Also note below, what A. Gary Shilling, publisher of INSIGHT, has to say about a recession.
     As I have emphasized so many times, the Street’s algos pretty much track the same stuff, but are  still programmed with  a bullish bias.
At some point, the Street will all bail at the same time. We saw this flash crash mentality in April/May 2010 (-13%); Aug.2011 (-16%); Jul./Aug. 2015 (-11.5%); Dec./Jan. 2016 (-13%); Jan./Feb. 2018 (-11.8%), and Jan. 2019 (-16.4%). Next time will be worse.
The big loser here is the person who needs a return on a fixed income investment.
ON A BRIGHTER SIDE:

January’s 7.9% jump was the biggest in 30 years, The Stock Trader’s Almanac’s January Barometer, published since 1972, has successfully forecast the S&P 500’s year as a whole 86.7% of the time over the last 50 years. Odds are, a strong January will lead to a gain for the year. However, there is no guarantee that between January and year-end there won’t be one or more major corrections. In pre-presidential years alone there were major corrections in 1971,1979, 1987, 2011, and 2015. Pre-presidential election years are the best of the four years in the presidential cycle.
SHUTDOWN

President Trump is threatening another shutdown, odds are that won’t happen. That doesn’t mean the market gets a pass between now and the Feb. 15 deadline when Trump and Congress have to make a decision on keeping the government open.  I can see a two-day shutdown, at worst, but a week or more, is not going to happen.  Great in-out trader’s buy/sell. The CBO reports this shutdown cost $11 billion, $3 billion of which will never be recovered.
Is this untethered stupidity really happening ? If it was a flick, we’d be laughing, but is smacks of a government out of control, That spells SELL.       >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

RECESSION ?
The National Bureau of Economic Research (NBER) is the arbiter of recessions drawing on a host of economic and monetary data to  track the beginning and end of recessions, rejecting the simple definition that a recession is two straight declines in GDP.     
I think we are is the very early stages of a recession, and that a bear market started last October.  The dominos are beginning to tumble. One at a time.
However, The Fed’s abrupt change in policy could buy time for the economy and delay the beginning of a recession.
A. Gary Shilling  believes we are headed for a recession and noted his reasons December issue, headlining his issue of “INSIGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession/Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling.
Shillings reasons for forecasting a recession are:
1. Output exceeds capacity
2. Stocks fall
3. Central banks tighten
4. Yield curve inversion near
5. Junk bond-Treasury yield spread opens
6. Housing activity declines
7. Corporate profits growth falls
8. Consumers are optimistic
9. Global leading indicators drop
10. Commodity prices decline
11. Downward data revisions
12. Emerging-market troubles mount
13. U.S.-China trade war escalation.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> RESSTIME:
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.
The daily disclosure of wrongdoing by this administration will weigh heavily on the market at a time the economy is going in the tank and the stock market  is on the verge of a bear market.
      An even bigger issue is about to hit the Street right between its eyes and that is, what will happen to stock prices when President Trump is removed from office, or he resigns ?
There are other issues that can crush the market (debt, fiscal crisis, depression), but extended dysfunction in the highest office in our country has the potential for immeasurable damage to stock prices.
      Investors must be prepared for the possibility of this happening. If it doesn’t play out that way, be very grateful.
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TRUMP  – Agent, Asset, or Facilitator ?
      Trump is toast, he will accept a deal to resign. The 16 attorneys just hired are not to defend his occupation of the office of President, they are to limit his massive legal problems, possibly keep him out of jail.
It will take years for the scope of wrong doings to be aired, which I believe will shock Americans beyond belief.
President Trump is the single most destructive thing this country has ever faced, he is a human wrecking ball, gutting our country of its global security, self respect, respect, honor, goodwill, good deeds, sacrifices,  and achievements. As long as he is in the office of the Presidency, we and everything we hold dear are at risk. When the business is rotten at the top there is nowhere else to go but down.
He has made consummate lying, abusiveness, irrationality, and disrespect the new normal for Americans, and tragically our children.
Stock markets thrive on CONFIDENCE (or lack thereof), and the continuing blundering and lying coming out of the White House  is devastating to confidence in the running of our country in the next two years.
What’s more, odds favor the Mueller investigation will lead to a prolonged constitutional crisis that will also be a drag on the economy.
It doesn’t take heavy selling to drive stock prices lower, just a decision by money managers that they can get stocks at lower prices so they defer purchases allow normal selling to have an impact.
RESIGNATION
Investors must be ready for a resignation by President Trump
who would cut a deal to trade his presidency for a get out of jail “sort of free” card, in face of incredible string of illegal activities.
The deal would include family members.
Who would succeed Trump as President ?
      It is possible, Vice President Pence would also be at risk and forced to resign, since he was Chair of the President-Elect Trump campaign, which is now under intense scrutiny.
According to the Succession Act of 1947, the Speaker of the House, Nancy Pelosi,  would be next in line to become President if both Trump and Pence are forced out of office, and that would cause a monstrous firestorm.
What if Pence resigns first and Trump appoints another Vice President who would then become President ?
It gets complicated and divisive, and that wouldn’t be good for stock prices.
All this is possible, in my opinion – probable, and would  most likely crush stock prices until resolved.
…………………………………………….
DID YOU KNOW ?
>We are in the late innings of an economic expansion, so a recession is a good bet. The current expansion started in June 2009, has lasted 116 months, the second longest on record and  twice as long as the average length of 11 cycles since 1945.
>Bear markets lead the beginning of recessions by 3 to 12 months.  The current bull market at 119 months is four times the average of the last 15 bulls going back to 1957
>Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
 >Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>
Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
BULLISH CASE
      The case for the bulls has been weakening. The stellar earnings increases in 2018 in excess of 20%  will be followed by increases less than one-third  as great .
FactSet has been lowering its projections for 2019 in recent weeks.
The Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  Following its January 30 FOMC meeting, Fed Chief Powell  implied no further rate increases are planned unless “data” requires it.
That’s a plus, unless the weakening in the economy is worse than reported.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>…
BEARISH CASE
RISING INTEREST RATES:
>The Fed is retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led to an ugly slump in the housing industry.  It raised its benchmark federal funds rate in December to 2.25% – 2.50% percent, but no further increases are planned.  That’s a positive unless this change in policy indicates the economy is in trouble.
>Year/year existing home sales down 12 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.
>The yield curve is flattening as short-term treasuries rise faster than long-tern governments just another warning sign of impending recession.
OVERVALUED MARKET:
> The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
> If companies were buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
.> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
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Earnings growth myth:  The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.
A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago in 2019 will make poor reading going up against the 2018 earnings .  So far, the Street is not factoring in the likelihood of a recession, which could mean negative growth.
> The S&P 500 price to sales ratio at 1.92 is 19% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
> The Shiller P/E is 29.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
> The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
> Thompson Reuters reports the S&P 500 sells at 17.1 times earnings and 16.8 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
> The bull market is now  nine years and six months old (117 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
> Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
> The current economic expansion has lasted 116 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
> GDP expected to slow in 2019 to 2.7%, CAPEX to 5% from 7%.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months.
> Housing stocks have been in a prolonged slump since January.

>Year/year existing home sales down 8 straight months. New home sales  fell 8.9% in October.  Single family starts fell  for third straight month to an 18-month low.   The 30-year fixed rate mortgage rate is projected to hit 5.3% in 2019.
The iShares  home construction ETF has dropped 30.5%, as interest rates rise. Not only is it  major employer, its health affects other industries, especially furniture and appliances.
> Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
> Jamie Dimon, CEO J.P. Morgan Chase,  thinks the benchmark  10-yearTreasury note , now 2.95%, should be 5%. The rate impacts lending for autos, mortgages and businesses.
> Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
> Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
> Recently, 1,100 economists Warned that  Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
> Former Fed Chair, Ben Bernanke, says economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending.
TRUMP’S TRADE WAR TANTRUM
> Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
> Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
>  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
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POLITICAL/STOCK MARKET
I have decided to publish my political comments in a separate publication under a different LOGO and structure it differently, publishing a commentary couple times a week, sometimes more, then publish the commentary history one day a week.
This will make easier for the reader and enable me to concentrate more on items.  What’s more, I will be able to refer readers to web sites where they can get additional information.
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
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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.