Beginning of a Long Hot Summer

Investor’s first read – Daily edge before the open
DJIA: 21,310
S&P 500:2,419
Nasdaq  Comp.: 6,146
Russell 2000: 1,463
Wednesday, June 28, 2017    8:51 a.m.
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         Failure to pass a healthcare bill has been a stumbling block to pursuing  the GOP agenda of tax cuts, deregulation and a big spend on infrastructure and/or the military.
         At some point, this kind of mismanagement and partisan shuffleboard will impact consumer sentiment, which to date has been strong.
         The surge in stock prices since Trump won the election in November is based solely on the expectation of a corporate windfall – tax cuts, deregulation, a big spend on the infrastructure and/or the military.
         As I have noted many times, investment decisions at the highest levels are computer-based – algorithms.  The overriding strategy has been to buy on weakness.  When these computers were programmed it was unlikely anyone could anticipate the bizarre behavior of President Trump, a pathological liar with an itchy trigger finger for anyone who opposes him.
         This spells uncertainty, at best, and disaster at worst.
          How do you factor this into a computer program ?
          Any change to the “buy on dips” strategy has to be to the sell side, and that means lower prices.
          That can happen this summer extending into fall. Be aware of the possibility.
TODAY
           The market will attempt to recoup some of yesterday’s losses. Let’s see if buyers show up in size.  If not, it’s a warning sign. If so, the rally must hold its gain – no rally failure. That would suggest sellers are waiting to use strength to unload. In short, we are looking for any change in the balance of buyers and sellers. The buyers have won every encounter – so far.                                                                             
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SUPPORT “today”:DJIA:21,268;S&P 500:2,417:  Nasdaq Comp.:6,131
RESISTANCE “today” DJIA:21,363;S&P 500:2,427;Nasdaq Comp.:6,172

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CORPORATE EARNINGS
(updated June 23, 2017)
Factset
      Q1 earnings increased  14.0%.      Q2 growth  is projected at +6.6 %, Q3 at +7.4%, and Q4 at +12.4%. For 2017 as a whole growth is projected at a plus 9.8%.  Currently, the P/E on forward  earnings is 17.6 x. That compares with a 10-year average P/E of 14.0.
Note: These numbers change frequently.
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MY TECHNICAL ANALYSIS  of the 30 DJIA Companies
:  (UPDATED 6/13/17)
      On occasion, I technically analyze each of the 30 DJIA stocks  for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages.
      As of  June 15, 2017,  a reasonable risk is 21,951 a more extreme risk is 20,703.Near-term upside potential is 21,418.
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POLITICAL/STOCK MARKET
NOTE: I have retained a lot of the copy here for new readers, but also because it is relevant, since assumptions and information here are confirmed by unfolding news.
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Better Care Reconciliation ACT (BCRA) aka, Trumpcare
     
       It looks like a final vote on the Senate healthcare vote will be delayed until after the July 4th recess.  It also looks like serious concessions will have to be made to pass it.
       But who gets the concessions – conservatives or moderates ?
       Ideology absolutely has no place  in this bill – NONE ! This bill should be crafted to serve the best interests of Americans who need affordable health insurance coverage.  Anything short of that is not in the best interests of our country, i.e., hostile.
        Most of Congress is covered by ACA, which was implemented in place of the Federal Employees Health Benefit Plan, when ACA became the law of the land.  So, Congress has some skin in the game……well, kind of.
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FLIPPING VOTES: 
      It doesn’t matter
if Russia was not able to hack into voting machines and flip Clinton votes  to Trump, if  Russia’s intrusion into Facebook and Twitter with  “fake” news was  able to convince voters before they voted that Clinton was seriously flawed and Trump the preferred choice.

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TRUMP TO PUT US  ON  A WAR FOOTING !
       I moved this one up in the queue, due to a recent Trump tweet that help from China “has not worked.”
       On January 12, I noted:
       “I am sure of one thing, the United States will be on a war footing in the spring of 2018. Two things, it will juice the economy….may push war hawks to act on military expenditures; two, ensure support for the mid-term elections.
(Investor’s first read.com.
       In April, Trump told the Financial Times, “If China is not going to solve North Korea, we will.” In June, he said, “While I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out.”
       This looks like a countdown to military action, or brinkmanship so dire that North Korea comes to the table. 
        Strategically, Trump would want to put the country on a war footing  with North Korea closer to the election in 2018, but if the Russia investigation gets too hot, he may want to begin the process earlier as a distraction.
WHAT ABOUT SYRIA AND CHEMICAL WEAPONS ?
      Another diversion to deflect attention away from yet another healthcare setback ?  Maybe it’s to divert attention from the Russia/Trump investigation, as is blaming President Obama for the Russian hacking. The only thing I am certain of is that this administration is the most untruthful administration in the 57 years I have been following politics.  What an utter disgrace, and we will be lucky to get out of this without an enormous amount of damage across the board.
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       I am adding Jill Stein, Green Party presidential candidate, to my list of “Connect the Dots” (see below).  Stein was sitting at the widely distributed photo where she and Michael Flynn were sitting at the dinner table with Vladimir Putin on December 15, 2015, a celebration of the 10th anniversary of Russian Network TV (RT).  Asked why she was there she replied, “The soiree was a great opportunity to layout some of my foreign policy proposals and get Russian reaction.”  
       Worth noting, Stein got enough votes in the Michigan, Wisconsin and Pennsylvania to give the electoral college vote to Trump “assuming” her votes would have gone to Clinton, which she claims would not be the case.  In all fairness, the Johnson/Weld ticket got three time as many votes as Stein in those states, and they weren’t dining with Putin.
      Why was Stein at the table ? Reportedly, she said her campaign was heavily promoted by RT. She told NBC’s Alex Seitz-Wald, “ And my own connection to RT, you know ironically, it takes a Russian television station to actually be open to independent candidates in this country and that is a shame. A shameful commentary on own media.” IMHO, Stein did nothing wrong, and is probably right about our own media which gave Trump a disgusting amount of free publicity, including liberal press MSNBC. Stein may have valuable input, since she was mixing with Russians at the highest levels.
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ROSENSTEIN OUT ?      Who Takes Over ?
     Expect Rod Rosenstein, Deputy Attorney General – DOJ will  likely be fired or have to recuse himself possibly as soon as this week, odds favor the latter. The real target here would be special counsel, Robert Mueller, who would be fired as a desperation stalling tactic by President Trump ‘if’” Trump can find an attorney general who would fire Mueller.  Trump cannot fire Mueller directly.
      Obviously,  firing Mueller would smack of  “consciousness of guilt,” and could lead to impeachment proceedings by the House, and/or increase pressure for Trump to resign..

      With Rosenstein out of the way,  associate attorney general, Rachel Brand, would take over.  If she resigns, or is fired, Dana Boente, U.S. attorney general for the Eastern District of Virginia would take over.
       I believe this scandal reaches far beyond collusion with Russia to get Trump elected.

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 IMPEACHMENT
      A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.

      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Intitially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.
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“Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald and Eric Trump – Wilbur Ross – Jill Stein – Michael Cohen – Ezra Cohen Watnick – Flynn – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Russia’s Felix Sater – Sergey Gorkov –  Sergey Kislak, ambassador to the U.S..all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer, Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
      Additionally,  Vice President Mike Pence simply had to be aware of what was happening in the campaign, but is being shielded because he is the second in command if  President Trump is impeached and convicted  or forced to resign. Stephen Miller, Joseph E. Schmitz may be of interest to the FBI for information they possess relating to the FBI investigation.
      According to CNN Politics,  Marc Kasowitz has represented Trump for personal and business matters for years. Worth noting, Kasowitz is defending Russian bank, OJSC Sberbank in U.S. court, as well as a Russian billionaire, Oleg Deripaska, who has close ties with the Kremlin. 
       WHY SO MANY RUSSIANS ? WHY ALL THESE RUSSIAN CONNECTIONS ?  THIS IS GETTING BIGGER – IMHO THIS WILL BE THE BIGGEST SCANDAL “EVER” AND MAY TAKE YEARS TO FULLY UNWIND.
          Was there a GLOBAL POWER PLAY here ?  Britain, United States, France, Netherlands, Sweden, Italy ?   Who was the puppeteer who were the puppets ?
        The new kid on the FBI “person of interest” block in its US counter-intelligence investigation is Nigel Farage, a Brit, former UK Independence Party (UKIP)  leader and tactician for Brexit. He may be positioned to have a lot of pertinent information about 2016 election tampering. Reportedly, he has had direct or indirect contact with all of the above.  …………………………………………………………………………………..
  President Trump’s budget is obviously DOA, with lots of blowback by Republicans looking to their prospects of re-election in 2018. The budget is a disgrace to who we are as Americans, as it skewers a portion of our society with little ability to defend itself, much less survive.  .
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OPINION: We are heading down a deep and perilous path, one that will test the full extent of our country as a republic. More importantly, we will be tested as Americans, as a country that can meet challenges with rational solutions and foresight to anticipate the needs of the future.  The politics of extremism and divisiveness are capable of destroying us from within.

      As a nation, we have been blindsided by the devious use of unsubstantiated social media, radio and  cable television content that pitches lies, misinformation and bias to drive a wedge deeper and deeper between Americans.

      This is all about total control, achieved by any means, legal or illegal, honorable or dishonorable. Americans must learn to mentally and emotionally process information accurately, in depth, and without social or political bias. That, or wake up some day as mere subjects of the  special and narrow interests of a quasi totalitarian state, once known as a constitutional representative republic, which championed the rights and protections of all individuals not a privileged political minority.

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

 

 

 

 

 

 

 

 

 

 

 

 

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