Will Fed Hint At A Rate cut on Wednesday ?

INVESTOR’S first read.com – Daily edge before the open deal 
DJIA:25,548
S&P 500:2,822
Nasdaq Comp.:7,688
Russell 2000:1,553
Monday, March 18
, 2019   9:06 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
THE MARKET:
The economic indicators released in recent weeks show a mixed bag, partly because they were skewed by Q4’s crunch and  the government shutdown, as well as a general weakening in global economies.
We need to move further beyond the distortion of Q4 and the shutdown to see if the weakening in global economies is going to accelerate.
The Street is hoping  the Fed’s policy change will re-charge the economy.  If the gloom is thick enough, expect the Fed to lower its fed funds rate.  Fed Chair, Jerome Powell, may even hint of that in his press conference 2:30 Wednesday.
In the interim, the market averages will enter sideways trading range.  While the top and bottom of that range has yet to be determined, it will probably be between S&P 500 2,700 and 2,850. The DJIA should range between 25,000 and 26,200, though expect some distortion to occur as a result of  fluctuations in Boeing’s stock (BA: 378).
……………………………………………………….
EARNINGS: The only change here is FactSet reduced 2019 projections for the S&P 500 further this week with 2019 coming in at +3.9%, down from +4.1% a week ago. Q1 is running at a minus 3.4%.
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections. The Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..       
ECONOMY: Too early to tell, but last month’s minutes of the FOMC meeting will be released at 2:00 p.m. Wednesday followed by a news conference, when we can expect Fed Chair Jerome Powell to make the most of it with parsed hype about how “rosy” the economic outlook is. He may even refer to lowering the fed funds rate.  On Thursday, we get the Leading Economic Indicator report. It was down 0.1 percent  in December, unchanged in January.
The “trampoline” effect is a term uses to refer to sharp rebounds from sharp plunges. It’s comparable to the difference  in the  bounce you get  when dropping a softball to concrete, or  throwing it down hard.
Its applies here to the market’s rebound since late December, but not so much to economic indicators – yet.
………………………………………………………………..
TRADE: At this level, a resolution to the U.S./China talks is most likely priced into the market, aside from a one-day spike when a deal is announced.
What is not priced in is “no deal” or a disappointing deal, what’s more, further deterioration in the economy is not  priced in either, because that raises the risk of  recession (see below).
Both sides want a deal. Trump is on a wrenching losing streak and needs a win even if it means concessions, China’s industrial output is at a 17-year low.
A late April date is targeted for a trade deal.
………………………………………………………………….
BREXIT: Politico urged Americans not to freak out about Brexit, quoting Allianz’s Mohamed A. El-Erian who said  disorderly   Brexit would be disruptive for the UK in the short-term…but less disruptive for Europe and, constitute only a blip in the  US and most of the rest of the world. Thursday Britain’s Parliament approved  U.K. Prime Minister Theresa May’s bid to delay Brexit until late May.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Fed Damned if they did and damned if the didn’t:
Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
      I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy as :”rosy” was simply not true. As a result that assessment plus a U-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller, the Southern District of New York ands the State of New York are  closing in on President Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
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.

 

 

 

 

 

 

 

 

 

 

 

Street’s Bullishness Based on Hopes of 2020 Earnings Rebound

INVESTOR’S first read.com – Daily edge before the open deal 
DJIA:25,709
S&P 500:2,808
Nasdaq Comp.:7,630
Russell 2000:1,549
Friday, March 15
, 2019   8:48 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
THE MARKET:
Street is gambling that there won’t be a recession. I think it is a gamble and the odds are not in their favor. BUT, if I am wrong, I will admit it ASAP here.
It looks like the market averages are  on the verge of tracing out a sideways trading range.  While the top and bottom of that range has yet to be determined, it will probably be between S&P 500 2,700 and 2,850.  Due to Boeing’s distortion, the DJIA’s range is more difficult to establish, but most likely will be between 25,000 and 26,200.  After that, the market can range generally between those levels until it breaks out in one direction or another. What are they smoking ?
……………………………………………………….
EARNINGS: A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. Analysts have been slashing 2019 earnings projections. The Street is betting on a rebound in 2020. If they start slashing projections for 2020, we have the next leg of the bear market.
………………………………………………………..       
ECONOMY: While reports on Durable Goods, MBA Mortgage Apps, the Atlanta Fed  Business report, and Construction Spending  were positive, they didn’t reflect a dynamic recovery in the economy.  We need a couple months to get a handle on the trend.  Thursday’s Jobless Claims offered little, New Home Sales are still struggling.
………………………………………………………………..
TRADE: At this level, a resolution to the U.S./China talks is most likely priced into the market, aside from a one-day spike when a deal is announced.
What is not priced in is “no deal” or a disappointing deal, what’s more, further deterioration in the economy is not  priced in either, because that raises the risk of  recession (see below).
Both sides want a deal. Trump is on a wrenching losing streak and needs a win even if it means concessions, China’s industrial output is at a 17-year low. ………………………………………………………………….
BREXIT: Politico urged Americans not to freak out about Brexit, quoting Allianz’s Mohamed A. El-Erian who said  disorderly   Brexit would be disruptive for the UK in the short-term…but less disruptive for Europe and, constitute only a blip in the  US and most of the rest of the world. Thursday Britain’s Parliament approved  U.K. Prime Minister Theresa May’s bid to delay Brexit until late May.
……………………………………………………………….
BOEING (BA): I still think Boeing’s  (BA) stock (374 pre-open) is at further risk, with the next support at $300. That would be 73 points down from here, which would take 495 points off the DJIA. (see Boeing below)
      Bloomberg Evening News reported $600 billion in orders are at risk, and China could be a beneficiary. While Canada and the United States grounded the Boeing 737 Max 8 jets, Boeing’s stock rose 1.73 points.  The stock traded  heavily three of the last four sessions with a floor in the mid-360s.  Down only 16.4% from its all-time March high of  446 BA sells at 21 x earnings and yields 2.18%.
Arrogance ?  I don’t think a 16% decline discounts the risk here. How long will it take until we are sure the answer we are given is right ? Can even Boeing, Southwest or American be sure.
     >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Fed Damned if they did and damned if the didn’t:
Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
      I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy as :”rosy” was simply not true. As a result that assessment plus a U-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller, the Southern District of New York ands the State of New York are  closing in on President Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
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 at a Crossroad on Growth, Deceleration

INVESTOR’S first read.com – Daily edge before the open deal 
DJIA:25,702
S&P 500:2,810
Nasdaq Comp.:7,643
Russell 2000:1,555
Thursday, March 14
, 2019   7:48 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
THE MARKET: It looks like the market averages are  tracing out a sideways trading range.  While the top and bottom of that range has yet to be determined, it will probably be between S&P 500 2,700 and 2,800.  Due to Boeing’s distortion, the DJIA’s range is more difficult to establish, but most likely will be between 25,000 and 26,200.  After that, the market can range generally between those levels until it breaks out in one direction or another.
………………………………………………………..       
ECONOMY: While reports on Durable Goods, MBA Mortgage Apps, The Atlanta Fed  Business report, and Construction Spending  were positive, they didn’t reflect a dynamic recovery in the economy.  We need a couple months to get a handle on the trend.
Obviously, a sharp rebound in the economy would goose stock prices, a recession would crush prices.
A Morgan Stanley study shows  a downturn in S&P 500 earnings growth has consistently triggered a plunge in stock prices. In fact, a turndown in the market tends to precede the downturn in earnings. Analysts have been slashing 2019 earnings projections.
………………………………………………………………..
TRADE: At this level, a resolution to the U.S./China talks is most likely priced into the market, aside from a one-day spike when a deal is announced.
What is not priced in is “no deal” or a disappointing deal.
Further deterioration in the economy is not  priced in either, because that raises the risk of  recession (see below).
Both sides want a deal. Trump is on a losing streak and needs a win even if it means concessions, China’s industrial output is at a 17-year low. ………………………………………………………………….
BREXIT: Politico urged Americans not to freak out about Brexit, quoting Allianz’s Mohamed A. El-Erian who said  disorderly   Brexit would be disruptive for the UK in the short-term…but less disruptive for Europe and, constitute only a blip in the  US and most of the rest of the world.
……………………………………………………………….
BOEING: While Canada and the United States grounded the Boeing 737 Max 8 jets, Boeing’s stock rose 1.73 points.  The stock traded  heavily the last three days with a floor in the mid-360s, which is only down 18.6% from its all-time March high of  446 where it sells at 21 x earnings and yields 2.18%.
Arrogance ?  I don’t think an 18% decline discounts the risk here. How long will it take until we are sure the answer we are given is right.  Can even Boeing, Southwest or American be sure.
     >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Fed Damned if they did and damned if the didn’t:
Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
      I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy as :”rosy” was simply not true. As a result that assessment plus a U-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
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.

 

 

 

 

 

 

 

 

 

 

 

 

Market Averages to Become Range-Bound

INVESTOR’S first read.com – Daily edge before the open deal 
DJIA:26,554
S&P 500:2,791
Nasdaq Comp.:7,591
Russell 2000:1,549
Wednesday, March 13
, 2019   8:28 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
      At this level, a resolution to the U.S./China talks is most likely priced into the market, aside from a one-day spike when a deal is announced.
What is not priced in is “no deal” or a disappointing deal.
Further deterioration in the economy is not  priced in either, because that raises the risk of  recession (see below).
It looks like the market averages are  tracing out a sideways trading range.  While the top and bottom of that range has yet to be determined, it will probably be between S&P 500 2,700 and 2,800.  Due to Boeing’s distortion, the DJIA’s range is more difficult to establish, but most likely will be between 25,000 and 26,200.  
THE BOEING IMPACT:
     The DJIA was distorted yesterday by a 24.60-point drop in Boeing’s(BA) stock price. After two take-off crashes by its 737Max 8 planes, close to a 40 countries have grounded flights. The distortion will continue today. Again, to calculate the impact of a stock on the DJIA, divide its change by 0.14748.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Fed Damned if they did and damned if the didn’t:
Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
      I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy as :”rosy” was simply not true. As a result that assessment plus a U-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
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 May Cut Its Fed Funds Rate – Why Not To Cheer

INVESTOR’S first read.com – Daily edge before the open deal 
DJIA:25,650
S&P 500:2,783
Nasdaq Comp.:7,558
Russell 2000:1,524
Tuesday, March 12
, 2019   8:28 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
Fed Chair Jerome Powell has hinted at a cut in its benchmark federal funds rate this year.  That would mean one thing, he no longer sees the economy as “rosy” or “in a good place,” he sees a recession. In fact, a cut in the fed funds rate has preceded each of the last three recessions.
The DJIA was distorted yesterday by a 22.53-point drop in Boeing’s(BA) stock price. After two take-off crashes by its 737Max 8 planes, three countries have grounded flights. The distortion will continue today as a third country, Australia, has grounded the 737. Again, to calculate the impact of a stock on the DJIA, divide its change by 0.14748.
While a pristine blue chip benchmark, the DJIA is a price-weighted average and therefore can be distorted by moves in its higher priced stocks.
Yesterday, the 22.53-point drop in Boeing’s stock lopped 153 points off the DJIA, i.e., if Boeing was unchanged for the day the DJIA would have been up 329 points rather than 177 points.
At 400, Boeing has 10 x the impact on the DJIA as Pfizer (PFE), 9x the impact as Coke (KO), 8x Intel (INTC), 5x Merck (MRK), Exxon/Mobil, 4x JP Morgan, Procter& Gamble (PG), 3x IBM, Caterpillar (CAT), Johnson& Johnson (JNJ), 2x Apple (AAPL) to mention a few.
The day ended with the DJIA up 0.70%, but the S&P500 up 1.25%, and the Nasdaq Comp. up 1.84%.
The market must be allowed to find a comfort level to discount serious uncertainties, without interference from the Fed.
TECHNICAL:
Yesterday’s surge takes a flash crash off the table, or rather delays it.  These crashes come like a thief in the night and without warning. Investors who are not prepared in advance will be down 10% in a heartbeat with more to come.
        I will warn of a flash crash on occasion, and it may not happen, but if it does, anyone heeding the warning will be grateful.
The Street is still double-timing to Fed Chief  Powell’s hype.  He was on 60-Minutes Sunday night, saying the economy is “in a good place” and denied any weakness. I don’t believe what I am seeing.
Hey ! I hope he is right. If he is wrong, he will have hurt a lot of investors, because he is pumping stocks up beyond reason with his comments.
The Street has one eye on  news on the U.S./China trade talks, and the other on the economy. The latter is a tough read due to distortions caused by Q4’s stock market crunch and the government shutdown.
This is not a pretty picture – too many uncertainties that can’t be resolved near-term. Fed Chief Jerome Powell downplayed recession fears on 60 minutes last night shrugging off auto loan defaults, and irregular trend in retail sales.  But really, what is he going to say ?    I am not getting good vibes from this man.  I think he needs to walk around the block with his eyes open.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Fed Damned if they did and damned if the didn’t:
Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
     I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy as :”rosy” was simply not true. As a result that assessment plus a U-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.
      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
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.

What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boeing’s Stock Plunge Impacts DJIA

INVESTOR’S first read.com – Daily edge before the open deal 
DJIA:25,450
S&P 500:2,743
Nasdaq Comp.:7,408
Russell 2000:1,526
Monday, March 11
, 2019   7:45 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
The DJIA will get whacked at the open by a sharp drop in Boeing’s(BA) price. After two take-off crashes by its 737Max 8 planes, two countries have grounded flights leading to a pre-market plunge of 30 points in its stock. That translates into a drop in the DJIA of  203 points – could be more or less at the open. To get the impact of a change in a stock on the average, divide the price change by the Dow’s divisor (0.14748).
 Everything else remains the same, after a quiet weekend. The biggest factor is, can the fed policy change from tightness to ease revive a solid growth rate in our economy ?  If it does, the Fed  may have to start raising rates again, which would tank stocks. If it fails and we sink into a recession, the market will plunge from its overvalued status.
Additionally, news of a trade pact can affect the market either way, and  the investigation of the Trump administration will begin to push uncertainty about the future to the limits.
Most, if not all of the relief of an end to the trade war is already priced into the market.  What is not, is a disappointment.
I can see no reason to be fully invested with these conditions and risk looming.
The market must find a level that adequately discounts these uncertainties, without interference from the Fed.
TECHNICAL:
A rally at the close Friday indicates there are still buyers out there willing to step in when selling eases. The DJIA’s technical pattern will be skewed today by a big drop in Boeing (BA).  Futures trading before the open  suggests a mixed open for the S&P 500 and Nasdaq Comp., but a drop of 160 -180 points for the DJIA (see above).
        The Street has one eye on  news on the U.S./China trade talks, and the other on the economy. The latter is a tough read due to distortions caused by Q4’s stock market crunch and the government shutdown.
This is not a pretty picture – too many uncertainties that can’t be resolved near-term. Fed Chief Jerome Powell downplayed recession fears on 60 minutes last night downplaying auto loan defaults, and irregular trend in retail sales.  What is he going to say ?    I am not getting good vibes from this man.  I think he needs to walk around the block with his eyes open.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
10 years since my “BUY”  at the bottom of the  Great Bear Market – March 10, 2009  – DJIA 6,800!

In June 2008, I decided to use an unfolding bear market to launch my daily, pre-open, blog “Investor’s first read,”* with the goal of keeping investors on the sidelines until a bear market bottom was reached.

On March 10, 2009, with the DJIA at 6,805 (now 26,000), I issued a Special Bulletin “BUY.”

This was after a 52% plunge in the DJIA, the worst bear market/recession since the 1920s.

Investors were petrified, the last thing anyone wanted to do was to buy a stock, many were selling out completely.

I had experienced 14 bear markets in my career, I was sure this was the bottom, and prepared readers for the buying opportunity with headlines like:

>February 24, 2009  (DJIA:   7,114“Does the Cauldron of Fear Have to Boil Before  

   this Market Turns ?”

>February 25, 2009  ( DJIA: 7,350 “When the Fear of Owning Stocks Turns to Fear

   of NOT Owning Stocks”

>February 27, 2009 ( DJIA: 7,182 ) “Lock and Load”  a surge of 2,000 points in the

   DJIA ?

>March 2, 2009  (DJIA:  7,062)   “$9 trillion Cash on the Sidelines vs $8 Trillion

   NYSE Market Value”

>March 2, 2009  ( DJIA: 6,832 “Ready …Aim.  ”SPECIAL BULLETIN”

>March 3, 2009  ( DJIA:   6,818 ) “Big Money Reaching for the Bushel Basket”

>March 4, 2009 (DJIA:  6,726) “Once off the Sidelines, Big Money Good for a 1,500 –

    2,000-point Rally”

>March 5, 2009 (Thursday – DJIA:   6,875 )   “Climactic Buy Possible by Tuesday

>March 10, 2009  ( Tuesday – DJIA: 6,805)  “FIRE !”   (BUY !) 

Fed Damned if they did and damned if the didn’t:
Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
     I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy a rosy was simply not true. As a result that assessment plus a u-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.
      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
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.

What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Odds of Flash Crash Increasing- Mueller Indictments Saturday ?

INVESTOR’S first read.com – Daily edge before the open deal 
DJIA:25,471
S&P 500:2,798
Nasdaq Comp.:7,421
Russell 2000:1,525
Friday, March 8
, 2019    8:46 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
This is an environment that can produce a flash crash, a steep plunge in stock prices, as buyers back off and sellers scramble to raise cash.
The trigger can be a disappointment in a trade deal with China, or worsening economic indicators, or crisis like North Korea being put on a war footing.
Until four days ago, the 20% rebound in the S&P 500 that started Dec.26 went uncorrected. Worse yet, it pressed deep into overhead supply, an area from which the market plunged in Q4.
A correction/consolidation and sideways trading range would be normal here, doubts about the trade pact and economy are creeping in at a time the Street thought the Fed had its back.
      The biggest factor is, can the fed policy change from tightness to ease revive a solid growth rate in our economy ?  If it does, the Fed  may have to start raising rates again, which would tank stocks. If it fails and we sink into a recession, the market will plunge from its overvalued status.
Additionally, news of a trade pact can affect the market either way, and  the investigation of the Trump administration will begin to push uncertainty about the future to the limits.
Most, if not all of the relief of an end to the trade war is already priced into the market.  What is not, is a disappointment.
I can see no reason to be fully invested with these conditions and risk looming.
The market must find a level that adequately discounts these uncertainties, without interference from the Fed.
TECHNICAL:
The market averages broke minor support yesterday without even trying to break up through resistance.
Resistance to the upside today without “news” is: is DJIA 25,560; S&P500: 2,758; Nasdaq Comp.:7,455.
The market averages need to hold at the following level or we will get another leg down.   DJIA:25,350; S&P 500:2,740;Nasdaq:7,395.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
10 years since my “BUY”  at the bottom of the  Great Bear Market – March 10, 2009  – DJIA 6,800!

In June 2008, I decided to use an unfolding bear market to launch my daily, pre-open, blog “Investor’s first read,”* with the goal of keeping investors on the sidelines until a bear market bottom was reached.

On March 10, 2009, with the DJIA at 6,805 (now 26,000), I issued a Special Bulletin “BUY.”

This was after a 52% plunge in the DJIA, the worst bear market/recession since the 1920s.

Investors were petrified, the last thing anyone wanted to do was to buy a stock, many were selling out completely.

I had experienced 14 bear markets in my career, I was sure this was the bottom, and prepared readers for the buying opportunity with headlines like:

>February 24, 2009  (DJIA:   7,114“Does the Cauldron of Fear Have to Boil Before  

   this Market Turns ?”

>February 25, 2009  ( DJIA: 7,350 “When the Fear of Owning Stocks Turns to Fear

   of NOT Owning Stocks”

>February 27, 2009 ( DJIA: 7,182 ) “Lock and Load”  a surge of 2,000 points in the

   DJIA ?

>March 2, 2009  (DJIA:  7,062)   “$9 trillion Cash on the Sidelines vs $8 Trillion

   NYSE Market Value”

>March 2, 2009  ( DJIA: 6,832 “Ready …Aim.  ”SPECIAL BULLETIN”

>March 3, 2009  ( DJIA:   6,818 ) “Big Money Reaching for the Bushel Basket”

>March 4, 2009 (DJIA:  6,726) “Once off the Sidelines, Big Money Good for a 1,500 –

    2,000-point Rally”

>March 5, 2009 (Thursday – DJIA:   6,875 )   “Climactic Buy Possible by Tuesday

>March 10, 2009  ( Tuesday – DJIA: 6,805)  “FIRE !”   (BUY !) 

Fed Damned if they did and damned if the didn’t:
Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
     I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy a rosy was simply not true. As a result that assessment plus a u-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.
      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
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.

What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
George Brooks
Investor’s first read.com
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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Flash Crash Conditions Building

INVESTORS first read.com – Daily edge before the open deal 
DJIA:25,673
S&P 500:2,771
Nasdaq Comp.:7,505
Russell 2000:1,536
Thursday, March 7
, 2019    8:46 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
Bottom line: The biggest factor is, can the fed policy change from tightness to ease revive a solid growth rate in our economy ?  If it does, it may have to start raising rates again, which would tank stocks. If it fails and we sink into a recession, the market will plunge from its overvalued status.
Additionally, news of a trade pact can affect the market either way, and  the investigation of the Trump administration will begin to push uncertainty about the future to the limits.
This is an environment that can produce a flash crash, a step plunge in stock prices as buyers back off and sellers scramble to raise cash.
The trigger can be any one or combo of the above, or something unexpected.
Most, if not all of the relief of an end to the trade war is already priced into the market.  What is not, is a disappointment.
I can see no reason to be fully invested with these conditions and risk looming.
The market must find a level that adequately discounts these uncertainties, without interference from the Fed.
TECHNICAL:
The market averages broke minor support yesterday without even trying to break up through resistance.
Resistance to the upside is DJIA 25,800-25,860; S&P500: 2,790-2,795; Nasdaq Comp.:7,580-7,590.
The market averages will try to hold above DJIA:26,20; S&P 500:2,767;Nasdaq:7,500.
      Major support is: DJIA:25,040; S&P 500: 2,690; Nasdaq Comp.:7,226

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
10 years since my “BUY”  at the bottom of the  Great Bear Market – March 10, 2009  – DJIA 6,800!

In June 2008, I decided to use an unfolding bear market to launch my daily, pre-open, blog “Investor’s first read,”* with the goal of keeping investors on the sidelines until a bear market bottom was reached.

On March 10, 2009, with the DJIA at 6,805 (now 26,000), I issued a Special Bulletin “BUY.”

This was after a 52% plunge in the DJIA, the worst bear market/recession since the 1920s.

Investors were petrified, the last thing anyone wanted to do was to buy a stock, many were selling out completely.

I had experienced 14 bear markets in my career, I was sure this was the bottom, and prepared readers for the buying opportunity with headlines like:

>February 24, 2009  (DJIA:   7,114“Does the Cauldron of Fear Have to Boil Before  

   this Market Turns ?”

>February 25, 2009  ( DJIA: 7,350 “When the Fear of Owning Stocks Turns to Fear

   of NOT Owning Stocks”

>February 27, 2009 ( DJIA: 7,182 ) “Lock and Load”  a surge of 2,000 points in the

   DJIA ?

>March 2, 2009  (DJIA:  7,062)   “$9 trillion Cash on the Sidelines vs $8 Trillion

   NYSE Market Value”

>March 2, 2009  ( DJIA: 6,832 “Ready …Aim.  ”SPECIAL BULLETIN”

>March 3, 2009  ( DJIA:   6,818 ) “Big Money Reaching for the Bushel Basket”

>March 4, 2009 (DJIA:  6,726) “Once off the Sidelines, Big Money Good for a 1,500 –

    2,000-point Rally”

>March 5, 2009 (Thursday – DJIA:   6,875 )   “Climactic Buy Possible by Tuesday

>March 10, 2009  ( Tuesday – DJIA: 6,805)  “FIRE !”   (BUY !) 

 


Fed Damned if they did and damned if the didn’t:

Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
     I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy a rosy was simply not true. As a result that assessment plus a u-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.
      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
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.

What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
…………………………………
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

 

INVESTORS first read.com – Daily edge before the open deal 
DJIA:25,673
S&P 500:2,771
Nasdaq Comp.:7,505
Russell 2000:1,536
Thursday, March 7
, 2019    8:46 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
Bottom line: The biggest factor is, can the fed policy change from tightness to ease revive a solid growth rate in our economy ?  If it does, it may have to start raising rates again, which would tank stocks. If it fails and we sink into a recession, the market will plunge from its overvalued status.
Additionally, news of a trade pact can affect the market either way, and  the investigation of the Trump administration will begin to push uncertainty about the future to the limits.
This is an environment that can produce a flash crash, a step plunge in stock prices as buyers back off and sellers scramble to raise cash.
The trigger can be any one or combo of the above, or something unexpected.
Most, if not all of the relief of an end to the trade war is already priced into the market.  What is not, is a disappointment.
I can see no reason to be fully invested with these conditions and risk looming.
The market must find a level that adequately discounts these uncertainties, without interference from the Fed.
TECHNICAL:
The market averages broke minor support yesterday without even trying to break up through resistance.
Resistance to the upside is DJIA 25,800-25,860; S&P500: 2,790-2,795; Nasdaq Comp.:7,580-7,590.
The market averages will try to hold above DJIA:26,20; S&P 500:2,767;Nasdaq:7,500.
      Major support is: DJIA:25,040; S&P 500: 2,690; Nasdaq Comp.:7,226

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
10 years since my “BUY”  at the bottom of the  Great Bear Market – March 10, 2009  – DJIA 6,800!

In June 2008, I decided to use an unfolding bear market to launch my daily, pre-open, blog “Investor’s first read,”* with the goal of keeping investors on the sidelines until a bear market bottom was reached.

On March 10, 2009, with the DJIA at 6,805 (now 26,000), I issued a Special Bulletin “BUY.”

This was after a 52% plunge in the DJIA, the worst bear market/recession since the 1920s.

Investors were petrified, the last thing anyone wanted to do was to buy a stock, many were selling out completely.

I had experienced 14 bear markets in my career, I was sure this was the bottom, and prepared readers for the buying opportunity with headlines like:

>February 24, 2009  (DJIA:   7,114“Does the Cauldron of Fear Have to Boil Before  

   this Market Turns ?”

>February 25, 2009  ( DJIA: 7,350 “When the Fear of Owning Stocks Turns to Fear

   of NOT Owning Stocks”

>February 27, 2009 ( DJIA: 7,182 ) “Lock and Load”  a surge of 2,000 points in the

   DJIA ?

>March 2, 2009  (DJIA:  7,062)   “$9 trillion Cash on the Sidelines vs $8 Trillion

   NYSE Market Value”

>March 2, 2009  ( DJIA: 6,832 “Ready …Aim.  ”SPECIAL BULLETIN”

>March 3, 2009  ( DJIA:   6,818 ) “Big Money Reaching for the Bushel Basket”

>March 4, 2009 (DJIA:  6,726) “Once off the Sidelines, Big Money Good for a 1,500 –

    2,000-point Rally”

>March 5, 2009 (Thursday – DJIA:   6,875 )   “Climactic Buy Possible by Tuesday

>March 10, 2009  ( Tuesday – DJIA: 6,805)  “FIRE !”   (BUY !) 

 


Fed Damned if they did and damned if the didn’t:

Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
     I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy a rosy was simply not true. As a result that assessment plus a u-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.
      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
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.

What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
…………………………………
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Swing Factor: Can Fed Revive Economic Growth ?

INVESTORS first read.com – Daily edge before the open deal 
DJIA:25,806
S&P 500:2,789
Nasdaq Comp.:7,576
Russell 2000:1,569
Wednesday, March 6
, 2019    9:06 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Summary:
The Street is having second thoughts about an announcement of a trade deal with China. For one, it may not be as beneficial to the U.S. as originally thought, for another, the deal may already be priced into the market.
What’s more, the Street has totally ignored the consequences of all the investigations into the Trump administration, and what effect it may have on policies going forward.
The biggest factor is, can the fed policy change from tightness to ease revive a solid growth rate in our economy ?  If it does, it may have to start raising rates again, which would tank stocks. If it fails and we sink into a recession, the market will plunge from its overvalued status.
It will be months before we have an answer.
TECHNICAL:
The DJIA must get past 25,890, the S&P 500 past 2,798, and the Nasdaq Comp. past 7,600 to get the market out of neutral.  Minor support is DJIA: 25,768, S&P 500: 2,787, Nasdaq:7,570.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
10 years since my “BUY”  at the bottom of the  Great Bear Market – March 10, 2009  – DJIA 6,800!

In June 2008, I decided to use an unfolding bear market to launch my daily, pre-open, blog “Investor’s first read,”* with the goal of keeping investors on the sidelines until a bear market bottom was reached.

On March 10, 2009, with the DJIA at 6,805 (now 26,000), I issued a Special Bulletin “BUY.”

This was after a 52% plunge in the DJIA, the worst bear market/recession since the 1920s.

Investors were petrified, the last thing anyone wanted to do was to buy a stock, many were selling out completely.

I had experienced 14 bear markets in my career, I was sure this was the bottom, and prepared readers for the buying opportunity with headlines like:

>February 24, 2009  (DJIA:   7,114“Does the Cauldron of Fear Have to Boil Before  

   this Market Turns ?”

>February 25, 2009  ( DJIA: 7,350 “When the Fear of Owning Stocks Turns to Fear

   of NOT Owning Stocks”

>February 27, 2009 ( DJIA: 7,182 ) “Lock and Load”  a surge of 2,000 points in the

   DJIA ?

>March 2, 2009  (DJIA:  7,062)   “$9 trillion Cash on the Sidelines vs $8 Trillion

   NYSE Market Value”

>March 2, 2009  ( DJIA: 6,832 “Ready …Aim.  ”SPECIAL BULLETIN”

>March 3, 2009  ( DJIA:   6,818 ) “Big Money Reaching for the Bushel Basket”

>March 4, 2009 (DJIA:  6,726) “Once off the Sidelines, Big Money Good for a 1,500 –

    2,000-point Rally”

>March 5, 2009 (Thursday – DJIA:   6,875 )   “Climactic Buy Possible by Tuesday

>March 10, 2009  ( Tuesday – DJIA: 6,805)  “FIRE !”   (BUY !) 

 


Fed Damned if they did and damned if the didn’t:

Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
     I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy a rosy was simply not true. As a result that assessment plus a u-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.
      Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
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.

What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 THE PRESIDENCY PROBLEM
Special Counsel Robert Mueller is closing in on Trump, et al, and  this is going to get ugly.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
…………………………………
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 ! Market May Have Discounted Trade Deal

INVESTORS first read.com – Daily edge before the open deal 
DJIA:25,819
S&P 500:2,792
Nasdaq Comp.7,577:
Russell 2000:1,575
Tuesday, March 5
, 2019    9:12 a.m.
………………………..
gbifr79@gmail.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
The Stock Market:
Technical:
After a surge at the open, the market took a big hit with the DJIA giving up 544 points high to low, before closing down 209 points.
Construction spending’s poor performance in December (down 0.6% vs projections for a gain of 0.3%), has to share the blame with concern that the U.S./China trade deal won’t be as advantageous to the United States as originally thought.
A correction/consolidation after a two month, 20% surge, would be healthy. At some point, we can expect a sideways trading range to develop as traders lock up some gains and investors, who saw their portfolio values melt in Q4, do some selling happy to get out without huge losses.
TODAY:
Some analysts believe a trade deal is already priced into the market. As noted here before, the market has rebounded into overhead supply, a level from which stocks plunged in December, so that is possible.
It is possible, investors won’t get  an opportunity to sell into an announcement of a deal.
      The S&P 500 is up 20% from its December correction low, selling would be normal, especially if yesterday’s plunge is followed up with a drop today.
We won’t know for a month or two if the Fed can head off a recession. I think it can delay one, but it is headed our way, and the stock market has not even begun to discount it.
The Street naively thinks the Fed can simply drop its fed funds rate and a recession will be averted and the stock market will soar.
 However, prior to the last two recessions (2007-2009 and  8 months in 2001), the fed funds rate flattened out then started to drop BEFORE a recession started.
The problem here is the Street is spoiled by a 10-year bull market and economic expansion, they don’t want the party to end.
The big danger here is, investors will greet the beginning of the next big turndown with buying, thinking it is a great opportunity, after all the Fed has their back, big declines can’t happen ???
We have had three 50%+ declines in bear markets (2007-2009; 2000-2002; 1973-1974) and the Fed couldn’t stop them.
The storm clouds are there, be prepared !
Summary:  No change from yesterday
Based on what I am seeing in reports on the economy, we need a couple months to put the government shutdown, and Q4’s crunch in the market and economy behind us.      We also need to see if the Fed’s change in policy from one of raising interest rates to one of “wait and see” can head off a recession.
     I think the failure of the Fed to acknowledge the seriousness of weaknesses in the economy was a huge blunder. Their referral a month ago to the economy a rosy was simply not true. As a result that assessment plus a u-turn on policy triggered a stampede in the stock market.
      Now, if  the Fed is right and the economy heats up, they will have to return to a policy of raising rates which will turn the market down from inflated levels.
If they are wrong and the economy slips into recession, stocks will turn down from inflated levels.
Either way, the Fed has increased the risk for investors.
TRADE TALKS
The U.S./China trade talks are progressing with expectations of a summit in late March between Trump and Xi. Both countries are hurting as a result of the trade war.
China seeks the lifting of levies on $200 billion of Chinese goods, and tentatively plans to lower tariffs on U.S. chemical, auto and farm  products,  and work toward better protection of intellectual property rights.
According to Market Watch Sunday, the biggest sticking point is whether U.S. tariffs would be lifted  immediately or gradually over time to ensure China doesn’t renege on any part of the deal.
Good news on tariffs will spike the market. That would be a good opportunity to raise cash, a lot of it.
……………………………………………..
POTENTIAL”
      The Street is hopeful for a favorable outcome from the U.S./China trade negotiations, but the summit between Trump and North Korea’s  president  Kim Jong Un failed to arrive at an agreement. Kim wanted all sanctions lifted, but was only willing to offer partial denuclearization.  I don’t think the Street cares about North Korea, and it may have already discounted a favorable outcome on trade, but not an unfavorable result.
“RISKS”
It doesn’t make sense that the market is soaring, because Fed did a total about-face on policy, because they were scared that  the country, the world, was on the edge of a recession. What if the Fed is right ? 
Stocks are entering “pricey” levels where the market cannot handle any bad news,
and there is the potential for a lot of it.
-The Street continues to revise earnings for 2019 sharply down
-Recent reports on the economy raise odds a recession  (See below)is looming
Debt (individual, corporate and government) has risen sharply due to years of low interest rates. It not only must be repaid, but additional debt to fund needs is out of the question.
-There is still risk in the successful negotiation of a trade deal with China, as well as progress dealing with North Korea.
-The Trump administration’s ability to govern may be damaged by the Cohen testimony and findings of the Mueller investigation, the renewed U.S. House investigation and Southern District of New York.
……………………………………………
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.  So far, the Street has ignored the issue. Bad news for Trump may not adversely impact stock prices, good news would jettison them, since it raises the odds that Trump would be re-elected in 2020.
      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.
…………………………………
What No One on Wall Street Wants to Hear
>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.
> 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.
>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
 >Nine out of the last 10 recessions have occurred with a Republican in the White House.
> While Q4 corporate profits are very impressive, analysts are dramatically slashing estimates for 2019. FactSet now sees Q1 this year at minus 3.2% down from minus 2.7% a week ago; Q2 at plus 0.3% down from plus 1.0%; Q3 at plus 1.9%  down from plus 2.4% and Q4 at plus 8.5% down from plus 9.9%. For the year they see an earnings gain of plus 4.1% down from plus 4.8% a week ago..     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.
>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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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.