Chaos, Confusion and Desperation

Investor’s first read – Daily edge before the open
DJIA:21,182
S&P 500: 2,433
Nasdaq  Comp.:6,321

Russell 2000: 1,415
Friday, June 9, 2017    9:11 a.m.
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Republicans attempting to gut Dodd-Frank Wall Street Reform and consumer Protection Act passed in response to Wall Street’s 2008 financial meltdown. 
       They are opening the henhouse door for more foxes to enter, this time devious exploiters of innocent peoples best financial interests, with the result likely being yet another Great Recession/Great Bear Market.
        Where there is big bucks to be made, exploiters will do what they do best – exploit.  Under the plan the ability to oversee consumer protection, predatory lending, big bank participation in risky practices, requirement of  retirement fund managers to work in client’s best interests is lifted.
       The world came perilously close to a total meltdown in 2008 – 2009, do we want to go there again. 
        Why would anyone want to enable these destructive things to return ?  Why ? Is it that the big money always is in position to pick up assets at fire sale prices after a crash ?
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          Would the removal of Trump crush the market ?  Only if it meant the stimulus would not happen.  Essentially, the stimulus is a Republican platform, and I suspect many Republicans would be happy to get rid of him,  After an initial sell off, the market would rally sharply…..as long as the Street can count on some of that promised stimulus.
TODAY

        The Street is heartened by the Republican attack on Dodd-Frank. What’s more, as watchers of Fox News, many on the Street think Trump got a clean bill of health by Comey’s testimony yesterday, and foresee clear sailing for the rest of the stimulus.
         A rally failure would signal more rational thinking, we have to let the market speak.
         The gutting of Dodd-Frank sends a message that rank speculation is permitted once again, that anything goes.  The final phase of bull markets can be wild, characterized by rampant speculation where everyone gets sucked in in quest of easy money.
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SUPPORT “today”:DJIA:21,136;S&P 500:2,431; Nasdaq Comp.:6,311
RESISTANCE “today” DJIA:21,267;S&P 500:2,443;Nasdaq Comp.:6,346

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CORPORATE EARNINGS
(updated June 2, 2017)
Factset
      Q1 earnings are projected to increase 14.0%. The biggest contributor in Q1 was energy sector. A rate of change cannot be calculated since Q1 of 2016 was a loss, but on a dollar basis the energy sector earned $8.5 billion versus a loss of $1.5 billion a year ago.
      Q2 growth  is projected at +6.6%, Q3 at +7.5%, and Q4 at +12.5%. For 2017 as a whole growth is projected at a plus 9.9%.  Currently, the P/E on forward  earnings is 17.7 x. That compares with a 10-year average P/E of 14.0.
Note: These numbers change frequently.
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MY TECHNICAL ANALYSIS  of the 30 DJIA Companies
:  (UPDATED 5/15/17)
      On occasion, I technically analyze each of the 30 DJIA stocks  for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages.
      As of  April 25, 2017,  a reasonable risk is 20,856 a more extreme risk is 20,703.Near-term upside potential is 21,333 which was hit yesterday.
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POLITICAL/STOCK MARKET
      If you watched Fox News, you are relieved that there was no smoking gun following former FBI director James Comey’s testimony Thursday before the Senate Intelligence Committee.
      If you watched another less biased TV channel, you are convinced this is just the beginning of a long, open-ended investigation of potential wrongdoing by the Trump team before and after the 2016 election.

       I am prepping for the unearthing of the biggest political scandal in our history. Watergate was double-A ball, the is is the “BIGS.”
     
Personally, I think the Russians hacked into ballot boxes in several key states where a paper trail was not possible. That kind of paranoia could easily label me as a ultra far right Republican, not an unaffiliated.  These machines CAN be hacked. It’s unlikely, but just have an open mind, a lot of bizarre things are happening, and hacking old voting machines should not be impossible.
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UK ELECTION – Bad News For Conservatives

     Prime Minister, Theresa May, sought a stronger mandate in an election that did not need to be held and lost her majority control, reportedly resulting in a hung parliament (!!)
      This comes a year after the Brexit vote – what now.  What is the message here for conservatives ?
       This is breaking news on an issue I know little about, but will try to summarize next week.
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       BREAKING NEWS late week highlighted an NSA document leaked to  “The Intercept.com” strongly suggests that Russian military intelligence tried to breach U.S. voting systems in an effort to help Trump win the election.  The document was leaked by a 25 year old contractor who was arrested after admitting intentionally sending it to The Intercept.com. The leak comes just three days before Comey’s testimony. Comey was fired on May 9, four days after the NSA document was compiled which Trump was briefed on. It is considered the clearest indication of a Russian cyber attack on the U.S. electoral process to-date, though the U.S. intelligence community determined there was ample evidence of Russian interference last year and that Russian president Vladimir Putin was involved.
      In fact, Mark Warner, ranking Democrat on the Senate Intelligence Committee warned Tuesday that the extent of Russian cyber attacks last year far exceeded what has been reported so far. According to a report by the Brennan Center for Justice,  20% of the voters in seven states used a digital system without a paper trail and voting machines in 42 states used old machines with outdated hardware/software.
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“Connect the Dots.” This investigation is open-ended
      
Farage – Trump- Sessions – Mercer – Cambridge Analytics – Bannon- Page – Kushner – Michael Cohn – Flynn – JD Gordon  – Breitbart – Stone – Assange – Manafort – Russia all connect directly or indirectly to the Trump/Russia investigation and have a connection to Brexit, as well. According to the “Observer, Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.
      Additionally,  Vice President Mike Pence simply had to be aware of what was happening in the campaign, but is being shielded because he is the second in command if  President Trump is impeached and convicted  or forced to resign. Stephen Miller, Joseph E. Schmitz may be of interest to the FBI for information they possess relating to the FBI investigation.
      According to CNN Politics,  Marc Kasowitz has represented Trump for personal and business matters for years. Worth noting, Kasowitz is defending Russian bank, OJSC Sberbank in U.S. court, as well as a Russian billionaire, Oleg Deripaska, who has close ties with the Kremlin.  hmmm.
       WHY SO MANY RUSSIANS ? WHY ALL THESE RUSSIAN CONNECTIONS ?  THIS IS GETTING BIGGER – IMHO THIS WILL BE THE BIGGEST SCANDAL “EVER” AND MAY TAKE YEARS TO FULLY UNWIND.
          Was there a GLOBAL POWER PLAY here ?  Britain, United States, France, Netherlands, Sweden, Italy ?   Who was the puppeteer who were the puppets ?
        The new kid on the FBI “person of interest” block in its US counter-intelligence investigation is Nigel Farage, a Brit, former UK Independence Party (UKIP)  leader and tactician for Brexit. He may be positioned to have a lot of pertinent information about 2016 election tampering. Reportedly, he has had direct or indirect contact with all of the above. 
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Jared Kushner – The Plot Thickens
     
Last week NBC News reported that Jared Kushner has come under FBI scrutiny in the Russia investigation and new revelations that he had sought to establish  a secure and secret communications back channel with Russia last December when Kushner met with Russian ambassador Sergei KislyakFormer Trump National Security Advisor, Michael Flynn, also attended that meeting. 

      In my March 29 blog, I referred to a Kushner meeting with Sergey N. Gorkov, CEO of Vnesheconombank (VEB) in December 2016. VEB has been subject to US sanctions for three years.  It is unclear what was discussed. 
       What is a back channel ?  Generally, it is a direct, secret channel of communication between countries that bypasses official channels. They are not illegal, every president has used them. In Kushner’s case, it was reportedly intended to establish a line of communication for Michael Flynn, Trump’s chief national security adviser (since fired for lying) to communicate with Russia presumably below standard diplomatic radar screens about Syria and the Mid-East.  Apparently, Kushner suggested Russian diplomatic facilities in order to bypass surveillance by American intelligence agencies. This may be the area that will cause Kushner a problem.
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Trump Backs Out of Paris Climate Change Accord
     
As expected, Trump backed out of the Paris Accord where 149 nations committed to reduce  harmful greenhouse gases produced by the burning of fossil fuels.  The “Make Great Again USA,” joins the only other two dissenting nations – Syria and Nicaragua.
      Trump must wait until November 2019 to make it official.  The decision can be reversed by Trump himself or a new president in 2020. Trump has implied he wants to renegotiate the deal to strike more favorable terms for the US.  

       Last week USA TODAY’ s “WHAT the Paris climate agreement withdrawal means for the U.S. economy,”  outlined how much Trump’s decision hurts America going forward
-we lose our seat at the table  for climate talks.

-we lose our ability to financially capitalize on the global shift to renewables.
-it reduces our ability to lead in the development of  cheap energy and sell that technology globally.
-job gains in renewables will slow. Over the years this could cost hundreds of thousands of jobs.  Renewables employ close to 14 times coal industry.
        AXIOS.com reports that some 30 mayors, three governors, 80 university presidents and 100 businesses  plan to submit a plan to the United Nations pledging to meet U.S. greenhouse gas emissions targets under the  Paris climate accord.
       “I was elected to represent the citizens of Pittsburgh, not Paris,” Trump said explaining his decision. Pittsburgh Mayor Bill Perduto was quick to remind Trump that 80% of  the city of Pittsburgh voted for Clinton.
      
Once again, Trump has relinquished the United States’ lead on an important global issue, reducing our credibility and opening the door for another country to fill the slot. 

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      President Trump’s budget is obviously DOA, with lots of blowback by Republicans looking to their prospects of re-election in 2018. The budget is a disgrace to who we are as Americans, as it skewers a portion of our society with little ability to defend itself, much less survive.     
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IMPEACHMENT
      A  Consult/Politico poll shows 43% of Americans want Congress to begin procedures for the impeachment of President Trump.

      The U.S. Constitution  enables Congress to remove a president for “treason, bribery, or other high crimes and misdemeanors.” Intitially, the House votes on one or more articles of impeachment- if a majority vote is reached, he is impeached.  BUT, impeachment only means indictment. The Senate holds a trial overseen by the chief justice and Supreme Court. A group of House members serve as prosecutors and the Senate as jurors. If two-thirds of the senators find the president guilty, he is removed from office and the vice president takes over.***
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HEALTHCARE:  NOW THE HOUSE REPUBLICANS OWN IT !
NOTE:
This is just the beginning and information is still sketchy. One excellent source is the Henry J. Kaiser Foundation (www.kff.org)
      The House narrowly passed the American Health Care Act (AHCA) last week by a vote of 217 to 213. 
      The House failed twice to pass a similar version. The bill was rushed through without pursuing standard practices – discussions and cost and consequence scoring, by the CBO.

      It now goes to the Senate where it will encounter changes and possibly rejection.

THE RISK !     

another meltdown ?
      HOWEVERTrump and most Republicans want to see ACA fail, and are doing everything to make that happen.  “THE HILL’s” June 4 issue, “States scramble to  prevent Obamacare exodus” addresses the dire state of ACA surviving,  explaining the plight of insurance commissioners in many states to keep insurance companies from leaving in face of the Trump administration’s ambivalence in assuring insurers the government would continue federal payments to compensate insurers for subsidizing out-of-pocket costs for lower income households.
     The biggest fear insurance commissioners have is that all insurance companies will pull out of  the market leaving insured with no ACA plans to buy. Blue Cross Blue Shield North Carolina plans a 23% rate hike for both on- and off-exchange plans due to the uncertainty of cost-sharing payments.
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PREUTERS WORLD NEWS APRIL 19, 4:20 PM
“A Russian government think tank controlled by Vladimir Putin developed a plan to swing the 2016 U.S. presidential election to Donald Trump and undermine voters’ faith in the American electoral system, three current and four former U.S. officials told Reuters.
      Russian documents appear to confirm what U.S. intelligence agencies have believed  all along that Russia influenced the outcome of our presidential election. 
      It recommended that a, “propaganda campaign on social media and Russian backed global news outlets to encourage U.S. voters to elect a president who would take a softer line toward Russia than the administration of then-President Barach Obama, the seven officials said.”
     Additionally, a second institute document recommended Russia end its pro-Trump propaganda and intensify messaging about voter fraud to undermine the U.S. electoral system’s legitimacy and damage Clinton’s reputation.
      So far, investigations by U.S. institutions and Congress have not concluded collusion between Trump’s team and Russian operatives occurred.
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TRUMP  IS TOAST ?
      Just a hunch, but I think collusion regarding influencing the election is only part of something much bigger, like major league money transfers for options on oil investments, real estate holdings, and land deals. That’s why it is taking so much time.
      If we begin to see more and more of VP Pence, it may suggest the end for Trump is getting closer. Clearly, the inside knows something is about to break.  Trump is “toast,” IMVHO.
      There are so many people who know so much, and they are going to be watching out for number ONE, and that is not Donald Trump.

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TRUMP TO PUT US  ON  A WAR FOOTING !
      
Expect the Trump administration to put the United States on a war footing within one year, probably regarding North Korea.  For one, it would justify its big military spend. For another, it would facilitate a mid-term election victory, since voters are reluctant to change  Congress significantly when the nation is gearing up for war.. It worked for George Bush in 2003.  Finally, it would deflect attention away from the Trump/Russia issue, that could sink the administration.
ALL OF THE ABOVE HAS THE POTENTIAL TO ADVERSELY IMPACT THE STOCK MARKET  AND   MERITS CONSIDERATION.
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Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer.  Neither Game-On Analysis, LLC, nor George  Brooks  is  registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed  as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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