Cracks in the Foundation

Investor’s first read – Daily edge before the open
DJIA: 21,479
S&P 500: 2,429
Nasdaq  Comp.:6,110
Russell 2000: 1,426
Wednesday , July 5, 2017    9:08 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
     
The Street is getting nervous about delays to the massive stimulus promised by the Trump administration.       
      Softness in consumer spending, auto sales, inflation, pending homes sales, housing permits, aircraft orders and capital goods spending, suggest the eight-year Obama economic recovery is struggling. 
       While a recession is not expected at this time, it is worth noting that 9 out of the last 10 recessions occurred with a Republican in the White House.
       If this continues, expect the Fed to delay further rate increases, as well as beginning to work off its $4.5 trillion balance sheet.
TODAY
       While the DJIA was up 129 points on a shortened trading day Monday, both the S&P 500 and Nasdaq Comp. closed at the lows for the day, a sign buyers hit a wall followed by selling taking many stocks down to the lows for thenday.   It’s called a rally failure and has happened five out of the last six days for all three market averages.
       Once again hot money used a sharp rally at the open to hammer  the Street’s highfliers –  Facebook (FB), Amazon (AMZN), APPLE (AAPL), Microsoft (MSFT), and Alphabet (GOOG).
      The S&P 500 was historically overpriced on Election Day, but the expectation of a huge corporate tax cut, deregulation of a zillion safeguards, and a big spend on the infrastructure juiced the S&P another 13.4% higher.
       Failure to deliver on these handouts would crack the market 12% to 18%.  That’s not all. If any president in the pre-algo days behaved as irrationally and childishly as President Trump, we would be in a bear market today.
      
Thank Wall Street’s computers for that, they have been programmed to buy regardless of a situation where the country with the greatest military power and most dynamic economy on earth is run by a president whose  behavior leads me to believe he is delusional, unstable, irrational, unfit, untruthful, arrogant, thin skinned, and dangerous as Hell.
      If the Street’s analysts suddenly decide to change the programming if their computers from a buy no matter what to raise cash, the market will take a hit, how big depends on what new negatives hit it  after it has turned down.
      Right now, the market is on the edge. It would be smart to have a cash reserve, just in case it breaks down now. Clearly, there are cracks in the foundation.
      I don’t think the Street wants to go gently into that dark place yet. There is still some hope, so another push up is possible only because some of the big money is not giving up hope.
      It is important to watch attempts to move up.  If strained, or if they run into resistance, risk of a correction is increasing.
      Personally, I think President Trump’s election was a big mistake, and odds are we will pay very dearly for that down the road after we have alienated all our allies, gutted checks and balances against corporate and political abuse, and set the stage for another Republican recession.                                                                                                  

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”:DJIA:21,437;S&P 500:2,431:Nasdaq Comp.:6,046
RESISTANCE “today” DJIA:21,518;S&P 500:2,433;Nasdaq Comp.:6,129

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
CORPORATE EARNINGS
(updated June 30 , 2017)
Factset
      Q1 earnings increased  14.0%.      Q2 growth  is projected at +6.6 %, Q3 at +7.4%, and Q4 at +12.4%. For 2017 as a whole growth is projected at a plus 9.8%.  Currently, the P/E on forward  earnings is 17.6 x. That compares with a 10-year average P/E of 14.0.
Note: These numbers change frequently.
 >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS  of the 30 DJIA Companies
:  (UPDATED 6/13/17)
      On occasion, I technically analyze each of the 30 DJIA stocks  for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages.
      As of  June 15, 2017,  a reasonable risk is 21,951 a more extreme risk is 20,703.Near-term upside potential is 21,418.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
 
POLITICAL/STOCK MARKET
………………………………………………………………………………
REMOVING TRUMP FROM  OFFICE

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

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

TRUMP approval ratings also abysmal abroad.
      July 4th is a time Americans celebrate the birth of our nation, a time Americans take a minute to be proud of our constitutional representative republic and its many accomplishments, which unfortunately are systematically being gutted as I write.
       Unfortunately, our image has dropped sharply under Trump as president. His approval ratings wallow  in the 30s, as he has hastened to disengage the U.S. from our long-standing foreign alliances.
      A recent Pew Research Center survey covering 37 countries gives Trump a 22% confidence rating that he would do the right thing in international affairs. President Obama’s rating in the same category as he left office was 64%.
      Trump’s plunge is especially pronounced among our closest allies in Europe and Asia.
       American people as a group came out well in the poll with a median of 58% favorable.

       Trump sucks wind in comparison with other major world leaders in the do the right thing category, trailing Germany’s Angela Merkel (#1), China’s Xi Jinping, Russia’s Vladimir Putin.
        Disapproval of Trump’s signature policies was obvious with abysmal approval ratings for his: withdrawal of support from  the Iran nuclear weapons agreement (34%); restrictions on immigrants entering the U.S. (32%); withdrawal from the international climate change agreement (19%); withdrawal of support for major trade agreements (18%; building the “Wall” (16%).

         Trump’s personality assessment is disturbing with 75% of the 37 countries saying he is arrogant, 65% saying he is intolerant, 62% dangerous, 55% a strong leader, 39% charismatic, 26% qualified to be president, 23% caring about people.
          So my headline on January 3, “TRUMP – A Human Wrecking Ball” is confirmed globally, as well.
          
There is a chance, a big one, that Trump and the Freedom Caucus (Constitutional anarchists) will do irreparable damage to our nation domestically and internationally in coming years, when Fourth of July celebrations will be for a nation “that was.” 
            This combination wants to shred everything accomplished in the last 230 years, then remake it to reflect their hard right ideology.

………………………………………………………………………..
Better Care Reconciliation ACT (BCRA) aka, Trumpcare       
     
It looks like a final vote on the Senate healthcare vote will be delayed until after the July 4th recess.  It also looks like serious concessions will have to be made to pass it.
       But who gets the concessions – conservatives or moderates ?
       Ideology absolutely has no place  in this bill – NONE ! Have they no SHAME !

     This bill has been developed in secret by a handful of Republicans, and no Democrats, yet it will affect all Americans.   It should be crafted to serve the best interests of Americans who need affordable health insurance coverage.  Anything short of that is not in the best interests of our country, i.e., hostile, un-American.
        Ironically, most of Congress is covered by ACA, which was implemented in place of the Federal Employees Health Benefit Plan, when ACA became the law of the land.  So, Congress has some skin in the game……well, kind of.
……………………………………………………………………………..
FLIPPING VOTES: 
      It doesn’t matter
if Russia was not able to hack into voting machines and flip Clinton votes  to Trump, if  Russia’s intrusion into Facebook and Twitter with  “fake” news was  able to convince voters before they voted that Clinton was seriously flawed and Trump the preferred choice.

……………………………………………………………………..
TRUMP TO PUT US  ON  A WAR FOOTING !
       I moved this one up in the queue, due to a recent Trump tweet that help from China “has not worked.”
       On January 12, I noted:
       “I am sure of one thing, the United States will be on a war footing in the spring of 2018. Two things, it will juice the economy….may push war hawks to act on military expenditures; two, ensure support for the mid-term elections.
(Investor’s first read.com.)
       In April, Trump told the Financial Times, “If China is not going to solve North Korea, we will.” In June, he said, “While I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out.”
       This looks like a countdown to military action, or brinkmanship so dire that North Korea comes to the table. 
        Strategically, Trump would want to put the country on a war footing  with North Korea closer to the election in 2018, but if the Russia investigation gets too hot, he may want to begin the process earlier as a distraction.
WHAT ABOUT SYRIA AND CHEMICAL WEAPONS ?
      Another diversion to deflect attention away from yet another healthcare setback and the Russia/Trump investigation.
      The only thing I am certain of is that this administration is the most untruthful administration in the 57 years I have been following politics.  What an utter disgrace.  We will be lucky to get out of this without an enormous amount of damage across the board.

…………………………………………………………………………
ROSENSTEIN OUT ?      Who Takes Over ?
     Expect Rod Rosenstein, Deputy Attorney General – DOJ will  likely be fired or have to recuse himself possibly as soon as this week, odds favor the latter. The real target here would be special counsel, Robert Mueller, who would be fired as a desperation stalling tactic by President Trump ‘if’” Trump can find an attorney general who would fire Mueller.  Trump cannot fire Mueller directly.
      Obviously,  firing Mueller would smack of  “consciousness of guilt,” and could lead to impeachment proceedings by the House, and/or increase pressure for Trump to resign..

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

…………………………………………………………………………. 
 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.
………………………………………………………………………….

“Connect the Dots.” This investigation is open-ended
       Nigel Farage – President Trump- Jeffrey Sessions – Robert Mercer – Cambridge Analytics – Bannon- Carter Page – Kushner (Jared and Ivanka) – Eric Prince – Donald and Eric Trump – Wilbur Ross –  Michael Cohen – Ezra Cohen Watnick – Michael Flynn – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway – Peter W. Smith (deceased) Russia’s Felix Sater – Sergey Gorkov –  Sergey Kislak, ambassador to the U.S., all connect directly or indirectly to the Trump/Russia investigation and some have a connection to Brexit, as well.
      According to the “Observer,” Mercer’s Cambridge Analytica was connected with Canada’s AggregateIQ through an intellectual property agreement and worked together on the Brexit referendum. Aggregate is also a data mining company. While Mercer was a big supporter of Trump, there is no known connection between AggregateIQ and Trump’s campaign staff.

       The Palmer Report.com  recently reported that Peter W. Smith (deceased) sought to collude with Russian hackers stealing emails from Trump’s opposition while claiming to be working with Michael Flynn.

      The Wall Street Journal just released two articles, one documenting Smith had some kind of recruiting connection with Steve Bannon and Kellyanne Conway. Unfortunately, Smith cannot be contacted to further confirm the story as he died of unknown causes shortly after his disclosure to the Journal.
            Additionally, IMHO, Vice President Mike Pence simply had to be aware of what was happening in the campaign, but is being shielded because he is the second in command if  President Trump is impeached and convicted  or forced to resign. Stephen Miller, Joseph E. Schmitz may be of interest to the FBI for information they possess relating to the FBI investigation.
      According to CNN Politics,  Marc Kasowitz has represented Trump for personal and business matters for years. Worth noting, Kasowitz is defending Russian bank, OJSC Sberbank in U.S. court, as well as a Russian billionaire, Oleg Deripaska, who has close ties with the Kremlin. 
       WHY SO MANY RUSSIANS ? WHY ALL THESE RUSSIAN CONNECTIONS ?  THIS IS GETTING BIGGER – IMHO THIS WILL BE THE BIGGEST SCANDAL “EVER” AND MAY TAKE YEARS TO FULLY UNWIND.
          Was there a GLOBAL POWER PLAY here ?  Britain, United States, France, Netherlands, Sweden, Italy ?   Who was the puppeteer who were the puppets ?
…………………………………………………………………………………..
  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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
…………………………………………………………………….

George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 
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.

 

 

 

 

 

 

 

 

 

 

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.