Does the Bipartisan Vote Signal a Change ?

Investor’s first read – Daily edge before the open
DJIA: 20,940
S&P 500: 2,384
Nasdaq  Comp.:6,047
Russell 2000: 1,400
Monday, May 1, 2017    9:11 a.m.
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ECONOMY

       The economy is a mixed bag. Q1 GDP was ahead only 0.7 percent,
auto sales and consumer spending are lagging, but new home sales are  rising and business investment up sharply.
      U.S. auto sales are down in the first three months of the year. Automakers are beginning to discount aggressively to accommodate young buyers who, on top of carrying a lot of student debt, are struggling to cope with other expenses like healthcare and shelter, according to Bloomberg News.
       Odds favor an extension of the economic expansion, though soft numbers may make a sell of the administration’s tax plan to Congress more difficult.
       Justification for the shortfall in revenues that the Trump tax cuts will create depends on strong economic growth (3% – 4%), but that may run into headwinds in a year or two.    
       At 96 months, the current expansion is two months short of 8 years old. That compares  with the average length of 11 cycles since 1945 of 58.4 months.  Only one cycle was longer than this one, the Mar. 1991 to May 2001) expansion (120 mths.).
        My point here is twofold. One, it is late in the economic cycle to rely on extended economic growth to offset  tax cuts that slash government revenues and add to the national debt. Two, if we do slip into a recession (they happen), the shortfall in government revenues will be magnified. What’s more, would there be any measures the government can then employ to pull the economy out of recession ? 
        As I see it, this is a grand ploy by Republicans to destroy 50 years of social consciousness efforts, nothing short of revenge by ultra conservative Republicans (see “Starve the Beast below).
         Where have those wonderful “real’ conservatives gone, politicians who believed in proceeding carefully, but with rational governance ?  Extremes like what we are witnessing here could eventually result a Depression.
TODAY
      The Street is relieved this morning to see a bipartisan deal struck over the weekend by both parties to extend funding for the government through its fiscal year end, September 30. What’s more, it denied the Trump administration many of its spending priorities, at least for the time being.  
      Stocks should rise at the open at which time we will see whether the Street has changed its mind on its outlook for the big stimulus. The bipartisan vote may suggest the stimulus won’t be as big as the Street hoped for in recent months.
 

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SUPPORT “today”:DJIA:20:20,927;S&P 500:2,383; Nasdaq Comp.:6,043
RESISTANCE:“today”:DJIA:21,017;S&P500:2,393;NASDAQ Comp.:6,071

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POLITICAL/STOCK MARKET
       GOOD NEWS ! A bipartisan deal was reached over the weekend  by Republicans and Democrats to keep the government open through September 30, the nation’s fiscal year end. To Trump’s surprise, it denied him many items on his wish list. Surprises included funding for the Nat’l Inst. of Health, EPA, the Advanced Research Projects Agency, and national parks.
       A hearing is scheduled for Tuesday by the House Rules Committee to vote on advancing the bill and setting procedures for a floor vote.
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        During their first 100 days, President Trump  spent 22 days at Mar-a-Laga, playing golf 22 times. During their first 100 days, Obama spent four days away from the White House, but did not play golf once. Is this what Trump means when he pines he inherited a mess ?
         What disturbs me is Trump dismisses his actions on ACA, immigration, his wall, sanctuary cities, etc.  as fulfilling his promises to his “base.”   Beg pardon Mr. Trump, but you are NOW the President of the United States, NOT president of a base which actually fell 2,865,075 votes short  of your opponent’s.
         A week after all this bluster to con America into thinking Trump has accomplished something in his  “first 100 days,” people will begin to ask, “What have you done for me lately ?”
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Education Secretary, billionaire, Betsy DeVos, wasted little time getting in lockstep with Trump’s rush to gut President Obama’s many initiatives to help young people. DeVos undercut  Obama’s initiatives to strengthen the rights of some 40 million student borrowers thus facilitating student debt repayment. Obama was responding to a rash of student defaults in face of false information and extra fees by lenders.
      How can scrapping rules designed to protect students burdened with debt, and vulnerable to predatory lending be in anyone’s interest  except the big money ?  What is it with this brand of Republican ?  Mean spirited ?  Clueless ?  I don’t get it.
      Small wonder resentment for the ultra rich is increasing.
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FRANCE – Don’t Count Le Pen Out Yet
     The United States isn’t the only place, “It ain’t over until it’s over.”
  Add France to Monsieur Berra’s reach.  On Monday I said euphoria over Macron’s expected victory May 7 stands to yield to uneasiness as the gap of  support he enjoys now will narrow.  Reportedly, that is already happening on the campaign trail where Le Pen scored some points and appears to be gaining momentum. Global markets soared Monday when Le Pen failed to win the presidency on the first time around.  Victory by Le Pen raises the possibility France would pull out of the EU.
STARVE the BEAST  !
    
Trump’s plan to cut the corporate tax rate to 15% from 35% would trigger a $2.4 trillion shortfall in government revenues, forcing massive cuts to government programs, as well as increased taxes in other areas to offset the loss.   

     This is an opportunity of a lifetime for Republicans to fulfill their dream to devastate social programs across the board, i.e. slash government income and there is no alternative but to gut government programs. 
      It’s called “Starve The Beast,” and will result in a vast reduction in the quality of life of most Americans, especially those who put Trump in office.
      Congress will waste little time seizing an opportunity of their lifetime – to ruthlessly, senselessly and wantonly dismember a system that works well without the intrusion of Republicans.
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      The rape and pillage of our federal government continues,
as Republican Thomas Massie  introduced a bill in February aimed at terminating the Department of Education effective December 31, 2018. This coincided with the Senate confirmation of Conservative Betsy DeVos, a long time advocate of school vouchers and critic of public education.

      As a budget is being developed, we can expect a major revamping of the nation’s government structure and huge cuts.
      Mick Mulvaney, director of the Office of Management and Budget plans to streamline the U.S. government structure by drastic reallocation of resources away from social “Great Society” programs to the Dept. of Defense and Homeland Security.
      Action is already underway to gut the EPA and Dept. of Education, but the administration’s efforts are bound to encounter Congressional opposition, since budget cuts and the elimination of agencies will undoubtedly have widespread impact, none the least of which may be the loss of Republican House and Senate seats in 2018.     
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I AM KEEPING THIS ALIVE BECAUSE IT HAS BEEN UPSTAGED BY TRUMP’S 100-DAY STAMPEDE TO  SAVE FACE.
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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. 
      Yesterday, Reuters released documents, which were prepared by the Russian Institute for Strategic Studies[https://en.riss/], after the election that confirm this conclusion.
      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.
     But U.S. investigations are still being conducted.
     I personally believe collusion DID take place, and odds are GOOD that it reaches far beyond collusion, that based on what I see and how people in the administration are acting.
     PRESIDENTIAL RECALL ?    
     Reportedly, there is no mechanism in the U.S. Constitution that enables voters to recall at the federal level, though 19 states permit recalls at the state and local levels. Impeachment is the only recourse in the event high crimes and misdemeanors are committed.
      The truth may never be confirmed, it being so debilitating to orderly and effective governance, that it would  result in irreparable divisiveness.
      THIS COULD BE THE ULTIMATE TEST OF THE GOVERNMENT SO MANY DEDICATED PEOPLE STRIVED AND DIED FOR.
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TRUMP  – 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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WHY TRUMP WOULD PUT US  ON  A WAR FOOTING !
       THE STAGE IS BEING SET NOW !
      
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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CORPORATE EARNINGS (updated  April 14, 2017)
Factset
      Q1 earnings are projected to increase 12.5%. Q2 growth  is projected at +8.1%, Q3 at +8.2%, and Q4 at +12.8%. For 2017 as a whole growth is projected at a plus 10.1%.  Currently, the P/E on forward  earnings is 17.6 x. That compares with a 10-year average P/E of 14.0. Energy is the big contributor to Q1, S&P 500 growth.  While its percentage growth rate cannot be calculated since the sector was losing money a year ago it is in the black to the tune of $8.5 billion vs. a loss of $1.5 billion in Q1 2016. Materials:
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MY TECHNICAL ANALYSIS  of the 30 DJIA Companies
:  (UPDATED 4/28/17)
      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 20,763 a more extreme risk is 20,571.Near-term upside potential is 21,333
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ODDS FAVOR
1-Trump’s presidency will implode within three years, Bannon will be gone, along with Breitbart News and Alt-Right’ influence.
2-Trump will put the United States on a war footing with North Korea in coming months with or without China’s cooperation.

Conclusion: It is happening now
3-Expect major domestic violence this summer as alt-Right groups confront protestors against tax reform and Congress’ gutting of a host of popular government programs.

Conclusion: It started on Easter weekend in Berkeley.
4-Seeds of a recession will be planted as Congress guts programs needed and used by millions.  Stock market has its final run.
5-Social Security and Medicare will be targeted for drastic changes if the Republicans hold control of both houses in 2018 and Congress is successful in gutting most of social service programs and the EPA per Trump’s wish list.     
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*Stock Trader’s Almanac
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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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