Fed Future Policy is Key Today

Investor’s first read – Daily edge before the open

DJIA: 20,837

S&P 500: 2,365

Nasdaq  Comp.:5,856

Russell 2000:1,362

Wednesday,  March 15, 2017    9:06 a.m.


  A bump in the Fed’s benchmark interest rate today from 0.50 – 0.75 to 0.75 – 1.00 percent is expected. What’s important is what Fed Chief Janet Yellen has to say about future rate increases in her 2:30 press conference. 

  The proposed massive Trump stimulus of tax cuts, deregulation, and spending on the military and infrastructure stands to kick up inflationary pressures. That can cause the Fed to consider a more aggressive tightening policy.

  Inflation is ticking up, driven by higher hourly earnings and the PCE price index now at 1.9 percent a smidge below the Fed target of 2.0 percent.

  (For details on the economic reports, go to mam.econoday.com)

  Exports of capital goods are lagging, contributing to the nation’s balance of trade deficit, which will be worsened if the U.S. dollar strengthens after the Fed announcement of a rate increase.

  There is a slight chance the Fed won’t raise rates, but it won’t meet again until May 2-3, so it almost has to do it now.

   The market averages found support at the same level that provided support four days ago after a nine-day correction.

   The Street is still in full focus on a massive stimulus.  While a correction would be normal in light of the fact the market is historically overpriced, the Street hasn’t been interested in valuations lately, it’s all about pie-in-the-sky.

   Should the stimulus be delayed, the market would have to adjust. Odds of a delay are increasing.       


SUPPORT “today”: DJIA:20,801;S&P 500:2,359;Nasdaq Comp.:5,842

RESISTANCE “today”:DJIA:20,889;S&P 500:2,375;Nasdaq Comp.:5,876

NOTE: If the Street gets the impression, Yellen is not overly concerned about inflation even in face of a massive stimulus, the market will surge today to DJIA 21,166, S&P 500: 2,389, Nasdaq Comp.:5,886, more tomorrow.


CORPORATE EARNINGS (updated  March 3, 2014)

      Factset now sees Q4 earnings for the S&P 500 up close to 4.9% vs. a Dec. 31 projection of plus 3.1%.

     Earnings growth for all of 2016 are now projected to be plus 0.4%.

     Q1 earnings are projected to increase 8.9%. 

     2017 as a whole are projected at a plus 9.8% down from earlier estimates of 11.6%.  Currently, the P/E based on earnings 12 months out is 17.7 x, which compares with a 10-year average P/E of 13.9. 


MY TECHNICAL ANALYSIS  of the 30 DJIA Companies:  (UPDATED 2/13/17)

 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  March 2, 2017,  a reasonable risk is 21,040 a more extreme risk is 20,938 Near-term upside potential is 21,367 .




        We now have Trumpcare, a highly controversial healthcare deform bill, that replaces Obamacare and is certain to stir a lot of ugly Congressional and national debate and slow down progress on the other programs Congress wants to ram through.

      More importantly, it skewers Americans desperately in need of affordable healthcare – so characteristically  Republican !

  While still in development, Trumpcare could cause as many as 14 million Americans to lose their healthcare coverage next year according to the nonpartisan Congressional Budget Office (CBO), more in future years.  Reportedly, it hurts seniors by charging them five times the amount charged younger people, slashes Medicaid benefits for nursing home care, hurts women by eliminating funding for Planned Parenthood, including family planning services, and may force the closing of hospitals and rural health clinics  in rural areas.

       Trump urges Americans to be patient, that it could take several years for prices to drop.   How convenient, that gets him and his party past the mid-term elections.  “It’s going to be a thing of beauty,” he says. 

       Really ?  How can I believe anything this man says ?  How can anyone who is paying attention, who is capable of objective thinking believe anything he or his apologists say ?  How can our allies, or adversaries believe anything he says ?

        Where is this taking us ?  Is this the beginning of a big plunge in a GREAT nation that is being dismembered by an element subversive to the spirit of our Constitution, Bill of Rights, and culture of decency and compassion ?

        Who are these people ?  Have they ever struggled to make ends meet. Worse yet, have they ever been crushed by unexpected medical expenses, or experienced the same for relatives ?

        Many of the people who are going to get hurt, voted for Trump and Republicans. If one voted against their interest, they really can only blame themselves and suffer the consequences. Hopefully, the next time they THINK before they cast their vote.


       During the campaign, Trump promised he wouldn’t touch Social Security and Medicare.  Just another Trump LIE ?

       .OMB director Mick Mulvaney told conservative radio host, Hugh Hewitt Wednesday, he is trying to get Trump to look at entitlement reform.

        He believes he can get around Trump’s promise by crafting  it as saving Social Security.  Beg pardon, but Social Security  is one of the most efficient systems of our social programs. The real problem is Congress spends its excess receipts over outflow on other programs.


      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.                                                                


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



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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