Humpty Trumpty Sat on a Wall………….

Investor’s first read – Daily edge before the open

DJIA:20,596

S&P 500: 2,348

Nasdaq  Comp.5,828:

Russell 2000:1,354

Monday,  March 27, 2017    9:14 a.m.

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     The failure of President Trump and a Republican Congress to repeal and replace Obamacare suggests other Republican conquests will be challenging, as well.

      The Freedom caucus, backbone of the do-nothing Congress over the last six years, did it again with Obamacare, and may cause similar problems with Trump’s plan for tax cuts and the big spend on defense and the infrastructure.

      Last week’s failure raises a valid question about the level of stock prices, which are up 9.5 percent since Trump’s win in November, mainly driven by promises of a huge stimulus.

      The Trump failure to repeal/replace Obamacare, has triggered sharp declines in global stock prices, the U.S. dollar, oil, and the stock-index futures prior to the open.

       Tax reform will be a thorny issue. Over the weekend Trump revised several issues, one of which being the lowering of the corporate tax rate to 15% from 35% and allow corporations to repatriate $2.5 trillion dollars now parked overseas for a U.S. taxed rate of 10%, the idea being they would use it to goose the economy.  Good luck on that one. Unless required as a condition, they will likely use the money to buy back stock, which they have been doing for seven years.

        Trump will shortly issue an executive order gutting Obama’s efforts to counter global warming, including restricting greenhouse gas emissions at coal-fired plants. Why don’t Republicans care about the environment. If they are wrong, any damage done now will NOT be able to be reversed 50 – 100 years from now.

        All this on top of investigations to ascertain whether the Trump team colluded with Russia representatives to tilt the U.S. election in Trump’s favor through fake news and hacking.

        Then too, all the lies, who can believe anything. Is this administration going to implode ? Can the mid-terms come soon enough ?

     If so, there is a lot of downside if negatives continue to resurface.

       

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SUPPORT “today”:DJIA:20,276;S&P 500:2,317;Nasdaq Comp.:5,734

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CORPORATE EARNINGS (updated  March 3, 2014)

      Factset

Q1 earnings are projected to increase 9.0%.  2017 as a whole are projected at a plus 9.8% down from Dec. 31 estimates of 11.6%.  Currently, the P/E on trailing 12-month earnings is 19.8 x, and based on earnings 12 months out is 17.7 x. That compares with a 10-year average P/E of 13.9. 

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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 .

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POLITICAL/STOCK MARKET

       Humpty Trumpty sat on a wall…………….

      The “Russia situation” seems to worsen daily for President Trump and his chief strategist, Stephen Bannon. Reportedly, the FBI has expanded its investigation of collaboration to Alt-Right Breitbart News, which Bannon used to head up.

      What’s worse, CNN’s national security analyst, Juliett Kayyem,  speculates that the FBI has been talking with Mike Flynn, formerly close advisor to Trump.  Flynn was forced to resign when it became apparent he was lying about dealings with Russia.

      The FBI wants to know if Breitbart and INFO Wars, another far right wing site, had a role in  Russian cyber attacks and the spread of fake news, where automated computer commands called “bots” distributed stories to the social media that were pro-Trump and anti-Clinton.

      Generally, a “bot” is designed to automate tasks, bypassing the need to do them manually.    

     The stench of the prospects of a Trump/Russia collusion increases with each disclosure and attempt to change the focus and cover the trail. 

    I still believe Paul Manafort  and Roger Stone hold the key to the puzzle.  I think they know whether there was collusion or whether Trump has financial ties to Russia or Russian billionaires, direct or indirect.  Properties somewhere ?  Indirect ownership in oil properties ?  Access to money ? 

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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.

3-Expect major domestic violence this summer as alt-Right groups confront protestors against Trumpcare and Congress’ gutting of a host of popular government programs.

4-Seeds of a recession will be planted as Congress guts programs needed and used by millions.  Stock market has its final run.

3-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.     

 WHY TRUMP WOULD 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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Note: 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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