Street Bets on Tax Cuts

Investor’s first read – Daily edge before the open
DJIA: 21,409
S&P 500: 2,425
Nasdaq  Comp.6,193:
Russell 2000:
Wednesday, July 12, 2017    8:54 a.m.
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         Fed Chief Janet Yellen will present her semi-annual economic address to the
 House Financial Services Committee today and Senate Banking Committee Thursday.    She is expected to note the Fed intent to raise interest rates one more time before year-end and begin shrinking the Fed’s balance sheet. ……………………………………………………………………………
         Corporate Q2 earnings will begin to come on stream Friday with some key bank earnings like Wells Fargo (WFC), Citigroup (C), JP Morgan Chase (JPM) leading the charge.  The market could benefit from a surprise feature – earnings could be better than expected.  While factset.com is projecting a 6.5% growth rate for the S&P 500, it wouldn’t be surprised if that rate jumps to 9.5%.  Q1 earnings were projected to increase 9.0% on March 31, but came in at 14% when all reports were in.
       The news on Donald Trump, Jr. worsened yesterday temporarily hammering stock in morning trading, but they bounced back when Senate      

       Majority Leader, Mitch McConnell (R-Ky) announced the body will delay its August recess t0 work on a healthcare solution and tax reform.
TODAY
          While stocks took a sharp hit yesterday morning, the major market averages held above support. So far, the Street is not concerned by unfolding developments in the investigation of Republican collusion with Russia in the 2016 elections.
          Instead, it is heartened by the Senate’s shortened August recess to address  healthcare and tax reform.  As long as the administration’s massive stimulus is a real possibility, the Street will buy stocks.

           Barring more disruptive news, look for a sharp move up at the open. The key here is does the market get hit with sellers once it has moved up. That would indicate the Street is raising cash aggressively, as it has been doing for two weeks.
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SUPPORT “today”:DJIA:21,381 ;S&P 500:2,424:Nasdaq Comp.:6,181
RESISTANCE “today” DJIA:21,491;S&P 500:2,434 ; ;Nasdaq Comp.:6,216

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CORPORATE EARNINGS
(updated June 30 , 2017)
Factset
      Q1 earnings increased  14.0%.      Q2 growth  is projected at +6.5 %, Q3 at +7.3%, 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 17.3 x. That compares with a 10-year average P/E of 14.0.
Note: These numbers change frequently. Factset.com is well worth a visit, it breaks its projections down by industry
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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.
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POLITICAL/STOCK MARKET
 ROSENSTEIN and MUELLER OUT ?      Who Takes Over ?
       Will President Trump  fire special counsel Robert Mueller Donald Trump, Jr. to impede criminal charges against his son Donald Jr. and stall the investigation of he and his team ?
       As I understand it, he would first have to fire  Rod Rosenstein, Deputy Attorney General –
      
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.
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 Sunday’s breaking news about Donald Trump Jr.’s meeting at Trump Tower with a Russian lawyer offering disparaging news about Hillary Clinton shortly after Trump’s nomination. The story has changed several times in the interim, each time getting significantly worse for Junior. This could get ugly, since it involves the son of a person running for president seeking hurtful information on the prime opponent from a country considered our adversary.  Also attending was Jared Kushner, Trump’s son-in-law and Paul Manafort (???). Regardless of what version of the story Trump Jr. tells next, Paul Manaford knows the truth about this issue and many others. Squeeze him past the ouch point, and he’ll tell all.
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     Donald Trump campaigned on the assertion that he alone would “Make America Great Again.”  In six months he has disgraced our country and the Republican Party with countless lies, irresponsible tweets and reckless , un-presidential behavior.
      Where is the outrage ? 
       This is all so bizarre – so many lies, non-stop.
       Is anyone alarmed about our president calling it an “honor” to meet with the man who is responsible for attempting to undermine our system of government ?   He caved !   Could it be he is seeking global power and wealth, or does he just envy Putin who is estimated to be worth more than $40 billion compared with Trump’s $3 billion.
      Trump tweeted Sunday that the he and Putie discussed forming  a Cyber Security unit, a joint operation with Russia to counter cyberattacks to which I blogged “Please, someone tell me this didn’t happen. How many foxes can this henhouse hold ?”
      In less than 24 hours, Trump disowned the statement. Why is this irrational behavior not causing Republicans and Independents to become concerned that WE ARE AT RISK ? Do we have to crash first to wake everyone up.
      The Republicans control the presidency, both houses of Congress, the Supreme Court and Fox News, accomplished nothing but to blunder endlessly.  They have botched healthcare.  If they pass anything it will screw at least 22 million very vulnerable Americans. If they simply repeal ACA, it may buckle after being booted around like a soccer ball for six months, so much so insurance companies  are unable to develop plans that will address future needs.
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By the way, that the Election Integrity Commission set up recently to prevent  voter fraud initially requiring all states to submit voter info for safekeeping and analysis in the White House ?   The administration is now telling states not to send it, in face of a suit filed by the Election Privacy Information Commission.
      The real fraud here is voter suppression and gerrymandering to ensure  a win that was not possible without these ploys – UN-AMERICAN !
       The irony here is the state’s rights party cannot trust the states to supervise voter fraud on their own, it has to do it at the federal level.  So what’s up ?  IMHO, they want to “mine” the data.  Gerrymandering and voter suppression aren’t enough.

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WAKE UP AMERICA, THESE EXTREMIST RIGHT WINGERS want to take over our country ! This is their big chance, they control the presidency both houses of Congress, the Supreme Court, Fox News, et al.  These are not Republicans or conservatives, these are Congressional Anarchists. Do your homework, and be objective.
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TRUMP’S ETHICS ADVISOR RESIGNS !

      Walter Shaub resigned as the ethics watchdog and took the job as head of the Ethics Practice at the Campaign Legal Center, a nonpartisan organization dedicated to strengthening existing ethics laws. Shaub had repeatedly urged President Trump to distance himself from his business interests.
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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.  
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TIME TO REVISIT  PSYCHO !
        In May, I headlined “Dumbing Down – American Tradition ?”
        The American voter, many politicians, our former friends abroad, and the press are trying to understand how “this” could happen in America.  With Trump, it’s simple, he’s a narcissist – vain, egotistic, selfish, manipulative, boastful, shameless, incapable of criticism and resistance, defensive, arrogant, entitled, abusive, vindictive, untruthful, and a denier of reality. An estimated 1% of all people have this disorder, unfortunately America has one for its president.
        He never would have been elected if  his only voter was the Republican of yore,  centrists or conservatives who stood on their principals, but  compromised on issues to get things done in the best interests of America,  unlike the Freedom Caucus office holder, (constitutional anarchists) determined to shred all progress of the past and replace it with their little narrow focused, privileged  fiefdom.
        Many Republicans vote Republican, trusting their party will pick competent candidates – same with Democrats.
         This time around was different.  A fairly large group of persons voted for Trump fully knowing what he is, and that’s not a person you want as a friend, neighbor, relative, employer, husband or family member. He made no bones about it, he is a bad influence on young people, young adults.
      SO WHY DID THEY VOTE FOR HIM ?
      Confirmation bias:  the tendency to interpret, perceive, or recall information in a way that confirms one’s pre-existing  beliefs even when faced with irrefutable proof to the contrary and even voting against one’s own interest.  They do it all the time. Credit lack of information, or simply the inability to mentally and emotionally process information accurately and without bias.  
Deviancy Down syndrome:  Essentially, this is the acceptance of poor behavior and performance as the norm, a dumbing down of expectations.
       In spite of all of Trump’s nonsensical bluster and tweets, even his critics are relieved when he has a moment of sanity, hopeful that a new Trump has emerged, one who acts presidential. Why is inferior behavior acceptable ?  Don’t know, but my guess is people feel less inferior when a high level official like Trump acts inferior too.

DUNNING-KRUGER EFFECT: A cognitive bias whereby people of low mental or physical ability actually perceive themselves as excelling in those areas.  Columnist, George Will recently touched on this, concluding Trump suffers from a dangerous disability, not only because he’s ignorant, and ignorant of his ignorance, but because  he does not know what it is to know something.”  
      WOW ! 
You said that, George ?  Another way to say it would be, a person who thinks they know everything on all subjects. Clearly, we don’t have to look far for one of these. It’s a failure to recognize their own shortcomings, so they conclude they have none.        Voters in this category don’t feel they need to do any  research on qualifications or policies, what comes to their mind is perceived as “fact.”
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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.
 

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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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“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, Jr.  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 – Rob Goldstone – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya 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. 
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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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