Street Nervous About Stimulus Delay

Investor’s first read – Daily edge before the open
DJIA: 20,658
S&P 500: 2,357
Nasdaq  Comp.:5,880
Russell 2000:1,367
Tuesday, April  11, 2017    9:13 a.m.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

      President Trump has scrapped the tax plan he proposed during his campaign and will start over with a proposal not coming until fall. Trump has indicated he  wants a tax cut that helps rural and industrialized parts of the country.  But are income taxes an issue with them ? What about jobs and a massive effort to train these people ?
      Infrastructure stocks got a play yesterday, which begs the question, who gets the promised big spend – infrastructure or the military ?
      Based on what we saw last week in Syria and North Korea, It looks like military spending would have a better chance of getting the nod in Congress, though the “spend” may not be as big as the Street hoped for.
     So here we are back to square one after a lot of wheel spinning and trips down side streets.
      I sense there are two reasons for the shake up in the White House.  The BIG money, the ones you rarely see and who are even less often quoted have decided they have too much at stake to permit Trump to blunder aimlessly and noisily onward day after day, risking the alienation of  established allies, the decimation of mutual trade relationships,  an unwanted war, and further polarization of America.
      Then too, Trump is hearing footsteps from all directions. He has circled the wagons, staffing key positions with relatives and close friends who will help him CHA.
TODAY
       The market is up over the last five months on expectation of a massive stimulus, but that is not happening as fast as the Street projected. This, in face of  a dangerously  inept administration. So far the Street has not given up hope, but doubts are creeping in as evidenced by slippage in stock prices over the last month, as the repeal and replacement of the ACA failed and Trump’s tax plan may not be introduced until fall.
      While an overpriced stock market has ignored stagnant earnings in recent years, that may change as earnings rebound to close the overvaluation gap.
       It’s a standoff. Bulls say an earnings rebound and the stimulus down the road will drive the market higher.
      Bears say, Trump’s bumbling, a division in Congress, the uncertain timing of the stimulus, and the possibility of a Trump scandal  will crack the market.
     Investors must be ready for a big move in either direction as the Street resolves this issue in coming weeks.

 >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
SUPPORT “today”:DJIA:20,526;S&P 500:2,346; Nasdaq Comp.:5,853
RESISTANCE: “today”:DJIA:20,726;S&P500:2,365;NASDAQ Comp.:5,903

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

POLITICAL/STOCK MARKET

      The rape and pillage of our federal government continues, as Republican Thomas Massie a 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.
…………………………………………………………………
      The U.S. Navy strike group, Carl Vinson, is currently headed for the western Pacific Ocean in the vicinity of the Korean peninsula, but will not arrive until next week.
      My guess is that the objective of the meeting between Trump and China President Xi Jinping was to inform Xi  the United States was going to move warships into the region in a show of force after North Korea’s recent missile launch. Both presidents agreed that North Korea’s nuclear development has reached a “serious stage.”  On February 26, China banned all imports of coal from North Korea in response to its continuing missile launches.
………………………………………………………………….
      After President Trump’s inauguration, former President, George W. Bush, was heard to comment, “That was some weird S_ _ _.”   Very prophetic “W.”.
      The Trump administration is undergoing a major shakeup, with national security adviser General H.R. McMaster and  Secretary of Defense James Mattis stepping in to stabilize an out of control bunch of inexperienced people in high places. Some speculate Trump shifting to a more centrist strategy.
      Steve Bannon’s demotion set a new tone, away from the isolationist, nationalism mindset and possibly back to maintaining military and economic balance, cultivating global strategic relationships to deter China from filling vacuums we would create under the Alt-Right, Ayn Rand approach to self-destruction. 
      Get rid of the Alt-Right influence and we have only to deal with Trump’s arrogance, warped ego and immeasurable lack of qualifications for the job.
…………………………………………………………………………………….

Syria Attack Was All About Trump’s 35% Approval Rating          

        It worked ! His approval rating is 40, up from 35. I Have continually warned that Trump would put the U.S. on a war footing to boost patriotic support and his approval rating.  We now have a double-header – Syria last week and now a U.S. Naval strike group is headed toward the Korean peninsula.
       Last week,  Syrian airfield strike with 59 Tomahawk missiles launched from two Destroyers in the Mediterranean Sea was in retaliation for Asaad’s use of Sarin gas on April 4 that killed more than 70 civilians.
      For Trump, this is an about face on intervention in the Mid-East, and the only reason I can see is he expects it to boost his approval ratings.
      In 2013 he urged President Obama not to retaliate against Asaad for his use of nerve agent sarin in 2013 tweeting “Again to our very foolish leader do not attack Syria –If you do many bad things will happen & from that fight the U.S.gets nothing.”  – “The only reason President Obama wants to attack Syria is to save face over his very dumb RED LINE statement. DO NOT attack Syria.” (Sept. 5, 2017).
………………………………………………………………………………………………………………..

HOUSE INTELLIGENCE COMMITTEE
       What happened to the hearings ?  Looks like Syria  was yet another distraction, perhaps this one unplanned. Chairman of the House Intelligence Committee, Devin Nunes has temporarily ceded control of  the investigation of pre-election collusion between Russia and the Trump team to Mike Conway of Texas, whining charges by “several left-wing activists” that he made unauthorized disclosures of classified information relative to the investigation.
……………………………………………………………………………..

TRUMP SQUIRMS BUT A WAR FOOTING MAY BAIL HIM OUT
      The more Trump squirms to find a way to divert attention from the main issue demanding resolution, the guiltier he looks.
      The current diversion is Susan Rice who Trump accused of being politically motivated when certain Trump associate were included in a sweep of foreign officials last year by U.S. intelligence agencies. Their identities are usually not revealed, but may be if national security is an issue. To everyone’s surprise, Trump claims in a tweet that Rice committed a crime when certain individuals were “unmasked”. Rice was National Security Advisor to President Obama from 2013 to 2017.
………………………………………………………………………………

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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

CORPORATE EARNINGS (updated  March 31, 2017)
Factset
      Q1 earnings are projected to increase 8.9%. That compares with a Q1 est. on Dec. 31 of +12.5%.  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 17.5 x. That compares with a 10-year average P/E of 14.0. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
MY TECHNICAL ANALYSIS  of the 30 DJIA Companies
:  (UPDATED 3/29/17 and )
      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 29, 2017,  a reasonable risk is 20,413 a more extreme risk is 20,196.Near-term upside potential is 21,113
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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 tax reform 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.
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.     
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.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>                                                       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.