Street Used Powell Rally to Dump Stocks, What Are They Seeing Ahead ?


INVESTORS first read.com – Daily edge before the open           
DJIA: 25.067
S&P 500: 2,700
Nasdaq Com.: 7,158
Russell 2000: 1,480
Thursday, December 6,  2018  8:50 a.m
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gbifr79@gmail.com

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NOTE: I will be changing over to another computer system this week
and may not be able to post a blog on one or two days.
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Market Status: 
      A week ago, Fed Chair Jerome Powell stunned the Street with  his statement that the Fed may be easing off its policy of increasing interest rates, a 180-degree reversal from the Fed’s position in October.
      The stock market soared in response to Powell’s statement, as it appeared the Street now sees a policy change at the Fed could mean lower interest rates and no recession.
      News out of the G20 meeting that Presidents Trump and Xi Jinping agreed on a trade war cease fire bumped stocks higher.
     
But, the stock market plunged Tuesday as second thoughts turned to uncertainty about the credibility of both developments, and will open lower today.
      If the Fed is easing, the Street should have been buying….but, they clearly weren’t.   They used the Powell/G20 rally to SELL.
       Was this surge  a “bull trap,” where investors get sucked in on the news, paying up for stocks only to see the market plunge ?
      We won’t have to wait  long to know that answer.
      I have been warning readers of a recession/bear market for months, but have to acknowledge that a Fed policy change to one of ease “should” delay that from happening unless the Street is spooked by what lies ahead.
       Unfortunately, the Fed policy change may be too late to avert a recession/bear market.
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CONCLUSION:
      Pre-open futures trading indicates a big drop at the open. There are a number of reasons for the sudden two-day plunge.
      The most hyped one is the G20 agreement between Presidents Trump and Xi accomplished little in their trade war talks  with risk for an escalation rising.  
      Then too, Fed Chief Powell’s reversal of Fed policy from interest rate increases to fewer rate hikes  may signal he see  a recession in 2019.
       But, another reason deserves credit and that is the increasing likelihood of a constitutional crisis relating to the Mueller investigation.
      It looks like major league charges are about to be levied at Trump,  his family and Trump team operatives.  This is bigger than Watergate, many times bigger.
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       Traders may want to buy at the open with the idea of clipping a quick profit on a technical rally during the day.
        The risk there is that the market doesn’t rally. They are traders so they know the risks.
         The DJIA should hit 24,607  in early trading. The S&P 500 should hit 2,667, and Nasdaq Comp hit 7,001 before a bounce.
          Bear in mind, this two day sell off goes against convention that the Street should be buying in face of a Fed ease.  They aren’t, and investors should question, why.
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Tech note:       
Bear Trap:
When news causes investors  to  sell or sell short in expectation of a decline in the market or a stock only to have the market or stock to rise instead.
         Bull Trap: When news causes investors to buy in expectation of a rise in the market or a stock only to have it decline.
Note: In my last post, I mistakenly referred to the ill-fated Powell rally as a bear trap when it was reslly a bull trap. I was right in the analysis (rally a fake out), but used the wrong term
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Economic Status: Late stage expansion with recession starting in late 2019. Bull markets hit peak 6 to 12 months ahead of recessions. Republicans were in White House in 9 of  the last 10 recessions. Their rosy projections ignore the likelihood of a recession within a year to 18 months. Housing and auto industries already in recession. The crunch can gain momentum ahead of schedule. U.S. fiscal crisis looms 2-3 years out.
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Technical Note: Frequently, there is what I refer to as a mid-afternoon counter move (2:30 – 3:00 where the market rallies or declines against the prevailing trend for the day.   This can be a fake out for investors thinking the market has turned (up or down).
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        A. Gary Shilling  just turned bearish in his November issue, headlining his issue of “INSUGHT“ with “Looming Recession ?”   I have tracked Shilling for decades. He nailed the 2007 – 2009 Great Recession Bear Market before anyone else. For him to suddenly turn negative is  a shocker.  He details his reasons in a 50-page analysis that  is overwhelming in detail and backed up with stats and graphs. No one in my experience has more economic/investing integrity than Shilling. 
 
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IMPORTANT NOTES: How high is high, how long is long
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Through September, this bull market is 116 months old, or 3.5 times longer than the average of the last  15  bull markets..
>Bear markets start 6 – 12 months ahead of the onset of a recession.  
>Nine out of the last 10 recessions have occurred with a Republican in the White House
>The current economic expansion has lasted 123 months. That’s 65 months (2.1x) longer than the average expansion (58.4 months) going back to 1945.
>Of the 10 recessions since 1950,the average time between the low point in the unemployment rate and the start of a recession was 3.8 Months.
> Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months. 
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Bear Market Perspective

      Officially, we are not in a bear market until the S&P 500 declines 20% (2,352).  That would translate into DJIA 21,560 – “ouch” !
       That’s the minimum drop for a bear, but the last two bears crushed the S&P 500 by 57% (2007-2009) and 50% (2000-2002).  
My bear market target would be declines of
      DJIA: 18,500 (-31.4%)
      S&P 500 :  2,150 (-27.0%)
      Nasdaq Comp.:5,200 (-36.1%)
      But, depending on what new negatives hit the market when it gets down there, the bear market could reach much, much  lower levels.
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EARNINGS GROWTH MYTH:
       The Street is counting on earnings growth to reduce the overvaluation of equities.   Look again.

       A 20% increase in S&P 500 earnings this year will  be tough to beat next year.  The quarter versus year ago quarters in 2019 will make poor reading going up against the 2018 earnings, possibly earnings growth around  5%. But the Street is not factoring in the likelihood of a recession, which could mean negative growth.
       At times, politics has little impact on the big  picture. This time is different.

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BULLISH CASE
       It is possible the Fed has backpedaled from a policy of tightening credit through increases in its fed funds rate.  If that plays out, the decline I am expecting will be delayed.     
      A sharp increase in corporate earnings is what the bulls are relying on to power the market higher
      Q2 earnings increased 25.0% over a year ago.
      Thomson Reuters projects Q3’s increase in earnings to  hit 28.0 and Q4 17.8%.
      However 2019 is a different story with earnings increases of Q1: +4.6%, Q2:6.7%,  Q3: +4.6% and Q4: +9.5%, with 2019 coming is at +8.8%
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BEARISH CASE
RISING INTEREST RATES:
      >The Fed may be retreating from its policy of increasing its benchmark interest rate (federal funds), though more information is needed. It has raised rates eight times since December 2015. That policy has led toan ugly slump in the housing industry. 
      >The 10-year treasury has been rising steadily and now stands at 3.09%.
      > The yield curve is flattening as short-term treasuries rise faster than long-tern governments just another warning sign of impending recession.
 OVERVALUED MARKET
      > The onset of bear markets have led the beginning of recessions by 8.5 months going back to 1956, so don’t look for a recession to signal a bear market. The longest lead time was 13 months (1968 – 1969) The “mode” (most frequent) is 12 months.
       > If companies are buying back their own stock at a record clip, pushing stocks higher, why then are insiders selling $8 of stock for every $1 of stock they buy ?
       .> Companies took advantage of low interest rates to load up on debt in recent years for acquisitions and to buy back their own stock. Excluding banks, the tally is $6.3trillion. The downside of this comes when these companies will need to refinance this debt at higher interest rates when it comes due.
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       > The S&P 500 price to sales ratio at 2.30 is 40% higher than in 2007 before the devastating bear market, and is even higher than in March 2000 before the dot-com bubble burst leading to a bear market. Both bear markets dropped 50%.
       > The Shiller P/E is 30.8  times earnings versus a mean of 16.6.  Shiller’s P/E is based on  inflation adjusted earnings over 10 years.
       > The Total Market Capitalization to GDP  stands at 147.3%, anything above 115% is  considered “overvalued.”
        > Thompson Reuters reports the S&P 500 sells at 18.1 times earnings and 16.2 times a year from now. All this versus a 10-year average of 14.3.
AGING BULL MARKET:
       > The bull market is now  nine years and six months old (115 months).  That’s 3.5 times the average of the last 15 bull markets.
AGING ECONOMIC EXPANSION:
      > Republicans – the recession party. Nine of last 10 recession have been with a Republican in the White House.  Odds favor Trump will make 10 for 11.
      > The current economic expansion has lasted 112 months. That’s 53 months (1.9 x) longer than the average expansion going back to 1945.  Nine out of the last 10 recessions have occurred with a Republican in the White House.
      > Of the 10 recessions since 1950, the average time between the low point in the unemployment rate and the start of a recession was just 3.8 months. 
      > Housing stocks have been in a prolonged slump since January. The iShares  home construction ETF has dropped 30.5%, as interest rates rise. Not only is it  major employer, its health affects other industries, especially furniture and appliances.
      Pending home sales are down 4.6% yoy
      > Household debt increased for the 16th straight quarter to 13.3 trillion, that’s 19%  above the post-financial-crisis low.
      > Jamie Dimon, CEO J.P. Morgan Chase,  thinks the benchmark  10-yearTreasury note , now 2.95%, should be 5%. The rate impacts lending for autos, mortgages and businesses.
      > Personal loans have soared   18% to  a record 120 billion, Personal savings as percent of disposable income at 3%, down from 9% in 2012.
      > Low interest rates have encouraged US companies to go on a debt binge, amassing  $6.3 trillion. With rates on the increase, refinancing will get more costly, according to S&P analyst, Andrew Chang, who points out that this amounts to $8 for every $1 in cash.
      > Recently, 1,100 economists WARN Trump is repeating biggest mistakes of Great Depression – tariffs, trade protectionism, according to conservative National Taxpayers’ Union.
      > Former Fed Chair, Ben Bernanke, says economy to fall off a cliff in 2020, thanks to the $1.5 trillion corporate and individual tax cut and $300 billion increase in spending.              
TRUMP’S TRADE WAR TANTRUM
      > Trump’s tariff tiff costing  US companies a bundle:  The damage extends to manufacturers, input suppliers, fishermen, and numerous businesses who are finding it more difficult to sell abroad.
      > Today’s businesses are complex, especially supply chains that can involve a thousand parts that make up a whole product, many of which are sourced from different countries, sometimes crossing back and forth across the same border a number of times.
      >  Trump is considering leaving World Trade Organization (WTO).
TRUMP ADMINISTRATION IMPLODING:
      So far, the stock market has not wavered in face of the increasing likelihood, Trump and many present and former associates are in legal trouble.
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POLITICAL/STOCK MARKET

SUPREME STUPIDITY !
Trump vs. Supreme Court Chief Justice John Roberts.  Rough guess here, but I would say Roberts thumps Trump every time they get in the ring.
Trump bashed  a decision by the Ninth U.S. Circuit Court of Appeals for ruling that the administration must consider claims of asylum regardless of where migrants cross the border, which rejected Trump’s wishes. He accused the court of bias blaming an  “Obama judge” for the ruling.  Roberts retaliated claiming the Court doesn’t have Obama, Bush, Clinton, or Trump judges.  …that an independent judiciary is something we should be thankful for.
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COWARDS ? Now is the time for the Republican-controlled Senate to do the American thing and protect the Special Counsel from  President Trump’s effort to undermine it.  This is no longer politics in general, this is about whether or not we are a nation of laws. Failure to do that, and I am convinced certain members of Congress are constitutional anarchists determined to destroy our republic.
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Rogue wave…. or monstrous blue wave ?
Real Americans are rising up to save our republic, and all the quality of life things worked and died for over the years.   After 2020, the right wing Republicans will be irrelevant, forced to climb back under the rock from which they emerged.
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What in the  Hell is wrong with us ?  These Central American peoples of all ages are willing to trek thousands of miles to attempt to enter America, and we are sending troops to back up border control to deny them legal entrance.  SHAME on our President, the selfish Republican party.  By their admirable efforts, they are demonstrating the kind of resolve we want in our workforce.
Christian ?   No, freaking way.  Our leaders are the epitome of  the  anti-Christ !  Hypocrites and un-American at heart ! 
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Trump has proposed a  5 percent budget cut for each Cabinet agency yesterday.
     Wait just a minute !
Didn’t Congress pass a $1.3trillion catchall spending bill earlier in the year after passing the Tax Cuts and Jobs Act in December, which gave corporations a 40% tax cut, and was skewed heavily in favor of big earners with the rest of the country getting a cut around 1%.
      According to the Treasury Dept. the federal deficit for FY Sept. 30 was $779 billion, up 17% from a year ago primarily due to the shortfall in revenues from corporations as a result of their huge tax cuts.
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Bath Iron Works (Maine) Gets $3.9 billion Navy Award 7 days before Sen. Collin’s “Yes” Vote for Kavanaugh
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      Reecntly, Bill Palmer, PalmerReports.com, gave his reason why Nikki Haley resigned from her post as United Nations Ambassador.

       The story was carried in more detail by the Business Insider.com, which points to her resignation one day after Citizens for Responsibility and Ethics in Washington (CREW) requested the State Dept. investigate her acceptance of seven free flights aboard private jets  from three South Carolina business men.
      While she listed the flights on her 2017 financial disclosure, the information was incomplete according to CREW and did not qualify for an exemption.
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       Breaking: Concern that right wingers are set to rewrite the United States Constitution via an Article V Convention, or Amendments Convention, called by two-thirds of the state legislatures (34).  A three-quarter vote is required for an amendment to become part of the Constitution.   Reportedly, right wingers want to convert our system of government to a confederation of “supreme” states, essentially minimizing the present amount of federal control.
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Trump in hot water on tax evasion and the legitimacy of his inheritance ?
We’ll see !!
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     Since Deputy Atty Gen’l Rod Rosenstein would not fire Special Counsel Robert Mueller, assuming Trump first fired Rosenstein.
     On November 8, 2017, I noted Brian Benczkowski was nominated by President Trump in June [2017] to be U.S. Assistant Attorney General for the Criminal Division. Along party lines, he was confirmed by the Senate recently, raising the question would he fire Mueller if Rosenstein was fired and he  was appointed in his place. He said he would not recuse himself from  questions in the Mueller investigation.
     The big question mark here is that Benczkowski had represented Russia’s Alfa Bank at some point in the past and had no prosecutorial experience.  He had worked for Atty Gen’l Jeff Sessions and the Bush administration and was not opposed by Rosenstein.
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     Palmerreport.com believes Roger Stone will be the next person indicted/arrested by Special Counsel Robert Mueller.
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  As if Trump did not have enough problems, here comes Allen Weisselberg, long-time CFO of the Trump Organization and now a recipient of “immunity” from  the Attorney General of New York.
       This is especially significant, notes PalmerReports.com, since he is testifying about state level charges in addition to federal charges, which cannot be nullified by a Trump pardon.
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      NO ATTORNEY CLIENT PRIVILEGE: Palmerreport.com reminds readers that Trump has NO attorney-Client privilege with Ty Cobb who he hired on July 14, 2017 to help with the Russia scandal. To save personal funds, Trump put Cobb on the White House payroll, so Cobb is free to disclose any information Special Counsel Mueller wants him to.
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  I expect Attorney General Sessions to be fired or to resign any day now.  That puts Deputy Atty. Gen. Rod Rosenstein in jeopardy.  Will Brian Benszkowski be moved in the fill the void. Would he fire Mueller if Rosenstein were fired ?
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HEADS UP !   A majority vote in both the House and Senate can change the number of Justices on the Supreme Court. The number is fixed by statute, not by the Constitution. It has ranged between 6 and 10 since 1789.
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DAMN  IT !   I miss decency.
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“President” Trump has made 4,229 false (lies) and misleading claims since his inauguration. (Washington Post). …………………………………………………………………   
WOULD ANYONE WANT their spouse to lie repeatedly ?, their child ?, mother ?, father ?, minister ?, child’s teacher ?,  coach ?, employer ?.  IF NOT, why would they support President Trump who is on record with telling 4.5 lies per day,  4,200 lies since his inauguration on January 20 ?. 
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Trump boasts about the stock market in his first 31 months as President, but the S&P 500 appreciated 149% during President Obama’s first 31 months in office, 2 ½ times as it advanced under Trump, and Obama inherited the worst stock market/economic collapse since the 1930s, Trump inherited a strong stock market and economic recovery.
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The U.S. Chamber of Commerce currently estimates the impact of Trump tariffs on the following states stand to be: Louisiana ($5.2 bil.), Washington ($5.7 bil.), Texas ($1.4 bil.), S. Carolina ($2.6 bil.), Illinois ($2.1 bil.), California ($4.0 bil.), Kentucky ($917 mil.), Michigan (842 mil.), Ohio ($826 mil.).
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Orwellian: George Orwell’s 1984 wretched society was controlled by denial of the truth,  the dissemination of  misinformation, propaganda, and surveillance, i.e., Big Brother is watching.    “Just remember what you are seeing  and what you are reading is not what’s happening.” Trump  told the VFW July 24
“The party told you to reject the evidence of your eyes and ears…” George Orwell’s  dystopian novel – “1984”  published in 1949.
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A recent Gallup poll shows  how  people polled  would vote if the election were held today
Democrats      30%
Republicans   26%
Independents 40%

The key here is twofold. The Democrats must get their vote out, which may be difficult in face of Republican voter suppression. Then too, they need to get a lot  of the Independent vote, which will be helped as Americans see the Trump administration gut treasured institutions, regulations designed to ensure a better environment in the future, healthcare, and undermine time-tested, valued global alliances while cultivating the favor of enemies.
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Special Counsel Robert Mueller  must comply with regulations, rules, procedures, and policies of the Department of Justice as set forth in 28 CFR 600. He can only be removed for misconduct, dereliction of duty, incapacity, conflict of interest, or other good cause, including violation of the Department’s policy.
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What Trump and his base have in common: They both deplore the same people – people of color, the handicapped, liberals, foreigners.
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VOTES FLIPPED for TRUMP  in Key States in 2016
      Daily Kos’ Aldous Pennyfarthing (Pen name for Tom Breuer)  gave reasons in Alternet.org, July 27, why he thinks the Russians [or someone] flipped votes for Trump in 2016.
      The basis for this conclusion was comparing exit polls with actual outcome in North Carolina Pennsylvania, and Wisconsin.
 Pennsylvania: Exit polls Clinton 50.5 – Trump 46.1.  Result: Clinton 46.1 –   Trump 48.8.
Wisconsin: Exit poll Clinton 48.2 – Trump 44.3  Result: Clinton 47.6 – Trump 48.8.
North Carolina: Exit poll Clinton  48.6 – Trump 46.5. Result: Clinton 46.1 – Trump 49.9.
      An FOI suit by Bradley Moss (cybersecurity lawyer) brought against the government  revealed Russians hacked inside voting systems in seven big states.
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Wake up out there. These aren’t conservative Republicans, they are anarchists, extremists  who have wrested control of the Republican party over the last 20 years and are intent on a party rule with no checks and balances.  This is  a bloodless coup.
If  they can lock up control of both Houses, the Presidency, Supreme Court and strategic lower court appointments, and a major news media broadcaster, survival of our republic will depend on whose side the military and police forces take.
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 Sinclair Broadcast Group  (BEWARE !)   
      Sinclair Broadcast Group is using its clout as owner of  193 television stations in 80 markets as a lever to manipulate local station viewers’ minds pitching it’s right wing propaganda. Viewers tend to trust local stations programing over national networks.  A July 16, 2018 FCC decision denied Sinclair’s acquisition of the Tribune Broadcast Group, which would have expanded its reach into New York, Los Angeles, and Chicago markets
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 Sinclair Bank (no relation to the broadcast  group) has surfaced as a lender to Michael Cohen, Jared Kushner, his father and Trump.  Ivanka Trump no longer on board. 
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        Treason is defined by Article 3, section 3: Treason, as levying war against the U.S., or in adhering to its enemy, namely aid and comfort, also defined as any act that deliberately strengthens or tends to strengthen enemies of the U.S. or that weakens the power of the U.S. to resist and attack such enemies.
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TRUMP’S BASE:  Some voted for Trump because they always vote Republican. Then there are those whose opinions are based on emotional disorders, those who will never accept the truth no matter what (Confirmation Bias); those who accept bad behavior as the norm (Deviancy Down); and those who while stupid, ill informed who actually believe they are highly intelligent, competent (Dunning Krueger). These people don’t have enough knowledge to know they don’t have enough knowledge, i.e.,too dumb to know they are dumb.(alternet.com 7/23/18)
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July 19, 2018: Republicans refuse to renew election security funding over Russian hacking – Democrats livid, as all of us should be. 
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The Dept. of Justice charged a Russian national, Mariia Butina, of illegally trying to influence American politics using the NRA, religious organizations  as a means of gaining backchannel access to the highest levels of the Republican Party.  Mother Jones says  Butina acted as a covert Russian agent, an unregistered foreign agent.
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      Since Deputy Atty Gen’l Rod Rosenstein would not fire Special Counsel Robert Mueller,   assuming Trump first fired Rosenstein.
     On November 8, I noted Brian Benczkowski was nominated by President Trump in June [2017] to be U.S. Assistant Attorney General for the Criminal Division. Along party lines, he was confirmed by the Senate recently, raising the question would he fire Mueller if Rosenstein was fired and he  was appointed in his place. He said he would not recuse himself from  questions in the Mueller investigation.
     The big question mark here is that Benczkowski had represented Russia’s Alfa Bank at some point in the past and had no prosecutorial experience.  He had worked for Atty Gen’l Jeff Sessions and the Bush administration and was not opposed by Rosenstein.

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A “MALEVOLENT FOOL” – Lt. Col. , Ret’d, Ralph Peters, ex-Fox analyst referring to Trump.   Malevolent: evil, harmful, injurious.
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Un-American ! Trump claims writers of U.S. Constitution treated Him unfairly, adding we have the worst constitution writers in the world…Russia has better constitution writers than we do, says Trump . “I talked with Putin, and he said their constitution never gives him problems.” Andy Borowitz, (The Borowitz Report).
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      WE DON”T WANT TO GO THERE !  The Trump administration is taking the United States straight to a place none of us wants to be – civil unrest,  an extended recession, a fiscal crisis where we can’t pay our bills, ergo the need to slash healthcare, safety net programs, a host of programs that have improved our quality of life.
      This administration’s actions on trade (tariffs, TPP), the intentional divisiveness of America along racial lines, and abandonment of our long-time allies have opened the door for China to dominate the world, economically and militarily.  That’s Un-American.  This has to be stopped.
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Republican strategist, Steve Schmidt, leaves Republican Party after 29 years, saying the party is “corrupt, indecent and immoral,” and with a few exceptions  elected  Republicans are “feckless cowards who disgrace and dishonor the legacies of the party’s greatest leaders.” Others quitting Republican Party: George Will, “Morning” Joe Scarborough. To date, 35 senior Trump advisers have left.
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President Donald Trump is NOT pro-business, he’s pro-Trump
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TRUMP EXIT STRATEGY: The most important thing for King Donald is his image.  Currently he is scrambling to initiate as many perceived accomplishments as possible (taxes, anti-immigrant, anti-allies, deregulation, North Korea, Iran, ISIS, unemployment).
      This way, if he is impeached, defeated in 2020, or forced to resign, he can claim to have been the greatest president of all-time – he’ll tweet it relentlessly, deviancy-downed Americans will believe it and every network in the country, whores that they are, (including MSNBC and CNN) will scramble to cover his tweets.  IMHO: he won’t risk losing in 2020, just not run – declare he has accomplished his mission and walk away.
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POSSIBLE ! That the blue wave won’t happen in November.  Why? The American voter is still zoned out about what is happening – too busy with other stuff, not capable of  objectively analyzing issues accurately without bias.
     The result: The extremist Republicans and their president will run the economy, a constructive foreign relations policy, and America’s quality of life into the ground.  In order to get the American voter’s attention, we have to hit bottom first.
      That means an extended recession, a fiscal crisis (unable to pay bills), a 65% drop in the stock market and,  national unrest greater than that which the Vietnam War attracted.
       We are witnessing the unfolding of  the biggest scandal in our country’s history, including illegal financial transactions, vote tampering and  untethered collusion and obstruction of  justice at the highest level.  This may take years to unravel.
      Again, I say “possible,” not probable..  Probable would be all that but not as severe.
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Corporations got a 40% tax cut, John and Jane Q get a 1.2% – 1.8% cut, even so, Trump plans to introduce a “rescission package” to cut $15 billion in already approved spending on the Children’s Health Insurance Program (CHIP), the Center for Medicare and Medicaid Innovation program, as well as 30 other programs. The  U.S. House will likely approve his  rescission  package, the Senate may not.
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According to Bloomberg.com, 1,100 economists warn that Trump is repeating one of the biggest mistakes of the Great Depression – tariffs and trade protectionism. The warning came in a letter from the conservative-leaning National Taxpayers Union.
      China loves it !  Trump opened the door, China entered, capitalizing on Trump’s regressive “America First” mantra, with its far reaching Belt and Road outreach with investments encompassing infrastructure, education, construction materials, rail and hi-way, auto, real estate, power grid and iron and steel investments to 68 countries, 65% of the world’s population and 40% of global GDP.
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      Kim took Trump’s war with North Korea option off the table, so looks like Trump now has his sights set on IRAN – to please his base, of course, in time for the mid-terms, of course
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North Korea give up nuclear weapons ?  Never !  Kim wants a global stage, so does Trump, who will not risk being embarrassed by the little tyrant. Trump will bail.  He needs a villain to trash to please his base. Kim has what he wants.  I think Trump has been played like a harp. 
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Impeachment of Trump unlikely with this Republican House. Trump has surrounded himself with newly appointed Cabinet members, so Section 4 of the 25th amendment is not a reality.   What’s left ?  A deal with Mueller for his RESIGNATION ?
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Must Read: “Will Christian Nationalism Drive Trump’s Base to the Polls in November ?”  Truthout April 15, Bill Berkowitz. This explains why his base of Christians votes for an immoral person, one whose behavior is the antithesis of the teachings of Christ.
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Will Trump  Fire Mueller

      Trump can’t fire Mueller directly, it must be done by the Department of Justice.  Trump would have to find someone to do it.  Nixon did it in 1973 when he had to work through two attorney generals until  his solicitor general, Robert Bork fired Special Prosecutor Archibald Cox. 
      Deputy Attorney General Rod Rosenstein isn’t going to do it, so Trump must find someone from DOJ , or someone outside who has already been confirmed by the Senate who will do it.         Philip Bump, Washington Post (WAPO) April 10, did a great job outlining possibilities in, “Why Trump can’t fire Mueller – at least not directly.”  I can only touch on a few of his points here.
       In his article, Georgetown University’s professor Paul Butler raises the interesting point that  firing Mueller may not be necessary if  Rosenstein is replaced by someone hostile to the Special Counsel’s investigation.  He would simply force a stall with lots of demands, even leak information to the White House.   
       REASONS NEEDED TO FIRE MUELLER: Trump would have to have  good reason to fire Mueller.  Grounds must be, misconduct, dereliction of duty, incapacity, conflict of interest, or other good cause, including violation of policies of the Department of Justice, and failure to follow Justice Departments guidelines and violation of applicable canons of ethics.
       CAN TRUMP RESCIND  SPECIAL COUNSEL REGULATION ?  Yes, it’s possible but many legal hurdles  would make it difficult and possibly so time consuming as to make the action worthless. There is no clear cut answer. This would be decided in court, the legal ramifications just very complex.
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FISCAL CRISIS LOOMS IN FUTURE:  Headlines:“Federal debt primed to explode”….”U.S. Deficit to Surpass $1 Trillion Two Years Ahead of Estimates”….”This Year’s budget deficit to hit $804 B after tax cuts and spending hikes”….
       This is all a Republican scheme to justify massive spending cuts to social, health, educational  and safety net programs. It is called “Starving the Beast,” and will lead to debilitating and prolonged recession/bear market, increased crime, rioting and civil unrest.  Republicans set the stage with massive, unnecessary tax cuts and a big budget spend (see below: “Corporate Tax Cut Irresponsible”)
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Cambridge Analytica (now in bankruptcy) is center stage again. Palmer.com  reports  someone behind the scenes is trying to block  Britain’s  Channel 4 News from airing an expose  into Cambridge’s role in using  Facebook (FB) to influence voters to vote for Trump and not Clinton.  On Friday,  Facebook  banned Cambridge’s access.  Palmer speculates the Mercers are behind the  attempt to prevent Channel 4’s expose.  I was on  Cambridge’s case back on June 22, 2017,  noting that billionaire Robert Mercer was connected to Cambridge through Canada’s Aggregate IQ through an intellectual property agreement and worked to influence voting  in the Brexit referendum.  Aggregate is a data mining company.  While Aggregate denies any connection,  the story won’t go away. Palmer sees a connection between Cambridge and John Bolton’s SUPER PAC.  Palmer notes that UK Parliament is investigating  the connection between Cambridge and Brexit and documents referred to by Cambridge whistleblower Christopher Wylie reveal  the firm gave stolen Facebook  user data to Bolton’s PAC  (receiving stolen goods ?), though it is not known how Bolton used the data if his PAC even received it.  (See below: Mercer on the run ?) …………………………………………….
Remember the name Felix Sater, former business associate of Trump, convicted  Russian mafia money laundering figure, and key FBI informant.
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Another name to watch is Ted Malloch who Palmer.com reports was served a subpoena relating to the Trump/Russia probe.  Malloch is a U. S. citizen living in London with close tire to Roger Stone, Brexit leader Nigel Farage and the Trump campaign.  As noted above in Cambridge Analytica, there is a connection to parties involved in Brexit and Trump’s campaign.
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George Nader  has long-standing ties in the Mid-East and Washington over many years.  What appears to be important here is he is cooperating with the Mueller probe not as a wrongdoer, but as a source of information.  He has had ties with the Trump administration through Steve Bannon  and reportedly attended a meeting in the Seychelles Islands January 11, 2017 along with Blackwater founder and former Trump associate, Eric Prince, and Kirill Dmitriev head of a U.S. sanctioned investment firm with close ties to Putin.  Reportedly Nader represented United Arab Emirates’ Crown Prince Mohammed bin Zayed Al-Nahyan.
      I referred to the Seychilles meeting on April 5, 2017 noting  the Washington Post reported the meeting was intended to encourage Russia to curtail support for Iran and Syria (Trump wish list) in exchange for lifting U.S. sanctions on Russia.
We’ll see.
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“Protecting guns and profits have become more important than protecting the lives of young people” Henry A. Giroux, Truthout ,  March 4.
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Why are so many Americans beholden to guns ? It could be their sense of security was rocked by 9/11 plus the Great Recession/Bear Market.  Then it could be racial, a fear that people of different colors will eventually outnumber them, prompting  the need (in their paranoid minds) to stage a forceful change in governance (revolution).  This makes little sense, but from their point of  simplemindedness, they feel more secure with a dozen guns and cases of ammunition in house just in case.
     What these whackos don’t understand is they can’t use their guns outside of their homes for fear of injuring or killing an innocent person which not only sends them to jail, but opens them up to a lawsuit where they lose their stock portfolio, car, house and all those “blankies” that  go bang.  ………………………………………

 A quasi-fascist state would give Trump the untethered power he craves.
Read: The Ghost of Fascism in the Age of Trump
http://www.truth-out.org/news/item/43529-the-ghost-of-fascism-in-the-age-of-trump
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U.S. Ranking globally and domestically is plunging under Trump
      Global approval of U.S. leadership from 134 countries has plunged to 30% from 48% in just a year.  Clearly, Trump isn’t making America Great Again in the eyes of all other countries.  The downside of this is we need the support of those countries.  Our nationalistic policies are opening doors throughout the world for China. A Gallup poll shows Germany replacing the U.S. as the top-rated power in the world.
      Under Trump, the United States has dropped to 11th place in the Bloomberg Innovation Index, which in addition  to  R&D spending, includes post secondary, or tertiary, education-efficiency category, which includes the share of new science and engineering graduates. Value-added manufacturing also dropped.  South Korea ranked first, followed by Sweden, Singapore, Germany, Switzerland, Japan, Finland, Denmark, France, Israel.
       Also under Trump, Americans’ trust in institutions (government, companies and the  media) has suffered the greatest loss on record according to a poll conducted by Edelman New York. The poll, including 33,000 “informed” individuals showed the U.S. dropping to 43 out of a possible 100, down 23 points in a year.  He is a human wrecking ball.
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CORPORATE TAX CUT IRRESPONSIBLE
“It's pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised,” Bloomberg continued. Had Congress actually listened to executives, or economists who study these issues carefully, it might have realized that. The tax bill is an economically indefensible blunder that will harm our future” –   Michael Bloomberg – billionaire business man former mayor NYC

      I don’t doubt some corporations need, and deserve a tax cut, but to reduce the rate from 35% to 21% is inexcusable, reckless, unjustifiable, and outright subversive to the best interests of America.
      Corporate income taxes comprise 9% of federal government receipts. If corporate taxes are slashed by 40% (from 35% to 21%), the government’s receipts from corporations are reduced by 3.6% from 9%.
      Individual income tax payments comprise 47% of  federal government receipts. At this point, I have no idea how much of an impact  Congress’ tax cuts will have on this source of federal revenues, but it stands to be significant.
      The Republican administration expects economic growth will be triggered by a sudden change in heart by corporations to abandon stock buybacks and the repatriation of billions stashed abroad to plug the big hole left in federal receipts by tax cuts with a surge in hiring and capital expenditures.
      That assumption is flawed. For one, why would a corporation  go on a hiring and cap-ex spending spree  with an economic expansion that  is 8-1/2 years old, 3 years longer (73%) than the average over 65 years (1945 – 2009).
      For another, are they naïve enough to assume there will be no recessions within the next 10 years ?
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Mercer on the run ?  Bannon and Breitbart bankroller, Robert Mercer is rapidly severing financial ties to Breitbart News and support of Steve Bannon and alt-right’s Milo Yiannopoulos. Mercer was a major supporter of Sen. Ted Cruz’s effort to gain the Republican nomination last year, but switched his allegiance to Trump when he won the nomination.
      In my March 21 post, I wrote, “Years from now, I suspect Mercer will be relaxing at his Long Island waterfront retreat, Owl’s Nest, or on his 200-foot yacht, Sea Owl, and look back over his illustrious career tarnished  by one regret – he backed the biggest con job in our nation’s history.”
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Red states In need of Fed government help the most
Six states (Arkansas, Indiana, Kentucky, Maine, Utah, Wisconsin),  are planning to require poverty stricken people on Medicaid  to get jobs  or lose the coverage. Maine, Utah and Wisconsin want to put a time limit on coverage, the latter wants to drug-test people. Excluded: People with long-tern disabilities, the elderly, and children.  Isn’t it bad enough these people are in poverty ? 
      Vox Media reports that 9.8 million Medicaid recipients  don’t have jobs  due to: Illness/disabled (35%), retired (8%), taking care of home or family (28%), going to school (18%), cannot find work (8%). The remaining 60.2 million Americans on Medicaid work full-time of part-time.  I’m not sure what’s the Republican beef here.
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TRUMP’S PARDON POWER
     The President has the power to grant conditional pardons; to commute sentences; remit fines and forfeitures; and grant amnesty. This power can be exercised at any time after the offense has been committed, before conviction of after. Pardons cannot be limited by or controlled by legislative action (US legal.com)
Expect Trump to attempt to pardon anyone he wants, including himself. It’s a way out of facing responsibility very much like dodging the draft. Like when he justified his numerous bankruptcies, saying he only used U.S. laws to his advantage.  Well, “pardons” are his prerogative, in many, not all cases. He would take advantage of whatever loophole to avoid consequences, sort of like dodging the draft, or did I already say that ?
     The President cannot pardon people for “state” crimes, and it is doubtful he can pardon himself.
      Can the Mueller investigation survive Mueller’s firing ?
Slate.com’s July 21 article, “Trump can’t Escape the States,” says “YES.”
1-A state [NY] could hire Mueller and team.
2-State attorneys general could use their quo warranto power to investigate Trump’s organization for fraud and money laundering from Russian sources.
3-A Congressional committee (Senate Intelligence Committee) could hire Mueller or create a Joint select Committee.
4-Congress could pass a new veto-proof independent counsel statute.
FINALLY: If Trump resigns and Pence takes over, Pence could pardon Trump, as Ford did Nixon.
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THE GREAT AMERICAN EXPERIMENT UNDER SEIGE:  Not since the Civil War has the spirit and future of our nation been at such great risk, from within.  This  administration, Congress and U.S. Supreme Court is surgically dismembering  efforts over many years to ensure the safety  and well being of “all” Americans.
     The sooner, Americans recognize these are not genuine Republican conservatives, but extremists determined dismantle that which has been achieved over the years and replace it with “their” brand  of a  quasi-fascist state.  Ben Franklin was right when asked what kind of government  the Founding Fathers had given us.  “A Republic, if you can keep it,” was his response.
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TRUMP looking for a “Get Out Of Jail Free Card if the Feds close in?”
    Why not, he dodged military service with 5 deferments  during the Vietnam era (1964 – 1970).
     Reportedly, he has asked advisers about his power to pardon family members and himself  relating to Mueller’s investigation.
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WHAT HAPPENS WHEN THE INVESTIGATION IS COMPLETED ? If the Special Counselor  concludes it is “necessary and appropriate” he is authorized to prosecute federal crimes arising out of the investigation, which he does after submitting a report to the attorney general explaining his reasons.

REASONS NEEDED TO FIRE MUELLER:  Misconduct,  dereliction of duty, incapacity, conflict of interest, good cause (??), violation of Department policies.
WOULD MUELLER BE REPLACED ? Unclear. If the Democrats controlled Congress they could appoint another Special Counselor
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  “Connect the Dots.” This investigation is open-ended. These are people were part of the Trump team, or in a position to know information relating to activities before or after the 2016 election, though  not necessarily in any way guilty of any wrongdoing.
       Nigel Farage – President Trump- Hope Hicks, 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 T. Flynn – Michael G. Flynn ( son)  – JD Gordon  –  Christopher Steele – Michael Caputo -Breitbart News – Roger Stone – Julian Assange – Paul Manafort – Rick Gates – Jill Stein – Sam Clovis –  Kellyanne and George Conway –Dana Rohrabacher – Bill Browder – Peter W. Smith (deceased: suicide), Paul Behrends – Brad Parscale – Sam Nunberg – Dan Scavino – Neal Kaytel, J.Corsi, Edward Burke, Keith Schiller –  Alex Van Der waan – Ted Malloch -Boris Epshteyn, Ike Kaveladze, and  Russia’s alfa Group – Felix Sater – Rob Goldstone – alfa Group – Emin Agalarov – Sergey Gorkov –  Sergey Kislyak, ambassador to the U.S., Natalia Veselnitskaya, Oleg Deripaska 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.
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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.  
        However, as “Business Insider.com” noted on Jan. 9, 2018, Trump could simply fire the Cabinet members who voted to oust him from office.
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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.” Initially, 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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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

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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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