Trump to Put U.S. on War Footing

Investor’s first read – Daily edge before the open
DJIA: 20,689
S&P 500: 2,360
Nasdaq  Comp.:5,898
Russell 2000:1,368
Wednesday, April  5, 2017    9:06 a.m.

     Consumer spending this year has been flat in spite of rises in consumer confidence and sentiment. After a record-setting 2016 where auto sales hit 17.6 million, the group is tracking lower and raising concern in the Street. Inventories are high and incentives near record levels.
      While it’s too early to think recession, investors should watch for other signs of weakness. At 93 months duration, the current expansion is the third longest in 100 years, topped only by the 1961-1969 expansion (106 months) and the 1991-2001 expansion (120 months).
      Earnings for Q1 will be reported in coming weeks. As of December 31, Factset was projecting a gain of 12.5%.  Currently that gain has been revised down to 9.1%. For all of 2017, Factset now see a gain of 9.8% versus its projection of 11.5% at year-end.
      The S&P 500 is currently trading at 24.7 times trailing earnings and at 18.3 times earnings 12 months out.  Its 10-year average P/E is 13.9.
      The S&P 500 P/E a year ago was 23.8X, so the over valuation cannot be attributed to the massive stimulus promised by President Trump.
Once again, the market closed at its highs for the day, generally a positive sign.  The Street would like to buy more aggressively in expectation of a massive stimulus including tax cuts, deregulation and a big spend on the military and the nation’s infrastructure.
But, failure to pass a repeal and replacement for the ACA and continued concern for wrongdoing by the Trump team and Russia before and after the election threatens to delay all the goodies the Street expected to cash in on.
       Stock-index futures suggest a positive open today, the key will be whether it can hold its gain. The S&P 500 and DJIA have been trending down since February, the Nasdaq has trended sideways.
      Usually markets that are ready to decline waste no time in doing so. While soft, this market still has buyers
      As noted below, I expect the Trump administration to put the country on a war footing with North Korea ASAP. It would justify a big  spend on the military (at the expense of infrastructure), but would distract attention away from the investigation of a Trump Russia collaboration to tilt the November election in favor of Trump.
      While new chapters of this political drama unfold daily, confirming suspicions that we may be witnessing the most horrendous political scandal of all time, I think it will take months or a year for us to know what really happened.
      At some point the Street will begin to appreciate how disastrous the Trump administration is for our nation’s best interests and sell relentlessly. So far, it does not look like it is ready for that.

SUPPORT “today”:DJIA:20,671;S&P :2,357; Nasdaq Comp.:5,894
RESISTANCE: “today”:DJIA:20,746;S&P500:2,369 ;NASDAQ Comp.:5,912

CORPORATE EARNINGS (updated  March 31, 2017)
      Q1 earnings are projected to increase 9.1%. That compares with a Q! 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 17.6 x. That compares with a 10-year average P/E of 13.9. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
:  (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
      Ex-Blackwater founder, Eric Prince is back in the headlines. The Washington Post reports  the United Arab Emirates (UAE) arranged a meeting on January 11 between Prince and a Russian close to Putin  intended to ultimately establish communication between Russia and President Trump.  The meeting was held in the Seychilles Isands in the Indian Ocean.  The Post reports that one item on the agenda was to encourage Russia to curtail support for Iran and Syria ( on the Trump wish list) in exchange for lifting the U.S. sanctions on Russia.
Prince, brother of Education Secretary Betsy DeVos, is a big supporter of Trump, having contributed $250,000 to his campaign.  A libertarian, Prince has global investment and business interests focused on below the radar activities related to providing security for the UAE and elsewhere, as well as developing mercenary forces for strategic deployment  by the UAE and African nations.


      Trump is scrambling to get an Obamacare repeal/replace plan agreed on for vote this week. The administration is negotiating with the Freedom Caucus to arrive on an acceptable plan.  That spells trouble for policy holders since the Caucus pushed for less coverage at greater costs than offered by the Republicans’ first try with AHSC (Trumpcare).  Trump wants a “WIN” at any cost.
BIGGER SCANDAL THAN WATERGATE IN THE WINGS ?  I think so.  Attempts to cover it up will delay findings, but there are simply too many individuals who know too much and who will surface.
he “Russia situation” seems to worsen daily for President Trump and his chief strategist, Stephen Bannon.
      Look for a “Make America Great Again” advertising blitz in coming weeks, funded by the Mercers.  I am not sure it is a good idea to attract attention at this time, since the Mercers funded Breitbart News and Stephen Bannon, former head of Breitbart and currently strategic advisor to Trump. Reportedly, the FBI has expanded its investigation of collaboration to Alt-Right Breitbart News.
      According to Business, Jared Kushner failed to disclose meeting with the CEO, Sergey N. Gorkov, of Vnesheconoombank in December 2016. The bank is Russia’sbank for “Development and Foreign Economic Affairs.  Reportedly, the bank was struggling in face of Russia’s economic woes.  Kushner was seeking investors for a Fifth Avenue office building that is reportedly set to be financed through Anbang Insurance Group, a company with ties to the Chinese government. A White House spokesman denied the New York office project was discussed.
      What then was discussed ?
      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, though Flynn is now in the running.  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 ? 
      I don’t think this gang expected to win, and as a result got careless and made some bad decisions when Russia came on the scene.
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.     
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:
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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