Trump’s 100 Days – Bluster and Blunder

Investor’s first read – Daily edge before the open
DJIA: 20,975
S&P 500: 2,387
Nasdaq  Comp.:6,025
Russell 2000: 1,419
Thursday, April  27, 2017    8:55 a.m.
 A combination of a prospective 9% increase in earnings this year and sizable tax cuts has been driving stock prices off and on since the  November elections.
       This, along with  a promise of  deregulation and a big spend on the military and infrastructure has overridden President Trump’s,  alarming, divisive behavior, which raises questions about his suitability for the most powerful office in the world.  Of course, not to minimize whatever comes out of the numerous investigations into election collusion, etc.
       I can see the possibility that some of these stimulus goodies will be served up, clearly odds favor it, but there will be  resistance by Democrats, and  Republican deficit hawks, which stand to luff Trump’s sails, claiming a tax cut of this magnitude would increase the deficit.
       Treasury Secy Steve Mnuchuin defends the tax cut, saying the growth in the U.S. economy will off set it.  Right !  What about a recession that will almost certainly develop within three years, assuming this expansion tops the longest on record (120 months between Mar. 1991 – Nov. 2001) ?

       While Trump released some generalities about his tax plan, the Street was disappointed in not getting more details.
      Trump seeks a reduction in the corporate tax rate to 15% from 35% (which few pay anyhow) and an unspecified tax on repatriated overseas corporate income (probably 10%).
      Hopefully, repatriated dollars won’t be used to buy back stock, but will be used to hire and train employees and upgrade plant and equipment !
      Friday, April 28, marks the deadline for Congress to avoid a government shutdown. If Congress doesn’t vote a budget, a stopgap bill will be passed to buy time until September 30, the end of the US fiscal year. Unlike in 2013, the deadline does not coincide with the need for an increase in the debt ceiling.

     If a stopgap bill, a Continuing Resolution (CR), is not voted, parts of the U.S. government will shut down at 12:01 am, Saturday.
      Don’t rule out a surprise new healthcare proposal by Trump, something he can neatly fit into proposals advanced within his first 100 days.

      Yesterday was kind of a “Buy the rumor, sell the news” day, where the market moved up in anticipation of an announcement on taxes, then sold off when it was released.
      The market has been shuffling along like a robot for years, because that is just what it is, bar a few instances where a flash crash requires a tweaking.
       Its behavior is increasingly dictated by investment decisions based on algorithms that are programmed among other things to measure value and potential changes thereof.
        These decisions are so universal that they can actually create a market  irregardless of issues not included in the complexity of the algo.
         All is well until something overrides the algo, usually a news event, or when some big hitters re-program their algo to account for what they suddenly see as over or under-valuation.

         I seriously doubt Trump’s tax announcement had anything to do with dressing up a chaotic “first 100 days, it just would be so uncharacteristic of him to sneak that in there before the deadline.
         Any chance of another proposal for repealing and replacing Obama’s resilient ACA ?  Bet on it coming to vote before Trump’s 100 days are up (Apr. 29), and it will be an ugly bill.
         Oh yes, – the 20% tariff on Canadian softwood lumber, the stuff that comprises up to 15% of the cost of a new home. His Apr. 25 announcement was preceded by a surge in lumber prices, which is estimated to add $1,200 to the cost of a new home.  That must smart a bit for our largest trading partner, especially since Trump claims the United States is not terminating NAFTA now. Kind of like getting punched when touching gloves before a fight.

        Expect another stab at new highs today, boosted by the perception that a lot of things are getting done in Washington, and of course by wishful thinking that the tax cut coming will be a granddaddy.
        Investors chasing anything that moves spells momentum, the strength of which will be tested by the end of the stock market’s “Best Six Months for Owning Stocks”* (Nov.1 to May 1).  That’s a seasonal phenom that has seemed to rear its ugly head frequently in the past. This is a “heads up,” not an urgent pitch to SELL.
SUPPORT “today”:DJIA:20,857;S&P 500:2,377; Nasdaq Comp.:6,001
RESISTANCE:“today”:DJIA:;S&P500:;NASDAQ Comp.:


         What disturbs me is Trump dismisses his actions on ACA, immigration, his wall, sanctuary cities, etc.  as fulfilling his promises to his “base.”   Beg pardon Mr. Trump, but you are NOW the President of the United States, NOT president of a base which actually fell 2,865,075 votes short  of your opponent’s.
         A week after all this bluster to con America into thinking Trump has accomplished something in his  “first 100 days,” people will begin to ask, “What have you done for me lately ?”
Can Section 4 of the 25th Amendment to the U.S. Constitution be used to dump Trump ?
Apparently not, according to Keith Obermann, sports and political commentator, in the Feb. 3, 2017 article of “The Slatest.”  “For my money, he’s nuts – couldn’t pass a sanity test,” Obermann says, but adds Section Four of the 25th Amendment does not say ,nuts, or impaired, or erratic or unbalanced or unhealthy, or bipolar, or narcissist, or sociopath, or psychopath. It only says if the president is unable to discharge the powers and duties of his office.”
       The behavior of President Trump has triggered many to scramble to find ways to remove Trump from office before he does irreparable damage to the country. For them a four year wait is too long.
FRANCE – Don’t Count Le Pen Out Yet
     The United States isn’t the only place, “It ain’t over until it’s over.”
 Add France to Monsieur Berra’s reach.  On Monday I said euphoria over Macron’s expected victory May 7 stands to yield to uneasiness as the gap of  support he enjoys now will narrow.  Reportedly, that is already happening on the campaign trail where Le Pen scored some points and appears to be gaining momentum. Global markets soared Monday when Le Pen failed to win the presidency on the first time around.  Victory by Le Pen raises the possibility France would pull out of the EU.
Trump’s plan to cut the corporate tax rate to 15% from 35% would trigger a $2.4 trillion shortfall in government revenues, forcing massive cuts to government programs, as well as increased taxes in other areas to offset the loss.   

     This is an opportunity of a lifetime for Republicans to fulfill their dream to devastate social programs across the board, i.e. slash government income and there is no alternative but to gut government programs. 
      It’s called “Starve The Beast,” and will result in a vast reduction in the quality of life of most Americans, especially those who put Trump in office.
      Congress will waste little time seizing an opportunity of their lifetime – to ruthlessly, senselessly and wantonly dismember a system that works well without the intrusion of Republicans.
      The rape and pillage of our federal government continues,
as Republican Thomas Massie  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.

      As a budget is being developed, we can expect a major revamping of the nation’s government structure and huge cuts.
      Mick Mulvaney, director of the Office of Management and Budget plans to streamline the U.S. government structure by drastic reallocation of resources away from social “Great Society” programs to the Dept. of Defense and Homeland Security.
      Action is already underway to gut the EPA and Dept. of Education, but the administration’s efforts are bound to encounter Congressional opposition, since budget cuts and the elimination of agencies will undoubtedly have widespread impact, none the least of which may be the loss of Republican House and Senate seats in 2018.     

“A Russian government think tank controlled by Vladimir Putin developed a plan to swing the 2016 U.S. presidential election to Donald Trump and undermine voters’ faith in the American electoral system, three current and four former U.S. officials told Reuters.
      Russian documents appear to confirm what U.S. intelligence agencies have believed  all along that Russia influenced the outcome of our presidential election. 
      Yesterday, Reuters released documents, which were prepared by the Russian Institute for Strategic Studies[https://en.riss/], after the election that confirm this conclusion.
      It recommended that a, “propaganda campaign on social media and Russian backed global news outlets to encourage U.S. voters to elect a president who would take a softer line toward Russia than the administration of then-President Barach Obama, the seven officials said.”
     Additionally, a second institute document recommended Russia end its pro-Trump propaganda and intensify messaging about voter fraud to undermine the U.S. electoral system’s legitimacy and damage Clinton’s reputation.
      So far, investigations by U.S. institutions and Congress have not concluded collusion between Trump’s team and Russian operatives occurred.
     But U.S. investigations are still being conducted.
     I personally believe collusion DID take place, and odds are GOOD that it reaches far beyond collusion, that based on what I see and how people in the administration are acting.
     Reportedly, there is no mechanism in the U.S. Constitution that enables voters to recall at the federal level, though 19 states permit recalls at the state and local levels. Impeachment is the only recourse in the event high crimes and misdemeanors are committed.
      The truth may never be confirmed, it being so debilitating to orderly and effective governance, that it would  result in irreparable divisiveness.

      Just a hunch, but I think collusion regarding influencing the election is only part of something much bigger, like major league money transfers for options on oil investments, real estate holdings, and land deals. That’s why it is taking so much time.
      If we begin to see more and more of VP Pence, it may suggest the end for Trump is getting closer. Clearly, the inside knows something is about to break.  Trump is “toast,” IMVHO.
      There are so many people who know so much, and they are going to be watching out for number ONE, and that is not Donald Trump.

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.

CORPORATE EARNINGS (updated  April 14, 2017)
      Q1 earnings are projected to increase 9.2%. That compares with a Q1 est. on Dec. 31 of +12.5%.  Q2 growth  is projected at +8.7%, Q3 at +8.2%, and Q4 at +12.6%. For 2017 as a whole growth is projected at a plus 9.7% down from Dec. 31 estimates of 11.6%.  Currently, the P/E on forward  earnings is 17.4 x. That compares with a 10-year average P/E of 14.0.
:  (UPDATED 4/13/17 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  April 25, 2017,  a reasonable risk is 20,763 a more extreme risk is 20,396.Near-term upside potential is 21,333
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.

Conclusion: It is happening now
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.

Conclusion: It started on Easter weekend in Berkeley.
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.     
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>                                                       Note: Source of weekly economic calendar and good recap of indicators:

*Stock Trader’s Almanac

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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