Investor’s first read – Daily edge before the open
S&P 500: 2,409
Russell 2000: 1,400
Friday, July 7, 2017 9:08 a.m.
Softness in consumer spending, auto sales, inflation, pending homes sales, housing permits, aircraft orders and capital goods spending, suggest the eight-year Obama economic recovery is struggling.
However, the jobs market is the bright star in the picture. The Employment Situation report for June shows 222,000 new jobs added, though wage growth lags.
Whether the Fed delays further rate increases and the beginning of its reduction of its $4.5 trillion balance sheet is less likely due to the jobs report which is an offsetting positive.
Historically, the stock market turns down three to six months before a recession begins and turns up the same before a recession ends. Big moves can take place before the beginning and end of recessions, you don’t want to wait for the official economic report to act.
The Street is becoming increasingly uneasy, but not giving up on the massive promised stimulus. A Senate decision on its Better Care Reconciliation Act (BCRA) may come shortly, or they may settle on just repealing ACA.
That would pave the way for a lot of Republican hoopla on tax cuts, possibly tariffs, and a big spend on the military and/or infrastructure. Right now it would be easier to justify the military, even though people who have done their homework would argue our infrastructure woes make us more vulnerable in terms of security than a slump in military spend.
Since mid-January, I have warned that Trump would put us on a war footing (see below) as a ploy to orchestrate patriotic support for the mid-term elections. He may not have a choice in the timing as North Korea is forcing his hand.
We have probably been preparing for a confrontation with North Korea for months. The biggest risk of course is Seoul, South Korea, which is within the range of conventional artillery.
The Street’s highfliers – Facebook (FB), Amazon (AMZN), APPLE (AAPL), Microsoft (MSFT), and Alphabet (GOOG) had been under pressure for 6 days, but found some support Wednesday. Yesterday they took a big hit at the open, rallied, hit a wall, then sold off but closed above their low for the day. That may signal a short-term rebound, possibly from the Nasdaq Comp. 5,997 level.
The market will bounce at the open, the key is how long can it last before sellers show up. The bulls need some reassurance on the stimulus and a ho-hum out of the Trump/Putin meet.
Expect news on the healthcare front. If it’s bad news for ACA holders, the Street really won’t care, so long as it speeds up tax cuts. Investing is all about making money. Healthcare only matters if its outcome adversely affects tax cuts.
SUPPORT “today”:DJIA:21,221;S&P 500:2,365:Nasdaq Comp.:6,006
RESISTANCE “today” DJIA:21,406;S&P 500:2,424;Nasdaq Comp.:6,137
CORPORATE EARNINGS (updated June 30 , 2017)
Q1 earnings increased 14.0%. Q2 growth is projected at +6.6 %, Q3 at +7.4%, 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 17.6 x. That compares with a 10-year average P/E of 14.0.
Note: These numbers change frequently.
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.
WHAT ? Ken Blackwell on Election Integrity Commission ? Really ?
I don’t have space here, but wikipedia him, or google, “Was the 2004 Election Stolen ?”
Co-Chair with Vice President Mike Pence is Kansas Secretary of State, Kris Kobach, known to be obsessed with voter fraud, though no meaningful fraud has ever been documented. The Commission has required all states to submit complete voter files, which will be stored on a web site operated by the U.S. Army before being stored on computers in the White House – WHOA ! This lends itself to hacking, as well as data mining, the use of the data for any number of reasons – all bad.
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
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.
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.
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.”
TRUMP approval ratings also abysmal abroad.
July 4th is a time Americans celebrate the birth of our nation, a time Americans take a minute to be proud of our constitutional representative republic and its many accomplishments, which unfortunately are systematically being gutted as I write.
Unfortunately, our image has dropped sharply under Trump as president. His approval ratings wallow in the 30s, as he has hastened to disengage the U.S. from our long-standing foreign alliances.
A recent Pew Research Center survey covering 37 countries gives Trump a 22% confidence rating that he would do the right thing in international affairs. President Obama’s rating in the same category as he left office was 64%.
Trump’s plunge is especially pronounced among our closest allies in Europe and Asia.
American people as a group came out well in the poll with a median of 58% favorable.
Trump sucks wind in comparison with other major world leaders in the do the right thing category, trailing Germany’s Angela Merkel (#1), China’s Xi Jinping, Russia’s Vladimir Putin.
Disapproval of Trump’s signature policies was obvious with abysmal approval ratings for his: withdrawal of support from the Iran nuclear weapons agreement (34%); restrictions on immigrants entering the U.S. (32%); withdrawal from the international climate change agreement (19%); withdrawal of support for major trade agreements (18%; building the “Wall” (16%).
Trump’s personality assessment is disturbing with 75% of the 37 countries saying he is arrogant, 65% saying he is intolerant, 62% dangerous, 55% a strong leader, 39% charismatic, 26% qualified to be president, 23% caring about people.
So my headline on January 3, “TRUMP – A Human Wrecking Ball” is confirmed globally, as well.
There is a chance, a big one, that Trump and the Freedom Caucus (Constitutional anarchists) will do irreparable damage to our nation domestically and internationally in coming years, when Fourth of July celebrations will be for a nation “that was.”
This combination wants to shred everything accomplished in the last 241 years, then remake it to reflect their hard right ideology.
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.
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.
“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 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 – Sergey Gorkov – Sergey Kislak, ambassador to the U.S., 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.
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
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.