Will France’s LePen Close the Gap ?

Investor’s first read – Daily edge before the open
DJIA:20,949
S&P 500: 2,391
Nasdaq  Comp.6,091
Russell 2000: 1,399
Wednesday, May 3, 2017    8:46 a.m.
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Stock markets rose sharply Monday, April 24 in response to the results of the first round of France’s election for President, which showed right wing, nationalist Marine Le Pen coming in second to centrist Emmanuel Macron.  A Le Pen victory puts France’s membership in the EU at risk.
      While Macron had a 20 point lead that day, I warned that the euphoria stood to yield to uneasiness as Macron’s edge would narrow by election day, Sunday, May 7.
      Their first and only televised debate is today, and it could be a game changer.
     
As boxing fans will attest, styles make fights. Macron tends to be long-winded and unclear. Le Pen, an attorney and head of the National Front party, is more colorful, speaking in easily understood sound bites
      Should Le Pen win,
it will revive populist movement prompted by Brexit and Trump’s win. It will also rock financial markets and the EU.
       A toll on both will be extracted leading up to Sunday, if Le Pen closes the gap.
TODAY
       Worth noting, we have entered May, traditionally a month that has produced a lot of temporary tops lasting into the fall. Respect that seasonal tendency. It marks the end of the “Best Six Months for owning stocks,” (November 1 to May 1), which advanced 12.3%.
      Currently, the market is consolidating  recent gains, a normal and healthy process in upbeat markets with the Nasdaq Comp. outpacing the DJIA and S&P 500.
       The Street still believes it will see tax cuts, deregulation and big spending on the military and infrastructure.  All this on top of a stable, gradually growing economy suggests higher corporate earnings.
        Obviously (to me), they won’t get anywhere near their wish list, but Trump’s proposed stimulus will extend Obama’s economic expansion and dramatic bull market for a year or two.
      All this is the kind of stimulus that would be introduced to pull a country out of recession, not add on to an existing economic expansion, which at 96 months is the second longest on record versus the longest (120 months).
     
     
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SUPPORT “today”:DJIA:20,836:S&P 500:2,378; Nasdaq Comp.:6,073
RESISTANCE:“today”:DJIA:20,976;S&P500:2,395;NASDAQ Comp.:6,104

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POLITICAL/STOCK MARKET

Trump’s fascination with dictators
      
News that President Trump may under the right circumstances, meet with  North Korean President Kim Jong-un and Philippeans President Rodrigo Duterte, both ruthless dictators.
       Under the right circumstances that might be a good idea, though it undercuts  US National Security Agency policies.
        What is it with Trump’s fascination with dictators like this who have no regard for human rights, dignity, and life, men who answer to no one, especially a press ? Additionally, Trump has praised Vladimir Putin.
       Given his ultimate wish, would Trump opt for such untethered power ? 
Trump Moving to Center ?
      
Recently, Aol’s Eric Lutz  wrote, Donald Trump reportedly planning a shift to the center as he tries to reset his presidency.”  Apparently daughter Ivanka and husband Jared Kushner have been pressuring Trump to temper his politics, and perhaps making some progress.
       While it would be a good idea, since IMHO the Democrats currently appear in line to regain control of Congress in 2018.
       But Donald Trump is a narcissist, and that can include some or all of the following: vain, egotistic, selfish, ,stubborn, manipulative,  boastful, incapable of criticism resistance, superiority complex, defensive, shameless, arrogant, entitled, abusive, vindictive, untruthful, and a reality denier.  Fortunately, only 1% of people have this disorder, unfortunately, one of them is our president.
       GOOD NEWS ! A bipartisan deal was reached over the weekend  by Republicans and Democrats to keep the government open through September 30, the nation’s fiscal year end. To Trump’s surprise, it denied him many items on his wish list. Surprises included funding for the Nat’l Inst. of Health, EPA, the Advanced Research Projects Agency, and national parks.
       A hearing is scheduled for Tuesday by the House Rules Committee to vote on advancing the bill and setting procedures for a floor vote.

       BAD NEWS !  Watch your back. This sudden moonwalk  by Congress is not to be trusted.  A good night’s sleep must hard to get if you’re a Republican. Campaigning for the mid-terms is only a year away, and the unpredictable, irrational behavior of  President Trump stands to put maintaining control at risk. If suddenly, these do-nothings become doers, beware
       I have always believed there is BIG, very BIG, money out there which has too much to lose to let  an out-of-control narcissist destroy what they savor – total control of their lives and assets. The Koch brothers would be one example, though they have become more visible than others. Robert L. Mercer and daughter qualify wealth-wise, but IMHO are not politically street smart enough. My guess, they will move on to other things within two to four years.  Early on, they backed Bannon and Brietbart News – Not a good idea.
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        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.
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Education Secretary, billionaire, Betsy DeVos, wasted little time getting in lockstep with Trump’s rush to gut President Obama’s many initiatives to help young people. DeVos undercut  Obama’s initiatives to strengthen the rights of some 40 million student borrowers thus facilitating student debt repayment. Obama was responding to a rash of student defaults in face of false information and extra fees by lenders.
      How can scrapping rules designed to protect students burdened with debt, and vulnerable to predatory lending be in anyone’s interest  except the big money ?  What is it with this brand of Republican ?  Mean spirited ?  Clueless ?  I don’t get it.
      Small wonder resentment for the ultra rich is increasing.
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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.
STARVE the BEAST  !
    
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.
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      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.     
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I AM KEEPING THE FOLLOWING ALIVE BECAUSE IT HAS BEEN UPSTAGED BY TRUMP’S 100-DAY STAMPEDE TO  SAVE FACE.
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PREUTERS WORLD NEWS APRIL 19, 4:20 PM
“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.
     PRESIDENTIAL RECALL ?    
     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.
      THIS COULD BE THE ULTIMATE TEST OF THE GOVERNMENT SO MANY DEDICATED PEOPLE STRIVED AND DIED FOR.
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TRUMP  – TOAST ?
      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.

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WHY TRUMP WOULD PUT US  ON  A WAR FOOTING !
       THE STAGE IS BEING SET NOW !
      
Expect the Trump administration to put the United States on a war footing within one year, probably regarding North Korea.  For one, it would justify its big military spend. For another, it would facilitate a mid-term election victory, since voters are reluctant to change  Congress significantly when the nation is gearing up for war.. It worked for George Bush in 2003.  Finally, it would deflect attention away from the Trump/Russia issue, that could sink the administration.
ALL OF THE ABOVE HAS THE POTENTIAL TO ADVERSELY IMPACT THE STOCK MARKET  AND   MERITS CONSIDERATION.
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CORPORATE EARNINGS (updated  April 14, 2017)
Factset
      Q1 earnings are projected to increase 12.5%. Q2 growth  is projected at +8.1%, Q3 at +8.2%, and Q4 at +12.8%. For 2017 as a whole growth is projected at a plus 10.1%.  Currently, the P/E on forward  earnings is 17.6 x. That compares with a 10-year average P/E of 14.0. Energy is the big contributor to Q1, S&P 500 growth.  While its percentage growth rate cannot be calculated since the sector was losing money a year ago it is in the black to the tune of $8.5 billion vs. a loss of $1.5 billion in Q1 2016. Materials:
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MY TECHNICAL ANALYSIS  of the 30 DJIA Companies
:  (UPDATED 4/28/17)
      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  April 25, 2017,  a reasonable risk is 20,763 a more extreme risk is 20,571.Near-term upside potential is 21,333
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ODDS FAVOR
1-Trump’s presidency will implode within three years, Bannon will be gone, along with Breitbart News and Alt-Right’ influence.
2-Trump will put the United States on a war footing with North Korea in coming months with or without China’s cooperation.

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.     
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*Stock Trader’s Almanac
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George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Brooks007read@aol.com
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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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