Thank Kudlow It’s Friday – Trade On!

Image result for kudlow crazy"Larry Kudlow says things are going great!

That's enough to pop the indexes another half a point overnight because there is ALWAYS about to be a trade deal with China and we ALWAYS celebrate it as if it's a surprise party – over and over again.   As George Orwell said:

"And if all others accepted the lie which the Party imposed -if all records told the same tale — then the lie passed into history and became truth. Who controls the past,' ran the Party slogan, 'controls the future: who controls the present controls the past. And yet the past, though of its nature alterable, never had been altered. Whatever was true now was true from everlasting to everlasting. It was quite simple. All that was needed was an unending series of victories over your own memory. 'Reality control', they called it: in Newspeak, 'doublethink'."

 

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Trade Off Thursday – Words Speak Louder than Actions

Image result for trump trade football charlie brown"And now there's no trade deal – again.

Keep in mind that, a month ago, we were told the deal was ready to sign and it amazes me that, almost every day, the Financial Media carries articles that say "President Trump Says Great Progress Being Made" as that's like running headlines saying "Boy Who Cried "Wolf" Says There's a Wolf".  Are we seriously that dumb?  Apparently, you can fool some of the people ALL of the time because someone is that dumb and the market rallies EVERY SINGLE TIME on the same news it rallied about last time

Remember, all Trump even promised was a LIMITED deal, a part one of 5 or whatever because there was no way they could even pretend to be close on an overall deal.  In fact, 100 Economists polled by Reuters don't expect a real trade truce until 2021 - let alone next week.  While the median probability of a Recession for the coming year fell to 25% from 35% last month, the Economic Growth outlook remained modest. 

Image result for economic forecast cartoon"Over 80% of 52 respondents to an additional question said the Fed had done enough to delay the next recession but that already-modest growth forecasts were largely left unchanged.  "I think in terms of the risks, they are probably still tilted towards the Fed maybe cutting rates once more at some point in the coming months if growth slows further, certainly if there is some renewed breakdown in trade talks," said Andrew Hunter, senior U.S. economist at Capital Economics.  "But barring that, it does look like they have done enough to avert a recession. In our baseline forecast, there is growth slowing a little bit further over the next couple of quarters but starting to recover next year."

I gave my own Economic Forecast last night on Money Talk, embracing the uncertainty:

As you can see, the NYSE has indeed been drifting along under the 13,500 line for two years after breaching it early in 2018.  The NYSE is the…
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Wild Wednesday – Trade In Doubt, Impeachment Begins, Powell Testifies and We Take Money Talk to The Street!

Where do I begin?  

The Index Futures are down about 0.5% as Trump once again puts a Trade Deal into doubt.  Europe and Asia are down more like 1% so we might be just getting started or Trump could send out one of those "I was joking" tweets after he threatened China with more tariffs yesterday.  “In the short term the market’s been too optimistic. The best interpretation of the trade situation is that almost everything that can be tariffed has been tariffed,said Christopher Mahon, director of asset allocation research at Barings.  

How come when he says it on Nov 12th, he's quoted in the WSJ but when I've been saying it for two months – no one notices?  I have to get a better publicist – or A publicist….  

Speaking of which, I guess I will have a better publicist as we move some of our Member Portfolios over to TheStreet.com starting with our Money Talk Portfolio, which kicks off this evening on BNN (Bloomberg Canada) at 7pm this evening.  Through the end of this quarter, the Money Talk tab usually found on PSW will ALSO be found on TheStreet but, over time, they will get the exclusive on that and a couple of other portfolios as well as some PSW content (also a subscription).   

We closed the old Money Talk Portfolio after two years with a 148.1% gain on Sept 18th as I didn't trust the upcoming quarter enough to risk the gains.  Turned out I was premature in my worries (as I often am because I'm a worrier) but I'm still worried so we're going to start with a couple of conservative trade ideas and see how things go.  The rule of the Money Talk Portfolio is we only do trades we announce on the show, once each quarter so it's a very low-touch portfolio using our options strategies to hedge the risk and lever our returns. 

When closing down the MTP, I did make the following suggestion for a good use of our $124,042 of cash:

Our 2019 Stock of the Year is IBM (IBM) and


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Testification Tuesday – Let the Impeachment Begin!

Image result for trump i am not a crook"Here we go!

After months of nonsense, the public Impeachment Hearings finally begin next week and, just to be clear, this is just a show for the public because the witnesses have, for the most part, already testified in closed-door meetings and will now be asked to repeat the highlights of their testimony for public consumption.  That's not a knock on the Democrats – that's just how these things work.  

Later on, there will be fresh testimony from people closer to the top of the Trump Food Chain – as well as from people who are, even now, attempting to block being forced to testify so they can (hopefully) avoid being charged as co-conspiritors, enablers or traitors.  During Nixon's impeachment, we had testimony from:

James McCord: One of the Watergate burglers who used to be in the CIA and the FBI.  Security officer for the Committe to RE-Elect the President (CREEP).  McCord wrote a letter to Judge Sirica claiming the defendents had pled guilty under pressrue and committed purjury.  In January 1973, WH Security Liaison Caulfield had told McCord the White House would grant him clemency, money and a job if he accepted his prison sentence and didn’t testify against members of the administration. When McCord relayed he had been offered clemency “from the highest levels of the White House” before the Senate Watergate committee on May 18, 1973, Nixon’s ties to the efforts of the White House to break into Democratic National Committee Headquarters finally surfaced.

John Dean: Former WH Counsel pled guilty to obstruction of justice in Oct, 1973.  Spent 4 months in jail.  Barred from practicing law (as Guilianni will be), Dean became an author and does well as a guest and speaker post-Watergate.  

HR Halerman:  Nixon's Chief of Staff.  A tape revealed the President discussing with Haldeman a plan to have the CIA divert the FBI from the probe because it involved national security. Haldeman resigned in April 1973 and was jailed for 18 months.  Halderman went to work for David Murdock's Real Estate Company.  

Alexander Butterfield: Nixon's Deputy Chief of Staff who revealed the existence of the taping system in the first place saying “When Don Sanders, the deputy
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Monday Market Momentum – Lost Due to Trade Setback

Trade off!

Over the weekend we had a little setback in the trade negotiations as Trump said he has NOT agreed to remove tariffs on Chinese goods and that news came after Chinese markets had closed on Friday so this morning,  the Shanghai Composite wwas down 1.8% and Hong Kong's Hang Seng dropped 2.6%.

Also in Hong Kong, tensions escalated even further this morning as the police opened fire on protesters while Hong Kong's Governor said the Govevernment won't "yield to violence."  A man was also "set on fire" – apparently by the protesters.  Around midday, crowds of office workers were seen fleeing clouds of tear gas filling the streets. Some rushed into the lobbies of buildings to seek shelter and poured water over their eyes to relieve the pain. Police made a number of arrests as people chanted abuse at them.  

Combine that level of chaos in a densely packed city AND have the market start to collapse – that's a recipe for disaster and one of the main reasons we've been leary about re-committing our capital to the market.  Chinese protests, however, also gave us our shorting premise on Booking.com (BKNG), as we discussed last week in our Short-Term Portfolio Review.  We felt the earnings would be impacted by the protests – which have been going on all quarter and we got a nice dip in BKNG on earnings, leading to a massive $18,872 (19%) portfolio gain in just two days – your welcome!  

 

 

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Fabulous Friday Finish

Wow.

I mean WOW!  Check out the headline on the front page of today's Wall Street Journal.  Is it really "news" to say the same thing, over and over again for month after month?  I guess it is news to traders because, once again, we're up in pre-market trading.  This is just what we were talking about yesterday, MADNESS!  

I guess it helps distract Conservative readers from the headline in the NY Times that says: "Impeachment Inquiry Tests Ties Between Barr and Trump" as it turns out Trump put pressure on Barr to make an official statement that his Ukraine call was "perfect" but Barr refused to say the President did not commit a crime when Trump demanded the Ukraine launch an investigation of Joe Biden and his son in exchange for the military aid Congress had already approved for our NATO allies in the Ukraine.  

Mr. Trump on Thursday angrily denied a report in The Washington Post, which was confirmed by The New York Times, that he wanted Mr. Barr to hold a news conference to say that the president had broken no laws, only to be rebuffed by the attorney general.  In a Twitter post, Mr. Trump called The Post’s article “pure fiction,” adding: “We both deny this story, which they knew before they wrote it. A garbage newspaper!” Mr. Barr, however, did not publicly deny the account.

Image result for trump obstruction impeachment"Perhaps if Trump hadn't already had Barr make a fool of himself attempting to exhonerate the President in the Meuller Report, Trump would still have some political capital to spend but the sheer volume of scandals surrounding the President makes it hard for Barr to be the point man defending every crime – lest he himself become an impeachable obstructor.  

Barr is getting into hot water as he's been in the loop as half the witnesses called by the House Committee investigating the matter have refused to testify.  Failure to answer a Congressional subpeona is a jailable offense but, so far, the House is just skipping ahead to the next witness and will re-call the dodgers next week in the public hearings so they can publically defy Congress and then there will be…
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Thrilling Thursday – Markets Blast Higher on Trade Progress (Again?)

Image result for peek a boo trump animated gif"I feel like we're playing Peek-a-Boo!  

You know, the game in which you are able to surprise a baby over and over again with the same simple trick?  Yeah, "peek-a-boo" – whose got a trade deal?  You have a trade deal!  Good boy.   Where's the trade deal?  Peek-a-boo!  There it is?  Look, it's a trade deal.  Where's the trade deal?  Where is it?  Peek-a-Boo!  There it is!  Who's a good boy?  Where's the trade deal?  Do you see a trade deal?  Peek-a-Boo!  There it is!  

Isn't that fun?  I could play that game for months and, apparently, every time I play the market goes higher – no matter how many times I show some small amount of progress towards a trade deal WE FRIGGING HAD TWO YEARS AGO!  There is no imagined scenario in which the US is actually getting a "better" deal than the free trade deal we had BEFORE Trump began messing around.  Trump has forced China to make other trading alliances – and China is not going to throw that away just to please the unreliable US.  

Today's big reveal, that's good for a 150-point (0.5%) gain on the Dow is because Beijing, WITHOUT saying there will be a deal, laid our a framework for phasing out tariffs over time.  Officially, according to the WSJ:

BEIJING—China’s Commerce Ministry said China and the U.S. have agreed to lift some tariffs on one another in stages if the two countries reach a partial trade deal, a goal both have been building toward since October.

If the phase-one deal is signed, China and the U.S. should remove the same proportion of tariffs simultaneously based on the content of the deal,” spokesman Gao Feng said at a regular press


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Wonderful Wednesday – Still at Record Highs – What Could Go Wrong?

Image result for S&P 3,100Another day near 3,100 on the S&P.

Kentucky seems to have voted Democrat Andy Bshaear to be the new Governor but current Governor, Matt Bevin refuses to concede, so that will drag on all day and maybe longer.  In Virginia, however, Democrats completely flipped the state blue, taking over the Senate and the House in a state that had been dependably Republican.  These are not good signs for the GOP in November or Trump now as Bevin was a huge Trump supporter and Trump personally flew down there and campaigned hard for him Monday night.

If GOP Senators, Congresspeople and Governors find no use for Trump's support – it's not a great leap to imagining they will find no use for Trump and his unbreakable wall of GOP impeachment blockers may begin to crumble.  Kentucky is Mitch McConnell's home state and "Moscow Mitch" only won 2014 56% to 40% against a throw-away candidate for the Dems (Alison Grimes).  Bevin won in 2015 52.5% to 43.8% and is out on his ass today – Mitch is getting nervous to say the least – as he hasn't had a real job since 1985.

China buys more from Brazil as tariffs biteMeanwhile, according to Bloomberg's excellent new "Terms of Trade" section (and according to me yesterday), China is insisting Trump drop all tariffs in order to move forward with the signing Trump is promising on Nov 17th.  In other words, there is no actual deal and Trump's lying to the American People and claiming there is one has now painted the US into a corner where Trump will be forced to concede to China in order to cover up his lies – that's why these things matter!

From the Chinese perspective, the argument is that if they are going to remove one big point of leverage and resume purchases of American farm goods and make new commitments to crack down on intellectual property theft — the key elements of the interim deal — then they want to see equivalent moves to remove tariffs by the U.S. rather than the simple lifting of the threat of future duties.

Also according to Bloomberg, the risk of a US
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Tremendous Tuesday – Markets Remain at All-Time Highs

The rally continues

We've been promised a trade deal and we've been promised tax cuts and the S&P has soared over the 3,000 level and is testing 3,100 with the Dow at 27,500, Nasdaq (100) 8,236 and the Russell is dragging behind at 1,603 as it was over 1,700 a year ago but no sense picking nits – this is a Hell of a rally!

Of course the Dollar has been pushed down 2% since the Fed last Wednesday and 2% of 3,000 is 60 and we're 60 points over the previous high so it would be nice to see the S&P and the other indexes REALLY make new highs without the help of a weak Dollar or trade or tax promises but these are not the kind of parents that are willing to let their children succeed or fail on their own merits – are they?

It’s very clear we’re seeing lots of celebration in the market, not just in stocks, but in emerging market assets such as the Yuan and coming out of havens like the Japanese Yen,” said Jane Foley, head of foreign exchange strategy at Rabobank. The cut in interest rates by the Federal Reserve last week has added to investors’ optimism, she said. “The rally can extend for a one to three month view.”

Image result for trump xi trade war cartoonPer Bloomberg: China is seeking the roll back of U.S. tariffs on as much as $360Bn worth of Chinese imports before President Xi Jinping agrees to go to the U.S. to sign a partial trade deal with President Donald Trump, according to people familiar with the matter. 

Negotiators asked the Trump administration to eliminate tariffs on about $110Bn in goods that were imposed in September and lower the 25% tariff rate on about $250Bn that began last year.  China has also previously demanded that Trump cancel plans to impose duties on roughly $160Bn in imports, scheduled for Dec. 15th, which would hit consumer favorites like smart-phones and laptops. At the very least, those tariffs have to be taken off the table for Xi to get on a plane to meet Trump.

Nonetheless, Trump and all the White House dwarves have been out talking up a trade deal and I think
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Just Another Manic Monday

The Dow is up another 125 points (0.5%) this morning.

The S&P is already up 22% for the year and, as you can see from this WSJ chart,  We've had lots of good years lately with the 2 down years in the last 10 combining for a total loss of less than 7% while the 8 positive years have added 142% but keep in mind that's cumulative, with the gains compounding each year – giving us the incredible new highs the market is at right now – despite having first dropped almost 40% in 2008.

On Fox News this morning, a guest was saying that we can't raise taxes now because the economy is so good that there's bound to be a recession coming so we need low taxes to fight off the recession.  Of course, when there is a recession – they'll tell us that they need to lower taxes too.  I've been watching a lot of Fox News this weekend as I'm on a ship and it's the only US news channel.  By the way, when are the Democrats going to stop harassing poor Presient Trump?

Our market rally has clearly been led by the Information Technology sector, which is up 36% and companies like Apple (AAPL), Chipotle (CMG) and Target (TGT) are up over 60% for the year, boosting the large-cap sector.  The S&P 500 is now trading at 20 times the earnings of it's components - another all-time high and significantly higher than other countries are trading.

When will the music stop – if it ever does?  The "normal" p/e ration for the S&P 500 is 16 – so we're 25% above that but "normally" there are other things you could do with your investment capital, like put it in the bank, bonds or housing but the banks and bonds now CHARGE YOU to hold your money in many countries and don't pay enough to keep up with inflation in the US while bonds are ridiculously low thanks to the Fed – certainly not a place you want to invest.

Real Estate is what led the last market correction so investors are sensibly gun-shy about tying up their assets in that sector again and that pretty much leaves…
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