RF's Financial News

RF's Financial News

Sunday, July 10, 2016

This Week in Barrons - 7-10-2016

This Week in Barrons – 7-10-2016:

“Who’s the banana republic now?” … Bernie Sanders

Mr. Comey (Director of the FBI):
Welcome to Amerika – the next banana republic.  Amerika used to be a place where you’d get a fair shake, a trial, and where your financial or power ranking made no difference.  On July 5th 2016, that all formally changed because you (Mr. Comey) told us that it was okay when ‘some people’ break the law.

Factually, Mr. Comey:
-       Hillary said under oath, many times that there were NO classified e-mails on her servers.  BUT according to you: “From the group of 30,000 e-mails returned to the State Department, 110 e-mails in 52 e-mail chains have been determined to contain classified information at the time they were sent or received. Eight of those chains contained information that was Top Secret at the time they were sent; 36 chains contained Secret information at the time; and eight contained Confidential information.”  I guess Hillary lied.
-       Hillary also said (under oath) that she had turned over ALL of the e-mails.  BUT according to you: “We also discovered several thousand work-related e-mails that were not in the group of 30,000 that were returned by Secretary Clinton.  We found those additional e-mails in a variety of ways.  With respect to the thousands of e-mails we found that were not among those produced to State, agencies have concluded that three of those were classified at the time they were sent or received, one at the Secret level and two at the Confidential level.”  I guess Hillary lied – again.
-       Then you went on to say: There is evidence that Secretary Clinton was extremely careless in her handling of very sensitive, highly classified information.  She also used her personal e-mail extensively while outside the United States, including sending and receiving work-related e-mails in the territory of sophisticated adversaries. Given that combination of factors, we assess it is possible that hostile actors gained access to Secretary Clinton's e-mail account.”

Mr. Comey, let me get this straight:
-       Hillary said (under oath) that there were NO classified emails on her servers, but you found 110 of them.
-       Hillary said (under oath) that she had given the FBI ALL of her emails, but you found 2,000 additional emails.
-       You said that it was very possible that people hostile to the U.S. hacked into her personal email account, and saw all 110 classified emails.
-       And although you found evidence of violations of statues regarding the handling of classified information, your judgment was to bring NO CHARGES against her.  You did this fully knowing that EVERY Amerikan with a single firing brain cell would say: "Are you kidding me?  Most people would be crucified for much less.”
-       You then went on to say: “To be clear, this is not to suggest that in similar circumstances, a person who engaged in this activity would face no consequences. To the contrary, those individuals are often subject to security or administrative sanctions.”

OMG.  So yes she’s guilty, but because she's #Crooked Hillary, you were instructed to look the other way.  The excuse that you’re using is that she exhibited gross negligence surrounding the highest level of state secrets, but did so in such an offhand fashion that she shouldn’t be prosecuted.  So Mr. Comey this begs the question: If she's so careless that she might have let Russians, Chinese, and Ukrainians hack her emails containing state secrets – Is she truly FIT to run this country?

Honestly, I don't believe it had anything to do with being extremely careless or grossly negligent.  I think #Crooked Hillary figured that by having control over her own private email server, no one would be able to find the shady deals she was doing through the Clinton Foundation – because private email servers are NOT subject to Freedom of Information requests.

Mr. Comey if this was you or I – we’d be rotting in Guantanamo for the rest of our lives.  But this is #Crooked Hillary and she gets a pass because the whole political process is corrupt.  And people wonder why Donald Trump is doing so well.  It’s such a breath of fresh air when Mr. Trump comes on TV and tells us: “The whole process is rigged!" – and he was proven right once again on July 5th.

Mr. Comey, both Hillary and Bill Clinton have looked into the cameras and have sworn on a stack of Bibles: "I did not have, receive or send classified email from my private server."   But on July 5th you confirmed just the opposite.  I think the worst thing about being lied to, is knowing that you’re not worthy of being told the truth.  Mr. Comey, if you’re wondering why Dallas happened, you need look no further than your July 5th ruling because: “Mistrust is the sure forerunner of hatred” … Margaret of Valois.

I'm ashamed of what Amerika has become.  Welcome to Amerika – land of the free and home of the brave – as long as your last name is Clinton.  The first casualty of any war is truth, and it is most often killed long before the first shots are fired.

The Market:

In the grand scheme of things, equity market internals are precariously balanced and unfortunately deteriorating.
-       Global currency wars continue.  BrExit has led to a 31-year low in the British Pound, and 40% of the world’s bonds have negative yields.  These currency wars are having pronounced effects on corporate earnings and domestic unrest.
-       Global yields have accelerated downward.  Corporations are embracing financial engineering and M&A over capital investments.
     -       Real assets like gold, real estate, and collectibles are inflating.
     -       Interest Rates remain the #1 variable.  Low inflation and GDP growth means that interest rates will remain lower for longer.
                  Earnings are a clear function of low global GDP growth. Earnings estimates are being revised downward for the 4th consecutive quarter, and revenue estimates are fairing even worse.
      -       Investor psychology NOT fundamentals are driving PE (price to earnings) ratios.  TINA (there is no alternative) has resulted in grossly inflated PE’s and valuations.

U.S. economic growth continues to muddle along at a sub-2% rate, and President Obama will have the distinction of being the first President in history (240 years) to never have at least one year of 3% GDP growth.  Corporate earnings have now fallen for four consecutive quarters.  Precious metals (the hottest market on the planet) continue to be in a bull market.  JLA is looking for an additional $300 to $400 move to $1,700 per ounce by the end of this year.  Many economists have gone back to the original Bretton Woods calculation – and using that same formula – have predicted the fair value for gold to be over $5,000 per ounce.  And finally, negative rates punish all savers, pension plans and insurance companies, while rewarding debtors in the belief that zero or negative rates foster growth.  Negative rates do NOT foster growth but rather force risk taking and the overvaluation of nearly all assets.  Lower rates:
-       Increase the value of a corporation’s discounted cash flows – forcing stock prices higher.
-       But lower rates often mean lower earnings.  Negative rates are demonstrating that there is a limit to how much lower rates actually stimulate growth, and there may be a tipping point where lower rates actually suppress growth. 

On Friday, we ended the day with the S&P just a couple points shy of a new all time high.  The reason for such a massive move was Friday’s Non-Farm Payroll report.  According to the talking heads, we gained 287,000 jobs in June.  But did we really create 287K jobs in June, after only creating 11,000 in May?  When you examine the report:
-       The BLS's ‘Birth/Death Model’ added 92K (fake) jobs to the report – lowering the total to 195K.
-       44K of those jobs were Verizon workers returning from being on strike – lowering the total to 151K.
-       And then we find that 90% of the remaining job gains went to people working part-time and 55 years old or over.  Can you say: “Welcome to Wal-Mart”?
-       So we created 15K real jobs in June – which is consistent with the 11K we created in May.

Are we going to see new highs?  It sure looks like it.  If we close over 2130, can we just buy into it and hope for more?  I think we can if order flow by the Central Banks is with us.  However, we’re in a really bizarre time.  If we break out over 2130, I wouldn't be terribly fast to jump on that trade because the possibility of a head fake is high.  Please be careful out there!

Currently the actual movement of the market is higher than what implied volatility is pricing.  That means in the short term – you should be buying directionally biased trades rather than selling spreads for premium purposes.  I think the market is dramatically underpricing volatility, and therefore you can’t make much money ‘selling’ undervalued products.

The trades I like in this market continue to be in the precious metals arena.  I’m keeping it fairly simple by being:
-       Long various mining stocks and their respective call options: AG, AUY, CDE, FFMGF, FSM, NGD, PAAS, and PGLC, and
-       Long Gold (GLD) and Silver (SLV).

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts aand trades – my handle is: taylorpamm. 

Please be safe out there!

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