This Week in Barrons – 6-18-2017:
“Speed multiplies the distribution of information that we know to be untrue”… Edward R. Murrow
In 2018, all or pieces of 23 U.S. states will have one or no Obamacare insurers (see Obamacare vacancies map below). The number of states without healthcare will continue to rise in coming weeks as insurers announce their intentions. But what can you do if you cannot get healthcare? Could this trigger the next Civil War?
Only this time, we will all be holding the ‘weapon of mass destruction’ right in the palm of our hand. Just 10 years ago we used a phone – as a phone. In 2007, the world changed with the introduction of the iPhone, and changed again in 2008 when the HTC-1 Android smartphone was introduced. This past Thursday, CNN reported: “Since 2007, the rate of suicide deaths among children ages 10 thru 14 has doubled.” The influence that one person has with 1,500 Facebook ‘friends’ and their respective 500 ‘followers’ is staggering. Surveys tell us that young people trust their cellphones more than their parents and clergy. An entire generation is growing up with their cellphone as their best friend. In the first Civil War, we only had to deal with the propaganda that flowed face-to-face, but now the pressure is coming from everywhere. It’s virtually impossible to tell real news from fake news anymore, and it’s happening on both sides of the aisle.
Politically and economically we are being held witness to one of the largest power struggles of all time. Trump supporters have their own set of issues – from Trump to Comey to Sessions to Kushner to who knows who will be next. On the Democratic side, they’re also dropping like flies:
- Seth Rich (linked to the DNC e-mail leaks) was shot.
- Shawn Lucas (the attorney working to expose the DNC) died in his bathroom just days after serving papers to them.
- Victor Thorn (the author that accessed secret Clinton emails) died from a bullet to the head.
- John Ashe (the former U.N. President) ‘accidentally’ crushed his own throat while lifting weights. He was scheduled to testify against the Clintons and the DNC the following week.
- Beranton Whisenant (the Federal prosecutor) died from a head trauma caused by a gunshot wound. He had direct links to Imran Awan and to Debbie Wasserman Shultz’s iPad that was used to exploit the DNC leaks. Mr. Awan (a high-level governmental IT supplier) could provide evidence to 20m U.S. cell phones that were being used for massive, data-collection efforts by the FBI and CIA.
A legal suit was filed on Monday by Dennis Montgomery saying that he has evidence (previously given to the FBI) surrounding the collection of phone, financial, and personal data via cell phone on 20m Americans. This information shows co-operation on the part of the FBI and CIA, and is in direct violation of the U.S. Constitution’s Fourth Amendment.
We are in the midst of a devastating civil war, and whether it is being fueled by invasion of privacy, healthcare or a crazy gunman attempting to take the lives of Congressmen during a softball practice – we need to recognize that the weapon of mass destruction is our very own cellphone. The only way to win this war is to turn off our cellphone, and spend time without it. Yes, I know what I’m saying is high treason, but as long as the cellphone is on – it can listen, transmit, and record. Believe me when I tell you, NOBODY wins a civil war.
There’s another Civil War brewing this summer, and this one is between Bitcoin and Ethereum. Just as Wall Street started to pay more attention to Bitcoin, a rival is increasingly threatening to become the top dog among cryptocurrencies. Ethereum’s market capitalization is nearing Bitcoin’s, as shown in the chart above (courtesy of CoinMarketCap). As of Wednesday, Bitcoin (shown in orange) accounted for 39% of the combined market capitalization for all cryptocurrencies – down sharply from 87% on Feb. 25. You can blame the erosion on Ethereum (shown in purple), which now makes up 31% of the total market cap – up from just 5% less than four months ago. If Ethereum’s market cap overtakes that of Bitcoin, then “The Flippening” will have occurred. That is the term that many people are using to refer to the shift in power and influence. Bitcoin’s market cap as of Wednesday was around $45B, and its price was $2,655. Ethereum’s market cap recently stood at $36B, and its price was $366.
Factually last week:
- The latest Bank of America Fund Manager’s Survey said: “Equity overvaluation has hit a record high, surpassing the all-time high set during the 1999 bubble.”
- Barrons Roundtable retiree Felix Zulauf said: "Today seems like late 1999. We haven't seen the peak yet. I expect the FAANG stocks and the Nasdaq to have a big selloff – easily falling 30% or 40%."
- Jim Rogers has been calling for a crash of epic proportions for 5 years now, and says: “The next crisis will be the biggest in my lifetime. Institutions that have been around for a long time – museums, hospitals, universities, and financial firms – will be wiped out."
- David Stockman said: “This market environment is the calm before a gigantic storm that I don't think is too far down the road."
- Marc Faber says: “The Fed’s policies have actually created a two-class system around the world. This gigantic financial asset bubble (according to the Baltic Dry Index) is about to collapse."
What if you told your best friend: “Hey, the DOW hit an all-time high today” – and all they did was yawn? First off, it amuses me that markets continue to set all-time-highs within the confines of rather ugly fundamental news. But secondly, nobody cares. Unfortunately, in the Central Bankster arena – we need to constantly feed the beast otherwise all ‘heck’ will break loose. Why? Because zero interest rates forced people along with institutions, pension plans, and insurance reserves – that would normally not buy stocks – into the stock market in search of yield. Their choice was to buy stocks or lose money due to inflation. With all of these elements being forced into the market, it’s clear that a whole lot is riding on the idea of the market moving higher.
The market’s effects are global in scope. If this market were to fall 45%, entire industries would cease to exist. Multi-billion-dollar pension funds would collapse. Banks would fail because most stock holdings have been used as collateral for other billion dollar loans. Our FED knew that they couldn’t rescue our economy. But (with coordination from the Swiss, ECB, and BOJ) felt that they could keep the wheels turning using an ever-rising market as a backdrop. Even with all of the trillions injected into our economy to date, we are finding that the absolute best we can grow is somewhere between 0 and 1.5% per year. So, just imagine all of the economic nightmares that would emerge if the Central Banksters stop their support of the markets. Yet, if they continue their market support we’re going to see a 50K DOW, and the people that can’t afford to be in the market are going to be on soup lines.
Normally the period from here into Labor Day is characterized by a sideways drift. I’ll continue to lean long, nibble on stocks with nice setups, and sell for quick gains. I’ll continue to keep my position sizes small until I see a reason to change.
Quantitative trading now accounts for over 90% of all trading. Quantitative trading does NOT focus on a company’s fundamentals, but rather on technical patterns. This is producing some very strange movement within some of the S&P companies such as Caterpillar (CAT) and Boeing (BA). Both CAT and BA have recently exploded to the upside – while Apple (AAPL) has completely imploded and is currently in ‘correction’ territory.
The above chart shows a marketplace in chaos. Standard correlations have broken down. For example: bonds are rallying which means interest rates are falling – while at the same time our FED (just this week) continues to raise rates. The NASDAQ is dramatically selling off while the S&P finishes the week where it started. Normally during periods of NASDAQ and S&P convergence we would see extreme bouts of volatility – but the VIX (the volatility measure) is barely moving.
Yes, this past week Amazon purchased Whole Foods for about $14B. And yes, after the acquisition was announced Amazon rallied slightly more than $14B – making the entire transaction (at least on paper) cost Amazon virtually $0.
This coming week I’m watching:
- Apple (AAPL): as one of my keys to the entire market place. Apple has quickly faded from 155 to 142 and is in correction territory, but it’s volatility is not very high. If AAPL bounces this coming week, it will trigger a NASDAQ rally, but my advice would be to short that rally.
- Caterpillar (CAT) and Boeing (BA) have come a long way in a very short time, and I wouldn’t be surprised to see them roll-over and give back a large percentage of their gains from the past several weeks.
- I’m looking for the S&P Index (SPY) to move sideways to down over the next week or so. The SPX ended the week at 2433, and has a weekly expected move of 21 points – giving it a range of between 2412 to 2454.
To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
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