This Week in Barrons –
10-1-2017:
“So you had a bad day…” Daniel
Powter … 2005 … https://www.youtube.com/watch?v=gH476CxJxfg
Dear President Trump:
When I’m having a bad day, I’ll forever remind myself
of your past week:
-
Saturday: You started off by lashing out against the NFL using racially
insensitive language, and then you called Kim Jong Un the “Little Rocket Man who won't be around long.”
-
Sunday: The NFL players and owners responded by
standing united against your outburst with their words and actions.
-
Monday: North Korea's minister proclaimed your
weekend remark a declaration of war, and the effort to repeal-and-replace
Obamacare failed.
-
Tuesday: You were criticized for your non-existent
emergency response to Puerto Rico’s devastation. And you found out that you backed the losing
candidate in the Alabama Senate race.
-
Wednesday: You put HHS Sec. Tom Price on the hot seat
for his use of private jets, and your slow Puerto Rican response gains global
traction.
-
Thursday: You played defense surrounding the botched
Puerto Rican situation, and released a new 9-page tax reform outline.
-
Friday: San Juan’s Mayor Cruz expressed her outrage
over your non-action, so you immediately fired HHS Sec. Tom Price.
-
Saturday: The world began picking apart your tax reform
proposal and is finding some glaring issues:
o
“What goes up…”:
You’re RAISING the tax rate
on the poor, and REDUCING the tax rate on the wealthy. Shouldn’t it be the other way around?
o
“Caught in a Trap…”:
You’re eliminating the
‘millionaire’ estate tax that will save: YOU = $564m, Wilbur Ross (Sec. of
Energy) = $545m, and Betsy DeVos' (Sec. of Education) = $900m.
o
“Different Strokes…”:
You’re comparing your
proposal to ‘trickle-down’ economics, but conditions have changed since the
1980’s.
o
“Walk in my shoes…”:
To pursue tax reform under
‘special budget reconciliation’, you will need to pass a budget and keep at
least 50 Senate Republicans in line. How
will this end any differently than your ‘repeal-and-replace’ initiative?
o
“Time is on my side…”: Unfortunately,
it’s not. This week's 9-page outline is
at least 200+ pages short and 5 months late.
With only 40 Congressional working days left in the year and the 2018
midterm elections on the horizon, policy analyst Gary Krueger said: “This administration continues to
over-promise and under-deliver. We
believe nothing will pass on taxes this year or next."
This week Gary Cohn (your economic adviser)
said: "A typical family that earns
$100,000 with two children, and has used the standard deductions – can expect a
tax cut of about $1,000. With that they
can: renovate their kitchen, buy a new car, take their family on vacation, and
even increase their lifestyle." Does he know that the median
American family only earns about half that ($55,000) per year? And it’s hard for me to believe that $500 or
$1,000 will: renovate a kitchen, buy a new car, take a vacation, or impact any
family’s lifestyle.
But the biggest problem with federal tax
reform is that most Americans don’t want it.
A recent Gallup poll asked people to rank the 10 most important problems
in America – and federal taxes did NOT make the list. The list was: government distrust, racism,
immigration, national unity, N.K. tensions, health care, jobs, disaster relief,
the environment, and crime. Currently,
most of the families that earn between $32,000 and $140,000 pay only 2.5% of
their income in federal income taxes. Almost half of all Americans pay no
federal income taxes at all – but do pay payroll, excise, corporate, property,
sales, state and local taxes. So, if
there is a problem with taxes, it’s NOT at the federal level.
Mr. President, it’s been a tough week. Might I suggest that we Americans are strange
beasts. We argue, fight, and hate each
other – but when something disastrous happens we help each other like no other
county, showing incredible acts of kindness.
I realize that we all seem to be increasingly wired toward ‘WIIFM’
(“What’s in it for me”), but I think a slight change in your stance toward
kindness, grace, humility, integrity, and honestly may go a long way at this
point. After all, we’ve all seen our
fair share of thieves, hucksters, and hustlers.
To quote Dilbert: “I want to like
people, but they don’t make it easy.” But
that’s not to say we stop trying. So
maybe you should take the weekend off, play a little golf, and hit it again on
Monday with a different perspective?
The Markets:
“They’re back…” Poltergeist
II … 1986
Just when you thought it was safe to forget about
Bitcoin – it’s back with a vengeance. Often
when stocks go through a pull-back, I look for a half-back retracement to prove
that the buyers are back. Both Bitcoin
and Ethereum are in that camp. But you
need to look no further than the most recent crypto-news:
-
Christine
Lagarde (the head of the International Monetary Fund) believes that
cryptocurrencies may give traditional government-issued ones a "run for their money." She said: "It
may not be wise to dismiss virtual currencies.
Instead of adopting the currency of another country – such as the U.S.
dollar – some economies might see a growing use of virtual currencies for ease
and security reasons. Call it dollarization 2.0.”
-
Sharps Pixley,
London’s leading gold bullion broker, announced that they are now officially
accepting Bitcoin as a payment method for gold bullion and other precious
metals.
-
Catalonia (the
northeastern region of Spain that includes Barcelona) has fought off and on for
its own independence for decades. It is
calling for it again – and has announced Bitcoin as their preferred
currency. Spain is trying to keep the
vote from happening by arresting all of the Catalan officials, confiscating the
paper ballots, and sending the police to block people from entering the polls.
-
Zimbabweans are
also dealing with a crisis concerning their economy. Their nations’ currency is practically
worthless, and this is forcing the country’s citizens towards alternative
stores of value like gasoline, food, medical supplies, and bitcoin. Earlier this week, bitcoin reached a high of
$7,200 on a Zimbabwe exchange, and the current price for BTC is $6,150.
-
Dispensaries in
California and Colorado will soon have another payment option for legal
marijuana purchases - GreenMed. It is an
app that uses blockchain technology (supported by Ethereum) to facilitate
payments.
-
Viktor Shvets
(head of global and Asia-Pacific equity strategy for Macquarie) wrote: "It
is unlikely that $400 trillion+ of financial instruments circulating around the
world would ever be repaid and most are now backed by assets that are already
either worthless or are diminishing in value.
How does one describe rates and a yield curve that are directly
determined by our global central banks rather than price discovery? Investors
should consider integrating cryptocurrencies into their portfolio, as a hedge
against the devaluation of fiat currencies like the dollar.”
The above chart shows Bitcoin (BTC = $4,285)
over the past 45 days. My Bitcoin buy
trigger (for the ‘half-back retrace’) fired at $4,120. I’m targeting $5,358, and above $4,680 we
should see a quick rally to $5,000. Ethereum
(ETH) also triggered, and I’m looking for an upside target of $420 with
significant resistance at $344. Litecoin
(LTC) did not reach my $58 buy level yet, but when it breaks above $58 –
it will be quick leap to $72.
By the way, a note that I find interesting:
CNBC’s viewership has dropped to a 22-year low of 152k viewers. Can you imagine – the largest financial
network only getting 150,000 viewers?
There are hometown radio stations that do better than that, and they’re
talking about Mrs. Jones’ garden.
I’ve had many questions regarding what
cannabis / marijuana stocks I like.
Without going into an ethical discussion, the trend in the U.S. is to
slowly continue to legalize the substance.
However, it's not the U.S. that is generating the most excitement. Canada is on track to pass nationwide
regulations allowing citizens to buy cannabis openly and legally. If these pass, there will be an absolute
explosion in demand from the growers and processors because nationwide
legalization for recreational use is simply too big to ignore. The
most notable names are Canopy Growth (TWMJF = $8), Aphria (APHQF = $5), and
Aurora Cannabis (ACBFF = $2). These are
not expensive stocks, but all could easily double over the next year.
Also, a relative newcomer that is also doing well is MedReleaf Corp.
(MEDFF). And finally, there is a ‘streaming’ company for marijuana stocks
– that finances the operations for a percentage of the profits – called
Cannabis Wheaton Income Corp (KWFLF = $0.75).
My top 3 picks are: Cannabis Wheaton (KWFLF), Aurora (ACBFF) and
MedReleaf (MEDFF).
September 2017 was the least volatile
September on record. The S&P
500 marked its sixth consecutive monthly gain. Small-cap stocks have been on fire to the upside
because they are more sensitive to changes in the domestic tax code. Renewed positive sentiment toward tax
reform, could fuel additional gains in the small-cap arena. With devastation comes opportunity, and this
is the case for the homebuilding sector.
Hurricanes Harvey and Irma could fuel demand for housing-related stocks.
But if you doubt this market, it probably
says that you’ve lived through run-ups like: 1995 to 2000, or 2004 to 2007 –
only to see the crashes of 2001 to 2003 and 2008 to 2009. It also says
that you recognize that this is NOT organic fundamental growth, but rather
financial engineering at its finest. The
ultimate goal is to either have the Central Banksters own most of the great
companies of the world, or continue this madness until the next big idea is
ready to launch. But, what else is new? Financial visionaries have been calling for a
50% pullback for 5 years or more. As
recent as August 10th Mark Zandi (the chief economist at Moody's) wrote: “If
you are a stock investor, buckle in.
Stock prices are up by nearly a third over the past 18 months, and seem
to be hitting new record highs daily.
But it will soon be nothing but a memory. The stock market is due for a significant
correction. The stock market is
overvalued. Stock prices are much too
high despite the good outlook for corporate earnings. The only other time in the past half century
that stock prices have been so highly priced was during the tech bubble.” But
that writing was almost 2 months ago now, and the DOW is up another thousand
points since then.
I’m leaning cautiously long until I see a
true coordinated move by the Central Banksters to remove liquidity. But it MUST be coordinated. Having our FED sell $10B worth of its assets
while the ECB is still printing $65B and the Japanese are still printing trillions
of yen is not a coordinated effort.
History is indeed being written and we're living through it. Take
it for what you can get, but don't get conned into thinking that this is
normal. There is absolutely nothing normal about today's markets.
Tips:
Recommendations:
Bullish: (Sell PCS = Sell a
Put Credit Spread)
-
Applied Optical
(AAOI = 64.67) – Sell PCS – Oct 6: +56 / -57, $0.35
-
Expedia (EXPE = 143.94) – Sell PCS – Oct 6: +135 / -136, $0.08
-
Bio-Tech Bull ETF (LABU = 85.47) – Sell PCS – Oct 6: +79 / -80, $0.20
-
Micron (MU = 39.33) – Sell PCS – Oct 6: +35.5 / -36.5, $0.08
-
Royal Carib Cruise (RCL = 118.54) – Sell PCS – Oct 6: +110 / -111,
$0.08
-
Restoration Hdwr (RH = 70.23) – Sell PCS – Oct 6: +62.5 / -63.5, $0.30
-
SPX Futures (SVXY = 93.75) – Sell PCS – Oct 6: +82 / -82.5, $0.16
-
Wayfair (W = 67.40) – Sell PCS – Oct 6: +60 / -61, $0.10
-
Weibo (WB = 98.94) – Sell PCS – Oct 6: +91 / -92, $0.18
-
YY Inc. (YY = 86.78) – Sell PCS – Oct 6: +82 / -83, $0.20
-
DBV Technologies (DBVT = 43.46) – Sell PCS – Oct 20: +15 / -10,
My Crypto-Currency Holdings
Include:
-
Ethereum (ETH),
Litecoin (LTC), Dash (DASH), Digix (DGD),
MaidSafeCoin (MAID), Metal (MTL), OmiseGo (OMG), PIVX (PIVX), Patientory
(PTOY), Steem (STEEM), and NEM (XEM).
To follow me on
StockTwits.com to get my daily thoughts and trades – my handle is:
taylorpamm.
Please be safe out there!
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