This
Week in Barrons – 5-7-2017:
“Let the games begin.”… Pres. Donald Trump
Dear President Trump:
You championed yourself as a savior of the American
worker during your campaign, but you have been largely silent on the
collapse of the retail industry. The
retail industry has shed more jobs since October – than the entire coal
industry employs. Retailers employ 1 out
of every 10 Americans, and their unemployment issue is only expected to get
worse. Currently more than 3,200 stores
have closed, and analysts expect that number to rise to over 8,600 closures
before the end of the year. For
comparison, 6,163 stores were shut down at the height of the 2008
recession. The typical retail employee
is low-skilled, spans all age brackets, and often requires a flexible working
schedule. Therefore, retail workers
losing their jobs will have a hard time finding a new one.
President Trump, in terms of the federal
minimum wage (which has an enormous impact on the retail industry), you
have made conflicting statements. On one
hand, you said that the federal minimum wage should be raised to $10 per hour,
but then you said that it’s really an individual state issue. As more retail workers lose their
jobs, the group of unemployed workers that do not possess a set of skills
that is easily transferable to another industry continues to expand.
President Trump, either you’re the best
salesman I have ever seen, or there's something bigger in play.
-
On one hand, you
have enacted more business focused executive orders than any other President,
but on the other hand you’ve been hell bent on encircling Russia with NATO.
-
On one hand, you
said NATO was obsolete, but on the other you love them (as long as they pay
their bills).
-
On one hand, you
said that we shouldn't interfere in other countries, but on the other you lob
missiles into Syria.
-
On one hand, you
said that you would ‘drain the swamp’, but on the other you brought in the
alligators from Goldman Sachs.
From day one I told my friends that you just
didn’t wake up one day and say: “Hey, I think I want to be President of the
U.S.” No, this must have been in the
works for a long time. You were probably
courted by major powers, talked into giving up your lavish lifestyle, and
forced to battle through the ‘primary’ muck to become President. For what? I think that the global
elites finally realized that fixing all of the world’s ailments are for naught
– if the U.S. economy folds. I think you
were picked to focus on fixing the business ills of our nation, and bring the
U.S. back to the competitive stage again.
I can almost hear the conversation:
G-Elite:
Donald, we told you we could make it happen, and now you're ‘the man’.
Trump: Yes – we did it, and I can't wait to start
fixing things.
G-Elite:
About all of that, you go right ahead and put machinists back to work, make
trade deals with nations, and get the economy going again. In fact, we selected you to be President
because the U.S. is hanging-on by a fiscal thread, with 50% of its people
living paycheck to paycheck. The U.S. is
the strongest country on earth, but if left to continue on this path – it will
go ‘belly up’. You focus on that. And as far as any wars and a global blueprint
goes – that’s off limits – understand?
Trump:
Why?
G-Elite:
Because the world is complex. We are
joined at the hip with many other nations.
Our foreign policy has to include their best interests, the Middle East,
global natural resources, and nuclear weapons.
The U.S. Dollar must remain as the global reserve currency, and the
Russia-China-‘Silk Road’ alignment is currently challenging that. We just can't leave all of those elements up
to a rookie.
Trump:
But, I’ll look stupid flip-flopping on my stance of not getting involved in
places like Syria.
G-Elite: Don't
worry about it – the American people are gullible. Just talk about the horror of gassed babies,
and they'll let you bomb Syria. In fact,
do something like lobbing missiles onto a vacant Syrian airbase, and we'll have
our media folks tell the world how ‘Presidential’ you are. Concentrate on making J.Q. Public’s life
better via pay raises, building ‘the wall’, and you'll be a hero.
Trump:
This President thing is harder than I thought.
With crude oil sliding below $45 a barrel, most of our domestic oil
producers are unable to balance their budgets.
Venezuela is on the brink of anarchy. Iran is under pressure, and
Russia is struggling to escape a recession.
After all, oil prices have given up all their gains since OPEC and
non-OPEC producers agreed to curb supply in November. And then there’s healthcare…
G-Elites:
We have an idea about healthcare for you.
To make it more competitive, try putting 200 doctors and 20 data
scientists in a room, have them catalogue every single medical treatment and
sub-treatment, and attach a tracking SKU to each one. Then have Amazon
create a web site where all the hospitals, doctors, and insurance companies can
publish their prices. People can than ‘click-to-buy’
the cheapest hip replacement (for example) along with the doctor & place
with the highest number of stars – that is covered by their current insurance
plan. It’s transparent, competitive, and simple.
Trump: Wow
– great idea. Let the games begin!
The Market:
The ‘beat down’ in silver and gold started
about April 15th (see chart below), and has been one of the most dramatic I've
ever seen. This was NOT a controlled
decent but rather an all-out attack, down 13 out of 15 sessions. I personally don’t think this was any
coincidence. I call it synchronicity –
coincidence with a purpose. How is it that during the EXACT three weeks
that our precious metals were getting pummeled, Bitcoin (a non-manipulated
currency) was making new all-time highs?
That answer is easy. For Bitcoin,
there are no ‘paper’ futures pits, and no Central Banksters that can attack Bitcoin
by printing $3B fake shorts. Nothing proves the manipulation of gold and
silver more than watching a digital currency go to all time new highs, while
one of the most respected precious metals of all time – collapses (see chart
below).
But then I asked myself: “Is there still a
demand for gold and silver?”
-
Hong Kong’s gold
imports more than doubled last month – rising to 111.647 tons in March from
47.931 tons in February.
-
India’s February
gold imports surged 82% higher to 50 tons.
-
And Russia’s
gold buying returned with the Russian Central Bank buying 37 additional metric
tons.
If I was writing a spy novel, the plot would
include forcing everyone out of their gold and silver holdings into
crypto-currencies. Then I would
architect a massive ‘EMP-like’ power outage that would collapse all of the
power grids, and make the crypto-currencies worthless. As intriguing as
that sounds, that’s just NOT going to happen.
But a lot of smart people are talking about how 2017 is really going to
‘shake people up’ – so something ‘unnatural’ is definitely going on here – stay
tuned.
This week’s ‘Non-Farm Payrolls Report’
showed 211K new workers entering the workforce and a 4.4% unemployment
rate. Unfortunately, the birth/death
model produced 255K of those 211K new jobs.
The birth/death model is an attempt to estimate how many new businesses
(with employees) are formed each month.
However, there are no real tax records or receipts to prove any of that
activity – it’s simply a fictitious estimate.
And if we subtract the 255k ‘fictitious’ jobs from the 211K actual jobs,
we find out that we actually LOST 44K jobs last month. As SF points out, if you examine the
unemployment report sector by sector – you will find is that the group of
individuals that re-enter the workforce quickly after being laid-off is
actually quite low (1.7%) and DECLINING.
That means computer programmers and others with present day skill sets
are finding employment opportunities quickly, but others with non-transferrable
skills are in an over-whelming majority and are having a much tougher time
finding employment.
The hard data is showing that a recession is
close:
-
Apple missed
earnings, and Facebook’s earnings failed to impress,
-
Productivity
fell 0.6%,
-
Core factory
orders fell the most in 13 months,
-
Unit labor costs
rose a huge 3%,
-
Ford, GM, and
other auto company sales fell between 5% and 7%,
-
Subprime auto
loans are becoming a problem,
-
Insiders are
selling their own company’s stock at record rates of 11 sells to every 1 buy,
-
The discrepancy
between a corporation’s reported ‘adjusted’ profits and their real corporate
profits (GAAP) is running at a record 22% difference,
-
The
International Monetary Fund raised its annual growth forecasts for China by
0.1%, Japan by 0.4%, the UK by 0.5%, and left the U.S. economy unchanged.
-
And it seems
that S&P 500 companies that generate more than half their revenue overseas
are posting quarterly earnings that are DOUBLE that of companies that conduct
most of their business domestically.
I think it’s possible that we set all-time
highs next week over the French election.
This could signal a ‘top’ similar to what happened on March 1st. After all, post March 1st we’ve
spent the last 64 days trading sideways.
I could easily see us blast higher for a day or two, and then begin
trading sideways again. The flip-side of that is the phrase: “Buy the
rumor, sell the news.” Could a Macron
win in the French election be a ‘sell the news’ event? It could.
Macron is a Rothschild banker who is all about keeping the socialist
policies intact, and the European Union alive and well. However,
when considering the future of the U.S., does a Macron win equate to our
retailers selling more goods and services?
Of course not. But with Apple failing to hit a home run, and
Facebook not leading the charge – our market needs a stimulus and it appears
that the French election could fit that bill quite nicely.
Tips:
“The Tail of 3 Indices – the NASDAQ, the S&P, and
the Russell Small Cap.”
Factually, the graph above is a 3-month
performance graph of the 3 major indices.
The NASDAQ (on the top) is up over 9%.
The S&P (in the middle) is up over 4%. And the Russell Small Cap Index (on the
bottom) is up over 2%. This is
reminiscent of the 1990’s, when people were throwing money at the NASDAQ. I don’t know how long the NASDAQ rally can
continue – as it has risen over 300 points in the past 2 weeks. It is highly unusual to see such a high
divergence between these 3 indices over such a short period of time. My recommendations include:
-
IWM ($139) is
the Russell Small Cap index ETF. I’m
looking buy IWM on weakness next week as it begins to close the gap between
itself and the NASDAQ.
-
XLF ($23.84) is
the financial sector ETF. If it can
close over $24, it could cause the S&Ps to pop to the 2450 level fairly
quickly.
-
XLE ($67.31) is
the energy sector ETF. It rallied on
Friday and caused the S&Ps to react positively. Look for it to rise on Monday and Tuesday,
and then on Wednesday begin to fall as traders will begin to sell into the
rally.
-
SLV ($15.50) is
the silver ETF. It has been crushed over
the past 3 weeks, and between here and $14.50 could be a long-term buying
opportunity. If it breaks under $14.50,
it will attract buyers.
-
SPX ($2,399) is
the S&P index product. It has an
expected move for next week of anywhere between $2,367 and $2,431. If the XLF and XLE both rally, then the SPX
will shoot to the top of its range rather quickly.
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!
Disclaimer:
Expressed thoughts proffered
within the BARRONS REPORT, a Private and free weekly economic newsletter, are
those of noted entrepreneur, professor and author, R.F. Culbertson,
contributing sources and those he interviews. You can learn more and
get your free subscription by visiting:
Please write to Mr.
Culbertson at: <rfc@culbertsons.com>
to inform him of any reproductions, including when and where copy will be
reproduced. You may use in complete form or, if quoting in brief, reference
<http://rfcfinancialnews.blogspot.com/>.
If you'd like to view RF's
actual stock trades - and see more of his thoughts - please feel free to sign
up as a Twitter follower - "taylorpamm" is the handle.
If you'd like to see RF in
action - teaching people about investing - please feel free to view the TED talk
that he gave on Fearless Investing:
Creativity = https://youtu.be/n2QiPSe_dKk
Investing = https://youtu.be/zIIlk6DlSOM
Marketing = https://youtu.be/p0wWGdOfYXI
Sales = https://youtu.be/blKw0zb6SZk
Startup Incinerator = https://youtu.be/ieR6vzCFldI
To unsubscribe please refer
to the bottom of the email.
Views expressed are provided
for information purposes only and should not be construed in any way as an
offer, an endorsement, or inducement to invest and is not in any way a
testimony of, or associated with Mr. Culbertson's other firms or
associations. Mr. Culbertson and related parties are not registered
and licensed brokers. This message may contain information that is
confidential or privileged and is intended only for the individual or entity
named above and does not constitute an offer for or advice about any
alternative investment product. Such advice can only be made when accompanied
by a prospectus or similar offering document. Past performance is
not indicative of future performance. Please make sure to review important
disclosures at the end of each article.
Note: Joining BARRONS REPORT
is not an offering for any investment. It represents only the opinions of RF
Culbertson and Associates.
PAST RESULTS ARE NOT
INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY
FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE
INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS
INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT
PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME
REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY
CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE
INVESTMENT MANAGER.
Alternative investment
performance can be volatile. An investor could lose all or a substantial amount
of his or her investment. Often, alternative investment fund and account
managers have total trading authority over their funds or accounts; the use of
a single advisor applying generally similar trading programs could mean lack of
diversification and, consequently, higher risk. There is often no secondary
market for an investor's interest in alternative investments, and none is
expected to develop.
All material presented
herein is believed to be reliable but we cannot attest to its accuracy.
Opinions expressed in these reports may change without prior notice. Culbertson
and/or the staff may or may not have investments in any funds cited above.
Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.
R.F. Culbertson
