This
Week in Barrons – 10-30-2016:
When I think of Halloween, I think of a simple
idea that hasn’t changed a whole lot, and yet has stood the test of time. Unfortunately, there are very few of those ideas. Immigration (for example), the U.S. policy
has remained static since 1990, and before SF sent me the following video: https://www.youtube.com/watch?v=LPjzfGChGlE
I would have thought that:
(a) our immigration policy mattered to the world, and (b) we were a part of the
solution. On both counts I would have
been wrong.
-
Since 1990 the
U.S. has taken in 1m immigrants per year, and that’s virtually our social and infrastructure
limit. The World Bank tells us that
there are 5.6B people living in poverty around the globe: (Africa - 650m, India - 890m, Asia - 1.3B, and Latin
America - 105m) and our 1m immigrants do
NOT even make a dent in that total.
-
Therefore, when people wish
to double the number of immigrants that the U.S. takes in (irrespective of the devastating
effect it will have on our own unemployed, the working poor, and our natural
resources) – I wonder if they’ve run the numbers.
-
Seldom have I heard the
stance that our immigration policies may be doing more harm than good. That in fact the immigrants that we accept are
among the most energetic, well-educated, and dissatisfied people in their
particular countries. IF they did not
immigrate, THEY would be the ‘agents for change’ within their own country.
-
So not only can’t we take
enough people to make a difference, but the people we take are the very ones
that would be the catalyst for changing their own cultures. After all, the true heroes are the ones that STAY
in their own country and apply their skills to help their fellow countrymen.
-
Numerically, our
immigration policy is working even worse than the odds suggest. While the U.S. was taking in its 1m
immigrants, the rest of the world was adding 80m to their own poverty numbers
every year.
-
Immigration is NOT the
answer. The ONLY place where 99.9% of
the impoverished people of the world can be helped – is where they live! I encourage you to watch this video done so uniquely by an economist who uses ‘gumballs’
to represent those in poverty, and explains (in very basic terms) why the US
policy is flawed and why it only exacerbates the issue: https://www.youtube.com/watch?v=LPjzfGChGlE.
As our government continues
to modify the definitions of inflation, GDP and unemployment to suit the
political landscape, those same definitions are coming home to roost. We have over 90m U.S. citizens not participating
in the workforce (www.bls.gov). That means over 37% of our working aged labor
force is NOT working at all. Of those 90m, over 43m of them are receiving
food stamps worth over $5B per month. Obamacare
costs have just started to skyrocket with national premiums increasing 25%, and
regional ones around Philadelphia rising 56%.
As the Obamacare patient population continues to skew toward the
unemployed and older, and as fewer and fewer ‘healthy people’ actually pay into
it – its prices will continue to rise. Eventually
the ‘takers’ will outnumber the ‘givers’ and the system will fail.
Anymore, I’m amazed
how complex and convoluted we can make a very simple idea, and I admire the
ones that have remained pure throughout the years. Picasso once said: “It took me 4 years to
paint like Raphael – but a lifetime to paint like a child.”
The Market:
Factually:
-
Paccar, Volvo,
and Daimler trucks all saw their profits and revenues decline in the third
quarter of 2016.
-
Mortgage
applications and business investment fell in Q3.
-
Italy’s oldest
bank ‘Monte dei Paschi di Siena’ announced that it will cut 2,600 jobs, close 500 branches, sell off its bad loans, and
raise capital in the latest bid to secure its survival.
-
OTTO / UBER made
its first autonomous driving delivery = https://www.youtube.com/watch?v=Qb0Kzb3haK8
-
Freight rail car
orders fell to their lowest level in 6 years, meaning that there is no growth
in shipping.
-
NATO recently announced
plans for its biggest military build-up on Russia's borders since the Cold War.
-
Reuters reported
that U.S. mutual funds had their largest outflow in five years. $16.9B was pulled from stock mutual funds in
the seven days through Oct. 19, more than in any other week since August
2011.
-
The first look
at 3rd quarter GDP came in at 2.9%. That's amazing considering the 2nd Q
was just 1.4%. The annualized rate is still under 2%.
This
week Deutsche Bank attempted to calculate how much of the S&P’s run up was
due too Central Bankster behavior. After
all, earnings have gone nowhere over the
past two years, and on a GAAP basis they are the lowest since 2010.
This means that earnings
growth has NOT been a factor behind the stock market's ascent
to all-time highs. After all, there are
three components of a stock’s price: (a) earnings growth, (b) a stock’s sector
multiplier, and (c) the ‘equity risk premium’ – as people view stocks as being
less and less risky they drive the price higher. DB said that the FED is worried that once
rates go up (as a result of renormalization) and due to the lack of a central
bank intervention, stocks will crash. As
it turns out the following chart shows that the FED has ample reason to be
worried. After all the bulk of the equity
performance between 2012 and 2016 is captured inside the ‘equity risk premium’.
This also means that every
push higher in yield, whether orchestrated by our Central Banksters, or due to events
like a ‘The Donald Becoming President’ risks upsetting the precariously
compressed equity risk premium (ERP) spring – leading to a violent market
crash. IF the ERP is responsible for 92%
(800+ points) of the S&P500 move since 2012, that would suggest that our
FED is directly responsible for approximately HALF the value of the stock
market, and any moves to undo this support could result in crash
that lands the S&P around 1,400.
In terms of trading next
week leading up to the election, I’m looking for the same S&P chop that
we’ve experienced for the past 5 months.
I expect the S&P to remain between 2120 and 2070 for the week, and
drift slightly higher in anticipation of a Clinton presidency.
Tips:
At 1pm on Friday, the
FBI announced that they were looking into more Emails concerning Hillary
Clinton. The market instantly went from up 74 to down 50. The Democrats started asking how the FBI
could be so insensitive as to open an investigation with just 11 days left to
the election. The Republicans started
proclaiming that just maybe the rule of law in the U.S. could be saved.
Theories abound
concerning what they have and why they did this: (a) The ‘powers that be’ see
the early voting results, realize that Trump is going to pull this off, and
want to save their necks. (b) FBI insiders were going to spill the beans on
what they know, as many field officers felt betrayed by Dir. Comey. (c) Dir.
Comey knows that WikiLeaks is going to release information this week that ties
ALL of the top politicians into the corruption, and wants to get ahead of it.
(d) FBI agents (NOT throttled about investigating Hillary) were working on
Weiner/Huma emails, and found so much stuff they were going to come forward. You can pick your favorite, but what we know thus
far is that the FBI found thousands of State Department-related emails
(ostensibly containing classified information) on the electronic devices
belonging to Mr. Anthony Weiner and his wife (top Clinton aide) Ms. Huma
Abedin. The discovery has prompted FBI
Director James Comey to (on the eve of the election) reopen the Clinton e-mail
case.
I don't know how this
all works out. My questions start with:
(a) Is this the first election where one of the candidates is possibly under
investigation for criminal activity? (b) If more bombshells hit, will the
DNC yank Hillary and replace her with Bernie or Joe? (c) Could Obama use executive order to delay
the election and give the DNC time to form a replacement?
My gut tells me that this
is showmanship. All the stuff they had
originally was MORE than enough to disqualify her from ever having confidential
clearance, and the FBI and the Justice System did nothing. I think the FBI field officers felt betrayed.
I think that as more and more Podesta e-mails
are made public, they had to do something to make it look like they're not
bought off shills. If this investigation
continues, Hillary could be the first Presidential candidate that on election
day is being investigated by the FBI for a Federal crime.
I’m watching:
-
NFLX (Netflix) – selling Call Credit Spreads around
$130,
-
GOOGL (Google) – selling Put Credit Spreads around $820,
-
AMZN (Amazon) – selling Call Credit Spreads around $770,
-
FB (Facebook) – buying Call Debit Spreads for earnings
run,
-
FFIV – buying Call Debit
Spreads – moving higher,
-
GS (Goldman) – buying Call Debit Spreads – moving higher
w/ rates,
-
OIL – looking to hold
the 47 to 48 level then move higher,
-
The Bank of
Japan and Bank of England both have interest rate decisions next week – and a
hint at more QE will drive the dollar and gold higher.
-
If Donald Trump
wins the Presidency – watch for
gold to spike higher over-night.
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: <http://rfcfinancialnews.blogspot.com>.
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 <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: http://www.youtube.com/watch?v=K2Z9I_6ciH0
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
No comments:
Post a Comment