Weekly Update 5.17.17
First rule of investing in the stock market is to NOT invest your politics. But if you have read our newsletters and updates this year, you know I have consistently shared the analysis that because of knowing Trump for 20 years in NYC and interviewing many times at Fox Business Network (as part-time anchor/host) that I had no doubt that
- with his bizarre ADD and compulsiveness (money can't by character)
- his immaturity and
- his profound ignorance/disrespect for our constitutional democracy (the written and more importantly NON-written rules) combined with our political system/built in checks and balances/geopolitical protocols/intelligence and judiciary systems...
...that it was only a matter of time before that reality would catch up with the Trump Administration and bite him/them in the ass. There have been SO many times when he should have been metaphorically been killed by his style and proudly ignorant approach to being POTUS (which I still do not believe he has absorbed ANY of the reality yet of the job) and survived I have consistently said "Let the market price OUT the Trump Trade dreams and price IN the value of our secular Super-Cycle technology leaders.
Which is exactly what has happened. BUT...the problem we face today is that while OUR portfolio is up 32% for the year (vs. 4.5% for the S&P 500) our Super Cycle growth stocks represent almost ALL the strength in the markets (along with the mega FANG caps Apple, Facebook, Alphabet/Google, Tesla, Netflix).
Key Point: IF hedge fund managers liquidate Nasdaq 100 and Seminconducters/Equipment stocks to offset their losses in the Trump Trade (banks, infrastructure, short bonds) we are going to get a 10-205%%+ correction in our positions.
Now the OTHER theme I have beaten is that we NEED a correction to get some great entry points for new positions live Cavium, MORL, Nvidia (again), Apple, Synaptics (SYNA) and a few others.
Well...here is the plan. The market clearly priced in 2017 tax reform and now is CLEARLY going to have to price it OUT for 2017. The Trump agenda is now stuck in the mud with his aproval rating with all Americans at 34% and registered voters 36%...in short he has wasted ALL his first year political capital.
The NDX Nasdaq 100 technicals are still in tact but # of stocks above 50-day are deteriorating:
The NDX price chart is still solvent (from being VERY over-bought and extended)
A break of 5500 on the NDX on BIG volume would make me take out portfolio insurance via put options to protect our $70k+ profits in 2017 and nearly $300 profits from 2016. BUT futures markets are UP pretty big right now 6pm PST and again ANY more formal issues with Trump are a LONG way off.
Stay tuned. I am running down reports from DC friends that additional grand juries and subpoenas are going out TONIGHT and in the morning directly to Trump associates NOT related to Mike Flynn. That means ex-manager Paul Manafort and others. FBI interim director McCabe meets with Senate tomorrow.
Reactions: CLEARLY this shit show is going to get WORSE before better.155 point DROP in the Nasdaq Index was ALL once again computer driven algo black box trades...its could be up 100 points tomorrow with algo's buying the same stocks they sold today.
- Drudge called the former FBI Director's memo "Comey's Revenge." And we will hear a lot more from him: The sacked director will HAVE to testify on the Hill and bring ALL his very copious and detailed notes on conversations with POTUS.
- Top officials in both parties say that if his account holds up, it would look like obstruction of justice on behalf of the POTUS is "extremely likely"
- The Justice Department just appointed a Special Prosecutor in the Russian interference in the 2016 Election AND Trump associate collaboration with Russians
- Capturing the mood of the stunned capital, Sen. John McCain told Bob Schieffer at an award dinner last evening that the Trump scandals have reached a "Watergate size and scale."
And now just being reported that NBC confirms Grand Jury's were impaneled...today to extend to Trump associates PRE inauguration. U.S. Marshals have reportedly been given arrest warrants...for delivery tonight and tomorrow (still following this up).
ACtion to Take: We are NOT going to go to full hedging yet...but stay tuned. Dire predictions about Trump are usually wrong, so forecasting the uncharted days ahead is a fool's errand. The president leaves Friday on a world tour that his staff desperately hopes can serve as a modest reset. It will take many weeks for the Special Prosecutor to get rolling.
Of course Trump has turned to conspiracy theories and denial and will not learn a THING from what he is about to be hit with. Trump's campaign sent supporters a fundraising email yesterday with the subject line "SABOTAGE": "You already knew the media was out to get us. But sadly it's not just the fake news… There are people within our own unelected bureaucracy that want to sabotage President Trump and our entire America First movement."
Watch for Trump to turn up the stoking of his base, because his support there is what gives him power over lawmakers: They're much less likely to abandon or undermine him if he remains popular in their states or districts. It's his most basic survival strategy — and it's another reason I can promise you Trump won't change a bit because he believes "Trump being Trump" is what won him the election.
What he does NOT seem to remotely get yet is his voters represent about 22% of Americans...and that as POTUS he HAS to be percieved as legislating for ALL Americans, not just white Rust Belt working class and Republican diehards.
Will there be impeachment proceedings? My guess is NOT unless more Comey notes give more evidence to obstruction of justice charges aka treason.
Bottomline: Unless something changes VERY quickly the almighty offshore tax repatriation may be put off but BOTH sides agree on changing the tax law. The trend and charts remain solidly in upward trading range. The volume today was larger than average but NOT blow-out crazy.
We have an experimental POTUS. NEVER in our history have we elected a person with no military or government experience. Never before have we elected a POTUS who does not read books but solely watches cable news. It would insane to expect to NOT have these episodes of naivete, ignorance of written and unwritten rules, and basically unforced errors in act, deeds and judgements.
There are just 42 legislative days till August Congressional break (till Sept 15). I am not a mind reader nor soothsayer...but I can tell you that UNLESS the tax overhaul gets out of the House and into the Senate by mid-Fall it ...and/or the AHCA failing in the Senate as I expect (or more precisely NOT passing the House with the Senate changes) "massive" tax overhaul will become a "mini" plan to salvage something.
Ladies and Gents…let us not forget...we are primarily investing in the Super 7 amazing and once a generation convergence of technology spending “Supercycles” 2016-2020:
- Data center based Artificial Intelligence (AI): Nvidia, AMD
- Conversion of billions of digital devices and TVs from LED screens to OLED: OLED AMAT LRCX
- Transformation of NAND memory from 2D to 3D: MU LRCX AMAT
- The Internet of Things (based on new 5G wireless roll-out starting later this year): Impinj (PI)
- Apple 8, 9, 10 Super Cycle: OLED MU Synaptics (SYNA)
- Autonomous Driving Vehicles: MobileEye (being bought by Intel) Autoliv
- ALL of these driving $400 Billion a YEAR in Data Super Center development (aka the Mega Cloud).
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