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Transfer of Power Thursday – “A Continuation”

"There won't be a transfer, frankly, there will be a continuation."  

Asked whether he would “commit here today for a peaceful transferral of power after the November election,” Emperor Trump declared: "We’re going to have to see what happens.  You know that I’ve been complaining very strongly about the ballots, and the ballots are a disaster.  Get rid of the ballots and you’ll have a very peaceful — there won’t be a transfer, frankly. There will be a continuation,” the President said. 

And so, Democracy dies.  Not with a bang, but with a whimper as the lack of outrage is itself outrageous.  If any other World leader said such a thing, they would call the UN in to supervise the election but here we are, in America, where voting is supposed to be a sacred right that empowers our Democracy and we're just letting a guy who lost the popular vote by 6% when he ran – DICTATE the outcome of the next election.  Like a….. Dictator.

Trump’s refusal to endorse perhaps the most fundamental tenet of American democracy, as any President in memory surely would have, was the latest instance in which he has cast grave uncertainty around the November election and its aftermath. Democrats are growing increasingly alarmed as Mr. Trump repeatedly questions the integrity of the vote and suggests that he might not accept the results if he loses.  Hours after Mr. Trump’s assertions, Senator Mitt Romney, Republican of Utah, expressed alarm over the comments on Twitter

“Fundamental to democracy is the peaceful transition of power; without that, there is Belarus,” Mr. Romney wrote. “Any suggestion that a president might not respect this Constitutional guarantee is both unthinkable and unacceptable.”

I'm sorry if this is "political" but are we seriously going to let this happen? 

OK, I got that out of my system.  Now how about those markets?  As if Trump wasn't depressing enough we have the markets falling apart, which does tend to happen when Dictators seize control of Governments.  Usually the simple act of a Dictator seizing power doesn't lead to an economic collapse but, as I noted in yesterday's Live Trading Webinar, we're already in an economic collapse and on a path to have 117M Americans infected by November 2021 if we don't DRASTICALLY alter our course and if you think 1/3 of all Americans catching a debilitating disease is going to be good for the economy or the markets – you need to find another profession!  

Long Before Trump, There Was Nero : PoliticalHumorOf course we're not just talking about an extinction event for the American people – the entire human race now hangs in the balance of this election as we apparently have just 11 years left "to prevent IRREVERSIBLE DAMAGE from Climate Change" according to a UN study.  That was back in March so we've already burned one of those years and re-electing Trump (or letting him stay in power despite the vote) will cost us 4 more years and, if Trump gets his way – maybe even 8.  

We are the last generation that can prevent irreparable damage to our planet,” General Assembly President María Fernanda Espinosa Garcés (Ecuador) warned the gathering in her opening remarks, stressing that 11 years are all that remain to avert catastrophe.

You can have a fire on the stove in your kitchen and you can smell some smoke and decide not to look at it because "it's probably nothing" and you can then have a raging fire in your kitchen and it becomes undeniable but you can then say "it will burn itself out" or "someone will do something about it" but there is a certain point at which the fire is now in your living room and surrounding your chair and you really should do something besides pray.  We're getting to that point, people!

When that fire is spreading from the stove to the kitchen to the living room – what is happening to the value of your house?  From the street, the house looks fine, perhaps with a warm light flickering through the window but there's a certain point at which the flames spread and become apparent to anyone looking at the house and suddenly the value goes from "Warm Home" to "Fixer Upper" to "Ashes" in a very short amount of time.

Don't be left holding the ashes….

 


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  1. At this point, anyone who supports POTUS for any reason, should get their head examined…

     

    Good Morning.



  2. Get rid of the ballots said:
    a. Putin
    b. Erdogan
    c. Kim Jung-Un
    d. Trump
    e. All of the above


  3. Election / Phil – Since it's already a given that this election will probably be a shit show, I have been wondering how it could play out in the markets. Right now I see multiple scenarios, many of them could lead to a massive drop:
    1. Trump wins fair and square – lots of unhappy people, but markets are happy we averted a catastrophe. This is the least likely scenario now.
    2. Biden is projected the winner in a landslide and Trump concedes. Market are OK with that as well. Also quite unlikely.
    3. Biden wins with a narrow margin and Trump refuses to concede and starts legal challenges. Markets are probably unhappy and are in a wait and see mode. Probably a 50% chance there.
    4. Biden wins big and Trump refuses to concedes and goes full nuclear with the scenario of asking red states to send their own electors (already being discussed, not an hypothetical). Markets lose their shit and we drop massive numbers over the following days. This is probably the other 50% of the equation.
    I think that anyone would need to hedge for scenario 4 or even put plays in place. Maybe to make some money to pay for relocation!


  4. ST Jean- Yes relocate to where? No one wants us! I'm thinking of unloading all my assets and burying myself in the mountains out west. Sneak over the border to Canada like the young men did to not go to Vietnam? Seems the whole world is in lock down. Know of a dentist who is relocating his young family to New Zealand. Putin played his cards right. Can't help but wonder what dirt they have on dumpy.


  5. Good morning!

    Scenarios/StJ – Not sure if Trump winning is good for anything.  As I noted in the Webinar yesterday (too depressing, don't watch it), re-electing Trump puts us firmly on a path to 117M infections by next November – I don't see how that's going to be a long-term positive.  2 works, 3 works and 4 is the end of the World as we know it.  

    I'm thinking cash.  They are jacking up the margin requirements and that's going to force a lot of liquidation – especially at IB where people are super-leveraged.

    • Updated for opening action: Stocks begin the session with modest losses, the S&P 500 down 0.35% and the Nasdaq off 0.50%. The S&P 500 at this point is more or less down 10% from its peak, or what the cognoscenti like to call "correction" territory.
    • Previously …
    • U.S. stock index futures have gone from sharply lower to flat to modestly positive multiple times overnight. At last check (40 minutes before opening bell), they're back in the red.
    • Nasdaq 100 is leading the decline, down 1.35%. S&P 500 -0.9%, DJIA -0.7%.
    • In economic news, initial jobless claims were little-changed at 870K and continuing claims were 12.58M - it translates into an expected unemployment rate of 8.6%.
    • Weak economic data used to be bullish for stocks as investors in Pavlovian fashion looked to more sugar from the Fed. But central bank chief Jay Powell yesterday said the Fed has done all it can do to prop up the economy (stock prices, really). Of course, he didn't really mean it … Instead, he's trying to goad Congress and the White House to agree on a fiscal stimulus deal. He did say it, though.
    • In a note this morning, Goldman has trimmed expectations for economic growth, citing its belief that no stimulus package from D.C. will be forthcoming.
    • Initial Jobless Claims+4K at 870K vs. +880K consensus, 866K prior (revised from 860K).
    • On an unadjusted basis, which is more comparable, jobless claims down 28.5K to 824.5K from the prior week.
    • The four-week moving average is 878.25K, down 35K from the previous week.
    • The advance seasonally adjusted insured unemployment rate declined to 8.6%.
    • Continuing claims of 12.58M are down from 12.75M, and higher than 12.3M consensus.

    • Bloomberg reports that, according to Health and Human Services (HHS) Secretary Alex Azar, all six frontrunning COVID-19 vaccines are being produced at industrial scale.
    • The companies have all previously announced production ramp-ups ahead of anticipated emergency use approvals aimed at being prepared for prompt widespread distribution.
    • Developing….
    • Selected tickers: AstraZeneca (NYSE:AZN), Pfizer (NYSE:PFE), BioNTech SE (NASDAQ:BNTX), Johnson & Johnson (NYSE:JNJ), Merck (NYSE:MRK), Sanofi (NASDAQ:SNY), GlaxoSmithKline (NYSE:GSK), Moderna (NASDAQ:MRNA), Dynavax (NASDAQ:DVAX), Novavax (NASDAQ:NVAX).
    • California Governor, Gavin Newsom signed a executive order N-79-20 banning the sale of new gas-powered passenger cars and pickup trucks in the state by 2035.
    • Electric vehicles are here to stay:

    • "Blink Charging (BLNK -4.9%) has been in the EV charging infrastructure business for more than ten years, and we believe that Governor Newsom’s executive order comes at a pivotal time in our country. His commitment to fully embrace electric vehicles is no surprise given that California is already leading the country in the widespread adoption of EVs," CEO Michael D. Farkas commented.
    • Among others, the most notable program of the state is the $436M Charge Ready program for the deployment of 40K charging stations in Southern California Edison’s service areas.
    • Morgan Stanley analyst Adam Jonas says investors shouldn't overthink the inevitable growth of the EV market with global penetration only at 2% and major automakers fully committed. He notes that the EV industry is growing at a 20% CAGR through 2040, while the internal combustion energy industry will shrink at an estimated 5% CAGR through 2040. Thus, the advice is given to 'take the over' on growth from the 2% mark.
    • California's big move to ban ICE cars is called notable because the state ranks by itself as the 5th largest GDP market in the world and could accelerate the move of fleets (corporate, logistics, rideshare) into EVs.
    • Jonas thinks the California announcement sets up well for Aptiv (APTV -2.2%) and Tesla (TSLA -6.0%) in particular. Of course, the list of EV stocks is growing by the day and includes names like Blink Charging (BLNK -4.9%), Arcimoto (FUV -4.0%), Spartan Energy Acquisition (SPAQ -6.5%), Electrameccanica Vehicles (SOLO +7.4%), Delphi Technologies (DLPH -0.8%), Tortoise Acquisition (SHLL -17.3%), Lordstown Motors (RIDE) and Workhorse Group (WKHS -5.7%). Interestingly, many of those names are lower following Tesla's Battery Day event and the high-profile flameout of Nikola (NKLA -17.8%) Executive Chairman Trevor Milton.
    • Read more about California's plan to ban new gasoline car sales by 2035
    • In a major revision to its PV module assembly capacity expansion plans for 2020, JinkoSolar (NYSE:JKS) says it will nearly double its nameplate assembly capacity to a new goal of 30 GW by the end of 2020.
    • JinkoSolar's initial plans were to take module assembly capacity from 16 GW at the end of 2019 to 22 GW but then revised the plan to 25 GW by year-end 2022; in reporting Q2 earnings and sales yesterday hat topped estimates, the company said it had already reached the 25 GW target by June.
    • PV Tech reports the company also plans to spend ~RMB14.5B ($2.12B) on a major new expansion, including 10 GW of ingot/wafer production, 10 GW of solar cell production and 10 GW of module assembly production, as well as a new R&D facility.
    • Despite COVID-19's impact on demand, JinkoSolar said it retains its initial 2020 module shipment guidance of 18-20 GW; combined with the latest expansion plans, the company expects a significant increase in bookings and overall demand next year.
    • "Given that the original target of 15% of non-fossil energy consumption in 2020 has already been exceeded, the Chinese government is currently drafting its 14th Five-Year Plan to amend the original target to 20% of non-fossil energy consumption by 2030, Jinko chief marketing officer Gener Miao said during yesterday's earnings conference call. "In the next five years, average annual installations in the Chinese market will most likely reach 60 GW."

    • Amazon (NASDAQ:AMZN) will host its fall hardware event today at 1 PM ET, and the company is expected to launch new Echo and smart security devices.
    • The event isn't livestreamed. Check back later today for live updates.
    • Echo devices are usually at the top of the bill with some new Alexa-powered accessories (microwave, wall clock) on the side. Last year's debuts included the Echo Show 5 and 8, an updated flagship Echo speaker, and the higher-end Echo Studio.
    • The rumor mill has suggested that Amazon will debut new versions of its Eero mesh router that support Wi-Fi 6.
    • The Ring lineup will likely get some product updates and new devices to add to a home's smart security ecosystem.
    • Amazon's launches are arriving ahead of the postponed Prime Day event, which is expected to run across October 13 and 14.
    • Amazon shares are down 1% pre-market to $2,969.85.
    • Previously: Amazon launches new Echos, Studio, and Buds (Sep. 25 2019)
    • B Riley FBR looks at the election implications in the apparel/footwear industry.
    • A Democratic sweep is seen leading to a bigger stimulus package, higher corporate tax rates, restructuring trade alliances (rollback China tariffs, join TPP) and potential for increased employer costs.
    • A Republican sweep is seen leading to further tax cuts (corporate and consumer), a large infrastructure plan, relief in heavily impacted COVID industries and a smaller stimulus package, and a potential for additional Chinese tariffs.
    • Analyst Susan Anderson has a logical solution. Instead, of handicapping the election results, she identifies companies that will not see much policy risk relative to their peers and could even potentially benefit regardless of the election outcome.
    • That list of politically-resilient stocks includes Hanesbrands (NYSE:HBI), Skechers (NYSE:SKX), Crocs (NASDAQ:CROX) and Callaway Golf (NYSE:ELY), which the firm tags with Buy ratings all around.
    • Sunworks (NASDAQ:SUNW) +355%.


  6. If scenario 3 or 4 (probability of one of them occurring is 100%!) tanks the market, I think that will allow the Fed to go all-out money printing.  That is the end game, print our way to prosperity!

    I cant afford to move to New Zealand.  Hopefully Canada will take US refugees for humanitarian reasons :(  


  7. whats causing this upward movement? good time to short?


  8. Hi Phil – Picked up a little M this morning.

    What are your thoughts on JWN?

    Thanks.


  9. Vaccine guidelines pit Trump against his own FDA



  10. Progressives pledge to keep pushing Biden to expand court



  11. World leaders criticize haphazard response to pandemic





  12. go joe


  13. To Canada!  

    Somewhere, somehow somebody

    Must have kicked you around some

    Tell me why you want to lay there

    And revel in your abandon

    Honey, it don't make no difference to me baby

    Everybody's had to fight to be free

    You see you don't have to live like a refugee

    • "One of the areas in the SPAC space that I'm particularly focused on is the incentives and compensation to the SPAC sponsors," SEC Chairman Jay Clayton told CNBC.
    • "There are two steps. One is the initial (equity) distribution of the SPAC to the market and the other is when the transaction takes place with the operating company. In both those situations, we expect the disclosure to be such that the investor can understand all of those motivations."
    • "We want to make sure they're getting the same rigorous disclosure that you get in bringing an IPO to market."
    • Related: DPHC -15.2%GRAF -12.5%FMCI -8.6%OPES -7.4%SPAQ -5.7%LCA -5.1%SHLL -6.9%.
    • The federal judge presiding over TikTok's request for a preliminary injunction against the upcoming weekend's U.S. ban has directed the United States to file a brief by tomorrow or agree to postpone the ban.
    • TikTok (BDNCE) lawyers told U.S. District Judge Carl Nichols that the potential ban is hurting the platform's reputation with users who are considering switching, Bloomberg says.
    • Earlier, Nichols had asked the government whether they would postpone so that he could rule on the injunction request.
    • Nichols says if the government agrees to postpone, then hearings can occur on a slower timeline (as the government prefers), Politico's Steven Overly says. Otherwise, he will expedite hearings so he can reach a decision by Sunday.
    • Sunday's deadline is inching closer even as confusion reigns over the fate of a deal with Oracle (ORCL +0.2%) that presumably settles the Trump administration's objections with TikTok's current U.S. operations.
    • September Kansas City Fed Composite Index+11 vs. consensus of +13 and prior +14 in August.
    • “Regional factory activity expanded again in September but was still below year-ago levels for the majority of firms,” said Wilkerson.

    I guess the KC Fed is good news but not in perspective:

    • The world's largest movie theater operator, AMC Entertainment (AMC -0.9%) to sell 15M shares to raise fresh funding to recover from COVID-19 pandemic.
    • Proceeds will be used for general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of existing indebtedness or working capital, capital expenditures and other investments.
    • "We currently estimate that unless theatre attendance levels improve significantly from the third quarter of 2020 to the fourth quarter of 2020 and again into 2021 and we achieve levels of attendance approaching approximately three-quarters of normalized levels, we will continue to require additional sources of liquidity to meet our obligations as they become due, and our required amounts of additional liquidity may be significant," said the company.
    • As of August 31, 2020, the company’s cash balance was $507.9M, this includes the initial $37.5M million proceeds received from the sale of the Baltics theatres.
    • The company’s cash burn for July and August 2020, excluding the proceeds from the sale of the Baltic theatres, was $230.4M or an average of ~$115.2M per month and was primarily impacted by initial reopening expenses, including initial costs associated with AMC’s Safe and Clean initiative and minimum lease payments as theatres began to reopen.
    • Source
    • Smith & Wesson (SWBI +6.2%) spikes in early trade after Aegis initiated coverage on the stock with a Buy rating and $23 price target.
    • The company now denotes a pure-play stock in the burgeoning U.S. firearms industry, according to analyst Rommel Dionisio, after recently spinning off its Outdoor Products & Accessories businesses.
    • The firearms sector has also recently seen a significant bump in consumer demand, he adds, and could see another spike in demand (particularly for higher profit margin rifles and high capacity pistols) should the upcoming presidential election result in a changeover to Democratic leadership.
    • Power Hedge makes a similar case in a recent SA article, Smith & Wesson Brands: Surging Firearms Demand Makes This A Good Play.
    • August New Home Sales: +4.8% to 1,011K vs. 875K expected and 965K prior (revised from 901K).

     

    • 30-year fixed-rated mortgage averages 2.90% for the week ending Sept. 24, 2020, up from 2.87% in the prior week and vs. 3.64% at this time a year ago, according to the Freddie Mac Primary Mortgage Market Survey.
    • "Mortgage rates set several record lows over the last few months and have remained low into September," said Freddie Chief Economist Sam Khater. "While there is room for rates to decrease even more, higher home prices and low inventory could potentially stifle the high demand that we’ve been seeing."
    • 15-year FRM averages 2.40% vs. 2.35% in the prior week and 3.16% a year ago.
    • 5-year Treasury-indexed hybrid adjustable rate mortgage averages 2.90% in the previous week and 3.38% a year ago.
    • By most accounts, demand for home sales remain robust, with August new homes sales at an annual rate of 1.01M easily beating expectations.
    • Most homebuilders rise, with the iShares U.S. Home Construction ETF (BATS:ITB) up 0.9%. By name, Lennar (LEN +1.7%), Taylor Morrison Home (TMHC +1.5%), TRI Pointe Group (TPH +2.2%), NVR (NVR +1.6%), Hovnanian Enterprises (HOV -0.6%), and D.R. Horton (DHI +1.0%) turn in the strongest gains.
    • Airline stocks are underperformers on the day as the drama over more government aid continues to play out even as some major airlines agree to delays in pilot furloughs.
    • Of course, the main problem in the industry of too few bookings is a global one that is expected to last for a while. Carriers are still cutting capacity as demonstrated in the chart below from the Centre of Aviation.
    • Notable decliners include Mesa AIR (MESA -2.3%), Spirit Airlines (SAVE -3.5%), American Airlines Group (AAL -2.1%), United Airlines (UAL -1.8%), Delta Air Lines (DAL -2.5%), JetBlue (JBLU -2.0%) and Southwest Airlines (LUV -2.2%).

  14. Economic analysis of the election outcome from Moody's (not a left wing outfit):

    https://www.moodysanalytics.com/-/media/article/2020/the-macroeconomic-consequences-trump-vs-biden.pdf

    Biden’s reversal of Trump’s policies on foreign trade and immigration would also contribute to stronger economic growth, so that by the end of their terms in 2024, real GDP would be $960 billion, or 4.5%, larger under Biden than Trump (see Chart 2). This translates into 7.4 million more jobs under Biden than Trump (see Chart 3). Longer-run growth also receives more of a boost under Biden’s policies, since they lift both labor force participation and productivity growth, though the effect is modest over the 10-year horizon of the analysis.


  15. Interesting that in their analysis, under Trump we get back to pre-Covid GDP only in 2022 and we don't recover the jobs lots until after 2025! Not sure how markets could be happy about that.


  16. LOL, more like: 

    Scenario 1:  Trump wins

    Riots GIF | Gfycat

    Senerio 2:  Biden Wins:

    Pin on Wtf

    Scenario 3:  Biden wins and Trump refuses to leave:

    Mad Civil War GIF by South Park - Find & Share on GIPHY

    Upward move/Monk – This is not upward movement:

    Homer Falling Off Cliff GIF | Gfycat

    The Week Ahead – 200,000 Deaths Weigh Heavily on the Market

    We saw this coming (early) back on August 22nd, in our first Newsletter, where my opening line was: "GET OUT!!!"  The S&P 500 was at 3,373 at the time and we did move up to 3,600 but now we're back at 3,254 and we'll be lucky to hold 3,200 with 3,000 being a more likely target for the next down move.  

    All we're doing today is bouncing off support.  

    3,600 to 3,200 is 400 points so an 80-point weak bounce is 3,280 and 3,360 is the strong bounce line.



  17. How much is COVID-19 hurting state and local revenues?






  18. So the weak bounces failed on day one.  Very bad if we're still under tomorrow.

    Dollar pulling back didn't help – that's a little alarming.

    /KC still fun off the $110 line.

    Look how crazy oil is:

    /NG changed months with a huge gap:


  19. Any recent news on GILD? Close to a 12  month low…