March 24, 2017
IGNORE the Wall St. bull about the Healthcare outcome affecting
Stocks, the Economy and Trump’s REBUILD AMERICA plans…
Remember how all the Wall Street brokerage house and internet genius yakheads spent ALL of 2016 coming up with reasons to NOT buy the stock market…? Including their last January hype about China’s collapsing market dragging down the rest of the world…? And then their totally backwards recommendation to “Sell in May and go away”…? And then again, their calls for Brexit to tank the planet…? AND finally, as if that was not enough HORRIBLE advice for one year, that if Trump got elected, US equities would fall off a cliff? DO you remember? Have they now repainted themselves (CYA’d) sufficiently to help you forget that virtually all of the supposed “logic” and “expertise” they spew is essentially worthless? Except maybe as a guide as to what NOT to be doing?
Well, they’re at it again…with THIS time their argument being that the Republican’s failure to repeal Obamacare will hamper Trump’s ability to follow through on his plans for tax reform and booming up the economy…that his administration has been crippled…and that, therefore, the last four months of strong gains in the stock market are…ONCE AGAIN (in their feeble “analysis”)…in doubt. One more time, those forever wrong nitwits are now going to start singing their song of, “We’re bullish (finally). But advise caution here (in other words, DON’T buy it) as the market has priced in too much optimism.” In other words, same old you know what…They’ve missed the entire move up, going back AT LEAST to early last year…and now they’ll still be watching, I believe, as THE MARKET BANGS OUT ANOTHER STRONG LEG UP OUT OF HERE.
For one thing, there is a BIG political difference between repealing Obamacare and any discussions about rebuilding our infrastructure or revamping the tax code, as, EVERYBODY in Washington DOES like to spend money on projects back home in their states or districts…and they are also always just as willing to talk about easing the tax bite…And my point is that the battles that will be fought over these issues will be emotionally quite different from the current polarization concerning healthcare. Apples and oranges…And whatever the outcome is with healthcare, I am firmly of the opinion that it WON’T be a signal (as Wall Street will “advise” you) that all of the anticipated economic stimuli will be delayed…and therefore detrimental to stocks or the economy. WHATEVER HAPPENS WITH THE HEALTHCARE ISSUE, TRUMP IS NOT GOING TO BACK DOWN ON HIS BUILD-EVERYTHING-IN-SIGHT PLANS NOR HIS TAX CUT PROPOSALS…AND HE WILL FIND MORE THAN ENOUGH VOTES IN CONGRESS TO HAVE HIS WAY IN BOTH OF THESE AREAS…AND THE RESULT, I AGGRESSIVELY BELIEVE, WILL BE STRONGER GROWTH AND HIGHER STOCK PRICES…AND SUBSTANTIALLY HIGHER INTEREST RATES.
For sure , the market’s relentless charge higher has turned some of the clueless talking heads to the bullish side (finally) but as evidenced below, there are still plenty of them preaching their same old “You better sell now!” BS…
And along these same lines, ask yourself this: REGARDING THE STOCK MARKET, IS THERE ANY WAY THAT THE CURRENT ATTITUDE, AMONG ANALYSTS AND THE KNOW-NOTHING MEDIA, COULD EVEN COME CLOSE TO BEING CHARACTERIZED AS “EXUBERANT”OR “EUPHORIC?”, which IS what I would absolutely expect to see…at least to some degree…if equities were about to reverse from here…
The truth is, as can be seen on the following long term Dow chart, on a relative basis, NOTHING HAS HAPPENED YET THIS YEAR…that is, the market has barely moved in 2017…And with everything that WILL be hitting the news and airwaves, I see no reason to expect anything less than something like 24,000 on the Dow…Although there will be the usual partisan bickering and infighting, I look for EVERYBODY to be on board with the “LET’S REBUILD EVERYTHING” train, and that for the next 6-9 months, the next “GREAT!” stimulative measure is going to be ALL the news domestically…and that the “Roaring Economy” is going to be, over and over, EVERYWHERE in the headlines…And rates will be going up bigger and faster than all the brokerage house “experts”, and subsequently the markets themselves, are currently expecting.
So…One more time: BUY STOCKS. SELL EURODOLLARS.
And here, again, is the longer term perspective in short term interest rates…And DO note that a 2-3% move (200-300 points in Eurodollar futures) is NOT unusual…And one more time, when Eurodollar Rates are Rising…Eurodollar Futures go DOWN.
Same has it has always been, expectations are currently NOT to see rates rise 3-4%...or to even rise “quickly”…but that IS the way this script typically has played out…
I am a broken record on this but I absolutely believe that the “meandering” move lower in Eurodollar Futures (chart following) has the overwhelming majority of analysts, investors and traders NOT understanding that this market IS on the move…and that “quietly sideways” can…and WILL, I think…turn overnight into a relatively straight move down…JUST as stocks surprised 99% of the investor community with the lift off in November, SO CAN IT BE HERE WITH EURODOLLARS…and I firmly believe that is exactly what we are about to see...I therefore RECOMMEND BUYING PUTS HERE...WHILE PRICES ARE WHAT I CAN ONLY DESCRIBE AS UNBELIEVABLY CHEAP RELATIVE TO HOW THIS MARKET CAN MOVE.
I encourage you to consider either getting started with this…or to add more to your existing position…WE STILL HAVE 6 MONTHS OF TIME HERE…And these very same options, currently at 5.5, closed at 9.0 just nine trading days ago...when this market was only 8 points lower…which is NOTHING in this market. In other words, the leverage is there right now…while this put is still dirt, dirt cheap.
IT DOES NOT MEAN I WILL BE RIGHT BUT I CONTINUE TO SEE THIS AS THE BIGGEST TRADE I HAVE EVER SEEN IN THIS BUSINESS…WITH VERY BIG LEVERAGE AND A TON OF TIME…AND, I WOULD ADD, AN ALREADY STRONG ECONOMY THAT I TRULY BELIEVE IS ABOUT TO EXPLODE ON THE UPSIDE…
I say…Get more…BEFORE the next leg down gets started.
All option prices in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Eurodollars