Tuning Out Politics and the Markets
- Another tax-reform pledge: Yawn… stretch
- A chart that gives the “Trump bump” new meaning
- Apple’s “Kinetic Window” opens up like clockwork — 35.5% gains ahead?
- Amazon’s real designs with Whole Foods (not about groceries)
- New FDA chief wastes no time opening up new competition
- Coke’s Keystone State blunder… the state that went into default… Jim Rickards’ advice for the zombie apocalypse… and more!
Here we go again — Treasury Secretary Steve Mnuchin on CNBC promising “massive tax reform.”
He did the same thing back on Feb. 23. We mentioned it at the time. Only then Mnuchin was promising it would get done by the end of July — in time for Congress’ summer break. Now he’s saying the end of the year.
Then as now, he offered little in the way of specifics. Then as now, the major U.S. stock indexes are not ripping higher on the day as one might have expected; they’re not going much of anywhere. The Dow and the S&P 500 have both backed off yesterday’s record closes, but not much.
Meanwhile, chew on this: The vaunted “Trump bump” since Election Day is looking more and more like… well, a continuation of the market’s move up from its lows in February 2016…
Heck, the S&P 500 could tumble from yesterday’s record close of 2,453 all the way to 2,300 and the uptrend going back 16 months would still be intact.
But really, the passing parade of politics and long-term market trends pales in comparison with the investing possibilities we’re glimpsing through “Kinetic Windows.”
We started telling you about them last week — a proprietary indicator developed by Agora Financial’s Jonas Elmerraji pinpointing the ideal moments to buy and sell. These windows occur both in broad market indexes and in individual stocks. He gave them the name “Kinetic” because these windows identify the times when markets are most likely to be in motion year after year.
Last Thursday we told you how Apple (AAPL) has two Kinetic Windows each year. The first one starts on Jan. 27 and ends and May 27. The second window opened last Thursday, June 15.
How’s it working out so far?
The Kinetic Windows are shaded in green on this chart. The blue line, meanwhile, is AAPL’s share price during 2017. The chart is even more uncanny now than it was when we showed it to you on the day the second window opened…
And remember, we were telling you about this at a time when tech stocks had fallen out of bed a few days earlier and conventional wisdom said AAPL would be dead money for weeks if not months.
The reality is that AAPL has just entered a 175-day “sweet spot” in which shares jumped an average 35.5% over the last 20 years.
Key point: By paying heed to AAPL’s Kinetic Windows, you can double the performance of merely buying and holding.
According to Bloomberg data, over the last 20 years AAPL has generated an average annual return of 24.6% excluding dividends. But by staying out of AAPL during those white spaces on the chart — about 75 days of the year — that turns into a 51.7% annual return.
Sure, you’d have to pay your broker a couple of extra commissions. But we figure you can probably live with that.
And all it takes is following the “K-Signs” that mark the beginning and the end of each Kinetic Window.
No, K-Signs aren’t foolproof. But Jonas has run the numbers on literally every stock in the S&P 500 over 20 years… and found that K-Signs generate a 93.5% win rate. We figure you can probably live with that too.
After 18 months of research — and ever-escalating investments in computer power to generate these K-Signs — we’re ready to take the wraps off a system unlike anything you’ve seen before. Unlike anything Wall Street has seen before, either. Watch your inbox tomorrow morning for the announcement: The subject line of the email will be, “The K-Sign Breakthrough, Revealed.”
[Ed. note: By the way… There’s a powerful K-Sign shaping up for gold this week. We’ll tell you more about that in tomorrow’s episode of The 5.]
The big market mover today is crude — down another 3%, below the $43-a-barrel mark.
The move coincides with more signs of rising production from Nigeria and Libya — two OPEC nations that are exempt from OPEC production caps.
West Texas Intermediate is now down 20% from its 52-week intraday high reached on the first business day of 2017. That’s the classic definition of a bear market.
Gold remains stuck below $1,250, the bid $1,243 at last check.
No big economic numbers to speak of today. But traders are buzzing about the first fraud charges in Great Britain arising from the Panic of 2008: Barclays and four of its former executives will be in the dock next month.
Ironically, the charges stem from Barclays’ attempt to avoid a government bailout — when it raised money from investors in Qatar.
Qatar, as you might be aware, is quickly becoming a pariah state in the Persian Gulf — shunned by its onetime ally Saudi Arabia and by extension the United States and the U.K. Hmmm…
“Amazon plans to turn Whole Foods into a technology company,” says our Louis Basenese with his take on AMZN’s $13.7 billion acquisition of WFM.
“Data are the blood that supplies Amazon its oxygen. The company leverages trillions of data points — millions per second — to serve you the juiciest ads.” Indeed, Amazon competes with Facebook and Google to generate the most lucrative user data.
“The 400 existing Whole Foods locations will now exist solely to transmit data back to the mother ship. If you’re a Whole Foods customer, you’re now a data point for Amazon. Also, if you work for Whole Foods, you now work for a data farm.
“The truth hurts sometimes, doesn’t it?”
Barely a month on the job, new FDA Commissioner Scott Gottlieb is moving quickly to throw open the industries he oversees to new competition.
In a blog post published last week, Gottlieb promised the agency “will provide guidance to clarify our position on products that contain multiple software functions, where some fall outside the scope of FDA regulation, but others do not.”
Translation: Apple could soon get clarity about a blood glucose monitor for diabetes patients that doesn’t pierce the skin. Right now the burgeoning health-tech field is fumbling in the dark, unsure if regulators’ heavy hand will fall on them at the very moment developers try to bring something to market.
“Hopefully,” says Adam Thierer of the Mercatus Center, “this is a signal that the FDA is waking up to the realities of the Information Age and are willing to let consumers take advantage of the many life-enriching — and potentially even lifesaving — technologies that could be at their disposal if not for excessive bureaucratic red tape.”
Meanwhile, Gottlieb’s FDA is also opening up competition to one of the priciest drugs on the market.
Two months ago we told you about an aspiring competitor to the EpiPen — which became something of a political football last year. “The EpiPen,” our Ray Blanco reminds us, “is an auto-injector used to deliver an emergency dose of epinephrine in cases of anaphylaxis… a serious rapid-onset allergic reaction that can kill.”
The EpiPen’s maker, Mylan, charges a price that opened up the company to allegations of price-gouging. Sales top $1 billion a year.
Last week the FDA approved a competing auto-injector from a company Ray recommended in FDA Trader called Adamis Pharmaceuticals. “It can now go grab a share of this market… and help lower prices.” Congratulations to readers who snagged a 50% gain in only 2½ months!
OK, so it’s not “New Coke,” but Coca-Cola just registered a huge fail on social media.
On Sunday, when a heat wave had settled over Pittsburgh, Coke put the following on Twitter…
Uh, yeah, that’s a map of the other big city in Pennsylvania.
Or as one wag replied, “Yinz got the wrong town on that map.” Heh…
A Coke spokesmodel issued a suitably contrite statement yesterday, although she couldn’t help lapsing into corporate-speak as she said the company is “exploring innovative, adaptive technologies to serve up personalized content to our fans… in this case, our map accidentally missed the mark — literally.”
On the subject of Illinois’ precarious finances, a reader writes: “States cannot file for bankruptcy, as they are considered ‘sovereign entities.’
“That’s a fiction that the U.S. has maintained despite the fact that Lincoln destroyed the Republic to save the union (which essentially made the states divisions of the federal government). As sovereign entities, they can default but cannot declare bankruptcy.
“The big question is what happens after a state defaults — does it revert to a territory under federal management or does it just repudiate all its debts and begin again?
“It’s ironic that the first state in line should be Illinois — home to more than one corrupt, incompetent president. I guess misery loves company, so when one of their native sons screws up the state, they send him along to the national level to screw up the nation.”
The 5: Arkansas defaulted in 1933 during the depths of the Great Depression. The state was a ward of the federal government for the following two years.
Bondholders sued and the state restructured. Lawmakers imposed a sales tax even though the bulk of the state’s residents were dirt-poor. Even with that, the state’s next highway bond issue wasn’t approved until 1949.
“Where’s David, The Wiz, Stockman?” a reader snarks. “Out spending the millions he made on shorting the April collapse of the NYSE?
“I guess the investors who’ve run the Dow and Nasdaq to new records forgot to ‘play along’ with The Wiz. I’m sure there eventually will be a big correction when the ‘Big Boys’ decide it’s time to tank the market, but it didn’t happen on David’s timeline.
“Now let’s see if Jim Rickards’ $10,000 gold happens. Should that come to pass without the ‘end of the world’ precipitating it, I’ll profit from that — I guess.”
The 5: Aw c’mon… David said the “retail apocalypse” would catch Wall Street off guard, not that it would tank the entire market.
Looking at his four recommendations of put options on retail names, we see three of the four are in the green, and the average of all four is up 36% after a holding time of at most three months. Not bad by our measure…
Meanwhile, it won’t take an “end of the world” scenario to achieve $10,000 gold — just a reorganization of the global monetary order, as happened three other times over the last century.
Speaking of the “end of the world,” Jim said something interesting in his weekly Strategic Intelligence update that’s worth passing along. He’d taken note of a Business Insider story about billionaires building reinforced boltholes in Montana or New Zealand or wherever, preparing for the breakdown of civilization.
“The billionaires,” says Jim, “have not thought very hard about the logistical problems that arise in a real societal breakdown. If you live in Manhattan or San Francisco, how will you get to your hideaway in the middle of nowhere? The billionaires have private jets, but how will you fuel your jet if the power grid is down and gas pumps don’t work? What makes you so sure that your pilot will fly your jet if it means leaving his family behind on a one-way trip? How will you even get to your private airstrip if the roads are choked with traffic?”
Jim’s guidance: “Rely on bicycles, not jets. Pick a place you can reach in a day. Rely on a good local community where neighbors help neighbors and grow their own food. Keep a monster box of silver (500 one-ounce pure silver American Eagles) to purchase necessities. The silver coins will even help restart the money supply with real money. Your model should be 19th-century rural America rather than 21st-century high-tech bunkers.”
The 5 Min. Forecast
P.S. Once again, keep an eye on your inbox tomorrow morning. We’ll take the wraps off the revolutionary “K-Sign” indicator Jonas Elmerraji has developed — a powerful tool with which to time your buying and selling with pinpoint precision. Twenty years of back-testing with all the S&P 500 stocks has served up a 93.5% win rate.
The subject line of the mail will be, “The K-Sign Breakthrough, Revealed.” And we’ll be back as usual with your regular episode of The 5 in the afternoon.