The Cole Memo is safe. And so is legal marijuana. Ditto for penny pot stocks.

As you might recall, last week White House spokesman Sean Spicer sent a shudder through the legal marijuana industry when he said “I do believe you’ll see greater enforcement” of the federal prohibition on pot in states where voters have legalized its recreational use.

But that’s not the White House’s call to make. It’s the Justice Department’s. And while it’s true that Attorney General Jeff Sessions is a throwback to the days of Nancy Reagan and “Just say no”… we’re getting more and more indications that he sees the proverbial writing on the wall.

Byron at Landing Side

From Politico: “Attorney General Jeff Sessions has privately reassured some Republican senators that he won’t deviate from an Obama-era policy of allowing states to implement their own marijuana laws.”

Says Sen. Rand Paul (R-Kentucky), “He told me he would have some respect for states’ right on these things.” Ditto for Sen. Cory Gardner (R-Colorado), whose state is in the vanguard of legal weed: “Nothing at this point has changed.”

Affirmation comes from a Justice Department spokesman, someone we presume is not an Obama administration holdover: “The department’s current policy is reflected in the 2013 Cole Memo.” As we explained last Friday, that’s the document that sets out the feds’ mostly hands-off approach to states that legalize and regulate pot.

Even if Sessions goes back on his word and pursues a crackdown, the backlash will be… well, “furious” doesn’t even begin to describe it.

Eleven U.S. senators have sent Sessions a letter asking that he “uphold DOJ’s existing policy regarding states that have implemented strong and effective regulations for recreational use.” It’s a bipartisan effort led by Sen. Elizabeth Warren (D-Massachusetts) and Sen. Lisa Murkowski (R-Alaska) — both hailing from states where the voters have spoken.

Meanwhile in the House, there’s bipartisan support for the Ending Federal Marijuana Prohibition Act of 2017 — sponsored by Virginia Republican Thomas Garrett and Hawaii Democrat Tulsi Gabbard. As the name of the bill suggests, it would take the matter out of Sessions’ hands altogether.

Then there are the governors of the states where the voters have spoken… and where reefer revenue is about to roll in, if it’s not already.

“It’s important to me to continue the quality of education,” Gov. Brian Sandoval (R-Nevada) tells The Daily Beast. “And you know that’s something they’ve done in Colorado, something they’ve done in Washington, something they’ve done in Oregon.”

Speaking of Colorado, Democratic Gov. John Hickenlooper thought it was a bad idea when voters in his state legalized recreational pot in 2012. But he’s done nothing to stand in the way since. Now that the state collected $200 million in weed revenue last year, he’s even more mellow.

And on Meet the Press last Sunday, he went further when asked about a showdown with Sessions. “Our voters passed [legalization] 55-45,” he said. “It’s in our Constitution. I took a solemn oath to support our Constitution… The states have a sovereignty, just like the Indian tribes have a sovereignty, and just like the federal government does.”

Chuck Todd pressed for specifics, asking whether “it’s clear that the federal government could stop you.”

Hickenlooper’s reply: “Exactly. I don’t think it is.”

Think about the import of that statement. In theory, Jeff Sessions could dispatch federal goons to Colorado to begin enforcing federal law. And in theory, Gov. Hickenlooper could dispatch Colorado National Guardsmen to meet them at the Kansas state line.

But Hickenlooper sounds supremely confident that Sessions will back down long before it comes to that. Sessions won’t spend the administration’s precious political capital on pot when polls find 71% of Americans agreeing with a states’ rights position.

If you’ve been holding off on penny pot stocks, unsure about the new administration and the legal gray area, we hope this puts your mind to rest. Besides, in recent weeks, Ray Blanco and his team have uncovered the “secret logic” to the sudden spikes in penny pot stocks… and it has nothing to do with politics.

Ray shows you how this system works… and how to use it in your own portfolio… when you follow this link.

For a second day in a row, every major asset class is slumping — except the dollar.

The major U.S. stock indexes are all in the red; the Dow is back below 21,000. Treasury prices are falling, pushing rates up; the 10-year has sailed past 2.5%. Gold has retreated to $1,224.

But as we write, the dollar index is up to 102.

No big economic numbers today… but Fed chair Janet Yellen gives a speech in Chicago this afternoon that — presumably — will eliminate all doubt that the Fed will raise its benchmark fed funds rate on March 15. But it’s not as though the dollar could scream even higher based on her speech — could it?

Don’t discount the possibility, says EverBank’s Chuck Butler, writing in today’s Daily Pfennig: “Things can go overboard, right? They can get overpriced, right? And they can get completely out of hand with regards to fundamentals, right? Well, just pick one for this potential additional dollar strength today.”

“One day of trading is hardly long enough to characterize Snap as the ‘hottest’ IPO in years,” says True Alpha editor Louis Basenese — eager to pour cold water on mainstream hype.

As we mentioned yesterday, the company behind the messaging app Snapchat began trading yesterday — and promptly leaped 44%.

But the hottest in years? “It takes months of trading to make that determination,” Louis tells us. “And the long-term performance of tech IPOs is a mixed bag, at best.”

stock price performance since IPO for selected tech companies

And don’t be fooled by Facebook: “Its performance is deceiving,” Louis warns. After pricing at $38 per share in May 2012, shares stumbled out of the gates — dropping as much as 54% in the first three months or so.

“Obviously, shares eventually recovered. But it took an eternity. Almost 15 months passed before IPO investors broke even on their ‘sure thing’ investment.”

That said, if you’re patient, there’s a “sweet spot” for IPOs like Snap, says The Rude Awakening’s Greg Guenthner.

“Unless you’re willing and able to trade in and out of an IPO,” he explains, “buying one before it even gets a couple of moving averages under its belt probably isn’t the move for you. Your best bet is to wait for the coil that emerges after the initial hype dies down.

“Facebook is a great example of how this strategy worked for patient traders. It took more than a year for Facebook to find its footing. But a picture-perfect sweet spot offered an ideal entry for anyone paying attention. The stock’s trading range compressed like a coiled spring and finally exploded higher in 2013. Once Facebook shares broke out, they never looked back…

a coiled spring, facebook inc.

“For longer-term IPO trades that won’t shake you out of your position or leave you with crippling losses, it’s all about waiting for the sweet spot,” says Greg. “Leave SNAP to the gamblers for now.”

As the week winds down, here’s occasion for a toast: The number of North American wineries is approaching a milestone.

The trade publication Wines & Vines counts nearly 10,000 wineries across the continent — 9,872, to be precise. That’s up 5% from a year ago. That includes “bonded” wineries as well as “virtual” ones that produce wine at host facilities.

Not surprisingly, California accounts for close to half of the total with 4,202. No one else comes close — 747 in Washington, 713 in Oregon, 385 in New York and 309 in British Columbia.

Leaping into the sixth spot this year is Texas, with 287 — that’s a 26% increase from a year ago.

“So gold researcher Koos Jansen filed a FOIA request with the U.S. Mint regarding the Treasury’s gold stash at Fort Knox,” writes a reader who seeks to connect some more dots from our lead item yesterday.

“The document he received in return was ‘redacted, incomplete, includes pages copied twice and materials I didn’t ask for’. He even got a refund of his $3K fee, prompting him to conclude that ‘the audit procedures have not competently been executed… and the result is suspicion of fraud.’

“It sounds like someone in Kentucky came down with a serious case of conscience over their nonmissing, nonaudited gold.

“As Jim Rickards points out, the Federal Reserve’s balance sheet looks scary until you factor in the Treasury’s ‘Deep Storage’ gold at Fort Knox and West Point. When that’s included, the Fed’s leverage ratio drops from 110:1 (which is extremely insolvent) to about 13:1 (which is more in line with many commercial banks).

“Jim also explains that the government’s resistance to auditing their gold cache doesn’t necessarily mean it’s not there. They may just want the public to think it’s unimportant — and hopefully ignore it. So even if the gold has been leased, as many people believe, we shouldn’t automatically assume that it was put on a boat to China.

“But considering Koos Jansen’s findings, maybe the gold really is gonzo. You gotta wonder.

“P.S. I write this as the markets have just completed one of the most bizarre days in memory: Precious metals tanked; the DJIA dropped 112 points; bonds are down; and yet the VIX (which is already at stupidly low levels) somehow fell almost 6% — all at the same time!

“Cue the theme from The Twilight Zone while I buckle up my tinfoil hat.”

The 5: And as we noted above, the weirdness has extended into today. It’s not the first time it’s ever happened, but it indeed feels odd when it does. And it doesn’t last…

“Global debt,” says the subject line of our next entry in the mailbag.

“If we could get all the countries that still owe us for WWI and WWII expenses, we’d be in a whole lot better shape. Is anybody or any body looking into this? Or are we all playing musical chairs and the last one to get a seat gets to hold the bag!?”

The 5: Now, that would have been an interesting tack for Trump to take during the campaign.

“Wanted to comment on the reader saying that gold and feral swine should be used as payments for the Dallas Fire and Police Pension Plan,” says another item in the mailbag.

“He then mentions that we humans have an antibody for pork. To which I say if we humans had an antibody for pork, there would be no such thing as politicians!!! But I digress, I’m afraid, rather fearfully now.

“Have a great weekend! Love The 5! Seems like your column is the most intelligent stuff I read on any given day, but I repeat myself.”

The 5: Wow, it’s been a long week…

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. Congratulations to readers of Rickards‘ and Massengill‘s Defense Technology Alert: Yesterday, Kevin Massengill urged readers to take 175% gains on Boeing call options… and tightened his stops on a tiny defense stock that’s already up 340%.

Not bad for a publication we launched less than three months ago… and with Trump’s defense-spending plans, there’s more where that came from. See why Jim says it’s not too late to take advantage.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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