- Alan Knuckman — our man at the CBOE — shows where the market’s got room to grow
- … one big number and three huge trends to watch for
- Zach Scheidt’s take on Dodd-Frank de-regulation — how “smallish” banks benefit
- Chill: Why feds won’t (can’t) police states’ cannabiz
- The asparagus lady’s 2018 forecast… Have constitutional rights “jumped the shark”?… Welcome to Amerika… and more!
Alan Knuckman — our man at the Chicago Board Options Exchange and a 25-year trade veteran — makes five bold predictions for 2018.
In an appearance on Fox Business Tuesday, Alan wasn’t shy about predicting another year of 20% gains for the S&P 500.
Today Alan joins us to make several more audacious predictions for the new year — the kind he reserves for Agora Financial readers like you — and backs them with sound reasons.
Prediction #1: “The Dow will reach 30,000”
“The Dow Jones Industrial Index is now within 21% of the 30,000 milestone which is very achievable after returning 25% in 2017.
“With earnings season on the horizon, it won’t be long before the Dow trades through that level,” Alan says. “In fact, the last two earnings seasons have produced historically high numbers and I expect the figures announced this month to be even higher due to the projections that include the new tax law.
“Because the Dow is a price weighted index, look for high priced (but low valued) stocks to get us to that $30,000 mark.”
Worried about a correction or a crash? Alan says now’s not the time. “Remember, any bearish market predictions have been squashed since 2009,” Alan says. “The trend is moving higher…keep on profiting while it does!”
Prediction #2: “Mergers and Acquisitions (M&A) Will Heat Up”
Alan takes note of several deals last month alone:
- “Disney acquired major assets from 21st Century Fox
- Campbell Soup bought snack-maker Snyder’s-Lance Inc.
- Boeing announced they’re in talks to acquire Brazilian rival Embraer
- And Penn National Gaming bought Pinnacle Entertainment”
Brisk M&A means companies believe the market will continue to grow rather than hit a wall. Otherwise, companies would wait out the market and buy when valuations are cheaper.
“And with the Republican tax plan now allowing corporations to repatriate trillions of dollars in overseas cash,” says Alan, “expect much of it to be used for mergers and acquisitions.”
Prediction #3: “The oil rally continues”
“WTI crude oil just passed $60 per barrel for the first time since 2015 and I believe this is just the beginning.”
Alan says, “once the $45 to $55 trading range was broken on the high side, $65 became the new trading target — and I expect that mark to be reached in the near-term.”
He points to several factors expected to bolster the price of crude in 2018.
- “OPEC agreed to continue production cuts through 2018.
- Unrest in the Middle East continues to boil over.
- Growing wages in emerging markets means millions of consumers are now entering the auto market for the first time (and they’re not buying Teslas).”
Alan’s final word: “Stick with oil.”
Prediction #4: “It’s all about the dollar (decline)”
The US dollar index slipped 8.5% in 2017. Alan reasons political uncertainty, low interest rates and a rebounding European economy have contributed to the dollar’s decline.
“Right now, the Euro/USD spot price is around $1.20 but I’ve got a breakout target set at $1.25 — meaning the dollar should continue to fall…But this is not a bad thing!”
“A lower dollar will serve as both a catalyst for the energy and mining sectors,” says Alan, “while also propelling earnings of U.S. corporations that sell goods and services overseas (this is because overseas profits will be exchanged back into more U.S. dollars).”
Prediction #5: “Infrastructure is in”
With tax reform out of the way, Trump will set his sights on making good on one of his most popular campaign promises — overhauling the nation’s worn-out infrastructure. If the White House can score a win on infrastructure, the market’s gains will come fast and furious,” Alan says. “Copper… steel… basic materials… they could all BOOM in early 2018.”
[Bonus prediction: Alan’s portfolio at Weekly Wealth Alert will keep on rolling with big winners in 2018, after delivering four winners in a row to wind up 2017. The math doesn’t lie: Alan recommended call options on Alibaba (BABA) Tuesday morning. Within four hours, he urged readers to take 52% gains on half the position and let the rest ride.
Gains just like these are waiting for you — but for reasons you’ll see when you click here, you’ll be in line for maximum payoff if you act by next Monday.]
If the Dow is headed for 30,000, it’s now less than 5,000 points away this morning.
Moments after the open, the Big Board cracked 25,000 for the first time. Meanwhile, the S&P 500 is leaving 2,700 in the dust and the Nasdaq is already 80 points past 7,000.
Gold has inched up to $1,315. A barrel of West Texas Intermediate is two cents away from $62 — the highest since December 2015. Bitcoin has retreated slightly, but it’s holding the line on $15,000.
Another editor weighs in on the new year: “My prediction for 2018 is that Congress will roll back parts of the Dodd-Frank Act,” say our income specialist Zach Scheidt. “The move will be very beneficial for banks.
You’re probably familiar with the Dodd-Frank Act — Congress’s 2010 attempt to mandate accountability and transparency from the financial industry. While the Act meant well, “the law included a bunch of nonsensical rules that have cost banks up to $36 billion in profits.” (By the way, guess who foots the bill? You got it — bank customers like you and me.)
“Perhaps the oddest section of Dodd-Frank is the one that defines a ‘systemically important financial institution’ (SIFI)… otherwise known as a bank that’s ‘too big to fail,’” says Zach. “SIFIs are considered to play such an integral role in the American economy that letting them go out of business would torpedo the entire financial system.”
A SIFI, according to Dodd-Frank, must be valued at $50 billion…chump change for big banks. “The rule means that a lot of banks have been swept into this category, putting them in the same league as the giant mega-banks — despite having less money to jump through all the hoops Dodd-Frank requires,” Zach says.
Key point: “It also means a lot of smaller banks have intentionally stunted their own growth, trying to keep themselves off the Dodd-Frank radar.”
“Luckily, in early November, a bipartisan group of U.S. senators announced they had reached an agreement to roll back some Dodd-Frank regulations,” Zach goes on.
“Part of the proposal is to level the playing field for smaller banks by increasing the SIFI threshold to $250 billion in assets.”
If legislation passes, it’ll remove the financial burden from some smaller banks…allowing them the freedom to grow unencumbered.
Zach has already pounced on one of those smaller banks — sporting a handsome 5.3% dividend yield — in Lifetime Income Report. For access to all of Zach’s dividend-paying names, delivering checks of up to $7,980, look here.
Pot stocks are gyrating today — thanks to breaking news that the “Cole memo” is a dead letter.
The Cole memo, named for the deputy attorney general who wrote it in 2013, spelled out the Obama administration’s mostly hands-off approach to states that legalize and regulate cannabis, despite it remaining illegal on the federal level.
This morning brings word that Trump’s drug-warrior attorney general Jeff Sessions is rescinding the Cole memo. “Sessions will instead let federal prosecutors where pot is legal decide how aggressively to enforce federal marijuana law,” reports the Associated Press. Supposedly he’ll make the announcement official this afternoon.
While many people in the “canna-biz” space are freaking out… we don’t share the alarm.
Last March we took note when Sessions said he found much of the Cole memo to be “valid.” Not because he was changing his tune on the wacky weed, but because it’s logistically impossible for the feds to launch a massive new crackdown: “Essentially, we’re not able to go into a state and pick up the work that the police and sheriffs have been doing for decades.”
That hasn’t changed. Sessions is going to leave it to the discretion of federal prosecutors? The ranks of U.S. attorneys remains decimated, ten months after after Trump forced out all 93 of them. Only yesterday Sessions named 17 interim U.S. attorneys, just to keep the seats warm while the president figures out who he wants to nominate permanently. Temporary types are also in charge of the Drug Enforcement Administration and the Justice Department’s criminal division.
Does that sound like legions of armed federal agents are poised to swoop down on the recreational marijuana businesses that opened their doors in California on New Year’s Day?
That said, our resident penny pot stock expert Ray Blanco urged his premium subscribers to take profits this morning on a couple of U.S.-oriented trades while the proverbial dust settles. His Canadian trades still look spiffy in the run-up to nationwide legalization on July 1.
In a weird twist on making predictions: “When I cast the asparagus, it creates patterns and it is the patterns I interpret,” says British fortune teller Jemima Packington.
In an article at The London Economic, Ms. Packington of Bath, England claims to be the only “Asparamancer” in the world. At age eight, she started using asparagus to forecast the future after watching her grandmother read tea leaves.
“I take what I do seriously but I never take myself seriously.”
“Jemima prefers to use fresh Worcestershire asparagus grown in the Vale of Evesham – the UK’s main supplier of the vegetable,” says the article. “She picks a handful of tips, tosses them into the air and ‘reads’ the shapes they form when they land.”
Ms. Packington claims 80-90% accuracy; by far, her most epic prediction was the passage of Brexit in mid-2016…However, she mistakenly presaged other countries would follow the Brits and beat a hasty retreat from the EU. (Wah-wah.)
Other right-on predictions for 2017? “The UK economy will thrive after successfully implementing Brexit.” Unlike gloom-and-doom predictions from economists, Ms. Packington was — surprisingly — correct. The UK’s economy grew by 1.5% last year. Not exactly thriving…but close enough for jazz.
And, in a bit of don’t-shoot-the-messenger reporting, the “Asparamancer” predicted President Trump would be viewed as a global “pariah” (her word, not mine) in 2017. I leave to your judgment, dear reader, the accuracy of that particular soothsaying….
A few of Ms. Packington’s predictions for 2018 include:
- A record number of royal births
- The ouster of Prime Minister Theresa May
- Politics rocked by scandal
- The bitcoin bubble will burst
The 5 calls it: A lot of low-hanging fruit here (or should we say asparagus?) — apart from the bitcoin thing, of course. Ms. Packington’s not exactly the Cassandra of our day…and we’re glad she doesn’t take herself too seriously.
To the mailbag: “The gentleman who wrote about exceptions to warrants being well defined and lawful is factually correct,” writes one of our regulars.
“Terry stops, incident to lawful arrest and exigent circumstances are all based on long standing case law. Terry vs Ohio, for instance, was decided 50 years ago.
“But case law is always evolving and many times it is decided by a divided court. In other words, the most learned scholars on the Supreme Court regularly disagree and dissent with decisions.
“So, in many cases, our laws are a fluke of who happens to be sitting on the bench and if they are political activists doing the bidding of the deep state or if the majority is trying to abide by the constitution to protect the citizens.
“To say that an arbitrary one hundred mile line inland from the border, which includes two thirds of the populace, are now subject to warrantless searches does not meet the reasonableness standard.
“We have given up our most fundamental constitutional rights against warrantless searches, for what? To protect us from ‘terrorists’ who after fifty years of world wide attacks hasn’t killed as many people as smoking does in a single year? Is that reasonable?
“Of course this has nothing to do with our safety and stopping terrorism. It is about power and control by the ruling class like it has been through history.
“Your constitution free zone defender would do well to remember that just because something is legal doesn’t mean it is morally just and shouldn’t be resisted.
“Rounding up the Jews, without a warrant, trial, or hearing was completely legal. Hopefully your reader wouldn’t be cheering on the SS!
“We’re not there yet but, with sheeple like your reader who know facts but completely lack reason and critical thinking to apply them, it looks like we have jumped the shark.”
“You talk about border searches on trains in the north?” a reader writes. “I often drive I-8 between Phoenix and San Diego.
“Most times the trip passes without incident but one traffic stop felt like I had landed on the wrong side of the Iron Curtain. Heavily-armed men in green fatigues screaming orders, snarling German Shepherds inches from my car window, the works, all in the name of catching illegal aliens.
“If this is what America has come to be, perhaps it’s time to consider other options.”
The 5: No doubt the more aggressive enforcement at these internal checkpoints is within 100 miles of the Mexican border.
But Dave brought up the Amtrak stops in New York State yesterday to illustrate how pervasive the enforcement culture is, even in the northern border zone where he resides. “Long ago at a smallish state university near my home,” he adds, “foreign students were told it was a free country and they could leave their passports and I-90 forms at home. No longer — lest they be accosted by Customs and Border Protection and face a $75 fine, if they’re lucky. Just another incremental step toward the ‘papers, please’ society for all of us.”
The 5 Min. Forecast
P.S. By the way, the second half of Alan’s recommended Alibaba options — the first half was up 52% in four hours on Tuesday — is on track to double sometime within the next two weeks.
If it all plays out the way Alan expects, Weekly Wealth Alert readers will gain 13 times the rise of Alibaba shares over the same holding period. Get access to Alan’s winning recommendations right now.
The 5’s compelled to visit our periodic theme of media malpractice — especially the elitist nature of corporate media here in the 21st century. Read More
Exposed? Media elites and other connected insiders might be colluding with finance types on lucrative trades in the markets. Read More
“Private equity companies are sitting on more than $2 trillion,” says Zach Scheidt. Here’s how these lucrative companies “make money in both good times and bad.” Read More
“There’s no legal impediment to even higher debt levels,” says Jim Rickards, “if Congress wishes.” But there’s no good way out… Read More
Social media’s swift ban hammer on “hate speech” and “misinformation” is more self-serving than you think. Read More
“SPACs right now are hot,” Ray says, “and everyone wants to get into the action somehow.” Read More
Go figure: At the time of writing, the S&P 500 is only 2% off its all-time high — which was achieved only six weeks ago. Read More
Apple’s pricey new iPhone “primes consumers for the higher cost of even more advanced connectivity that could be making its way,” Ray Blanco says. Read More
A curious mainstream narrative begs the question: Is there a 2020 version of the “Froman email” floating around Wall Street and D.C.? Read More
Regardless of the election, gold’s scarcity coupled with swelling demand — and a pandemic in the background — seem like a recipe for a Midas metal rebound. Read More