Ricks Picks

Liz Warren and the Election Cycle


Trump is pulling out all of the stops to keep the economy humming as campaign season draws closer. On Tuesday he let Wall Street know he’s considering capital gains cuts and other pro-business changes in the tax code to help fortify the U.S.  economy against mounting recessions in Europe and China. His plan to index taxes to inflation will likely draw fire from the usual quarters, since those in higher tax brackets would reap most of the gains. Although even leftists undoubtedly recognize that inflation is one of the most pernicious and lucrative ways in which government steals from us, they’re willing to go along with it if most of the theft seems to be from “the rich.” The fallacy lies in failing to acknowledge that the “wealthy” on whom blue-state voters would inflict higher taxes are in fact merely affluent. They don’t travel in chartered jets or spend summers cruising the Mediterranean. Rather, they are often working professional couples who borrow to put their kids through college like the rest of us, who live in houses bigger than they can afford, and who are challenged to save enough for retirement.

Year-Three Goodies!

We have market historian Yale Hirsch to thank for discovering and explaining the stock market’s election cycle clearly enough so that it makes sense. Years one and two of a president’s term are spent taking care of political promises that don’t explicitly benefit “the rich.” Year three is where the president starts giving away goodies, and that’s why it is the strongest part of the cycle, followed by year four. Trump isn’t taking any chances, and that is ample reason to give the ten-year-old bull market the benefit of the doubt.

He will be bucking strong headwinds, to be sure. Besides the by-now palpable threat of a global economic downturn, there is strong evidence that the U.S. housing and auto sectors have topped. If interest rates stay low and these key areas do not improve, Trump’s odds will decrease commensurately. And if stocks should start to plummet for no apparent reason, as they always do from the tops of bull markets, Trump could face a tough challenge from the likes of Elizabeth Warren, our current pick as the Democratic frontrunner.  Heaven help investors — help us all — if it begins to seem even remotely possible that she could win in 2020. The Dow Industrials would begin to fall hard for long stretches of weeks and months, dooming Trump’s reelection.  The bear market would begin to feed on itself at that point, with no bottom until Warren’s brand of socialism has wrecked America for a generation. [Note: Rick will be on holiday from August 23 to September 4. During that time, there will be no daily commentaries, although he will continue with timely updates as warranted at Rick’s Picks.]

Comments on this entry are closed.

Ben August 21, 2019, 6:11 am

With all due respect to both you and Mr. Hirsch, I don’t think you guys are looking at this realistically. Are people really going to say…

“Man, I hate this recession! I’m gonna get me a beer and vote for a wooden Indian socialist!”

“I voted for Donald Trump the first time, but I’m staying home this time because I want a socialist to make this recession permanent.”

In what universe? In what universe?!

none August 21, 2019, 5:40 am

“He will be bucking strong headwinds, to be sure.”

I have never seen anything like this!

According to the Spectator, chair Powell has banned any public appearances by any Fed Board member, noting that “appearances at conferences have been canceled, all scheduled interviews have been abandoned and any comments on or off the record are outlawed.”

The move over the 3 year high in GC is a hedge/’tell’ towards the collapse of rates now trading at an all time low. The 40 year bear market in rates continues and takes off even harder towards the downside, just after so many suggested a major long term declining trend line was broken and had started the new bull market in rates. Don’t you recall!

Prime Rate at 1% is the low point.

Suggesting a BUSH43 2.0.

The Era Of Globalization is ending and will have as great an affect on markets as when it took off in the early 1980’s.

In 1960, Detroit was the richest city in the US.

In today’s world a man such as Louis Pasteur would have a hit on him by the ‘peta animal rights’ people.

Have a great day Rick continuing to be hammer! LOL

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