On Markets and Self-Made, Manufactured Crises

Jim Woods

It is said that man is a being of self-made wealth and self-made soul.

By “soul,” I mean a man’s conscious contents (and by “man” I mean human beings). So, when I see what looks to me to be a set of consistent self-made, self-inflicted wounds by the president of the United States, well, I begin to get worried on not just a political level, but on also a much deeper level.

Practically speaking, as a market watcher and purveyor of investing advice, I’m also starting to become concerned about the effect this has on our money. That concern has risen mightily over the past week due to the manufactured crises we’ve seen emanating from the White House.

First, it was the inelegant firing of FBI Director James Comey. It’s one thing to fire someone (which was the president’s right), but it’s another thing to have that person learn about their dismissal on TV, and not directly from his boss. Perhaps I’m just “old school” here, but if you have to deliver someone bad news, have enough guts to look into their eyes and deliver that news right to their face.

Then there were the most-recent revelations of perhaps why Mr. Comey was fired, which is extremely troubling. If you believe the latest news reports (and that is a big “if”) Comey was allegedly asked to back off the Trump-Russia probe. When he didn’t agree, the president terminated him.

I’m not an attorney, but that does sound like the genesis of a possible obstruction of justice claim to me. Given this situation, is it any wonder why markets are reacting with a knee-jerk sell-off today?

Then there was the recent revelation that President Trump may have divulgeone-tinmed Top Secret intelligence gathered by a friendly foreign government (the word is it was Israel) to the Russians.

This revelation is disturbing from a citizen’s point of view; but from a market observer’s point of view it’s one more manufactured crisis capable of destroying any hopes of progress on the one thing that’s really driven markets higher since November — the passage of the pro-growth Trump agenda.

Speaking of that agenda, things appear to be somewhat perilous.

Remember that the president took office with hopes of enacting a $1 trillion infrastructure build out. While that number was mostly wishful thinking, the idea of an infrastructure spending plan that could get bipartisan support was one that looked promising.

Yet the reality is there hasn’t been any progress on this front. Moreover, the current political turmoil isn’t likely to get members of Congress to the table to deliver a win for President Trump anytime soon.

Exclusive  Investors, Traders Unhappy about FOMC Uncertainty

Then there was the pro-growth notion of deregulation, and particularly the repeal and replacement of Obamacare. Well, after an initial failure to even bring the Trump plan to the House for a vote, we did see a reorganized plan narrowly pass.

While this was the president’s first, albeit modest, legislative win, there seems to be little chance of any bill passing the Senate. And even if there is passage of a health care reform bill in the Senate, it isn’t likely to bear much resemblance to the House plan.

Yet the biggest pro-growth Trump agenda elephant in the room remains tax cuts.

At the beginning of the year, markets expected an agreement (at least in principle) on a tax cut proposal by the August Congressional recess. What we all (i.e. market professionals) wanted to see was a reduction in the corporate tax rate down to 15%, or at most 20%. We also wanted to see a general agreement on a one-time repatriation tax holiday for foreign profits.

Here, again, there really has been little to no progress.

Right now, there are major roadblocks on this issue within the Republican ranks, with some in Congress insisting on so-called “revenue neutral” provisions such as border adjustments and removing interest deductibility for corporations.

The most interesting thing about the tax cut issue is that stocks have continued to climb in 2017, despite the lack of actual progress on the tax front. I think this is because there still is a broad expectation that some kind of tax cut deal will be implemented by early next year.

Before the president’s self-inflicted wounds of the past week, I would have said that a tax cut of some sort passing Congress by the end of the year is very likely. Now, however, I’m not nearly as certain.

That’s unfortunate for investors, for citizens at large… and for America.

Fortunately, however, there is a way you can put the power of a proven “safety switch” to work for you. That safety switch is the plan we’ve relied on in the Successful ETF Investing newsletter to help generate market-beating returns for most of the past four decades.

If you want a plan that will get you through all kinds of politically manufactured crises, then I invite you to check Successful ETF Investing today!

*************************************************************
ETF Talk: Vanguard Short-Term Bond ETF Offers Sustainable Income

Exclusive  Daily Data Flow: Stocks Rise, 'Fiscal Cliff' Drama Continues; Gold near $1,700

By Eagle Staff

This week’s featured exchange-traded fund (ETF) is Vanguard Short-Term Bond ETF (BSV).

As its name implies, BSV tracks shorter-term U.S. government, investment-grade corporate and investment-grade international dollar-denominated bonds. All of the bonds in BSV’s portfolio have maturities in the duration range of 1-5 years.

With $21.59 billion of total assets under its belt and daily trading volume over $112 million, BSV is a huge fund with a lot of liquidity. The fund is passively managed using index sampling. Its efficient management practices yield a low expense ratio of just 0.07%.

One of the main advantages that this shorter-term bond ETF offers over the long-term bond ETFs is reduced fallout from the Fed’s interest rate hikes, which are expected by many forecasters later this year.

You may be interested to know that BSV is held by many large investment banks, such as Bank of America (19.55 million shares), Wells Fargo & Company (14.94 million shares) and Morgan Stanley (8.02 million shares). Banks do this to diversify their portfolios and hedge against interest risk.

From the chart below, we can see that BSV experienced a sharp decline in late 2016, as it dropped to a low of around $78.75. Since then, the fund has rebounded and currently trades at around $79.80. Year to date, BSV’s return is 0.48%. BSV has a dividend yield of 1.59%.

BSV’s top five holdings in the portfolio are the U.S. Treasury 1.25% Note, 1.49%; U.S. Treasury 1.375% Note, 1.46%; U.S. Treasury 1.25% Note, 1.42%; U.S. Treasury 1.5% Note, 1.39%;  and U.S. Treasury 1.125% Note, 1.35%.

BSV provides constant current income with high credit quality. If you are seeking a safe go-to investment in the bond market, we encourage you to look into Vanguard Short-Term Bond ETF (BSV) as a potential purchase.

As always, we are happy to answer any of your questions about ETFs, so do not hesitate to send us an email. You just may see your question answered in a future ETF Talk.

3 ETFs to Play Gundlach’s Latest Big Recommendation

When Jeffrey Gundlach speaks, investors listen.

I’ve been listening to the DoubleLine Capital CEO/CIO for years, as he’s one of the smartest men on Wall Street. And after correctly predicting both a Donald Trump presidential victory, and the subsequent post-election Trump equity rally, Gundlach is making a different call today… one that involves short selling the S&P 500 and buying emerging markets.

This “short home, long abroad” strategy was revealed recently by Gundlach at the Sohn Investment Conference in New York. The DoubleLine chief, also known as “The New Bond King,” recommends investors short the S&P 500 Index via the SPDR S&P 500 ETF Trust (SPY) while also buying the iShares MSCI Emerging Markets ETF (EEM).

Exclusive  Is George Soros a New Gold Indicator?; Markets Soar to New Highs Again; Wal-Mart Sales Slip

But even if you buy Gundlach’s theory, simply shorting SPY and buying EEM isn’t the only way — or even the best way — to do it.

Here are what I think are three better ways to use ETFs to play Gundlach’s latest big recommendation.
15 Things to Buy with Your Sell in May Profits

Life in the equity markets has been very good to investors, especially since the unexpected election of Donald Trump as our 45th president.

The S&P 500 is up nearly 11% since Election Day, and many stocks are up far more than that since the “Trump reflation trade” has been in effect.

Now, however, we’re in May, and that means many investors are planning to follow one of Wall Street’s oldest adages: “Sell in May and go away.”

If you are sitting on a whole lot of post-election profits, and you are getting ready to sell in May and go away, the question then becomes … what do you buy with all that money?

Here’s a fun look at some of my favorite things to buy with your sell-in-May profits.

On Pushing Aside Static

“Getting things straight in your head is a major achievement because there is so much clutter out there. You’ve got to push aside the static to really hear the music.” — Steve Wynn

The brilliant hotelier and casino mogul transformed Las Vegas with his ability to push aside the static and really hear the music. That’s good advice when it comes to your personal life, your business decisions and your money. So, forget the clutter and get things straight in your head. Doing so will make you more successful and, ultimately, a lot happier.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Click here to ask Jim.

In case you missed it, I encourage you to read my e-letter from last week about how low-volatility stocks may be facing a bumpy ride ahead.

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE


img
previous article

Warren Buffett doesn't often admit to mistakes, but at his latest investment conference, he admitted he missed two great opportunities.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 5 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details

LEARN MORE HERE

Nicholas Vardy

A Stanford and Harvard Law graduate, Nicholas Vardy scours over 40 different global markets every day to uncover new profit opportunities for subscribers. His 3 advisories and trading services include:

Product Details

LEARN MORE HERE

Jim Woods

A 20-plus-year veteran of the markets, Jim Woods has varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

Product Details

LEARN MORE HERE

Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE

DividendYieldHunter.com

Editor Tim McPartland has published Dividend Yield Hunter since 2006. His web site features three model dividend portfolios along with timely income investing alerts.

Product Details

LEARN MORE HERE