2Nd Quarter 2017 News

2017 2nd Quarter The Retirement Planner Financial Planning and Investing for Retirement 2001 Midwest Road Suite 107 Oak Brook, IL 60523 Telephone 630-495-9700 Web site www.rpiinc.com Swamp Things ell that didn’t take long. Pres- Trump got elected seemingly due to his W ident Trump discovered that it platform of economic growth, less gov- is hard to get things done in Wash- ernment and regulations and lower taxes. ington. Who knew? The first promised repeal and replacement of But the apparent ineptness of his own Obamacare was dead on arrival, Written by party and the strong opposition from the mainly due to his own party’s inept- Norman P. Chiodras MS, Democrats for anything Trump does have CFP, RFC, President ness. These are the folks led by Paul Exclusively for RPI Clients many of his supporters concerned about Ryan who had seven years to come the success of his agenda. Should inves- up with an alternative plan but never tors be concerned too? What if he can’t did. The best they could do was to fulfill his promises, will the market erase keep everything the same but stop Inside This Issue the gains since the election? the mandate forcing people to buy insurance and eliminate the penalty for not having insurance…which, by While the Trump administration has been Swamp Things 1 the way, were pretty much the only successful in already removing many reg- revenue streams holding up the ulations and consolidating or eliminating • when stocks become a safe whole wobbly mess. some 150 government departments that haven were redundant or unnecessary, there are • what could go wrong? potential setbacks that could upset inves- With the second attempt, Trump did • conclusion tors. Upon passing the recent budget to not leave it up to the hapless Repub- keep the government open, Dave Brat (R- When Governments licans and worked the phones him- VA) summed it up this way on Fox Busi- Go United Airlines 6 self. The replacement bill passed the ness News, “The Congress deal funds House along party lines but will un- sanctuary cities, Obamacare, EPA, likely pass the Senate, where bills • protect our care Planned Parenthood; doesn’t fund the usually go to die. • health freedom wall. Where’s the Trump agenda? He just • conclusion won the presidency!” Rush Limbaugh’s In the meantime, the stock market Potpourri 12 question to Vice President Pence was, “If just continues setting one record after this is what happens, why vote Republi- another. It has been on a tear since can? ” Page 2 2017 2nd Quarter SWAMP THINGS I myself was puzzled by his pick of high in May. The French CAC-40 former Goldman Sachs executives shown below has broken through a Steven Mnuchin for Treasury Secre- downtrend line on the monthly level. tary and Gary Cohn as his top eco- Are all these markets in the US and nomic advisor. For decades, Gold- Europe soaring because economies man Sachs has been infiltrating gov- are so solid? Hardly. First quarter ernments around the world for their GDP for the US grew at an anemic own benefit, aptly earning the moni- annual rate of 0.7%. ker Government Sachs. They are the very definition of the swamp. Trump’s decision to enlist his daugh- ter Ivanka, her husband Jared Kush- ner and Dina Powell as close aides left many supporters scratching their Yet the stock market heads as well. Influential radio host Mark Levin warned on Twitter, just shrugs it off. “Jared Kushner, Gary Cohn, Dina Which begs the Powell: the three big-government lib- question. Is there erals tightening their hold on the White House.” The promotion of peo- “France is suffering from tremendous some other dynamic ple who represent the antithesis of high unemployment, little to zero po- at play here that is Trump’s platform has not only led to tential job growth, cursed by stagfla- levitating stocks? infighting within his administration, tion, and security worries that are the but has left voters wondering if they greatest among the European states,” will be left behind once again. Is notes well-known international econ- Trump draining the swamp or refill- omist Martin Armstrong of Arm- ing it? strong Economics. “The unilateral act of Merkel accepting refugees suppos- edly from Syria that ended up being a Yet the stock market just shrugs it wholesale invitation for anyone from off. Which begs the question. Is there all Islamic countries has devastated some other dynamic at play here that France who was never asked by Mer- is levitating stocks? Perhaps a look at kel in advance to accept these refu- European markets might give us a gees.” And it was announced recently clue. that the ECB (European Central Bank) is working on a new bailout When Stocks Become a Safe Haven plan for France’s banks. The German DAX just hit an all-time Even worse news for France was re- Page 3 SWAMP THINGS cent election of Emmanuel Macron an especially high risk of default. as their next President. Did France Armstrong, who advises institutions forget that Macron served briefly worldwide, notes that “the Swiss are under the disastrous socialist gov- buying US equities as a hedge against ernment of Hollande? Macron was the Euro and political unrest… Their a member of the Socialist party that total equity holdings have now substantially hiked taxes on high- reached $80.4 billion, up $17 billion income earners. The result is 25% from the $63.4 billion at the end of unemployment amongst the youth. 2016.” However, the elites in Brussels Remember, once loss of confidence must be wiping their brow. Emman- takes place it snowballs in that direc- uel Macron’s victory promises no tion and eventually turns into panic. It change for Europe and it has been is unimportant whether what was wor- the blessing Brussels so badly ried about ever comes to fruition. wanted to further advance the feder- Facts don’t matter, confidence does. alization of Europe. “Macron will surrender far more French sover- And when economic growth is slow, How can stock eignty to Brussels than anyone sus- corporations use their money for buy- markets head pects based upon reliable sources,” ing their own stock rather than ex- north while concludes Armstrong. panding their business. “In November economies head 2016, Goldman Sachs’ chief equity south? How can stock markets head north strategist David Kostin estimated that, while economies head south? in 2017, S&P 500 companies will spend $780 billion on buybacks — a new record,” an article in Forbes not- Armstrong says history shows that ed. when people lose faith in government they buy private assets such as stocks and gold. When you think According to CNBC, US corporations your government could default on are hoarding $2.5 trillion of cash over- their bonds and your currency could seas. If they bring back that money plunge, you hedge against it. into the US, it will be taxed at 35%. So the Trump administration wants to en- tice them with a one-time offer – a As we have reported before, even central banks are getting in on the 10% tax. If part of this money finds its way back to the US, once again it will act. They are in the dire position of holding mainly their own countries’ likely be spent on stock buy backs which could add further fuel to the ral- bonds which in the Eurozone are at ly. Page 4 2017 2nd Quarter SWAMP THINGS These are likely reasons why the stock care about themselves and will do market could continue to decouple everything within their power to from underlying economies. But dete- stop Trump’s success. riorating economic conditions will continue to fool many investors and Trump does not appear to have the cause them to miss out. Money will ability to self-edit and continues to always seek geopolitical and currency give the swamp additional fodder safety. with his own self-inflicted wounds. These are huge and very welcome What Could Go Wrong? distractions for those hoping he So let me get this straight. The worse fails. the economies get, the deeper government swamps get and the worse the It would be naïve to assume that situation in Eurozone becomes, the this won’t upset our markets at They could care better for US stocks? Yeah, that about some point down the road. The dan- sums up where we are today. less if Trump found ger is that all of the distractions postpone the promised tax cuts the cure for cancer. However, it is not quite that simple. which our stock markets have al- They only care As we have been alluding to in past ready built in. This will likely be about themselves issues, the swamp people (establishment the catalyst for the 5-10% correc- and will do Republicans, Democrats, Intelligence tion we have been expecting. Yet it everything within and media) in Washington do not want is remarkable that the stock market their power to stop to see Trump succeed at anything as it has held up so well in light of recent political turmoil. Trump’s success. would then embolden his entire agenda -- an agenda that leaves them with less power and could even end their We believe the march to Dow careers. They could care less if Trump 30,000 will begin in earnest as soon found the cure for cancer. They only S&P 500 Price to Sales Ratio Page 5 SWAMP THINGS as the Dow can penetrate 23,000.

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