The Next President?

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Includes: AAPL, AMZN, BA, BAC, C, CSCO, F, FB, GE, GOOG, IBM, INTC, LMT, MSFT, SBUX, SPY, T, TSLA, XOM
by: The Nattering Naybob

Summary

Discussion of the potential effects on equity, bond, commodity, capital and asset markets regarding:

Automotive Debt; Q4 2015 GDP; Jan 2016 Durable Goods.

Reflective Rhetoric; De-evolution.

Perception is Reality; The Fallout of Bad Choices.

The President satirically tells a tragically beautiful story of a brutal dictator on the lam, who comes face to face with the injustices committed by his regime, when his country is taken over by revolutionists who place a bounty on his head. Exhibiting sweeping cinematography, a modern fable about power, reconciliation, and the hope for breaking a never ending circle of violence. This brilliantly acted film explores the possibility of stopping the violence after a revolution in search of freedom and democracy.

Automotive Debt

"That eighteen (18) month at ZERO% grace period could be the only thing holding the consumer credit tidal wave up for the time being" -In Time?

$920B in Revolving Credit and $1.3T in student loans, a ticking bomb? If you missed our last missive In Time?, you should make and take the time, pun intended.

Plucked from recent headlines: "The average college graduate who has any student loan debt graduates with between $25,000 and $30,000 in student loan debt. On a standard ten year repayment schedule, this means a monthly payment in the range of $280 to $330 per month. The average new car loan in the second quarter of 2015 averaged $28,500, was for five years, and carried a monthly payment of $483 month." - Forbes

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Above note, there is now over $1T in automotive debt. Mostly on these terms, fog a mirror, no down, no interest, bad credit, no job, no problem, here are the keys. Thanks for coming, drive carefully.

MSM Econometrics

Q4 2015 GDP - 3rd estimate coming this Friday. "The government's initial figure showed growth of 0.7%, but that will likely be adjusted down to a 0.4% annual rate" Slapping lipstick on the pig they delivered +1%, a big MSM (main stream media) hooray!!! Translation in Fed speak, robust economy with room to raise.

January 2016 Durable Goods - - February coming this Thursday - Hailed as as rebound in manufacturing, the MSM trumpeted new orders seasonally adjusted MoM - +4.9%; Yoy +1.8%; hooray!!! Under the sheets - crapola - unadjusted Mom -13.6%; Yoy -2.5%. Ex transport and ex defense orders and shipments are all just as bad.

How bad was it? New orders Jan 2016 was -1.2% below Jan 2007; A decade and trillion dollars of stimulus later? Pouring salt in the wound, a longer horizon indicator 180 day MA for capital goods shipments a new low -2.1% = Dec 2008 and April 2001.. click here for all the gory details. And the contraction continues, but again based on the MSM narrative, all is well and room to raisetwice more this year. Lets see what this weeks "happy daze" econometrics bring.

Reflective Rhetoric?

"Mais les fausses opinions ressemblent à la fausse monnaie qui est frappée d'abord par de grands coupables et dépensée ensuite par d'honnêtes gens qui perpétuent le crime sans savoir ce qu'ils font."

"False opinions are like false money, struck first of all by guilty men and thereafter circulated by honest people who perpetuate the crime without knowing what they are doing." Joseph de Maistre - Les soirées de Saint-Pétersbourg, Ch. I

Kramer commented: "I thought we would figure it out when alternating Dem and GOP presidencies failed to produce a result, but I misunderestimated the role of GOP obstruction. Instead of showing that the Dem's solution does not work, the GOP prevented Obama from trying it and effectively forfeited their own chance to give it a go. Not unsurprisingly, the electorate is now rejecting two-party governance in favor of an essentially no-party strong man. (The SCOTUS scuffle is further evidence that governing is the farthest thing from partisan minds.)"

We agree with Kramer's astute assessment. It now appears that Hillary Clinton and Donald Trump are probably the two finalists. If the "strong woman" wins will the denial about the email "serve-her" or not? If the "strong man" wins would there be "hell toupee"?

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De-evolution?

This campaign trail was been wrought with accusations, shouting, profanity, a lack of comport, deference, demeanor, intelligence and the heightened inability to elucidate with alacrity. Replete with sexual repartee as to the size of Trumps hands, etc.? The rhetoric of Rubio, Cruz, Trump, Clinton with Sanders being the "best behaved"? brings to mind...

"Even a fool, when he holdeth his peace, is counted wise: and he that shutteth his lips is esteemed a man of understanding." Proverbs 17:28

My ears burn when their mouths open, speaking volumes of nothing, and erasing all doubt they are fools. One shakes their head wishing to wake up, is this real or a reality TV nightmare? The level of gibberish and gobbledygook could not have been imagined possible even four short years ago. Whiskey, Tango, Foxtrot happened? Where are all the bright people of conscience?

I look on with incredulousness, the current Presidential election being an apropos sign o the times. A tragic soap opera more befitting of a "reality TV show" is the best we can do? The devo-lution of: our candidates (WWF like), their rhetoric (idiotic), the third estate coverage (vacuous bias), the supporters (soccer hooligans), and our process; is a seeming national disgrace and tragedy of the commons. This is what passes in the new millennium for democracy in action with "freedom of choice"?

Jackass A or Pachyderm B, either way it makes one wonder, what difference? and would we be better off voting for Alfred E. Neuman? We're ruined anyway, might as well let him finish the job? Neuman's probably VP candidate is Dead Possum running with the Road Kill party on a very similar platform to Neuman. Possum's slogan is: "At least I won't make things worse." I kid the Presidential candidates? Oh no, not in the least.

Here's the rub, investors around the world have faith in the perception that US equities, bonds, markets and dollar assets are the best and safest. That sense of security and stability is why the "BIG money" flows here. Whomever we elect next will have a direct effect on our policies effecting that "flight to safety" and the global economy itself.

Perception is Reality?

Kertch commented: "Trump would get essentially NOTHING done, unless he "makes deals" with the special interests. Remember, "Hope and Change" quickly ran out of hope and got us very little change. The only real outsider is Bernie, and if he won he might as well turn the Whitehouse lawn into a four-year Woodstock festival, because everyone else in Washington would ignore him."

Kertch is on to something. In Trump, I am reminded of Carter. The electorate fresh off Watergate, Nixon and Ford are "mad as hell and not going to take it anymore". The lesson learned from the Carter administration was, electing anyone perceived as an outsider, or incompetent, or a loose cannon or a threat to "business as usual", could be a huge risk. Not only for the potential furtherance of bipartisan gridlock by design. Said Presidential selection would "send a message" which could be interpreted as a threat to the safety and security of tens of trillions in global investment.

The "outsider" or "strong man's" detractors contend that proposals to cut individual and corporate taxes and impose major tariffs on Chinese exports to the United States - would cost trillions of dollars and send the U.S. economy into a tailspin. Other's say that assertion is debatable and "The Donald Effect" in not quantifiable at this time. How about a guess? A partial list of potential Trump policy effect on various sectors:

  • Defense - more spending, good for defense contractors and their ecosystem. BA, LMT.
  • Healthcare - a clawback from Obamacare would be negative to managed care profits, bad for managed healthcare.
  • US Multi-Nationals - retaliatory export tariffs, tax policy on foreign earnings and corporate inversions would cut profits and shift the competitive field.
  • Corporate tax cuts - domestic corps would benefit and multi nationals might recoup some foreign earnings tax losses.
  • Retail - tariffs on Chinese goods could result in higher prices, reducing consumer spending.
  • Automotive and Discretionary - individual tax cuts could boost consumer spending.
  • Construction - The "Yuge" Wall could provide $25B towards CAT, Deere and their ecosystem.

50% of illegal immigrants enter the US through an airport or port of entry. The wall would do nothing to stop the flow of drugs or the drug trade. IMHO - regardless of who is elected, said wall never gets built and is strictly hollow campaign rhetoric to solicit votes.

The election, policy and future actions of our next president, could shatter the aforementioned faith in perception. Affecting risk assessment and subsequent mitigation on the part of global investors. Which could result in investment migration or capital outflows, and the resulting unpleasant economic consequences of such.

Fallout of Bad Choices?

"Toute nation a le gouvernement qu'elle mérite."

"Every nation gets the government it deserves."

Joseph de Maistre - (oft misattributed to de Tocqueville and Lincoln). Letter 76, on the topic of Russia's new constitutional laws (27 August 1811); published in Lettres et Opuscules. I gotta do some Nattering about fact checking, but not today...

To paraphrase de Maistre, the government mirrors the populace, which gets what it deserves. John Q. better be careful what it wishes for, as this election could be "a shot heard round the world", in the wrong way. In that case, much like the fallout of bad choices, that we still suffer sixteen long years later, we might as well be electing Neuman/Possum - 2016 "Honest about their idiocy." Food for thought and remember to get out and exercise your freedom of choice.

I wish to dedicate this missive, to one of my mentor's Salmo Trutta, who is a prolific commenter on SA. Without Salmo's tutelage, and insistence in not masticating and spoon feeding the baby ducks, as in learning the hard way, by doing the leg work and earning it, this missive would not have been possible. To you "Proximo"... "win the crowd and win your freedom" - Spaniard

Would like to thank you folks fer kindly droppin in. You're all invited back again to this locality. To have a heapin helpin of Nattering hospitality. Naybob that is. Set a spell, take your shoes off. Y'all come back now, y'hear!

Market Plays

As for how all of the above ties into the potential and partial list of market plays below... the market as a whole could be influenced, and this could tie into any list of investments or assets. Those listed below happen to influence the indices more than most.

There are many macroeconomic cross sector and market asset correlations involved that affect your investments. Economic conditions, the eurodollar, global dollar debt and monetary policy all influence the valuation of the above and market plays below, via King Dollar's value, credit spreads, swap spread pricing, market making, liquidity, monetary supply and velocity, just to name a few. For a complete missive series listing covering those subject and more, click here.

The potential global economic developments discussed in this missive could affect numerous capital and asset markets, sectors, indexes, commodities, forex, bonds, mutual funds, ETFs and stocks.

A List of 17 Potential Market Plays (Long or Short?): Apple Computer (NASDAQ:AAPL); Google (NASDAQ:GOOG); Facebook (NASDAQ:FB); Microsoft (NASDAQ:MSFT); Citigroup (NYSE:C); General Electric (NYSE:GE); Cisco (NASDAQ:CSCO); Bank of America (NYSE:BAC); Amazon (NASDAQ:AMZN); Tesla (NASDAQ:TSLA); SP 500 Trust ETF (NYSEARCA:SPY); Ford (NYSE:F); Starbucks (NASDAQ:SBUX); Intel (NASDAQ:INTC); ATT (NYSE:T); IBM (NYSE:IBM); Exxon/Mobil (NYSE:XOM)

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.