Dan’s Blog

Buckle Up

Dan Calandro - Sunday, January 22, 2017

It wasn’t long after Donald Trump gave one of the most unique inaugural addresses in the history of our great country that pundits like Chris Matthews and Rachel Maddow likened him to Hitler. I wonder if those two knuckleheads have ever read even a few pages of Mein Kampf.

To refute their utter nonsense I ask this: Would Hitler ever say, “When you open your heart to patriotism there is no room for prejudice,” as Trump did during his inaugural address?

Of course not.

And since when is placing America first a bad thing?

It’s hard to take the American Left seriously.

Several years ago I walked into a meeting in Chicago and an owner of the company was holding a bust of Thomas Jefferson. He was taping his favorite Jefferson quote to the base of it. Jefferson was his favorite he said, and then asked me what I thought of the icon. I said, “Jefferson was brilliant, a smart liberal.” He smiled and nodded.

The debates back then were for big, complicated issues. The banter between Hamilton and Jefferson on things like a national bank and currency were epic, brilliant arguments. And while Jefferson never shied away from dirty politics he never put forth a naked stance. Deep thought and legitimate tenets always backed his policy stances.

But that is not commonplace with today’s Left. Rarely to do They engage in debate of deep thought. Their way is always the correct way because They say so; and their opposition is always wrong because they always want some type of destruction – because They say it is so. Not because it is, in fact, so.

For example, because Trump and Republicans want to repeal the disaster that is Obamacare (simply look at its performance results for proof of failure) and replace it with something that could possibly work (see: Gruber Acknowledges Supreme Letdown for my 12 point plan) they are somehow illegitimate. But instead of legitimate policy debate Democrats resort to demagoguing their opposition with insidious one-line slogans like: Republicans want to “Make America Sick Again.”

Kool-Aid anyone?

Because they are liberal they can say whatever they want, regardless of factual basis, and without impunity.

But the other side can’t.

If someone merely disagreed with an Obama stance they were immediately labeled a racist. 

A difference of legitimate opinion does not a racist make.

For instance, if a person called Obama a communist then they would have instantly been labeled a racist. Yet according to Obama’s own words in the AUDACITY OF HOPE, he was greatly influenced by “the radicals, the communists.” It only stands to reason that if communists greatly influenced a person then that person might actually be a communist. Whether or not the person was an actual communist is irrelevant. The point is that an actual legitimate basis for the accusation exists.

And for the record, a person cannot be a racist if they believe Obama is a communist. An example of racism would be if a person believes that all black people are communists – and that their belief system is superior to communism. For instance, if a person believes that all black people are capitalists and that capitalism is an endearing position then that person is not a racist. They are a fan.

The far Left in America, the hypocrites that claim to be tolerant and inclusive, are the first to shout down opposing views and demean their opposition as stupid, racist, or fascist. When they lose they are the first to claim foul play, riot and destroy property, and pursue changes to protocol and law to destroy the opposition.

To intimidate with force rather than to persuade with fact and logic are tactics and practices of communist and/or fascist regimes. And governors who do not condemn such practices are either communists or supporters of communists.  

This, not to mention, that every major piece of major legislation passed in the Obama years was rammed through Congress by one authoritarian party and with no inclusion of the minority. That was when Democrat congressional positions included things like, “We won and you lost,” and “You have to pass the bill so you can find out what’s in it.”

A legitimate argument can be made that Democrats are the true communists or fascists practicing in America.

But instead Trump is being billed as that radical – and he has done none of those things or presided over an administration that has excluded the minority party from the legislative process. I’m not saying that Trump will or won’t do these things. I’m just saying that he hasn’t done them yet. So to call him “Hitlerian” like Chris Matthews did is liberalism at its worst – as is describing Trump’s address as “militant and dark,” as Rachael Maddow did.  

So why do I go down this ugly political road in an investment blog?

Because governments control markets – and this ladies and gentlemen is your government and its operating environment.

Trump had an extremely positive message for the America People, American jobs and industry, and American security. But implementing such an ambitious agenda will not be easy with an opposition Party that looks to be doubling down on their failed tactics and inferior agenda. This is not to mention that Trump also has to fight a pathetic and fragmented Republican Party who has sold out the American People so much over the last two decades that it won’t be easy breaking them out of their bad socialist habits.

Trump’s anti-establishment stance put both Democrats and Republicans on their heels at the inauguration. He blamed them both for the so many failures over the last two decades. Good for him. But that won’t make things easier.

Although Republicans should embrace Trump’s message and change their ways they might not. And if they don’t this can get really ugly, really fast; and then who knows how long much needed reform will take.

Investors must keep their eyes on what this new government is doing. It will set the course for stocks and correction.

I reiterate this condition because it is so very important…Trump’s policies if enacted as pitched will force the Federal Reserve to swiftly raise interest rates. That will strengthen the dollar – even though Trump has recently said that the dollar is already too strong. That’s a quagmire in-and-of-itself. In any event, it is these higher yields that will bring about the next major global reset. It will push European referendums to exit the EU and the Euro will collapse. And the crisis that will follow will infect the U.S. and investors all around the world.

That makes Trump’s first 100 days incredibly important – because it will be damn near impossible for him to get anything positive done once the next crisis hits. Democrats, of course, know this. That is why they are stalling confirmations on his cabinet selections, which of course will delay confirmation of Trump’s Supreme Court nominee.   

Investors should remain cautious and keep their antennas raised.

It might also be helpful to buckle up the seatbelt. This is going to be a rocky road.

Stay tuned…

  The road to financial independence.

The Million Dollar Question

Dan Calandro - Monday, January 02, 2017

The Dow Jones Industrial Average was last year's big winner; it posted a solid 13.4% gain in 2016. The S&P 500 added 9.5% for the year, and the 15-51 Strength Indicator recorded an 8.6% gain. All three market indicators ended the year more than 1% off their all-time highs, and more than half of their annual gains came after the November 8th election. There is little doubt stocks ended the year with much more optimism than when they started. See below.


The post election bounce was lead by Financials, who should reap huge benefits in a higher interest rate environment. Higher interest rates incentivize banks to lend; more loans equal more profit. And with the Trump promise of lower corporate taxes businesses will have more incentive to invest in growth and borrow. All of that helped to propel Financials upward by 18% in the final two months of the year.

The move in Financials particularly helped the performance of the Dow Jones Industrial Average, which has more financial stocks and a higher allocation to that market than does the 15-51 Indicator.

Healthcare stocks also surged late in the year, rising some 12% post-election. This in hopes Trump will deliver on his promise to repeal-and-replace Obamacare.

Let us pray.

Another market with a late year rally worth noting is the Defense and Aerospace sector, which added 10% in the final stretch. The rest of the market was spattered with solid single-digit gains.

So there you have it – investors sent a strong message after the election: Trump policies will be good for banks, healthcare companies and defense contractors.

Make of it what you will.

The highest performing Industry in 2016 was Industrial (19%) and the lowest was Financials, which even with the strong post-election performance only eked out a 1% gain for the year. A table of 2016 industry returns is below.


Even though the strong move in stocks stole the headlines, it wasn’t the mainline event for financial markets in 2016. Yields, once down 40% in the year, ended up 8% after a swift post-election reversal. Bond values and yields run in opposite directions.

Yields jumped 31% in the aftermath of the vote and, as expected, the Trump victory prompted the Federal Reserve to finally make another move at their December 2016 meeting. They raised the Fed Funds rate by another quarter-point.

This will be a continuing theme.

Gold ended a rocky 2016 up 8% and continued to take its lead from the stock market. The precious metal lost 10% since the Trump victory and ended the year 16% off its high. This, too, was to be expected. See below. 


To investors I say this: Forget about the stock market as a leading indicator and look to the bond market for future guidance. Yields are the real story. 

Below is an excerpt from SURVIVING THE NEXT CRASH

“And while another act of war on the homeland can obviously begin the next major corrective cycle, I still believe the impetus will be money related: inflation, spiking yields, widespread currency and debt devaluations, the collapse of the Euro, or something along those lines.”

A major problem still exists in Europe. Governments are going broke and the European Central Bank is getting tight. Greece can’t afford itself with historically low interest rates. The same goes for Italy, whose government is in turmoil. Add Portugal to the list, Cypress, etc. etc. – and then add the cherry on top, France. They’re in shambles, too. Higher interest rates will make all of their conditions worse.

Factual Note #1: Trump’s policies will force U.S. interest rates higher.

Factual Note #2: U.S. interest rates drive global rates.

Also from SURVIVING THE NEXT CRASH,

“It’s hard to imagine how much longer the German people will continue transferring their hard earned taxed dollars to irresponsible countries like Greece, Italy, and Portugal, etc. etc…These are the things that break-up unions – currency unions, that is.”

Well it appears that that time is getting closer. After several failed bailout attempts the EU looks to be getting tired of the same old dog-and-pony show. This time around they are demanding member nations to implement reform and austerity measures before another emergency funding program is initiated. But those broke countries – those who either failed to implement austerity measures or implemented policies that made their conditions worse – are unwilling to accept EU dictate and German demands. They just want more money to fund their failed systems. 

And that is the crux of the matter.

At what point does Greece, originator of the EU-Exit movement, leave the Euro in order to reclaim their right and ability to print their own money and debt?

The EU won’t give them any more money. Are they to do nothing?  

The same goes for Italy.

Portugal.

Etcetera...etcetera.

The point is that once one country leaves the currency union others will follow. And then boom, crisis: the Euro collapses and the world undergoes a widespread debt and currency devaluation.

We haven’t even mentioned the many issues in emerging markets and the IMF’s many warnings. Higher interest rates will make that problem worse as well.

And then again there’s this scary point, also from SURVIVING THE NEXT CRASH

“This is not to mention that at some point the Federal Reserve will have to start removing some of the QE money from the economy to avoid hyper-inflation – and that’s going to be a real trick.”

Add the Trump tax cuts into this equation and it really gets tricky.

What a mess it will be.

Like I said when this dialogue began, forget about what the stock market is saying right now. Yields, while still low, are sounding an alarm. They are the most important indicator to watch.

And it is equally important to watch what the new President does. Governments control markets, and this is the biggest change in government we have probably ever seen, a change much bigger than the last one, from G.W. Bush to Obama.

That said, I’ll make one final note before ending this piece…

There is no way to know what the Trump will do once in office. We know what he campaigned on, and we know that he has already backed off some of those promises. Maybe that’s just transitional politics. Maybe not. It’s hard to figure for so many reasons. However what we do know is that his first hundred days will be critical, and very telling.

Perhaps the most ironic thing to come from the election is how both political Parties have claimed victory – the Republicans because a republican won the Electoral College, and the Democrats because Hillary won the popular vote.

But the Republican establishment did everything they could do to derail a Trump presidency. Conservative pundits like The Weekly Standard used all of their power and might to sabotage his chance of winning. Paul Ryan called him a racist and former President H.W. Bush endorsed the other side. As a result of the many establishment condemnations Trump raised little-to-no money and had a mere fraction of Hillary’s campaign budget.

And he won anyway.

The Republican Party, like Hillary Clinton and the rest of the Democrat elites, lost the 2016 election in resounding fashion.

And instead of realizing that they need real change the Parties each positioned the election results as a victory. Democrats threaten to obstruct Trump at every angle and Republicans say they are  “willing to work” with him – a position that purports both Parties as simply tolerating an outcome rather than reforming their misguided operations.

That could spell trouble.

Will the Republican Party with their socialist big-government tendencies fight Trump every step of the way, pissed that he spat in their faces and then smiled from the winner’s circle? Will they water down his campaign promises into useless clichés that accomplish nothing? Will they act swiftly and decisively as Obama and the Democrats did, or will they once again sellout the free-market system by cowering to minority propaganda that produces stupid things like auto-expiring tax cuts and bloated government regs like No Child Left Behind?

What will Trump do and how quickly will he get it done?

That is the million-dollar question.

Stay tuned…

 The road to financial independence.


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