Transition of power week in the U.S. This is the week where the U.S. shows the world that it is the model of Democracy. It’s the week where the U.S. showcases how democracy is supposed to work.
All parties celebrate the peaceful transition of power respecting all and doing their best to help the new administration take over the helm of running the country.
All other countries are envious of how the U.S. model of democracy works so well.
31 or more Democratic congressmen and women are boycotting the inauguration. Many in the Democratic party are openly saying that the President-Elect is not a valid President. Many in the Democratic party are saying that they will obstruct the new administration in any way they can.
My question is this: What in the world happened to the U.S. being the model of democracy for the world to be envious of?
It would take much more time than I have to explain my thoughts on this but let me make one comment that should frighten every investor.
For a Democracy to work there has to be at least to solid political parties primarily to keep the other honest. The Democratic party has been in free fall for some time now as a result of the party moving further and further to the left.
The country is primarily made up of moderates both left and right. So when the Democratic party moves to the left their base keeps falling in numbers.
On the path the Democrats are on it is just a matter of time before they become completely irrelevant as a party in the U.S. I really am afraid that the Democratic parties handling of the change in power is not going to bode well for them.
If the republicans can pass voter ID nationwide and remove the Soros voting machines out of the states the Democrats will be finished as a serious party. Their firewall of Ohio, Michigan, Wisconsin, and Pennsylvania is no longer there and without that, they cannot win another presidency.
If the incoming administration is successful in accomplishing much of what it said it was going to do this will just hasten the demise of the Democratic party.
I am saying this not with glee but with sadness as a one party system is prone to all types of abuses. And if you think the Republicans are above these abuses then all you need to do is go back and take a look at history.
But, I see nothing to indicate the Democrats changing their course that has brought them to this point. To the contrary, they are doubling down on a devastating strategy.
Where does this come in on the investing level? In my opinion, what is happening now is very bullish for the market in the short term. The reason being that the policies of the outgoing administration have been so unfriendly to business that it will be a breath of fresh air once these stifling regulations get lifted.
However, in the long run, think 2007. The abuses that were present in the financial sector were historic. That is the problem with a one party system. These abuses tend to come around more often.
My recommendation is to take advantage of the bullishness that will persist most likely through the first half of this year. Then I would be very cautious and evaluate things as they come.
On a short term basis, things are settling down a bit at home and abroad. Although we still have a few more days before the transition of power and I anticipate a few more surprises from the current administration that have the potential to upset the markets.
The Paris conference so far has been a big nothing. And the way it is looking that is the way it will end up. The boycotting by the Democrats is being ignored by most. People are not buying it this time around.
The boycotting by the Democrats is being ignored by most. People are not buying it this time around.
The two things to watch now are 1. the new heath care law that is coming soon and 2. the battle between the sanctuary cities and the federal government.
One trade I am watching is biotech. This big pharmacy bashing will take its toll on biotech stocks. However, I doubt that the new administration will accomplish all that it wants in the day of lowering prices for drugs. The lobby of big pharm is one of the biggest and almost every congressman has their hands in big pharm pockets. So the end result will likely be a compromise that will make buying biotechs a real opportunity soon.
These two items will be front and center next week after the inauguration.
I am long and looking to get longer on weakness. My swing positions are looking good. In particular, my GLD trade is up another 1.5% this morning in premarket.
Also of note the indexs look like a gap down with both financials and biotech very weak. TLT is up 1.3%.
If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. Typically I talk about the overall day expected with the markets and also give some levels on the ES and NQ for failed breakout scalping.
It’s my private twitter feed for the stock market and its free. Sports Handicapping is the subscription-based part of this site. But considering the cost of joining it’s almost free:)
Good Luck Today
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