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How to Avoid the Market’s Stimulus “Kodak Moment” and What to Do Instead

By , Technical Trading Specialist, Money Morning • @DRBarton_Stocks - • Print | Email

Back in my college days as a chemical engineering student, I found myself driving down to Kingsport, Tenn. I was due to start a cooperative education job at the Eastman Kodak chemical plant there.

I remember looking at the biggest chemical plant in the world with awe (13,000-plus employees at the time). Kodak sold off its chemical business – now Eastman Chemical – in 1994.

This former employer of mine has been in the news a lot lately. Through a $765 million loan from the Trump administration, it was set to revive the U.S. pharmaceutical industry.

As the news hit and the Robinhood trading crowd piled in, shares soared from $2 to more than $60 in two short days. Hope and optimism ruled.

A few days later, reality set in. The stock cratered. It's now around $10 and trending down.

This is an example of what we in the trading world call "Buy the Rumor, Sell the News."

When a rumor first hits the news feeds, it creates excitement and optimism. Stocks rise, and other traders don't want to miss out.

But things are rarely as rosy as they look at first glance. Once reality sets in, excitement gives way to reason. People start looking into the actual details of the matter.

And more often than not, it turns out that in their excitement, traders overshot.

Kodak's pharmaceutical loan was one example.
But that's small potatoes compared to what's coming next. Kodak was just one company.

This time, stock markets as a whole could be in for a "sell the news" moment. That's why today, I'm going to show you how to avoid the hype and what to do instead to come out on top… Full Story

This time, stock markets as a whole could be in for a "sell the news" moment. That's why today, I'm going to show you how to avoid the hype and what to do instead to come out on top...

Washington

Congress Just Took a Huge Step Toward Full Marijuana Legalization

By , Director of Cannabis Investing Research, Money Morning - • Print | Email

Full cannabis legalization has never been more promising than it is now. The pieces are slowly but surely falling into place and bringing us closer… and closer.

The Judiciary Committee of the U.S. House of Representatives approved a bill that would take cannabis off Schedule I of the Controlled Substances Act.

Now, that bill will go to the full House of Representatives, where it has a real chance of passing.

Committee Chair Jerrold Nadler's Marijuana Opportunity Reinvestment and Expungement Act (MORE Act) would effectively legalize cannabis for recreational use in any state that allows it.

What's more, it would gather a 5% sales tax on cannabis sales, with the money going toward job training and legal assistance to those whose lives have been adversely affected by the government's long war on drugs. It would provide for expungement of the records of people convicted of cannabis-related "crimes" and require federal agencies to adjust to reality by, for example, not denying security clearances based on cannabis use.

This is a very good bill. If it passes, it would be good for the industry, for those who paid dearly during the years before cannabis was legal, and for the country.

And I can't overemphasize what this indicates for full legalization heading into 2020… Full Story

And I can't overemphasize what this indicates for full legalization heading into 2020... Full Story

Washington

The Modern Monetary Theory Could Trigger a Rome-Style Collapse

By , Associate Editor, Money Morning • @DavidGZeiler - • Print | Email

The left wing of the Democratic Party has a lot of ambitious proposals on the table in the form of the Green New Deal, and they've come up with an imaginative way to pay for it: Modern Monetary Theory, or MMT for short. This is essentially the idea that there's nothing to prevent a sovereign government like the United States from printing as much money as it needs to pay for whatever it wants.

But here's why MMT would end in disaster...

Washington

The Schumer-Sanders "Buyback Ban" Is a Terrible Idea - Do This Instead

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW - • Print | Email

Last week, senators Chuck Schumer (D-NY) and Bernie Sanders (D-VT) co-authored an opinion piece in The New York Times titled: "Limit Corporate Buybacks: Corporate self-indulgence has become an enormous problem for workers and for the long-term strength of the economy."

The senators said, "From the mid-20th century until the 1970s, American corporations shared a belief that they had a duty not only to their shareholders but to their workers, their communities, and the country."

I have to say the senators are right: Buybacks should be limited. They benefit too few people, who already have the advantage.

But the senators are dead wrong about buybacks' impact on workers and the wider economy.

That a bunch of D.C. insiders are wrong isn't news at all. But in this case, I'll show you the senators' prescription for fixing the problem is disingenuous at best, and a command-economy disaster at worst.

The good news is, the problem of buybacks is very fixable.

And my way to do it would not only benefit corporations and shareholders, but regular, middle-class workers and small investors, too... Full Story

Washington

Jeff Sessions Is Gone, and Pot Stocks Are Soaring

By , Director of Cannabis Investing Research, Money Morning - • Print | Email

We knew Nov. 7 was going to be a historic day for the cannabis sector – we've been saying as much in the lead-up to the midterms. 

But as we've also seen, the marijuana industry moves at hyper speed. And the real post-election story was virtually impossible to predict, at least in terms of timing.

By midday Wednesday, the markets had woken up to the fact that voters in one of the most populous states, Michigan, and one of the most conservative states, Utah, had opened the door to legal marijuana in some form or another, and stocks spent a couple of hours gaining in value.

But then… it happened.

The No. 1 opponent of legal cannabis in the United States lost every ounce of his power to hold back the fastest-growing industry on the planet. Investors need to know just how important this is to the growth of cannabis as a business in the United States.

This is huge...

Washington

I'm Not Remotely Worried About a Federal Weed Crackdown

By , Defense + Tech Specialist, Money Morning • @Robinson_STI - • Print | Email

There aren't many U.S. Department of Justice officials who would be "rock stars" anywhere, period, let alone at a San Jose legal cannabis industry expo.

But I'm here to tell you: There was such a star in our midst at this conference…

I'm talking about former Deputy Attorney General James M. Cole.

Back in 2013, he was the No. 2 official at the Justice Department who authored the now-famous "Cole Memo."

That memorandum ordered federal agents to leave states with legalized marijuana well enough alone – as long as they had adopted a clear regulatory framework for doing so. The landmark memo gave the states and federal law enforcement a kind of legal modus vivendi for regulated cannabis, allowing each party to "look the other way."

The memo was instrumental in helping a multibillion-dollar legal weed sector take root and thrive.

So it's no surprise that, as a keynote speaker at the Cannabis Business Summit & Expo in San Jose July 25-27, Cole was treated like a conquering hero.

I had the chance to catch up with him privately beforehand to hear what he had to say...

China

Here's What the Japanese Prime Minister Was Really Doing at the White House Last Week

By , Money Morning - • Print | Email

Make no mistake: Japanese Prime Minister Shinzo Abe's relationships to his people, his party, and North Korea will affect your money.

And there are precious few people in the world who understand those relationships as well as Chief Investment Strategist Keith Fitz-Gerald.

If you have any money invested in the stock market, you'll want to see this three-minute video...

Washington

How to Cash In on the Transatlantic "Split" That's Got Nothing to Do with Trump's Tweets

By , Managing Editor, Money Morning - • Print | Email

Of course, last week, on June 6, the West marked the 74th anniversary of the allied "D-Day" landings in Normandy, France.

This anniversary, though, was capped off by a G7 summit in Charlevoix, Canada.

Right now, relations – at least, on the surface – between the modern Western allies are mighty frosty, dominated by Twitter and press conference feuds between Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron, and U.S. President Donald Trump, largely over the subject of the multilateral trade war breaking out over protectionist tariffs. Of course, they've largely kept quiet on social media, but it's no secret British Prime Minister Theresa May and German Chancellor Angela Merkel aren't thrilled with Trump's positions, either.

I'm hard-pressed to recall any recent G7 (maybe call this "G6+1") meeting as tense as this one, though a few probably come close.

On the other hand, dispassionate observation and analysis of market action tell us that all this hostility and discord has been baked into prices – discounted.

But our Capital Wave Strategist, Shah Gilani, is watching a "split" of sorts beginning to open up between the United States and the European Union – one that's got nothing to do with politics or soundbites and everything to do with… growth.

I caught up with him to get filled in on the details, but he did me one better…

He told me how to play this emerging situation that's coming and going - there are going to be some pretty big swings...