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Dozens of prominent veterans sign onto letter supporting ‘outstanding’ Hegseth nomination amid controversies

A growing number of prominent veterans are signing onto an open letter endorsing Defense Secretary nominee Pete Hegseth as he battles back allegations that may stymie his confirmation.

The Heritage Foundation began collecting the signatures on Thursday and garnered more than 74 in that short time, a foundation official told Fox News Digital.

‘As military veterans and patriotic Americans, we are pleased to see an outstanding veteran nominated to lead the Department of Defense,’ the letter begins.

‘Hegseth is a decorated combat veteran who served as an Infantry Officer in the Army National Guard, deploying overseas to combat zones in Iraq and Afghanistan, earning two Bronze Stars and a Combat Infantryman Badge.’

The veterans state that Hegseth has ‘worked tirelessly’ to support U.S. troops and that his experience and drive will lead him in rebuilding the military back to a ‘fighting force . . . capable of defending the national security interests of the American people.’

They cite Hegseth’s long-held stance on ‘depoliticizing’ the military and his rebuttals of ‘DEI’-type policies and other ‘toxic ideologies’ they claim have been foisted upon troops in recent years.

‘Ending wokeness is just the start. The Pentagon is also bloated with bureaucracy and waste. The defense industrial base is failing to deliver,’ the veterans wrote.

‘Cost overruns and delays have become the norm. The Department of Defense needs a Secretary of Defense willing to confront both the entrenched bureaucracy and the defense industry and force them to deliver the ships, planes, and munitions our troops need to confront America’s adversaries.’

Dan Caldwell is a veteran of the Marine Corps and Camp David security force who, along with his fellow adviser at the Center for Renewing America, three-time-deployed Marine Joseph Wade Miller, signed onto the letter.

They join at least 40 other prominent veterans in supporting Hegseth’s nomination, as the former ‘Fox & Friends Weekend’ co-host faces allegations surrounding alcohol abuse and mistreatment of women.

Eddie Gallagher, of the Pipe Hitters Foundation, also signed the letter. Gallagher launched the veteran defense-focused nonprofit after being found not guilty in a war crimes trial.

James Jay Carafano, Rob Greenway, Wilson Beaver, Steve Bucci and Jeremy Hayes, all decorated military veterans who are advisers to, or fellows at, the Heritage Foundation, signed onto the missive.

The letter also calls out the previous administration’s inability to secure the southern border and restore peace in Eurasia. 

‘Pete Hegseth shares these priorities and is ready to execute the Commander in Chief’s agenda on day one. As proud American veterans, we stand with him and the President in this historic endeavor,’ they write.

Kevin Roberts, the president of Heritage, called Hegseth the ‘right kind of fighter for America’ and a person who is ready to ‘clean up’ the Pentagon.

‘At a time when bloat and woke initiatives detract from the core warfighting mission of our armed forces, we need a secretary like Pete who has both served in combat and advocated for veterans on Capitol Hill,’ Roberts said separately from the letter.

Victoria Coates, a former adviser on national security to both Trump and Sen. Ted Cruz, R-Texas, said Hegseth would be ‘a literal breath of fresh air in the musty halls of the Pentagon.’

On Thursday, Hegseth said he refused to back down from a fight as his nomination remains in limbo amid drinking and sexual misconduct allegations. He has denied any wrongdoing. 

‘We’ve had great conversations, about who I am and what I believe,’ Hegseth said of his meetings with senators. ‘And, frankly, the man I am today, because of my faith in my lord and savior Jesus Christ and my wife, Jenny, right here, I’m a different man than I was years ago.’

That exchange followed the leak of a critical letter that Hegseth’s mother, Penelope, wrote to him years ago about his relationships with women. However, Penelope Hegseth told Fox News on Wednesday that she had written the email in an impassioned moment and later apologized for it.

Multiple sources reported to Fox News that Trump is considering his former primary opponent, Florida Gov. Ron DeSantis – a retired Navy lieutenant commander – for the top Pentagon spot in case Hegseth falters.

Fox News’ Louis Casiano contributed to this report.

This post appeared first on FOX NEWS
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Politics

Conservatives worry Congress won’t have ‘spine’ for spending overhaul after DOGE meetings

Republicans have big plans for spending cuts next year, but some GOP lawmakers are doubting Congress can muster the momentum for significant changes.

Elon Musk and Vivek Ramaswamy, whom President-elect Trump tapped to lead the Department of Government Efficiency (DOGE), an advisory panel on cutting spending and the national debt, were on Capitol Hill Thursday for a series of meetings with lawmakers on how Congress and the White House can work together to achieve that goal.

And while that advisory panel is chiefly aimed at what executive actions Trump could take, lawmakers are conceding that significant, lasting change must be achieved through legislation. And some Republicans are skeptical they can get there.

‘The problem’s in that room,’ said Rep. Tim Burchett, R-Tenn., referring to other GOP lawmakers who met with Musk and Ramaswamy. 

‘These guys, you know, they talk real tough,’ but they did not vote in ways he believed showed they were serious about cutting spending.

‘You don’t see a lot of that. Now, when is that going to start? Is it going to start just because Elon and Vivek [address us]?’ Burchett asked. ‘I just worry about us losing steam. … We’ve got to get some guts, and people have got to hold us accountable.’

Retiring Rep. Dan Bishop, R-N.C., told Fox News ‘a lot of members’ stood up to suggest ways to ‘save money’ during Thursday afternoon’s brainstorming session with Republicans and the DOGE duo.

‘One would think more of them would have been willing to vote, cast votes on the floor of the House in order to do those things early,’ Bishop added.

The DOGE discussions have opened up longstanding wounds within the House GOP, whose members spent a significant amount of the 118th Congress battling among themselves over how to navigate government funding and other fiscal issues. 

The national debt recently surpassed $36 trillion.

A senior House GOP aide expressed optimism about the new goal but added that Musk and Ramaswamy were ‘swinging for the fences.’

‘The hard part is once they find the stuff to cut, I think it’s Congress who has to do the actual cutting, right?’ the aide said.

Another senior GOP aide said, ‘The mission of DOGE is worthy and absolutely necessary, but nothing is going to change. We aren’t going to cut spending like we [have to] to get our fiscal house in order, and we aren’t going to slash waste at any significant level.’

Rep. Chip Roy, R-Texas, also skeptical, told Republicans at Thursday’s meeting they needed to ‘grow a spine’ to actually move meaningful spending cuts.

‘I’ve said to my colleagues, ‘If you can’t print money, if, literally, it was banned today, what would you do?’ You would do what you do for your home budget. You would say, ‘Well, we can’t take a vacation here. I can’t get a fancy new car because I need to get braces for my child,” Roy told WMAL radio host Larry O’Connor.

‘We don’t ever do that, and, until we do, all of the DOGE waste-cutting in the world won’t help. We’ve got to do both. We need the waste-cutting, but we need Congress to grow a spine.’

Some Republicans are skeptical of having Musk and Ramaswamy lead the charge.

‘They had no game plan — a wish list that they’re giving to Santa and the American people that will never be even remotely accomplished,’ one GOP lawmaker, granted anonymity to speak freely, told Fox News Digital of Thursday’s meeting.

The GOP lawmaker called DOGE a ‘magical department that has been erected out of thin air,’ and pointed out its logo was heavily inspired by a cryptocurrency known as ‘dogecoin’ that Musk has backed.

‘They’regoing to run into a brick wall called ‘members of Congress who know how to do our job,’’ the lawmaker said.

This post appeared first on FOX NEWS
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Stocks

Stay Away From Large Cap Value Stocks

Growth vs Value Rotation, the pendulum swings again

Relative Rotation Graphs (RRG) are not only good for visualizing sector rotation, but they are also valuable tools for visualizing other market dynamics. For example, the relationships between Growth and Value stocks or Large-cap vs. mid- and Small-cap stocks and the combination of these two breakdowns of the market.

The pure growth-value rotation, as shown in the RRG above, RRG tells an interesting story.

Value had its moment in the sun from August to early October, but the tides have turned since then.

Around the week ending Sept 27, the value tail started to roll over while still inside the improving quadrant and the growth tail did the opposite inside the weakening quadrant. Basically signaling the end of a temporary countertrend move.

Now, it’s clear that growth is once again beating value.

Size Matters: Small and Mid-Caps Take Center Stage

When we add the RRG showing rotations of large, mid, and small-cap stocks, the picture becomes even clearer.

Small and mid-cap stocks are still gaining relative strength in the leading quadrant.

Meanwhile, large caps are languishing in the lagging quadrant, continuing to lose ground.

A More Granular Look: Where the Action Is

Now, let’s get into the nitty-gritty. We get a more nuanced view by combining the breakdown of the US stock universe into growth and value with large, mid, and small caps.

The resulting RRG with six tails, three for growth and three for value broken down into three size segments, paints a vivid picture:

Mid and small-cap growth stocks are the clear leaders, deep in the leading quadrant and heading further into it.

Value small-cap and mid-cap stocks on the right side of the graph are holding their own, although they are losing some relative momentum.

Both the large-cap tails inside the lagging quadrant show this segment’s current weakness. Still large cap growth has just started to curl back up a bit while large cap value continues to head South-West.

This means that large-cap value is now the weakest segment in the market. Inside the lagging quadrant and traveling on a negative RRG-Heading.

What This Means for Investors

Large-caps in general, particularly large-cap value, are best avoided for now.Small-cap and mid-cap growth stocks deserve your attention — they’re where the action is.

Market Outlook: Steady as She Goes

Despite these rotations, the overall outlook for the stock market in the coming weeks remains healthy.

The S&P 500 chart shows the rhythm of higher and lower lows is intact. Divergences causing concern have been negated, and breadth metrics have normalized—they’re no longer sending too many negative signals.

#StayAlert and have a great weekend. –Julius

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Sports

Expanded CFP is nearly set, but no one seems happy about it

The most predictable byproduct of tripling the College Football Playoff from four to 12 teams was that whining would become a varsity sport on its own. 

First up was the ACC’s commissioner, Jim Phillips, who said his league was “shocked and disappointed” that Miami dropped from No. 6 to No. 12 and almost certainly out of the playoff field after losing to Syracuse. (No mention of the fact that the Hurricanes blew a 21-point lead). 

Then came Big 12 commissioner Brett Yormark, who blasted the committee for ranking Boise State above both Arizona State and Iowa State, as his league will only get one team in the playoff field.

“The committee continues to show time and time again that they’re paying attention to logos versus résumés,” he said. (Never mind that the two Big 12 teams playing for an automatic bid have one top-25 win between them.)

And then here came the SEC. Danny White, the Tennessee athletics director who is presumably miffed that the Vols might have to go on the road in the first round, said on a local radio show that a computer ranking system should replace the committee (Even though this was already tried with the BCS and everyone hated it.)

Then Lane Kiffin, the Ole Miss coach whose team is almost certainly on the outside looking in at 9-3, had to spill his sour grapes all over the playoff party. “It’s a bad system,” he said. “Have any of those coaches (on the committee) been down here in the deep South, into these stadiums and played in these games that are on this? So how do they even know?” (One of the former coaches on the committee, Gary Pinkel, had just a little bit of SEC experience at Missouri, but why let facts get in the way of a good rant? And also, Lane, maybe just beat Kentucky next time.)

So here we are, just a couple of days away from having the first 12-team playoff field set to go, and it seems like nobody’s happy with the monster they’ve created. For a template on what to expect Sunday, just refer to the 24-hour period after every NCAA basketball tournament selection show when lots of people seem to have ‘Very Strong Feelings’ about who the last couple of at-large teams in a 68-team field should be. 

Except for last year, when Florida State got replaced by Alabama – due almost exclusively to the fact that the Seminoles’ starting quarterback was injured – we didn’t have much of this in the first decade of the four-team playoff. Things were generally clear-cut, and the No. 5 team usually didn’t have much of a gripe. Now that we’ve brought mediocrity into the picture, everyone in college sports seems to have an opinion about how unfair and bad the process is – unless, of course, it works to their benefit this time. 

Given that context, SEC commissioner Greg Sankey deserves some credit – but also a healthy dose of cynicism – for how he answered a question on Thursday about the sudden angst over the format. 

Whether it’s fair or not, Sankey is still miffed at his conference commissioner colleagues (some of whom no longer work in college sports) for stonewalling playoff expansion plans in 2021 after Texas and Oklahoma bolted to the SEC. So in his view, it seems, any problems with the system are the result of expansion plans slowing down, then speeding up again to get ready for 2024, as another round of conference expansion killed the Pac-12 and further consolidated power in the hands of the Big Ten and SEC. 

“We don’t want to go through change every year,” he said. “We want to work to get things right. Now, I know that we’re in this new era and that’s going to cause a lot of questions. My perspective in having lost a year of preparation that we can’t recover means we’re going to have more of these adjustment conversations.”

He continued: “Should we be providing these lower-seeded conference champions that access point? That’s been discussed before. I think that starts to illustrate one of the new issues.”

In other words, while Sankey admitted that he’d like to see eight SEC teams in the field and believes his league has enough depth to deserve that consideration, his news conference Thursday didn’t make number of teams a front-burner issue. He isn’t going to blow his political capital – and he has a lot of it these days – going overboard to lobby for a mid-pack SEC team over somebody else to get that 12th spot. 

What seems more likely when the commissioners gather again in the coming weeks to discuss the playoff format for 2026 and beyond is that the SEC is going to draw some red lines around seeding that probably puts their teams at a disadvantage, now that we’ve seen it play out in real time.

If you simply freeze the playoff field as the committee had it this week, the SEC would have three teams playing in the first round with two of them going on the road: Tennessee at Ohio State and Alabama at Notre Dame. Meanwhile, presumptive champion Texas gets a first-round bye as a No. 2 seed, where it would likely face Georgia for a third time this season in the quarterfinals. 

And you can see pretty easily why that’s a problem.

The initial idea of the 12-team playoff was that the four first-round byes would go to the four highest-ranked conference champions. That makes sense in theory and keeps the conference championship games relevant until the very end. But in practice, it leads to a bracket that doesn’t make a whole lot of sense. 

If things stay the same as they are now, the No. 5 seed, Penn State, would be lined up to play No. 4 Boise State in the quarterfinals. And the winner of Tennessee-Ohio State, both of whom are ranked above Boise, would have to face No. 1 Oregon. 

I hesitate to say that’s not fair, because this is college football after all, and nothing in this sport has been fair for the last five decades or so. But it does seem wrong that you have an easier path to the semifinals as a No. 5 seed than a No. 1 seed, or that a No. 2 seed like Texas would have a far more difficult quarterfinal game than a No. 4 seed. 

In any sport that uses a tournament format to decide championships, that’s not how it’s supposed to work. If Georgia has had a better regular season than Arizona State and is ranked higher by the committee, it should have a more favorable path to a championship. That’s a pretty easy concept to understand. 

Sankey is correct that constantly making changes to the format, as the BCS did seemingly every year, is the wrong path for the CFP to go down. That only increases the anger and sows distrust in the process. 

Having a human committee isn’t the problem here. In a sport like college football where you only play 12 games in a season (and some of them are complete mismatches), there’s not enough data to put into a computer formula and feel confident that you’re getting a good result. You need people to be part of the process.

The only real issue with the 12-team playoff as it stands is the seeding. Not Kiffin’s complaints or Yormark’s declarations. It’s simply rewarding teams with byes who do not deserve them. 

The question is whether there will be enough agreement among the conference commissioners to fix it because – and here’s the cynical part – it’s almost certainly going to work to the SEC’s benefit most years while penalizing a league like the Big 12 that is fortunate to have a playoff spot at all given the poor quality of play in their conference this year. 

Sankey brought up that he had been in favor of re-seeding after the first round, but other commissioners wouldn’t get on board with that. Another possible fix would be to just give the top two conference champions byes into the quarterfinals and then seed the rest of the field Nos. 3-12 as the committee ranks them (with automatic bids for the Big 12, ACC and the Group of Five). 

“I think we’ll look at this and probably have another one of those types of conversations,” Sankey said. “I don’t want us to just react; I want us to be thoughtful in how we consider these issues.”

Will tweaking the playoff to emphasize true seeding benefit the SEC? Most years, probably so. But that would be preferable to the nonsensical mess of a bracket that the committee is going to unveil on Sunday. 

This post appeared first on USA TODAY
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Mike Tyson sued for ditching promotion deal to fight Jake Paul

Mike Tyson is being sued in a London court for nearly 1.5 million euros ($1.59 million) for allegedly breaking a deal to promote a gambling company in order to fight social media influencer-turned-prizefighter Jake Paul.

Medier, a Cyprus-registered company that promotes online casino and betting company Rabona, is suing the former heavyweight champion and his company Tyrannic for allegedly reneging on the deal, which was agreed in January.

The lawsuit, filed at London’s High Court in October, says Tyson terminated the deal in March – the same day his fight with Paul was announced – because Medier breached their agreement.

Medier’s lawyers, however, argue its actions did not constitute a breach of the deal and that Tyson’s breach of contract has caused Medier losses of around 1.46 million euros.

‘The true reason for Mr Tyson and Tyrannic’s hasty and unlawful termination was because Mr Tyson had agreed a deal, sponsored by Netflix, to fight the influencer Jake Paul,’ the company’s lawyer said in documents made public on Friday.

Tyson and Tyrannic have yet to file a defence to the lawsuit and Tyson was not immediately available to comment.

Paul, 27, beat the 58-year-old Tyson by unanimous decision in Texas last month, in a fight streamed live on Netflix that failed to live up to its enormous hype.

This post appeared first on USA TODAY
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Stocks

What’s The Outlook For December AND For 2025?

Could we see a short-term shift towards defensive sectors? Real estate? Utilities? I haven’t uttered these words in awhile. And why should I as our major indices have forged into new all-time record high territory? Well, I’m only talking about very near-term, maybe the next 1-3 weeks? I wouldn’t change a thing as a long-term investor, I’d simply stay the course with more aggressive areas. But here are a few things that short-term traders might consider:

Seasonality

December has been a very strong month for U.S. equities, with the S&P 500 rising an astounding 55 of 74 years (74%) since 1950. That represents the most monthly advances of ANY calendar month, topping April (53) and November (51), two extremely bullish months as well. There’s more, however. Defensive groups tend to lead equities higher in December and THAT is different. If we look back the last 12 years (since this secular bull market was confirmed in April 2013), here are the average December returns for each sector, relative to the S&P 500 and prior to December 2024 (the %s in parenthesis represent December 2024 returns mid-day Friday):

Real estate (XLRE): +1.4% (-3.3%)Utilities (XLU): +1.2% (-3.4%)Consumer staples (XLP): +0.9% (-1.2%)Health care (XLV): +0.7% (-2.3%)Financials (XLF): +0.5% (-2.5%)Materials (XLB): +0.4% (-3.4%)Communication services (XLC): +0.1% (+0.9%)Industrials (XLI): +0.0% (-2.8%)Technology (XLK): +0.0% (+1.9%)Energy (XLE): -0.5% (-3.8%)Consumer discretionary (XLY): -0.8% (+1.9%)

Thus far, in the first week of December 2024, seasonality is turned on its head. Will December 2024 simply be a strange year where we see aggressive sectors perform well all month? Or will “normal” December seasonality kick in and we see a quick rotation back towards defensive sectors?

Positive Divergences and Key Support

I believe there’s a reasonable chance of a reversal in defensive sectors back to the upside next week. Take a look at 60-minute charts of all the defensive sectors:

XLRE:

XLRE’s PPO is beginning to turn higher, just as it tests its 4-week uptrend line. If we see another low in price, it’s quite likely that a positive divergence will result, indicative of slowing downside price momentum. That, along with XLRE’s propensity to lead the market in December, has me interested in a quick trade. Seeing a reversal to the upside first would be a welcome sign. I’d at least be watching the action here over the next week.

XLU:

The XLU already has printed a positive divergence, suggesting a potential 50-hour test in the 81.00-81.50 area. Again, realizing utilities typical December leadership, I’m watching for a reversal.

XLP:

XLP looks solid after printing a bullish cup with handle continuation pattern. Consumer stocks have been strong, especially consumer discretionary (XLY). But XLP likes December, so we’ll see if it can outperform the XLY for a brief period.

XLV:

Ok, I’m not seeing much bullishness here. I have recently discussed the long-term support on XLV near the 137 level, prior to the latest bounce from 140. Currently, however, I see a bearish PPO crossover and no solid price support nearby. There’s a gap support level just above 144 that might hold, but otherwise, XLV could be poised for a return visit to 140.

Historical Annualized Returns By Day By Major Index

While December is a bullish month for our major indices, we are rapidly approaching the worst period within December. We break down the strong and weak periods for our EarningsBeats.com subscribers every month in our EB Monthly Seasonality Report and we provide upcoming daily annualized performance numbers in our EB Weekly Market Report (WMR). Our latest WMR highlighted the following daily annualized returns for the first half of December on the S&P 500, NASDAQ, and Russell 2000:

S&P 500 (since 1950)

Dec 2: +20.80%Dec 3: -37.54%Dec 4: +34.45%Dec 5: +36.61%Dec 6: +44.90%Dec 7: +22.82%Dec 8: +16.37%Dec 9: -7.56%Dec 10: +9.26%Dec 11: -41.19%Dec 12: +2.75%Dec 13: -0.12%Dec 14: -62.95%Dec 15: -17.54%

NASDAQ (since 1971)

Dec 2: +39.30%Dec 3: -54.04%Dec 4: +22.34%Dec 5: +99.62%Dec 6: +13.03%Dec 7: +1.36%Dec 8: +53.51%Dec 9: -69.02%Dec 10: +53.82%Dec 11: -86.19%Dec 12: -14.96%Dec 13: -61.84%Dec 14: -109.19%Dec 15: -29.80%

Russell 2000 (since 1987)

Dec 2: +121.88%Dec 3: -26.06%Dec 4: +32.13%Dec 5: +136.88%Dec 6: +48.07%Dec 7: -26.09%Dec 8: +93.55%Dec 9: -90.45%Dec 10: -18.96%Dec 11: -104.36%Dec 12: +16.47%Dec 13: -38.62%Dec 14: -87.43%Dec 15: -36.23%

The first week of December held true and was very bullish, especially the large cap growth stocks that drove outperformance in both the S&P 500 and NASDAQ.

Beginning on December 9th (Monday), though, we have seen plenty of historical weakness. This does NOT guarantee us lower prices next week. I’m simply pointing out historical tendencies. I remain cautiously bullish in the upcoming week, but absolutely believe our major indices are heading higher in time. This can mean different things to different traders. But with this type of historical weakness, I will avoid leveraged products on the long side and I’ll likely trade stocks in defensive sectors as well as stocks in aggressive sectors, just to hedge a bit.

Big Picture Rotation and a HUGE Event

NOTHING is more important than following rotation and understanding where Wall Street is positioning and re-positioning. Nothing will help your trading success more than following this rotation and taking advantage of it. That’s why we’re hosting a completely FREE event on Saturday, December 14th at 10:00am ET, “Key Market Rotation Heading Into 2025”. Who better to invite to join me than Julius de Kempenaer, the creator of Relative Rotation Graphs (RRG) charts, Sr. Technical Analyst as StockCharts.com, founder of RRG Research, and host of “Sector Spotlight” on YouTube? Julius and I would love for you to join us as we debate the merits of owning various asset classes, sectors, industries, and individual stocks in 2025. In particular, we’ll address the outlook for the Mag 7 stocks like AAPL, NVDA, and others. For more information and to register for this very timely topic, CLICK HERE! Keep in mind that ALL those who register will receive a recording of the event. So if you can’t make the event live, no worries at all!

Happy trading!

Tom

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Stocks

Double Top on Industrials (XLI)

Industrials (XLI) benefited greatly from the “Trump Trade”, but fell back to digest the gap up rally. It rallied again but failed after overcoming overhead resistance at the prior November top. Now it is pulling back once again and that has formed a bearish double top formation. The bearish double top’s minimum downside target would bring price down to the next level of support around 132.00.

To add insult to injury, on Thursday it saw a Price Momentum Oscillator (PMO) Crossover SELL Signal. Participation has been sinking since the last top and while percentages of stocks above key moving averages are above our bullish 50% threshold, clearly the sector is breaking down while the SPY makes new all-time highs.

Further issue is the negative divergence on the Silver Cross Index. It is also below its signal line so the IT Bias is BEARISH. Relative strength is being sucked out of the sector right now.

Conclusion: Industrials (XLI) may’ve benefited from the election, but the shine has worn off the trade. More stocks are losing support at key moving averages and the IT Bias is BEARISH. This is a sector we likely want to avoid given the downside target of the double top formation is around 132.00.

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Step 1: Asset Creation, Step 2: —————?, Step 3: Asset Growth

The secret sauce of 1-2-3 investing is quite simple: don’t skip Step 2. Far too many investors who’ve succeeded in creating wealth are anxious to rush forward with “all gas, no brakes” to embrace the excitement of Step 3 – Asset Growth. Only in retrospect do they so often discover the hard way that the essential connective tissue between asset creation and asset growth is the imperative prerequisite of asset protection (see our book Tensile Trading, Chapter 1, page 2).

Now more than ever in my five decades of managing my assets do I implore you to build your personal investment citadel based on a protection mantra. You absolutely must curtail your impulses to speed forward without building a solid asset protection foundation first. Your future financial prosperity depends on it.

This blog is not intended to focus on all those asset protection specifics. We’ve offered all that in much detail in our book (Tensile Trading). This blog is meant to raise the alarm as to the recent seismic increase of risks I see these days associated with investing our portfolios. I’m certain we can all recount numerous examples of Ponzi schemes, shady derivatives, and an infinite variety of “alternative investments” that have fleeced individual investors and even sophisticated money management firms. Those risks not only continue to exist, but are ever more clever and seductive. And it’s the risks in the “trendy” asset category of “private equity” that has me particularly worried.

The tsunami of money flooding into the private equity space now deems it ripe for operators on the Dark Side to take up residence there, even more than they have in the past. There are many reasons for all this new money chasing a finite universe of private equity deals. One of the most significant catalysts is that large Mutual Fund companies are desperate to stem the flow of assets out of their respective fund complexes and believe that presenting investors the opportunities to invest in private equity will help stem that negative flow. Oh yes, perhaps the higher fees might also have something to do with it!

Recently, I experienced this phenomenon firsthand. In thirty years as a Vanguard client, I’d never had a phone call pitching me financial products. They recently called to suggest I put assets into private equity.

This is not a sermon about whether private equity investing is right for you or not, but I do beseech you to understand all aspects of liquidity — in other words, how long are you required to hold it. This is a financial sermon about my perception that risks are everywhere and risks are escalating. Let me share four personal data points to support this.

I recently attended an anniversary dinner for a large money management firm whose success in private equity investing is undisputed. As the various speakers revisited their historical successes, I was struck by their strategy for the future. They have deemed it necessary to hire a highly respected forensic scientist to head a sizable due diligence department within the firm. In today’s financial arena, digging deep into the backgrounds of every potential deal is imperative and non-negotiable. They claimed that an extensive percentage of potential deals where the numbers alone would have Warren Buffett salivating were in fact abandoned due to “dark side discoveries during due diligence.” My point is that with too much money chasing fewer private equity deals, not all the money managers will be inclined to execute such deep and meticulous due diligence. It’s the investors who will inevitably pay the price.

My second data point is the number of financial advisors I see who are outright misleading. It’s common for me to pickup on their gaslighting techniques where they attempt to manipulate investors and their perceptions of reality. In The Wall Street Journal, Jason Zweig amplified on this by labeling it as “trust washing.” Rather than earning your trust the hard way, these shady manipulators attempt to buy trust by claiming they were seen on TV, quoted in respected periodicals or written popular investment books — thereby crowning themselves as trustworthy financial gurus. To convince yourself, just google how many financial advisors have been convicted and are serving jail terms. I was stunned.

I spoke to a good friend recently who is a tech executive. I didn’t want to push him for specifics, but he told me that based on their experiences in the past, Google now has a corporate policy of “Zero Trust.” Sounds bloody ominous to me. As individual investors, perhaps our mantra needs to be the same.

Finally, the recent front page article in The Wall Street Journal about Morgan Stanley (MS) and their collection of corrupt and nefarious clients was daunting and disturbing. Yes, MS is motivated by profits to collect assets — hence weak controls and poor due diligence should not be surprising. What was shocking to me was that an audit revealed the large percentage of their clients who were deemed to be extremely high-risk. In other words, clients leaning towards the dark side.

In summary, today’s financial reality is such that we individual investors don’t have the tools necessary to vet sophisticated complex investments sufficiently. In my opinion, we should not venture down that road with anything but a small percentage of our assets. Call it your “high risk” allocation or perhaps your “funny money fund.” The S&P 500 (SPY) basket of stocks is a far more dependable asset growth vehicle which is diversified, pays dividends, offers growth and lovely liquidity. These are benefits that should should not be underestimated by you.

I plead with you to steer clear of the “all gas, no brakes” investment tendencies. Embrace the mantra of asset protection before asset growth. Your future self will thank you!

Trade well; trade with discipline!

Gatis Roze, MBA, CMT

StockMarketMastery.com

Author, “Tensile Trading: The 10 Essential Stages of Stock Market Mastery” (Wiley, 2016)Developer of the “Stock Market Mastery” ChartPack for StockCharts membersPresenter of the best-selling “Tensile Trading” DVD seminarPresenter of the “How to Master Your Asset Allocation Profile DVD” seminar

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Court rejects Boeing plea deal tied to 737 Max crashes

A federal judge rejected Boeing’s plea deal tied to a criminal fraud charge stemming from fatal crashes of its 737 Max aircraft.

U.S. District Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas expressed concern in his decision on Thursday that a government-appointed monitor, a condition of the plea deal, would include diversity, equity and inclusion policiies.

He wrote that “the Court is not convinced in light of the foregoing that the Government will not choose a monitor without race-based considerations and thus will not act in a nondiscriminatory manner. In a case of this magnitude, it is in the utmost interest of justice that the public is confident this monitor selection is done based solely on competency.”

In October, O’Connor ordered Boeing and the Justice Department to provide details on diversity, equity and inclusion policies when the monitor would be selected.

The court gave Boeing and the Justice Department 30 days to decide how to proceed, according to a court document filed Thursday.

In July, Boeing agreed to plead guilty to a criminal charge of conspiring to defraud the U.S. government by misleading regulators about its inclusion of a flight-control system on the Max that was later implicated in the two crashes — a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019. All 346 people on the flights were killed.

Boeing and the Justice Department didn’t immediately comment.

Victims’ family members had taken issue with a government-appointed monitor as a condition of the plea deal and sought to provide more input. They called it a “sweetheart deal.”

Erin Applebaum, an attorney representing one of the victim’s family members applauded the deal. “We anticipate a significant renegotiation of the plea deal that incorporates terms truly commensurate with the gravity of Boeing’s crimes,” Applebaum said in a statement. “It’s time for the DOJ to end its lenient treatment of Boeing and demand real accountability.”

The deal was set to allow Boeing to avoid a trial just as it was trying to get the company back on solid footing after a door burst off of a flight in midair at the start of the year, reigniting a safety crisis at the manufacturer.

The new plea deal arose after the Justice Department said in May that Boeing violated a previous plea agreement, which was set to expire days after the door plug blew off the 737 Max 9 on Jan. 5. O’Connor said in his decision on Thursday that it “is not clear what all Boeing has done to breach the Deferred Prosecution Agreement.”

Under the new plea agreement, Boeing was set to face a fine of up to $487.2 million. However, the Justice Department recommended that the court credit Boeing with half that amount it paid under a previous agreement, resulting in a fine of $243.6 million.

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Dollar General tests same-day delivery as discounter chases Walmart

Dollar General is testing same-day delivery to customers’ homes as the deep discounter tries to fend off fiercer competition with Walmart.

On an earnings call Thursday, Dollar General CEO Todd Vasos said the retailer “soft launched” the delivery program in September. Now it offers same-day delivery at about 75 stores, he said. It is offered through a third-party company, which he did not name.

“We’ve always said here, ‘We’re going to do delivery our way when it’s time,’” Vasos said. “We believe it’s time.”

He said the company expects it will ultimately expand the offering to “thousands of stores.”

With same-day delivery, the Tennessee-based dollar store is acknowledging the pressure from other retailers like Walmart, Amazon and Temu that offer convenience along with low prices. Walmart, for instance, has significantly grown its online business, posting 10 quarters in a row of double-digit e-commerce gains in the U.S., as it offers curbside pickup and speedier home deliveries.

Dollar General, on the other hand, typically does not share updates or specific figures about its e-commerce business in quarterly earnings reports because of its heavy reliance on brick-and-mortar sales.

Yet over the past year, Dollar General has felt the pinch from both economic challenges and its own strategy. Consumers, particularly low-income households, have pulled back on discretionary purchases because of the cumulative effect of high inflation. Dollar General also has paid millions of dollars of fines for sloppy stores and blocked fire exits that became both workplace safety hazards and potential turnoffs for its shoppers.

In recent months, Dollar General’s CEO has spoken about losing market share to Walmart. Vasos said at a Goldman Sachs retail conference in September that “the guys in Bentonville [the Arkansas home of Walmart’s headquarters] took a little bit larger piece” of the retailer’s middle-income customer base.

Vasos said the company launched its own program after learning from its DoorDash deliveries, which are available at about 16,000 of its stores.

The new offering, DG Delivery, is available for customers at select stores, according to Dollar General’s website. Customers place orders through Dollar General’s app and can get the same store prices and delivery in as little as an hour. The program also accepts digital coupons and offers cash back rewards.

DG Delivery does not appear to charge a fee or have a minimum order requirement, according to the website.

On Dollar General’s earnings call on Thursday, Vasos said Dollar General is still working on its business model for the online offering, but said it relies on labor from a third party rather than using store employees or company-employed delivery people. He said same-day delivery is an opportunity to grow the retailer’s advertising business, too, since customers would engage with the app more frequently when placing orders.

But the option is still available at only a tiny fraction of Dollar General’s stores. It has more than 20,000 stores across the country, including many in rural parts of the U.S.

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