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A Funny Thing Happened To Oil Prices When Nixon Killed The Gold Standard

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

For the past 150 years, crude oil prices have varied between around $10 per barrel and around $120 per barrel. For many decades, oil prices were relatively “stable” but a funny thing happened in the early 70s and everything changed – whether coincidental or causative the linkages between the oil crisis and Nixon’s Gold-Standard-busting of Bretton Woods are clear in the chart below. Goldman expects continued high oil price volatility with risks skewed to the downside as the market searches for a new equilibrium… and a period of macroeconomic adjustment to structurally lower oil prices. Is oil adjusting to a new ‘gold-standard-esque’ normal?

 

“Stabilitee”

 

As Goldman noted back in July…

The security situation in the Middle East remains highly unstable. The Islamic State (IS) has taken control of swaths of Iraq and Syria, employing brutal tactics throughout its advance. Shiite militias, the Kurdish peshmerga, and Iraqi forces have struggled in recent months to contain the insurgency. A US-led coalition has conducted airstrikes in the region since August. In Iraq, Haider al-Abadi has replaced Nouri al-Maliki as prime minister after the latter resigned in August amid political gridlock. Elsewhere in the region, the deadline to reach an agreement on the future of Iran’s nuclear program was extended until July 1, after Iran and the five permanent members of the UN Security Council + Germany failed to clinch a deal before the late November deadline. A seven-week war between Israel and Hamas militants ended on August 26 with an Egyptian-brokered ceasefire on August 26, but tensions continue to fester.

 

Despite the unstable situation in the Middle East (as well as in Russia), oil prices have plummeted by +40% since we published. A lack of oil supply disruptions in Iraq and Russia as well as the return of Libyan output, which relaxed near-term supply concerns, likely triggered the initial sell-off. However, major underlying drivers ultimately set the magnitude of the price decline – namely, continued strong non-OPEC production growth, weak demand growth, as well as a critical shift in the OPEC reaction function in favor of maintaining market share. Indeed, the cartel’s decision on November 27 to hold output steady signaled a major step away from its long-standing strategy of supporting prices with production cuts. Exacerbating


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Credit Doesn’t Care What the FOMC Says: The “Recovery” That Never Was Is Over

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Authored by Alhambra Partners' Jeffrey Snider, via Contra Corner blog,

The stock market takes off in holiday celebration of the FOMC being even less clear than it really has been in some time; perhaps going all the way back to Alan Greenspan’s intentional mush. Equity “investors” are happy that the Fed may be happy about the economy, even though there is nothing in actual markets (outside of stocks) to suggest that anything the Fed proclaims carries even the slightest validity. Growth and inflation are going to be good, so the philosopher kings in DC say for the sixth year in a row, this time enough to end ZIRP (after almost seven years) and get to tightening.

Axiomatically, ambiguity is not certainty but the degree to which ambiguous language is taken as a comfortable conviction shows exactly the game being played here. Stock investors expected this exact vagueness and since the received abstruseness was as expected it was certainly reassuring to bid equity prices. This is how far rational expectations theory has devolved.

It is very curious, then, to see vastly larger markets unperturbed by anything that occurred at the FOMC this week. Sure, nominal yields rose in the treasury market a bit, though only slightly after an immense buying spree. Overall there was a distinct lack of distinction, and thus positive conviction, in credit and funding. The eurodollar market is only slightly tighter in the shorter tenors to where it was before the FOMC’s “radical” and “revolutionary” semantical modification.

ABOOK Dec 2014 Considerable Period Eurodollars

The eurodollar market’s companion forward rate gauge, interest rate swaps, were also less than impressed by so much mushiness. There is nothing but more of the same here:

ABOOK Dec 2014 Considerable Period Swaps

Given how much noise has been made over this last policy statement, you would think there would at least be a small imprint somewhere. Swap spreads have settled into this spread level going back to the first “dollar” tightening back in late June/early July which coincided with exactly zero FOMC policy shifts. Now, as the FOMC proclaims greater economic accomplishment, spreads remain undisturbed instead of decompressing still further as in stock-based rapture.

That was the case, though again not drawn out by policy language, in certainly the 5-year swap spread that had finally broken above 20 bps for the first time in over a year…
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Evolution of YouTube: Will it Supplant Mainstream TV, Vanish, Evolve, or Languish?

Courtesy of Mish.

What will become of YouTube?

It started from nowhere about 10 years ago as an idea with no revenue and no content, then pretty quickly lots of content coupled with a plethora of copyright infringement lawsuits.

Today, YouTube gets 300 million hours of watching every day. Top content producers have millions of followers and make millions of dollars.

But where to from here?

New Play Button

The New York Times tackles that question in a fascinating story YouTube’s Chief, Hitting a New ‘Play’ Button.

The article is about Susan Wojcicki, the chief executive of YouTube, how she got her start, and in turn how Google got its start. Wojcicki was Google’s 16th employee, and she is still with Google.

The Times notes Smosh, a pair of 20-something lip-syncing comedians, have roughly 30 million subscribers to their various YouTube channels. PewDiePie, a 24-year-old Swede who provides humorous commentary while he plays video games, has a following of similar size.

Every day, one billion people around the world watch more than 300 million hours of videos on YouTube. In November, 83 percent of Internet users in the United States watched a video on YouTube, according to comScore. In contrast successful network television shows like ‘NCIS: New Orleans’ or ‘The Big Bang Theory’ average a little more than half that in weekly viewership.

I’m at the other end of the extreme. I watch very little TV. In fact, I have never even heard of ‘NCIS’ or ‘Big Bang’

It’s a fascinating success story for 46-year old Ms. Wojcicki, one of the most powerful media executives in the world.



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Bond Yields Set To Plunge In 2015: Next Year Global Treasury Supply Will Tumble By 20% As ECB Joins The Party

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Back in May 2013, when we wrote “How “Modern Money” Really Works” and noted that in the current environment, as a result of prudential regulation, derivative clearing requirements, bilateral margin requirements and general economic uncertainty including deflationary scares and other flights to quality/safety, there could be a gargantuan shortage of “high-quality collateral” amounting to as much as $11.2 trillion, we explained that demand for Treasury paper will increase with every passing month as the market realizes that traditional supply/demand dynamics in the rates market no longer exist and have been supplanted by regulatory demand-side technicals coupled with supply calculus which is predicated almost exclusively by what central banks do, or rather, how much Treasurys they monetize.

In retrospect, our observation also explains why everyone got the bond trade wrong in 2014, as everyone – most certainly Goldman Sachs and its clients – not only expected a global economic rebound (clearly that did not happen in 2014, when Chinese growth hit the brakes to record lows, and when both Japan and Europe re-entered recession absent GDP-fudging semantics), but were oblivious to the key considerations behind the high-quality collateral theme. Why, none other than Goldman in its Global Economics Weekly from June 27, 2012 and Fixed Income Monthly from July 2012 concluded that “there is not much evidence in favor of the explanation” of the high-quality collateral (HQC) thesis as a driver of Treasury demand. To see just how wrong Goldman was, compare the 10Y’s Friday close with Goldman’s 3.50% year-end target, and now add some 30x Total Return Swap leverage.

Which bring us to Friday afternoon, when as Goldman observes in a new note, “since then, the regulatory environment has further developed, with Dodd Frank now in place. Also, given this year’s rally in fixed income, the topic has become of interest again.”

So where do we stand now that there is still trillions of explicit demand of HQC. Well, it seems that contrary to all expectations that the global recovery will stabilize inflation (or maybe deflation now plunging oil prices are actually a good thing: it seems Keynesian dogma was only kidding after all)?

Well, according to Goldman’s own calculations, the demand squeeze for the High Quality Collateral that is global “Developed Market” Treasurys is about to go through the roof…
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Jim Grant: “The Fed Has A 3rd Mandate… The Administration Of American Equity Prices”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Having recently given us a two paragraph synopsis of all that is wrong with our financial market faith in fed officialdom, Jim Grant unleashes his critical wit and insight on CNBC to explain the Fed’s new remit, as Bill Dudley recently explained, “the administration of American equity prices.” The Fed will find it difficult ro raise rates – both technically (for reasons we have explained in detail previously) and “they will find many blocks in the way having to do with financial markets’ reaction.” Simply put, the Fed wants to raise rates but mostly it wants peace and quiet, which it does not have: “The Fed is America’s central bank but it is the steward of the world’s currency,” and as Grant concludes, “it is raining currencies around the world… and the Fed must be coginizant of that.”

 

Jim Grant…

 

*  *  *

As he notes, it is indeed raining currencies around the world…





The False Promises Of 2% Inflation

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Richard Ebeling via Epic Times blog,

A specter is haunting the world, the specter of two percent inflationism. Whether pronounced by the U.S. Federal Reserve or the European Central Bank, or from the Bank of Japan, many monetary central planners have declared their determination to impose a certain minimum of rising prices on their societies and economies.

One of the oldest of economic fallacies continues to dominate and guide the thinking of monetary policy makers: that printing money is the magic elixir for the creating of sustainable prosperity.

In the eyes of those with their hands on the handle of the monetary printing press the economic system is like a balloon that, if not “fully inflated” at a desired level of output and employment, should be simply “pumped up” with the hot air of monetary “stimulus.”

The Fallacy of Keynesian Macro-Aggregates

The fallacy is the continuing legacy of the British economist, John Maynard Keynes, and his conception of “aggregate demand failures.” Keynes argued that the economy should be looked at in terms of series of macroeconomic aggregates: total demand for all output as a whole, total supply of all resources and goods as a whole, and the average general levels of all prices and wages for goods and services and resources potentially bought and sold on the overall market.

If at the prevailing general level of wages, there is not enough “aggregate demand” for output as a whole to profitably employ all those interested and willing to work, then it is the task of the government and its central bank to assure that sufficient money spending is injected into the economy. The idea being that at rising prices for final goods and services relative to the general wage level, it again becomes profitable for businesses employ the unemployed until “full employment” is restored.

Over the decades since Keynes first formulated this idea in his 1936 book, The General Theory of Employment, Interest, and Money, both his supporters and apparent critics have revised and reformulated parts of his argument and assumptions. But the general macro-aggregate framework and worldview used by economists in the context of which problems of less than full employment continue to be analyzed, nonetheless, still tends to focus on and formulate government policy in terms of the levels of and…
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From Average Joe To Average Jihadi – How A Texas Plumber’s Truck Turned Up In Syria

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

A photo posted to Twitter last week by Ansar al-Din Front, an Islamic extremist brigade, clearly shows a Ford truck with a “Mark-1 Plumbing” decal on the door and a militant standing in the bed firing the anti-aircraft gun…

 

As Haaretz reports, the Texas plumber whose truck was photographed in Syria says he has no idea how it ended up thousands of kilometers away in the war-torn country…

Mark Oberholtzer, who has owned and operated Mark-1 Plumbing in Texas City for the past 32 years, confirmed it was his truck in the picture. He said he no longer owned the vehicle and had no idea how it ended up in Syria.

 

Oberholtzer said he had traded in the truck to second-hand dealership three years previously. He left the decal on the truck in the expectation that the dealership would remove it.

 

A spokesman for the dealer said that they had passed it on to a car auction house.

 

Oberholtzer has been besieged by phone calls – some threatening – since the picture was posted. “A few of the people are really ugly,” he told The Galveston Daily News.

 

Later in the week, federal Homeland Security officials arrived at Mark-1 Plumbing to question Oberholtzer and his staff.

*  *  *

It seems US exports are indeed picking up!!





It Cost Ukraine’s Government $4 Billion To Get Re-Elected

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As the world grows used to hearing of reserve depletion among less-developed nations defending their currencies from collapse, we thought the following chart might open a few eyes as to the real driver of attempting to create ‘stability’ by intervention. In the run-up to October’s parliamentary election in Ukraine, the Hryvnia became oddly stable – signaling to the world that the current government had everything under control and should be re-elected. Since the re-election, the Ukrainian currency has re-collapsed to record lows. How did the Ukrainian government ‘ensure’ re-election via ‘stability’? By blowing almost $4bn (a record 23% of reserves) in one month to maintain the currency’s level…

 

 

Money well spent we are sure…

 

Charts: Bloomberg





Dollar Bulls Regain Upper Hand

Courtesy of ZeroHedge. View original post here.

Submitted by Marc To Market.

The powerful divergence theme re-emerged and effectively ended the dramatic correction throughout the capital markets. The FOMC statement strengthened conviction of a mid-2015 lift off, even if the pace of tightening may be somewhat slower than previously anticipated. At the same time, the Swiss National Bank’s decision to move to negative interest rates, partly in anticipation of the ECB expanding its asset purchases as early as next month, underscores that Europe remains well behind the US in the credit cycle.

 

Rather than attribute the downdraft in the dollar and equity markets to a shift in underlying fundamental drivers, we had seen the hand of a technical correction, driven by short-term market positioning, and aggravated by year-end portfolio adjustments.      Indeed the euro peaked within a few ticks of the 50% retracement objective of its losses from the October 15 high near $1.29. For its part, the dollar’s dramatic slide against the yen stopped just shy of a key retracement objective of its rally from both October 15 and October 31 that was found near JPY115.50.

 

We expect the dollar’s higher trend to continue.  However, the lack of participation over the next two weeks could obscure this trend.    The Dollar Index made a new high before the weekend near 89.65.  A move above 90.00, which has held back previous dollar bounces since the onset of the Great Financial Crisis, would signal an acceleration of the dollar ‘s advance.   Initial support is pegged in the 88.80 area.   

 

The euro recorded a new low for the move just before the weekend near $1.2220.   A break of $1.2200 would suggest losses toward $1.20.  It has not been able to resurface much above $1.2300 since breaking below in response to the SNB’s decision. 

 

Technical indicators suggest the dollar’s uptrend against the yen will resume.  The move above JPY119.50 strengthens the conviction that the greenback is on its way back to the December 8 high near JPY121.85 and beyond.   Initial dollar support is seen in the JPY118.50-80 area. 

 

Sterling is not particularly interesting at the moment.  It caught between the strength of the dollar and the weakness of other currencies, including the euro, Swiss franc, yen and Australian dollars.  Against the greenback, it has been confined largely to a…
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Judge Rules Obama’s Abuse Of Executive Orders Is “Unconstitutional”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Martin Armstrong via Armstrong Economics,

A federal judge, Judge Arthur J. Schwab of the Western District of Pennsylvania, used a deportation decision to probe the constitutionality of President Obama’s executive order on amnesty, declaring it “unconstitutional.”

It is about time that Executive Orders are challenged in court for they are absolutely unconstitutional since they smack of a dictatorial abuse of power that denies the people the right to decide the fate of their nation.

Indeed, Texas and other states have already initiated lawsuits challenging the order. Nonetheless, the key here is that ANY such Executive Order is unconstitutional violating the entire concept of a Republic where it is at least a pretense that it is a government by the people rather than a king acting on a personal whim. This is what the law should be – not because of the subject-matter, but any issue.

Obama could just as easily order that the IRS increase taxes to 85% without Congress. Anything would be possible. This is the immigration issue, but the act of an Executive Order is everything. Obama just issued such an unconstitutional order to the FCC directing them to regulate and license the Internet. There is nothing any President could do without a vote from the people

Consequently, Judge Schwab wrote:

“President Obama’s unilateral legislative action violates the separation of powers provided for in the United States Constitution as well as the Take Care Clause, and therefore, is unconstitutional.”

Full Decision below:

Juarez Escobar





 
 
 

Phil's Favorites

Europe in Wonderland

Courtesy of Mish.

If you don't have the money, spend it anyway, says the Ukrainian government.

Of course, that's no different than the philosophy of any other country, including the US.

In this case, however, Ukraine's borders on default.

Please consider Ukraine Can’t Scrimp on Military Spending as S&P Rating Cut.
Ukraine’s president, speaking a day after the nation’s junk credit rating was cut further, said next year’s budget mustn’t cut corners on military spending and should account for the possibility of an invasion.

“The war made us stronger, but has crushed the economy,” Poroshenko said. “There’s one article of spending that w...



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Zero Hedge

THe INTeRViEW...

Courtesy of ZeroHedge. View original post here.

Submitted by williambanzai7.

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Who knows what evil lurks in the minds of Un...

 

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What do you think would happen if someone dared to produce a movie about a plot to ass-asinate the Butt-tard in Chief?

 

 

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Misdirection: Instead of torture victims, we are now supposed to feel sorry for a hacked politically incorrect Hollywood studio...

...

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Chart School

Can you make a living trading Springs and UpThrusts?

Courtesy of Read the Ticker.

We tell the truth about trading springs and upthrusts, no holding back!

More from RTT Tv

NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net Investing Quote...

..“The market always tells you what to do. It tells you: Get in. Get out. Move your stop. Close out. Stay neutral. Wait for a better chance. All these things the market is continually impressing upon you, and you must get into the frame of mind where you are in reality taking your orders from the action of the market itself — from the tape.”…

Richard D. Wyckoff
.."Markets are constantly in a state of unce...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Insider Scoop

#PreMarket Prep Guest List For The Week Of December 22, 2014

Courtesy of Benzinga.

Brian Kelly, Curtis Erickson and Jerremy Newsome will all be guests on this shortened week of Benzinga's #PreMarket Prep broadcast, sponsored by Nadex.

Be sure to tune in at 8:00 am EST Monday-Friday here to tune in to the exciting show.

Don’t miss our #FedForecast2015 event either!

You can learn more about that here.

Monday, December 22, 8:35 a.m.

Jonathan Corpina (...



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Digital Currencies

Chart o' the Day: Don't "Invest" in Stupid Sh*t

Joshua commented on the QZ article I posted a couple days ago and perfectly summarized the take-home message into an Investing Lesson. 

Chart o’ the Day: Don’t “Invest” in Stupid Sh*t

Courtesy of 

The chart above comes from Matt Phillips at Quartz and is a good reminder of why you shouldn’t invest in s...



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OpTrader

Swing trading portfolio - week of December 15th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Sabrient

Sector Detector: Energy sector rains on bulls' parade, but skies may clear soon

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Scott Martindale of Sabrient Systems and Gradient Analytics

Stocks have needed a reason to take a breather and pull back in this long-standing ultra-bullish climate, with strong economic data and seasonality providing impressive tailwinds -- and plummeting oil prices certainly have given it to them. But this minor pullback was fully expected and indeed desirable for market health. The future remains bright for the U.S. economy and corporate profits despite the collapse in oil, and now the overbought technical condition has been relieved. While most sectors are gathering fundamental support and our sector rotation model remains bullish, the Energy sector looks fundamentally weak and continues to ran...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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