Archive for 2011

Guest Post: On (Delayed) Tax Day

Courtesy of Tyler Durden

Submitted by Brad Schaeffer

On (Delayed) Tax Day

Ah, April 15th! I want you to consider that the date means absolutely nothing to 47% of US households as they will pay zero in federal income tax. Yes, state, property and sin taxes still get them, but we are seeing a disturbing trend towards a tipping point where fewer than half of us pay any sort of income tax. Five years ago it was 40% who paid no income tax. By 2012 this could be the first election in which the majority of voters will be able to vote themselves more government largess paid for by a minority of taxpayers. We may soon have to re-jigger the American Revolution’s familiar rallying cry into: “Representation Without Taxation!”
 
Statistics vary slightly but it can be argued that the top five percent of US households pay 60% of federal income tax. Ten percent account for over 75%. Another two-fifths make up the rest. And half are exempt. And yet…twenty percent of US households get 75% of their income from the federal government. Another one-fifth receives 40% of their financial support from Uncle Sam. Think about what this means in terms of fiscal responsibility down the road. How receptive to cutting taxes which they do not pay, or cutting government spending, from which they benefit, is a majority voting block going to be in the future? Indeed, what does this say about our prospects for economic growth or curbing the size and scope of an ever growing government colossus in the face of a crushing $20 trillion deficit looming on the horizon?

Very soon we may not be merely de-incentivizing economic activity but actively waging war on it.

Obamacare is but the most recent and fiscally insane manifestation of this myopia that now holds sway in the capitol and white
house—and has for over a decade regardless of the party in power (in case one thinks this overtly partisan). I am coming to fear that this administration is not about mere “spreading the wealth” as 2008 candidate Obama let slip in a revealing off-teleprompter moment. Rather its aim is to increase dependency upon the state based upon an illogical faith in the judgment of detached federal bureaucrats over the parochial citizenry. It is also about cynically creating a permanent voting block addicted to government hand-outs which will in…
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Treasury Yields Update

Courtesy of Doug Short

Note from dshort: I’ve updated the charts below through April 15th. The early signs of a correction in U.S. equities have been accompanied by a rise in Treasuries and a decline in yields (which move in the opposite direction). The question is whether this reversal in Treasuries has staying power.


The behavior of Treasuries is an area of special interest in light of the Fed’s second round of quantitative easing, which was formally announced on November 3rd. The first chart shows the percent change for a basket of eight Treasuries since November 4th.

The next chart shows the daily performance of several Treasuries and the Fed Funds Rate (FFR) since 2007. The source for the yields is the Daily Treasury Yield Curve Rates from the US Department of the Treasury and the New York Fed’s website for the FFR.

Here’s a closer look at the past year with the 30-year fixed mortgage added to the mix (excluding points).

Here’s a comparison of the yield curve at the time of the Fed’s QE2 announcement and the latest curve.

The yield spread had been widening in November and much of December and since then has contracted a bit. The next chart shows the 2- and 10-year yields with the 2-10 spread highlighted in the background.

The final chart is an overlay of the CBOE Interest Rate 10-Year Treasury Note (TNX) and the S&P 500.

For a long-term view of weekly Treasury yields, also focusing on the 10-year, see my Treasury Yields in Perspective.





Raising Lazarus From the Dead?

Courtesy of Leo Kolivakis

Via Pension Pulse.

Today is Palm Sunday, marking the beginning of Holy Week for the Orthodox Church. I’m not particularly religious but decided to stop off St-George church this afternoon to light a candle. Nobody was there; it was so peaceful and serene, just the way I like it when praying.

This morning I watched the American political shows, and then reflected on how mainstream media presents certain topics on the economy. Bear with me as I take you through some topics.

First, ABC’s this Week discussed the Ryan budget, proposing $6 trillion in federal government spending cuts. I think Republicans are dreaming if they think they can pass these cuts. As far as all the fear mongering on raising the debt ceiling, I will bet with all the doomsayers out there that the US won’t ever default on its debt.

And as far as raising US government revenues, there is any easy solution, it’s called a value-added tax, better know as a goods and services tax (GST). Canadians and Europeans know all about it. It hasn’t crimped Canada or Germany’s growth. It’s a fair tax because it’s a consumption tax, therefore non-regressive. The rich are back, spending more than ever on luxury goods, so it’s easier to tax what they’re spending on than introduce more income taxes. (The smartest thing the Conservatives did in Canada was tax free savings accounts, TFSAs, and the dumbest was cut the GST by 2%).

I then watched Indra Nooyi, whom Fortune Magazine has listed as the most powerful businesswoman in the world for several years running, discuss her thoughts on a “blueprint” that brings manufacturing jobs back to the United States:

“We need to start somewhere. I think the first step is, create a blueprint for the country,” Nooyi told CNN’s “Fareed Zakaria GPS” in an interview that aired Sunday.

“I don’t think worrying about the re-industrialization of America is a Republican issue or a Democratic issue. It’s the country’s issue,” she added.

 

“There is an extremely qualified cadre of recently retired CEOs and C-suite (top-level) executives who can all be co-opted to help author this blueprint for the future.”

 

Obama’s Democrats have been sparring with opposition Republicans over how much government spending to slash this fiscal year, as part


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ETF News Update: Like A Coiling Snake (DIA, SLV, IWM)

Courtesy of John Nyaradi

Over the past several weeks, major equity markets have been in a sideways range while precious metals have been making headlines with parabolic moves.  However, almost unnoticed, a stampede from growth sectors to conservative sectors has been well underway.

On My Radar 

Taking a look at the big picture from a technical standpoint, we see the following concerning the S&P 500.

chart courtesy of StockCharts.com

 In the chart above we can see that the 2 Day RSI is overbought and MACD is on a “sell” signal which would point to the probability of a downside move ahead.   

Furthermore, we see the price hovering around the 50 Day Moving Average which is resistance/support and that the average itself is starting to flatten out.

And finally we see the range between resistance at the 1320 level and support around 1300 which leaves us in a narrow trading band. 

Looking to the Point and Figure Chart of the S&P 500, we see a similar picture.

 chart courtesy of StockCharts.com 

In the P&F chart we see support at 1250, resistance at 1330 and that we’re still on a “sell” signal with a downside price objective of 1160 using point and figure methodology.

The View From 35,000 Feet 

As I mentioned at the outset, a quiet stampede has been taking place away from risk or growth sectors to safe, or lower risk sectors, and this move has been underway since late March/early April.

The major risk/growth oriented sectors set recent highs in late March/early April and since then have put in the following declines:

Materials:   (XLB) -3.8%

Energy:      (XLE) -3.9%

Industrials: (XLI)  -2.4%

Technology: (XLK)  -1.4%

These moves have garnered little notice but very often shifts in sector sentiment like these precede corresponding moves in the major indexes. 

Another dead giveaway of risk aversion is recent action in the bond markets which were in steady decline and now have suddenly reversed course with TLT, the 20 Year Bond, ETF up approximately 3% in the last five trading days. 

Economic and earnings data points were mixed this week and looked like this: 

Positive: 

ü   Industrial production climbed 0.8% from a previous 0.1%

ü   Capacity Utilization climbed.

ü   Michigan Consumer Sentiment rose

Negative: 

ü   MBA Mortgage Index declined 

ü   March Retail Sales rose 0.4% vs. 1.1% previously 

ü   Initial Unemployment claims rose to 412,000 vs. 385,000 previously…
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A Stampede Out of Risk Sectors (XLB, XLE, XLI, XLK)

Courtesy of John Nyaradi

Over the past several weeks, major equity markets have been in a sideways range while precious metals have been making headlines with parabolic moves.  However, almost unnoticed, a stampede from growth sectors to conservative sectors has been well underway.

On My Radar 

Taking a look at the big picture from a technical standpoint, we see the following concerning the S&P 500.

chart courtesy of StockCharts.com

 In the chart above we can see that the 2 Day RSI is overbought and MACD is on a “sell” signal which would point to the probability of a downside move ahead.   

Furthermore, we see the price hovering around the 50 Day Moving Average which is resistance/support and that the average itself is starting to flatten out.

And finally we see the range between resistance at the 1320 level and support around 1300 which leaves us in a narrow trading band. 

Looking to the Point and Figure Chart of the S&P 500, we see a similar picture.

 chart courtesy of StockCharts.com 

In the P&F chart we see support at 1250, resistance at 1330 and that we’re still on a “sell” signal with a downside price objective of 1160 using point and figure methodology.

The View From 35,000 Feet 

As I mentioned at the outset, a quiet stampede has been taking place away from risk or growth sectors to safe, or lower risk sectors, and this move has been underway since late March/early April.

The major risk/growth oriented sectors set recent highs in late March/early April and since then have put in the following declines:

Materials:   (XLB) -3.8%

Energy:      (XLE) -3.9%

Industrials: (XLI)  -2.4%

Technology: (XLK)  -1.4%

These moves have garnered little notice but very often shifts in sector sentiment like these precede corresponding moves in the major indexes. 

Another dead giveaway of risk aversion is recent action in the bond markets which were in steady decline and now have suddenly reversed course with TLT, the 20 Year Bond, ETF up approximately 3% in the last five trading days. 

Economic and earnings data points were mixed this week and looked like this: 

Positive: 

ü   Industrial production climbed 0.8% from a previous 0.1%

ü   Capacity Utilization climbed.

ü   Michigan Consumer Sentiment rose

Negative: 

ü   MBA Mortgage Index declined 

ü   March Retail Sales rose 0.4% vs. 1.1% previously 

ü   Initial Unemployment claims rose to 412,000 vs. 385,000 previously
continue reading






Years of the Modern

Courtesy of Jim Quinn of The Burning Platform

Years Of The Modern

Is humanity forming en-masse? for lo, tyrants tremble, crowns grow dim,
The earth, restive, confronts a new era, perhaps a general divine war,
No one knows what will happen next, such portents fill the days and
nights;

Years prophetical! the space ahead as I walk, as I vainly try to
pierce it, is full of phantoms,

Unborn deeds, things soon to be, project their shapes around me,
This incredible rush and heat, this strange ecstatic fever of dreams
O years! –
Years of the Modern - Walt Whitman

The great American poet Walt Whitman wrote these words in 1859. Whitman was trying to peer into a future of uncertainty. He was sure the future would be bleak. He had visions of phantoms. Maybe he saw the 600,000 souls who would lose their lives in the next six years. Whitman had captured the mood of a country entering the Fourth Turning. He didn’t know what would happen, but he felt the beat of war drums in the distance. Whitman did not have the benefit of historical perspective that we have today.

There have been three Fourth Turnings in American History. The American Revolution Fourth Turning ended in 1794 with the Crisis mood easing with the presidency of George Washington. Whitman didn’t realize that, 64 years after the previous Fourth Turning, the mood of the country was ripe for revolution and the sweeping away of the old order. When the stock market crashed in 1929, 64 years after the exhausting conclusion to the Civil War Fourth Turning, Americans didn’t realize the generational constellation was propelling them toward a new social order and a horrific world war. It is now 66 years since the conclusion of the Depression/WWII Fourth Turning. All indications are that the current Fourth Turning began in the 2007 – 2009, with the collapse of the housing market and the ensuing financial system implosion.

I find myself vainly trying to pierce the veil of events yet to be. The future is filled with haunting phantoms of unborn deeds which could lead to renewed glory, untold death and destruction, or the possibly the end of the great American experiment. Walt Whitman captured the change of mood in the country with his poem. History books are filled with dates and descriptions of events, battles, speeches and assassinations. What most people don’t understand is Fourth Turnings aren’t about…
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Will The Finnish Vote Dead End Europe’s Bailout Bonanza?

Courtesy of Tyler Durden

The early Finnish votes are in and it does not look good for Portugal. As Reuters reports, Finland’s anti-euro True Finns made huge gains in an election on Sunday, raising the risk of disruption to an EU bailout of Portugal. The right-leaning National Coalition topped the ballot, gaining just over a fifth of all votes. Party leaders will start talks soon on forming a new government. The problem is that as the anti-euro moniker indicates, the True Finns are pretty much hell bent on vetoing the Portugal bailout which means the ongoing annexation of Europe’s periphery by Olli Rehn is about to finish (and yes there is a finish-Finnish joke in there somewhere). Per Marketwatch: “Early results Sunday from Finland’s parliamentary elections suggest the anti-EU bailout True Finns party will hold the second-most number of seats and could even be part of a coalition government. Such an outcome may mean the EU’s planned bailout of Portugal is vetoed by Finland, a move that would roil the euro-zone markets. With half the votes counted the True Finns were on 19% support, and on course for 41 seats, tied with the Social Democrats and one seat less than National Coalition Party’s predicted 42-seat haul, the BBC reported. Finland is the only euro-zone country that requires bailouts to be approved by its parliament. Strong gains by the True Finns could derail a planned rescue for Portugal.” What this means is that Goldman Sachs’ European analysts will be scrambling all night to come up with loophole to European law that will not result in an epic plunge for the European currency, as apparently not even that sage among sages, Thomas Stolper, whose 2010 batting average of 0.000 made his contrarian calls manna from heaven in the past year, could anticipate this Black Swan. We will keep you informed of all the sell-side spin as it starts trickling in.

In the meantime, here is more from Marketwatch:

A stronger-than-expected showing by the True Finns, “or if some members from other parties take a similar line, could make things very touch and go,” said Steven Barrow, currency and fixed-income strategist at Standard Bank. “And clearly if there’s any possibility at all that Portugal might not get its money, it could hit bonds and the euro hard.”

Strategists note that the main opposition


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Guest Post: Years Of The Modern

Courtesy of Tyler Durden

Submitted by Jim Quinn of The Burning Platform

Years Of The Modern

Is humanity forming en-masse? for lo, tyrants tremble, crowns grow dim,
The earth, restive, confronts a new era, perhaps a general divine war,
No one knows what will happen next, such portents fill the days and
nights;

Years prophetical! the space ahead as I walk, as I vainly try to
pierce it, is full of phantoms,

Unborn deeds, things soon to be, project their shapes around me,
This incredible rush and heat, this strange ecstatic fever of dreams
O years! –
Years of the Modern- Walt Whitman

The great American poet Walt Whitman wrote these words in 1859. Whitman was trying to peer into a future of uncertainty. He was sure the future would be bleak. He had visions of phantoms. Maybe he saw the 600,000 souls who would lose their lives in the next six years. Whitman had captured the mood of a country entering the Fourth Turning. He didn’t know what would happen, but he felt the beat of war drums in the distance. Whitman did not have the benefit of historical perspective that we have today.

There have been three Fourth Turnings in American History. The American Revolution Fourth Turning ended in 1794 with the Crisis mood easing with the presidency of George Washington. Whitman didn’t realize that, 64 years after the previous Fourth Turning, the mood of the country was ripe for revolution and the sweeping away of the old order. When the stock market crashed in 1929, 64 years after the exhausting conclusion to the Civil War Fourth Turning, Americans didn’t realize the generational constellation was propelling them toward a new social order and a horrific world war. It is now 66 years since the conclusion of the Depression/WWII Fourth Turning. All indications are that the current Fourth Turning began in the 2007 – 2009, with the collapse of the housing market and the ensuing financial system implosion.

I find myself vainly trying to pierce the veil of events yet to be. The future is filled with haunting phantoms of unborn deeds which could lead to renewed glory, untold death and destruction, or the possibly the end of the great American experiment. Walt Whitman captured the change of mood in the country with his poem. History books are filled with dates and descriptions of events, battles, speeches and assassinations. What most people…
continue reading





Global Key Economic Event And Bond Issuance Summary For The Upcoming Week

Courtesy of Tyler Durden

Now that the global financial system is down to living literally auction to auction, with negligible available cash and deficits as far as the eye can see, not to mention a European continent living day to day on the whims of either political extreme, issuance of government paper, and particularly its proper uptake, takes takes on a especially significant role. Below we present not only Goldman’s summary of the key events in the past week as well as those in the next 5 days, but a bond auction schedule, together with a POMO summary, for the next two weeks.With everyone selling as much paper as they can wet away it, not even the global central banking cartel selling unlimited long term puts on the worldwide treasury curve will do much to prevent the upcoming global yield tsunami.

Source: Morgan Stanley:

Next, Goldman summarizes the past week, and forecast the next 4 business days (Friday is a holiday)

What Matters in FX This Week : Business Surveys in Europe and Turkish Central Bank Meeting

From a macro perspective, last week’s data offered a slightly more positive mix of growth vs. inflation. CPI data in the US showed a more moderate increase in core inflation, while consumer confidence in the US came in slightly better than expected and long-term inflation expectations eased.?
?

In terms of our own market views, we re-emphasized our Dollar bearish bias in the FX Monthly but also highlighted that limited further upside in European rates together with slightly more volatile risk sentiment could temporarily hurt our long EUR/US $ exposure. Our commodities strategy team turned more neutral in the near term for oil, and as a result, we closed our long recommendation in Canadian equities.
?

Week Ahead?
?

The week ahead is reasonably light on data. The European PMIs and the German IFO will be the key releases to watch. So far, these forward-looking growth indicators have remained steady at remarkably high levels, and it will be interesting to watch whether it extends for another month.?
?

As a result of our more neutral stance on oil, we are watching our RUB trade closely. If the CBR remains hawkish then there is room for RUB to continue to perform even if oil prices correct lower in the near term. Therefore, watching next week’s investment data is key for…
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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

http://www.insidercow.com/ more from Insider

Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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