Archive for 2012

ECB Slated to Become “Currency Forger of Europe”; Merkel, the “Teflon Chancellor”

Courtesy of Mish.

As time passes, the rifts between the Bundesbank and the ECB grow wider. So do the rifts between what German citizens want and what German chancellor Angela Merkel is willing to do to “save the euro”.

Merkel increasingly (and as expected) does what she need to do to preserve he legacy, consequences (and Germany) be damned.

Please consider Merkel tries to calm storms over Greece, ECB policy

Angela Merkel tried to calm a growing storm over euro zone crisis strategy on Sunday after the Bundesbank likened ECB bond-buying plans to a dangerous drug and a conservative ally of the German leader said Greece should leave the currency bloc by next year.

The comments, from central bank chief Jens Weidmann and a senior figure in the Bavarian Christian Social Union (CSU), Alexander Dobrindt, point to mounting unease in Germany with the policies being used to combat the three-year old debt crisis.

“We are in a very decisive phase in combating the euro debt crisis,” Merkel told public broadcaster ARD in an interview. “My plea is that everyone weigh their words very carefully.”

Dobrindt, whose party is preparing for a regional election in Bavaria and the federal vote next autumn, told top-selling German daily Bild he expected Greece to leave the euro zone in 2013. His comments drew a swift rebuke from Foreign Minister Guido Westerwelle who said “bullying” of euro members must stop.

But Weidmann, a former economic adviser to Merkel, said in a front-page interview in influential German magazine Der Spiegel that the bond buys could violate rules against the ECB providing outright financing to governments.

“Such a policy is for me close to state financing via the printing press,” Weidmann told Spiegel. “In democracies, it is parliaments and not central banks that should decide on such a comprehensive pooling of risks. We should not underestimate the risk that central bank financing can become addictive like a drug,” Weidmann said.

Dobrindt was more direct, saying Draghi risked passing into the history books as the “currency forger of Europe”.

Merkel’s Disingenuous Pledge of “Help”

I really do not know why Merkel is so revered, although feared I can certainly understand. She is a skilled politician, very adept at saying one thing and doing another, yet not getting challenged on it.

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U.S. Gasoline: High Price Could Continue Despite Low Demand

Courtesy of ZeroHedge. View original post here.

Submitted by EconMatters.


By EconMatters, August 26, 2012


Crude oil rallied alongside other commodities and the euro to its highest in three months last week on NYMEX, mostly from market’s expectation of new Euro Zone bailouts, and a third round of quantitative easing from the U.S. Fed.


Crude oil had continued the uptreand after the Energy Dept. reported a decrease of U.S. oil inventory by 5.4 million barrels in the week of last Friday.  Scanning the news, you are likely to see quotes such as “The [EIA inventory] report is relatively supportive,” and “Supply concerns persist due to Iran dispute, Syria tension.”



Data Source: EIA, August 23, 2012


What Oil Shortage?  

On the crude oil side, although crude stockpile has gone through four consecutive weeks of draw, it is still above the 5-year range (See Chart Below).  Moreover, as we are heading into the slow demand season of the year, inventory most likely will start to build again.


Source: U.S. EIA, August 22, 2012



About That ”Tight” Gasoline Market 

Inventories of gasoline (and diesel) in the U.S. are at their lowest levels for this time of year since 2008 (partly due to recent refinery…
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Forced to Pay To Fund Things Other Than Itself, Pennsylvania Turnpike Drowns In Debt, A Symptom of the Times

Courtesy of Lee Adler of the Wall Street Examiner

The Pennsylvania Turnpike is a nice highway that crosses the state from New Jersey to Ohio, brushing by Philly and Pittsburgh on the way. When it opened in 1940 it was the first limited access toll highway in the US and the nation’s first and longest intercity limited access highway. It was known for its long tunnels that cut through the mountains of Western Pennsylvania.

I grew up in the 1950s about a mile and a half from the Fort Washington Interchange around the time the eastern portion of the highway opened.I remember my father telling me, when we were on on our long trips to New York and Connecticut where my cousins lived, that the highway was modeled after the world famous German Autobahn. I would ask Dad if the Pennsylvania Turnpike was better and more famous than the New Jersey Turnpike, which had more lanes, and seemed to me as a 7 year old to have a lot more traffic. It was very important to me that the Pennsylvania Turnpike was, in fact, better.  He assured me that indeed it was. It was the best and most famous highway in America. And that was that. Dad’s word was plenty good enough.

So even today, 54 years later, I still have an emotional connection to that highway. On my road trips between my homes in Florida and Quebec, I’ll frequently drive 30 miles out of my way to drive the 20 mile stretch of the Turnpike from the Plymouth Meeting Interchange to the Philadelphia Interchange.

Pennsylvania Turnpike Dark At the End of the TunnelIt’s that connection that caused me to note this story about the Turnpike, because it tells so much about the progression of America, and about who we once were and what we have become. We were a nation of dreamers and builders and doers. And we paid for what we dreamt of and built, and we made it work. Today we are a nation of debtors, borrowing to fund current consumption (and current destruction), while sticking our kids and generations to come with the bills. We have become a nation that refuses to pay for what we dreamed of and decided we wanted, whether it be to fund the most massive military machine the world has ever seen, or the promise to care for our elderly, which either is, or will be, us.

For many years…
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Which Asset Classes Are Most Vulnerable To ‘Policy’ Disappointment?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The lull in market activity over the past weeks is poised to give way to a multitude of events that could potentially determine the market direction for the remainder of the year. Policy responses from both sides of the Atlantic are awaited, though nuances rather than headlines may be more important. In the short run however, Deutsche Bank notes some indicators suggest that risky assets may be vulnerable. Specifically, relative to fundamentals they also find that the US equity rally over the past quarter has now been excessive relative to the US economic leading indicators. Looking at cross asset valuations by comparing the level of asset prices today vs. their peaks and troughs since Sep-2008 we also find that the S&P500 appears to be the richest relative to fundamentals.



Deutsche Bank: The cross asset view: Equities could be vulnerable in the short term

In the table below, we calculate a ‘pointer’ for each asset, corresponding to the position of today’s price relative to its historical peak and trough. A pointer equal to 0% means that the current price is equal to the historical trough, a pointer equal to 100% means the current price is equal to the historical peak. We use the pointer of the global PMI Composite as a benchmark (pointer of 68.5%). In this simple framework, assets with a pointer above/below this level have under-reacted or over-reacted to the deterioration of global fundamentals.


For the market to move further into a risk-on mode from current levels, positive developments regarding one or more of the following issues would be required:

  • Spain will need to make a formal application for the aid program, which, as Draghi mentioned, is a necessary though not sufficient condition for bond purchases by the ECB
  • Political developments in Italy signaling an intention to follow Spain in seeking aid via the ECB/EFSF/ESM bond buying program
  • Further clarity on the mechanism of ECB bond purchases: whether the ECB would target yields levels or pre-commit a potential size of asset purchases. Setting an explicit cap on yields could be politically contentious as it commits the ECB, at least theoretically, to unlimited bond purchases. In addition, a justification of the level of cap would be onerous
  • Draghi mentioned that the ECB is working to address the seniority issue

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Guest Post: Good Riddance

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by John Aziz of Azizonomics,



A beautiful post from Murdoch disclosing fully and unashamedly the big media agenda; the use of state power to shut down more efficient and better competition.

A quick reminder of the facts; newspaper advertising revenue is falling off a cliff:

This is creative destruction; and creative destruction is a wonderful force for growth and development. Times change, societies change, fortunes will be made and fortunes will be lost.

It’s in the immediate interests of the entrenched big media elite to harness the power of the state to create draconian laws to snub out the copy and paste new media culture that has developed, because that opens up a whole new revenue stream: litigation. If you can’t earn your millions, you might as well litigate your way to them.

But big media could be spending their money on creating and monetising compelling products and content delivery systems that make people want to buy, rather than trying to legislate and litigate their way to success. Look at Steam, look at Spotify, look at iTunes and the App Store. For all of the draconian measures that might be put in place to “control” the internet, if big media’s product sucks, people will still not buy it.

Newspapers can survive by being creative and compelling, Murdoch. Just because your revenues are nosediving doesn’t mean that we should all lose our freedom to pay for your success.

Ron Paul: “I Don’t Fully Endorse Romney For President”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

On the ‘new’ eve of the Republican Convention, it appears all is not well in the Romney-Ryan ranks. In what is quite a stunning admission, though not entirely surprising given his outspoken desire for a change to the status quo, the NY Times is reporting that Ron Paul does not fully endorse Romney for President. Mr. Paul, said convention planners had offered him an opportunity to speak under two conditions: that he deliver remarks vetted by the Romney campaign, and that he give a full-fledged endorsement of Mr. Romney. He declined. “It wouldn’t be my speech,” Mr. Paul said. “That would undo everything I’ve done in the last 30 years. I don’t fully endorse him for president.” Whether this is Paul playing an admirable ‘long-game’ and/or standing by his libertarian roots (or angry at his apparent marginalization) is unclear but one thing is for sure; with the dominance of ‘young’ voters (seeking ‘change’?) behind Ron Paul relative to ‘old’ voters with Romney, this rebuff will not help in the fight against TOTUS. As BigStory reports, Paul is telling his supporters to stand firm because “we will become the tent eventually!

On Sub-Pennying, ‘Internalizers’, and Why the Flash Crash Could Happen Any Second of Any Day

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Nanex's excellent and thorough analysis of sub-penny trade data doesn't support SEC's conclusions about internalizers as written in the final flash crash report. There is abundant evidence that internalizer software was acutely sensitive to the integrity of the consolidated feed and would switch off internal matching only if and only when the quote was crossed. Furthermore, short term volatility had little, if any impact on the number of sub-penny trades. About the only thing our findings have in common with the SEC report on this matter, is that the date in question was May 6, 2010.

This revelation, that internalizer software is sensitive to the integrity of the consolidated quote, means someone could manipulate the consolidated quote in order to cause internalizer software to reject valuable retail orders and spill them to dark pools or exchanges. This may explain the common micro-bursts of activity that occur throughout the trading day and cause a number of stocks to have crossed quotes in the consolidated feed.

Sub-penny Analysis Leads to Flash Crash Discovery

While analyzing sub-penny trades since 2006, we made a few fascinating observations, one of which reminded us of something the SEC wrote in their final flash crash report about internalizers (the source of most sub-penny trades). Internalizers are stock wholesalers that buy order flow from retail firms such as Schwab and E*Trade. Normally, they match orders internally and fill trades based on the prices from the SIP (securities information processor, the consolidated data feed). Most retail orders never reach an exchange. You can measure the activity of internalizers by analyzing the number of trades that were executed at sub-penny prices (prices requiring 3 or more decimal places). Since exchanges forbid orders that are priced below increments of 1 cent, internalizers are the only regular and consistent source of sub-penny trades.

Back to the flash crash report. The SEC wrote that internalizers stopped matching customer orders because of the wild price swings. Furthermore, they wrote that a delay in consolidated quote was unlikely to affect anyone with a direct feed. However, from analyzing a trillion trades since 2006, we found that the occurrence of sub-penny trades has little correlation with market activity (see this animation). This is probably because no matter how wild prices are, an internalizer…
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Bank Capital Shrinking But Liquidity Continues to Grow In Spite of Fed Draining

Courtesy of Lee Adler of the Wall Street Examiner

The composite liquidity indicator rose last week. The indicator is breaking out to new highs again after a pause. Four of its components remain in bullish intermediate trends. Two are neutral. There’s no sign in this data of any change in the outlook for the markets.

Commercial Bank Capital Weekly Levels

Bank capital has been shrinking again since the surge earlier this summer. The long term downtrend remains intact. In theory this should be bearish, but as the great business theoretician Yogi Berra observed, in theory there should be no difference between theory and practice, but in practice there is. In this case I think that part of the explanation is that massive deposit inflows have left US banks flush with cash. Some of that cash has been the basis for a 10% increase in financial lending. That category includes loans to finance securities purchases. In addition the banks’ own securities investment and trading accounts have risen dramatically in size.

Don’t blame this big increase in securities holdings on the Fed. This has come since the end of QE2. The Fed has shrunk its System Open Market Account (SOMA), the official name for its securities holdings, by $70 billion since then.

I think two things are happening. Big deposit inflows are forcing the banks to seek yield, so they’ve been buying a lot of MBS and other higher yielding paper, as well as lately increasing their Treasury purchases. These purchases push liquidity into the markets.

Secondly, the banks are holding $1.5 trillion in cash reserves at the Fed earning virtually nothing. These funds pressure the banks to either make loans or buy securities. If loan demand is weak, or of poor quality, the banks will opt to purchase “safe” securities. As a result, we’ve seen massive bubbles in fixed income securities. As the cycle progresses, this may spread into stocks. That’s usually the way it works. It’s what Bernanke has been hoping for. The problem is that the trickle down effect to the economy is minimal. When eventually the economy doesn’t grow fast enough, the financial bubbles driven by too much money and too easy credit (for certain economic sectors) collapse.

Securities Held By Banks - Click to enlarge

Securities Held By Banks – Click to enlarge


Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the…
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The Rot Runs Deep 1: The Federal Reserve Is A Parasitic Wealth Transfer Machine

Courtesy of Charles Hugh-Smith of OfTwoMinds blog,

The Federal Reserve is a wealth transfer machine, skimming wealth from the productive many and transferring it to the parasitic few.

Today I launch a series entitled "The Rot Runs Deep" that examines the moral and financial rot at the core of American finance, politics and culture. We have reached a unique junction of American history: the confluence of Big Lie propaganda, neofeudalism and the worship of false financial gods.

The Big Lie propaganda machine of corporate media and the Central State has perfected Orwell's nightmare vision of centralized media and a fascist centralized State which turn lies into self-serving "truth."

Since the Federal Reserve is once again expected to "save" a crumbling, exploitative Status Quo, let's use the Fed as an example. The propaganda machine would have us believe that the Federal Reserve, the privately owned central bank of the U.S., has "saved" the Status Quo from financial ruin on numerous occasions by "smoothing out" the business cycle (credit expands and contracts) and by "stimulating aggregate demand" by lowering interest rates and pumping money into the economy (quantitative easing).

We are constantly prompted to worship the Federal Reserve's supposedly god-like powers to rescue a corrupt and venal Status Quo from the black hole of recession and collapse, and this Big Lie masks its real nature: The Fed is nothing but a parastic wealth transfer machine, skimming wealth from the many and transferring it to the few.

In effect, the Fed is the "enforcer" of neofeudalism in America: the feudal Lords of Finance control the for-sale political system and skim tribute from the 99.5% toiling in the fields below their castles. The Fed enforces this parasitic transfer of wealth by manipulating interest rates to enrich the banks and provides "free money" to the Financial Lords which is then used to buy assets and lend at interest.

The mechanisms of the Fed's parasitic transfer of wealth are well-known. Here's one: the Fed "loans" money to the Feudal Lords at 0% interest. the Lords then loan this free money out to peasants, students and other debt-serfs at high rates of interest. The interest "earned," courtesy of the parasitic Fed, is theirs to keep.

If they can't find enough debt-serfs who can pay more interest, they can always deposit the free money back at the Fed and earn interest from the Fed itself.

Here's another: the…
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9/11: Criminal Incompetence and Ass-Covering by the Bush Administration

Courtesy of ZeroHedge. View original post here.

Submitted by George Washington.

14 Facts Which Show Criminal Negligence and Ass-Covering

On this eleventh anniversary of the 9/11 terror attacks, we would like to take a look back at what went wrong.

While the Bush administration tried to make its response to 9/11 its crowning achievement, the truth is that they acted with criminal incompetence and ass-covering.

(1) The U.S. is at least partly responsible for creating Al Qaeda.  For example, Jimmy Carter’s National Security Adviser admitted on CNN that we organized and supported Bin Laden and the other originators of “Al Qaeda” in the 1970s to fight the Soviets.

Professor of strategy at the Naval War College and former National Security Agency intelligence analyst and counterintelligence officer John R. Schindler documents, the U.S. supported Bin Laden and other Al Qaeda terrorists in Bosnia.

(2) The chair of the 9/11 Commission said that the attack was preventable.  It is thoroughly-documented that an attack such as 9/11 was entirely foreseeable.  Specifically, Al Qaeda flying planes into the World Trade Center and Pentagon was something which American military and intelligence services – and our allies – .

(3) U.S. intelligence services have repeatedly infiltrated Al Qaeda and related groups, but then idiotically failed to stop them.  For example – as the New York Times, CBS News and others reported – the FBI informant involved in the 1993 bombing of the World Trade Center begged the FBI to substitute fake bomb power for real explosives, but his FBI handler moronically let real explosives be used.

Similarly – as reported by Newsweek, the New York Times and others – an FBI informant hosted and rented a room to 2 of the 9/11 hijackers while they were in the U.S., but then stupidly failed to stop them.

Indeed, former counter-terrorism boss Richard Clarke theorizes that top CIA brass tried to recruit the hijackers and turn them to our side, but were unsuccessful. And – when they realized had…
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Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.


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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...

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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?


Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?


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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped


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D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...

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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ... 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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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

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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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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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:


·       How 2017 Will Affect Oil, the US Dollar and the European Union


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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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About Ilene:

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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