Archive for May, 2017

Russian Lawmaker Issues Sobering Threat: We’re Willing To Use Nukes To Defend Crimea

Courtesy of ZeroHedge. View original post here.

Authored by Mac Slavo via SHTFplan.com,

As of late, the media has forgotten about tensions between Ukraine, NATO, and Russia. Crimea and the conflict in Eastern Ukraine have largely left the public’s awareness. However, that shouldn’t be the case, because this region is still a powder keg that could blow at any time. And if it does, it could easily result in another world war.

If you don’t think the situation in Ukraine could still explode into a wider conflict, take a look at what this member of Russia’s parliament recently said at an international security conference.

“On the issue of NATO expansion on our borders, at some point I heard from the Russian military — and I think they are right — If U.S. forces, NATO forces, are, were, in the Crimea, in eastern Ukraine, Russia is undefendable militarily in case of conflict without using nuclear weapons in the early stage of the conflict,” Russian parliamentarian Vyacheslav Alekseyevich Nikonov told attendees at the GLOBSEC 2017 forum in Bratislava, Slovakia.

Russian military leaders have discussed Moscow’s willingness to use nuclear weapons in a conflict with military leaders in NATO, as part of broader and increasingly contentious conversations about the alliance’s expansion, Nikonov later told Defense One.

That’s a startling admission when you think about it. It seems the Russian’s believe that if there is a war between Russia and the West, their conventional forces won’t be capable of defending Russian soil from NATO. They’re basically warning us that “if you bring a knife to this fight, we know we can’t win, so we’ll be bringing a gun.”

And there’s a good reason for them to believe that NATO poses a dire threat to their territory and interests.

“For us, [NATO] is a military alliance spanning three-quarters of the global defense money, now planning to expand that figure,” said Nikonov.

In the two years since Russia annexed Crimea, NATO’s Baltic members have doubled their defense budgets. In 2018, Latvia, Lithuania, and Estonia are projected to spend nearly $670 million, up from $210 million in 2014. “This growth is faster than any other region globally,” Craig Caffrey, principal analyst at IHS Jane’s, remarked last October. “In 2005, the region’s total defence budget was $930 million.


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Chart of the Day – The USA is not a Corporation

 

Chart of the Day – The USA is not a Corporation

Courtesy of Cullen Roche, Pragmatic Capitalism

Mary Meeker is out with her annual “Internet Trends” presentation and she continues to promote this very misleading view of the US government as a corporation. For instance, here’s a chart showing the “income statement” of the USA:

Okay, let’s cut to the chase. Governments are not corporations. Corporations exist to increase shareholder value by earning more income. Governments exist to serve a public purpose that the private sector generally cannot or will not earn an income achieving on their own. For instance, national defense is a pretty bad way to make money because you blow up most of your physical assets and deplete your workforce in the process of destroying other people’s stuff. War is a really really bad way to increase aggregate incomes. But national defense is obviously a public good. Without our national defense we probably wouldn’t have most of the great profit generating corporations that we have in the USA because well, we might not even exist.¹

So, the obvious point is that we need the government to exist for certain purposes that the private sector might not want to do on their own or simply cannot do on their own. And many of those activities will not be profitable for the government.² But the fact that they’re not profitable does not mean they’re bad. As I showed with national defense, you can operate in the red in perpetuity and still make a perfectly rational argument that national defense is among the most important things that make private entities profitable. In this sense, it’s kind of like we pay into a public pot for the greater good knowing that that pot is going to be used for purposes that might not have a quantifiable or tangible return on investment.

Tie all of this in together with the fact that a government has solvency and income capabilities unlike any corporation or household and the comparisons become useless and probably reckless.

¹ – Here’s a better perspective of how you might show that these annual “losses” actually create an environment of extraordinary shareholder value.  

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Sorry Siri – You’re The Dumbest “Smart” Assistant Out There

Courtesy of ZeroHedge. View original post here.

Many industry experts predict that our interactions with computing devices will move away from text-based input towards voice-based input in the future. Smartphones, voice-enabled speakers and other devices already come with so-called smart assistants such as Siri, Cortana or Google Assistant. As Statista’s Felix Richter notes, these virtual assistants can help you organize your day, control smart home devices and answer general questions. Or can they?

Infographic: How Smart Are

You will find more statistics at Statista

Take Amazon’s Alexa for example: the assistant powering the company’s popular line of voice-enabled speakers was able to answer just 20.7 percent of the 5,000 questions fired at it as part of the experiment. Notably, Google Assistant and Microsoft’s Cortana were much more knowledgeable when it came to these factual questions while Apple’s Siri performed similar to Alexa… but as the chart above shows, Siri was the worst-performer in terms of 100% correct responses.





America’s mass incarceration problem in 5 charts – or, why Sessions shouldn’t bring back mandatory minimums

 

America's mass incarceration problem in 5 charts – or, why Sessions shouldn't bring back mandatory minimums

Courtesy of Tanya Golash-BozaUniversity of California, Merced

File 20170523 5777 1fifro7

Attorney General Jeff Sessions is pushing for stricter sentencing in criminal cases. AP Photo/Frank Franklin II

Today, the United States is a world leader in incarceration, but this has not always been the case.

For most of the 20th century, the U.S. incarcerated about 100 people per 100,000 residents – below the current world average. However, starting in 1972, our incarceration rate began to increase steadily. By 2008, we reached a peak rate of 760 incarcerated persons per 100,000 residents.

The increase in incarceration cannot be explained by a rise in crime, as crime rates fluctuate independently of incarceration rates. Incarceration rates soared because laws changed, making a wider variety of crimes punishable by incarceration and lengthening sentences.

This sharp increase was driven in part by the implementation of mandatory minimums for drug offenses, starting in the 1980s. These laws demand strict penalties for all offenders in federal courts, no matter the extenuating circumstances.

The Obama administration took some measures to roll back these mandatory minimums. In 2013, Attorney General Eric Holder issued a memo asking prosecutors to prosecute crimes with mandatory minimum sentences only for the worst offenders.

Earlier this month, however, Attorney General Jeff Sessions rescinded that memo and issued his own, which requires prosecutors to “charge and pursue the most serious” offense. The punitive sentiment behind Sessions’ memo is a throwback to our failed experiment in mass incarceration in the 1980s and ‘90’s.

The rise of mass incarceration

According to political scientist Marie Gottschalk, mass incarceration took off in three waves.

First, in the mid-1970s, Congress began to lengthen sentences. This culminated in the 1984 Comprehensive Crime Control Act, which established mandatory minimum sentences and eliminated federal parole.

Then, from 1985 to 1992, city, state and federal legislators began to lengthen drug sentences. This was the heyday of the war on drugs.…
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China Manufacturing Contracts For The First Time In A Year: “The Economy Is Clearly On A Downward Trajectory”

Courtesy of ZeroHedge. View original post here.

Following yesterday’s official  (if less credible and focused mostly on SOEs) manufacturing and non-mfg PMI reports from China’s National Bureau of Statistics, both of which came either in line or slightly better than expected, moments ago Caixin/Markit reported its own set of Chinese manufacturing data, and it was far more disappointing: at 49.6, not only did it miss expectations of 50.1, but by printing below 50, the operating conditions faced by Chinese goods producers deteriorated for the first time in nearly a year. As shown below, this was the first contractionary print sine last June when China’s massive, anti-deflationary fiscal stimulus kicked in.

The seasonally adjusted PMI posted below the neutral 50.0 value at 49.6 in May, the first contractionary print since the middle of 2016. Although only indicative of a marginal deterioration in operating conditions, Caixin conceded that the index fell from 50.3 to signal the first decline in the health of the sector for 11 months.

The fall in the headline index coincided with slower increases in output and new orders, while staff numbers were cut at a quicker rate. Subdued demand conditions underpinned a renewed fall in purchasing activity, albeit only slight, and the first increase in inventories of finished items in 2017 so far. The latest data also signalled the first fall in input costs since last June, which in turn led manufacturers to lower their selling prices for the first time since February 2016.

Commenting on the data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

“The Caixin China General Manufacturing PMI fell 0.7 points to 49.6 in May, marking its first contraction in 11 months. The subindices of output and new business stayed in expansionary territory, but both fell to their lowest levels since June last year. The subindices of input costs and output prices dropped into contractionary territory for the first time since June 2016 and February 2016 respectively. The sub-index of stocks of purchases signalled a renewed decline, while the sub-index of stocks of finished goods rebounded, indicating that companies have stopped actively restocking as inventories began to stack up. China’s manufacturing sector has come under greater pressure in May and the economy is clearly on a downward trajectory.”

And while Chinese manufacturers reported a further rise in production during May, the pace of expansion


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Why Carson Block Sees “Real Problems With Canada”

Courtesy of ZeroHedge. View original post here.

Less than a week after declaring that China’s economy is headed for an economic “day of reckoning” thanks to its twin asset bubbles (real estate and equity), short-seller Carson Block said he’s starting to believe there are “real problems with Canada” – particularly the country’s dangerously overvalued housing market.

Block discussed Canada’s housing market with a Bloomberg reporter who called him for comment after shares of Element Fleet Management, a Toronto-based leasing company, plunged 38% on unfounded speculation that the famed short-seller had chosen the company as his next target. Shares of troubled home lender Home Capital Group also dipped in early trade.

Block told Bloomberg that the action in those two stocks suggests Canadians are (rightfully) nervous about soaring real estate prices and household debt…

“I’m starting to believe that there could be some real problems with Canada,”

Though Block said he hadn’t heard of Element before Wednesday, the run on Home Capital Group’s deposits in recent weeks suggests that “investors denial is just starting to crack.” HCG is being drained of assets at an unprecedented pacealready 94% of retail deposits have fled the troubled lender – and the company has erased more than half of its market capitalization since a Canadian regulator accused it five weeks ago of misleading investors over an internal probe of fraudulent mortgage loan applications – a practice that bears some resemblance to US mortgage lenders’ reliance on “liar loans,” which helped inflate the subprime bubble.

“Particularly given what happened to Home Capital in recent weeks I kind of wonder if Canadian investors are really nervous about the stuff that they’re holding and that’s why there was so much sensitivity around Element this morning,” Block said.

When I see a reaction like we saw to a stock that I had never heard of because people were evidently concerned that we were about to short it, that tells me that maybe we’re at a point in Canada where investor denial is just starting to crack,” he said.

Block told Bloomberg that Canada’s real estate market has “been pushed by foreign money” to the kind of “buying frenzy” the U.S. experienced a decade ago.


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New Warning Signs Emerge For Subprime Auto Securitizations

Courtesy of ZeroHedge. View original post here.

Last month, we pointed that one of wall street’s largest underwriters of auto debt was suddenly slashing their own holdings of auto loans while simultaneously ramping up the issuance of auto securitization facilities thereby pawning off the risk to ‘suckers’ who have no idea they’re jumping in front of yet another financial freight train (see “Deja Vu: JPM Slashes Auto Loans For Their Own Book; Ramps Up ABS Issuance For The Suckers“).

Now, according to Bloomberg and Wells Fargo, new signs are emerging which suggest that auto ABS facilities, like their RMBS cousins of last decade, aren’t quite as bullet proof as the ‘suckers’ thought they were.  While a subtle degradation, Wells Fargo points out that fewer auto borrowers are suddenly paying off their loan balances early.  And while that may not sound as dire as say a default, it suggests that auto borrowers may be finding it more difficult to find new financing when they go to trade in their 3-year old clunker for that brand new BMW.

Fewer subprime borrowers are paying off their auto loans early, a possible sign that consumers with weaker credit scores are struggling more, according to a report by Wells Fargo & Co. researchers.

Borrowers are making fewer extra payments on loans that were bundled into bonds in 2015 and 2016, compared with loans in 2013 and 2014 bonds, according to Wells Fargo analysts led by John McElravey. The data on prepayments may offer another sign that subprime consumers are having more trouble paying their bills, the analysts wrote in a note dated Tuesday. Borrowers are already defaulting on a growing amount of auto debt.

Last decade, slower monthly payment rates on credit cards were an early sign of the consumer credit cycle changing for the worse, the analysts wrote. For auto loans, slower prepayment may be more of a coincident indicator than a leading one, they wrote.

Of course, just like 2007, the largest seller of auto ABS, Wells Fargo (just as Bear Stearns did in 2007), is telling investors that they have nothing to worry about…unless you think slower paydowns and a massive declines in used car prices are a problem…

The researchers at Wells Fargo, the number one seller of


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Is Bitcoin Standing In For Gold?

Courtesy of ZeroHedge. View original post here.

Via Paul Craig Roberts and Dave Kranzler,

In a series of articles, we have proven to our satisfaction that the prices of gold and silver are manipulated by the bullion banks acting as agents for the Federal Reserve.

The bullion prices are manipulated down in order to protect the value of the US dollar from the extraordinary increase in supply resulting from the Federal Reserve’s quantitative easing (QE) and low interest rate policies.

The Federal Reserve is able to protect the dollar’s exchange value vis-a-via the other reserve currencies—yen, euro, and UK pound—by having those central banks also create money in profusion with QE policies of their own.

The impact of fiat money creation on bullion, however, must be controlled by price suppression. It is possible to suppress the prices of gold and silver, because bullion prices are established not in physical markets but in futures markets in which short-selling does not have to be covered and in which contracts are settled in cash, not in bullion.

Since gold and silver shorts can be naked, future contracts in gold and silver can be printed in profusion, just as the Federal Reserve prints fiat currency in profusion, and dumped into the futures market. In other words, as the bullion futures market is a paper market, it is possible to create enormous quantities of paper gold that can suddenly be dumped in order to drive down prices. Everytime gold starts to move up, enormous quantities of future contracts are suddenly dumped, and the gold price is driven down. The same for silver.

Rigging the bullion price prevents gold and silver from transmitting to the currency market the devaluation of the dollar that the Federal Reserve’s money creation is causing. It is the ability to rig the bullion price that protects the dollar’s value from being destroyed by the Federal Reserve’s printing press.

Recently, the price of a Bitcoin has skyrocketed, rising in a few weeks from $1,000 to $2,200. Two explanations suggest themselves.

One is that the Federal Reserve has decided to rid itself of a competing currency and is driving up the price with purchases while accumulating a large position, which then will be suddenly dumped in order to crash the market and scare away potential users from Bitcoins. Remember,


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NYPost Claims Trump Administration Spying On Press To Find Leakers

Courtesy of ZeroHedge. View original post here.

In what is bound to create mass hysteria among the mainstream media, NYPost’s bombastic columnist John Crudele reports that the Trump administration is spying on a number of journalists in an effort to flush out The White House leakers.

Crudele notes that there was a big ruckus four years ago when the Associated Press announced that telephone records for 20 of its reporters had been subpoenaed by the Justice Department.

The government was apparently looking for CIA leaks about an operation in Yemen that time. Crudele reports it is happening again…

The Justice Department has gotten a warrant from the US Foreign Intelligence Surveillance Court — also known as the FISA court — to conduct electronic surveillance on a group of journalists who’ve been the recipient of leaked information, the source said.

The journalists are not the target, according to my source – and I say, thank goodness for that. Instead, the Trump administration is looking for the leaker.

Of course, just as with practically every media story nowadays, the source is anonymous and there is no confirming evidence or secondary source, but as we reported previously, three White House leakers (who were holdovers from the Obama administration) have either already been fired or will soon be, the source claims.

Last week, the Trump campaign released an email to supporters entitled “SABOTAGE,” in which the campaign said, “There are people within our own unelected bureaucracy that want to sabotage President Trump and our entire America First movement.”





Ethereum Forecast To Surpass Bitcoin By 2018

Courtesy of Zero Hedge

Back on  February 27, when bitcoin was trading in the mid-teens, we wrote "Step aside bitcoin, there is a new blockchain kid in town."

In recent days, the world's second most popular digital currency, Ethereum, has been surging (despite its embarrassing hack last June when some $59 million worth of "ethers" were stolen forcing the blockchain to implement a hard fork to undo the damage), prompting many to wonder if some big announcement was imminent. It appears that yet again someone "leaked" because on Monday, an alliance of some of the world's most advanced financial and tech companies including JPMorgan Chase, Microsoft, Intel and more than two dozen other companies teamed up to develop standards and technology to make it easier for enterprises to use blockchain code Ethereum – not bitcoin – in the latest push by large firms to move toward the holy grail of a post-central bank world in which every transaction is duly tracked: a distributed ledger systems.

Commenting on the sharp – for the time – rise in ETH price (which had moved from $13 to $15), we said "the move may be just the beginning if most corporations adopt Ethereum as the distributed ledger standard: Accenture released a report last month arguing that blockchain technology could save the 10 largest banks $8 billion to $12 billion a year in infrastructure costs — or 30 percent of their total costs in that area." Since then most corporations have indeed adopted Ethereum as the distributed ledger standard.

* * *

Three months later, and with Ethereum 15x higher at $230, Bloomberg today writes: "Step aside, bitcoin. There’s another digital token in town that’s winning over the hearts and wallets of cryptocurrency enthusiasts across the globe."

It's not just the lede that is familiar, it's everything else too, especially the forecast.

The value of ether – the digital currency linked to the ethereum blockchain – could surpass that of bitcoin by the end of 2018, according to Olaf Carlson-Wee, chief executive officer of cryptocurrency hedge fund Polychain Capital who was interviewed by Bloomberg.

"What we’ve seen in ethereum is a much richer, organic developer ecosystem develop very, very quickly, which is what has driven ethereum’s price


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Phil's Favorites

DARK TOWERS by David Enrich

 

In his best-selling book Dark Towers, David Enrich, finance editor at The New York Times, chronicles the complicated history of Deutsche Bank and its entanglement with Donald Trump. Reviewing Dark Towers, Roger Lowenstein writes, 

"Enrich’s most tantalizing nugget is that in the summer of 2016, Jared Kushner’s real estate company (which received lavish financing from Deutsche) was moving money to various Russians. A bank compliance officer filed a “suspicious activity report,” but the report was quashed and she was fired. The suggestion that maybe the money was payback for Russian campaign meddling isn’t one that Enrich can prove. Similarly, we will have to wait to see if Deutsch...



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Zero Hedge

NYSE Announces Disaster-Recovery Test Due To Virus Fears

Courtesy of ZeroHedge View original post here.

In a somewhat shocking sounding move, given administration officials' ongoing effort to calm the public fears over the spread of Covid-19, The New York Stock Exchange has announced it will commence disaster-recovery testing in its Cermak Data Center on March 7 amid coronavirus concern, Fox Business reports in a tweet, citing the exchange.

During this test, NYSE will facilitate electronic Core Open and Closing Auctions as if the 11 Wall Stree...



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Chart School

Dow, Three strikes and your out!

Courtesy of Read the Ticker

The Dow has topped out with major events, the current virus could be the third strike!

2001 - 9/11 Twin Towers
2007 - Bear Sterns
2020 (?) - C19 Virus


Chart explains all. Dow Jones Industrial's comparing market tops 2000, 2007 and 2020.


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Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of ...

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ValueWalk

Cities With The Most 'New' And Tenured Homeowners

By Jacob Wolinsky. Originally published at ValueWalk.

Homeownership is a major investment. Not just financially, but when a person or family purchases a home, they’re investing years – if not decades – in that particular community. 55places wanted to find out which real estate markets are luring in new homebuyers, and which ones are dominated by owners that haven’t moved in decades. The study analyzed residency data in more than 300 US cities and revealed the top 10 cities with the most tenured homeowners – residents who’ve lived in and owned their home for more than 30 years – are sprinkled across ...



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Kimble Charting Solutions

Financial Crisis Deja Vu: Home Construction Index Double Top?

Courtesy of Chris Kimble

Most of us remember the 2007-2009 financial crisis because of the collapse in home prices and its effect on the economy.

One key sector that tipped off that crisis was the home builders.

The home builders are an integral piece to our economy and often signal “all clears” or “short-term warnings” to investors based on their economic health and how the index trades.

In today’s chart, we highlight the Dow Jones Home Construction Index. It has climbed all the way back to its pre-crisis highs… BUT it immediately reversed lower from there.

This raises concerns about a double top.

This pr...



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Insider Scoop

A Peek Into The Markets: US Stock Futures Plunge Amid Coronavirus Fears

Courtesy of Benzinga

Pre-open movers

U.S. stock futures traded lower in early pre-market trade. South Korea confirmed 256 new coronavirus cases on Thursday, while China reported an additional 327 new cases. Data on U.S. international trade in goods for January, wholesale inventories for January and consumer spending for January will be released at 8:30 a.m. ET. The Chicago PMI for February is scheduled for release at 9:45 a.m. ET, while the University of Michigan's consumer sentime...



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Biotech & Health

Could coronavirus really trigger a recession?

 

Could coronavirus really trigger a recession?

Coronavirus seems to be on a collision course with the US economy and its 12-year bull market. AP Photo/Ng Han Guan

Courtesy of Michael Walden, North Carolina State University

Fears are growing that the new coronavirus will infect the U.S. economy.

A major U.S. stock market index posted its biggest two-day drop on record, erasing all the gains from the previous two months; ...



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The Technical Traders

SPY Breaks Below Fibonacci Bearish Trigger Level

Courtesy of Technical Traders

Our research team wanted to share this chart with our friends and followers.  This dramatic breakdown in price over the past 4+ days has resulted in a very clear bearish trigger which was confirmed by our Adaptive Fibonacci Price Modeling system.  We believe this downside move will target the $251 level on the SPY over the next few weeks and months.

Some recent headline articles worth reading:

On January 23, 2020, we ...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Members' Corner

Threats to democracy: oligarchy, feudalism, dictatorship

 

Threats to democracy: oligarchy, feudalism, dictatorship

Courtesy of David Brin, Contrary Brin Blog 

Fascinating and important to consider, since it is probably one of the reasons why the world aristocracy is pulling its all-out putsch right now… “Trillions will be inherited over the coming decades, further widening the wealth gap,” reports the Los Angeles Times. The beneficiaries aren’t all that young themselves. From 1989 to 2016, U.S. households inherited more than $8.5 trillion. Over that time, the average age of recipients rose by a decade to 51. More ...



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Digital Currencies

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

 

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

‘We have you surrounded!’ Wit Olszewski

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

When bitcoin was trading at the dizzying heights of almost US$2...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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. Contact Ilene to learn about our affiliate and content sharing programs.