Archive for 2017

Bill Introduced Allowing Cancellation Of Over $1 Trillion In Student Debt Through Bankruptcy

Courtesy of ZeroHedge. View original post here.

Courtesy of Sov Man’s Simon Black, here are several of the most bizarre legal anecdotes to take place in the US and around the globe over the past week, staring with a bill currently making its way through Congress, which is seeking to wipe out over $1 trillion in student loans.

* * *

A Convenient Way to Cancel a Trillion Dollars of Debt

What happened:

Bankruptcy is like the ultimate get out of jail free card. You just get to wipe the slate clean, and even though your credit score and ability to borrow might suffer, you are free from all your previous obligations. But student loans have long been exempted from being erased by bankruptcy.

If this bill passes Congress however, hundreds of billions of currently delinquent student loans, potentially as much as $1.4 trillion worth of student loan debt…

…. would be eligible to be wiped out by declaring bankruptcy.

As the number of those defaulting on their student loans grows, this provision could be widely used by those seeking to escape their college debt.

What this means:

The government has helped raise the costs of college and basically scam people into accepting their loans, so it is easy to be sympathetic towards those with student loans. But still, it is messed up to allow people to discharge debts they agreed to pay.

There might be a little piece in most of us that doesn’t mind seeing what we consider a predatory lender get screwed and be left with the bill.

But apart from the overall immorality of failing to pay your debts, since the government owns most of the student loans, it would basically be the taxpayers getting screwed over once again. What a surprise.

Basically if massive amounts of debt were erased, it would be another bubble bursting, which would send the U.S. into a fresh round of economic instability.

The economy would spiral downward in relation to how many people took advantage of their get out of jail free card.

* * *

Criminal Consequences for Filming on Private Property?

What happened:

If you sneak beer into a football stadium, you have explicitly broken a stadium rule. You might expect to be kicked off their private property for this transgression. But what if instead you got a year in


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Relief Rally Approaches Resistance

Courtesy of Declan.

Wednesday’s gap created a significant reversal, stalling the mini-rallies kicked off in April. Thursday and Friday generated some come back against last week’s loss, bringing many of the markets back to the highs of the gap down.

The S&P is in a position where shorts may look to attack the gap. Friday’s spike high put itself inside the gap, recovering the 50-day MA in the process. This gain was supported by a ‘buy’ trigger in On-Balance-Volume. While shorts might have the better risk:reward option, a move above 2,389 opens up for a retest of 2,405.

The one index which struggled with the recovery rally was the Russell 2000. The break from the ‘bear flag’ has struggled to make it back to the top of Wednesday’s high, or even the 50-day MA. Technicals are weak and the relative performance of Small Caps against Tech indices has accelerated lower.  The 6-month picture is range bound which keeps the broader outlook as neutral, but this will change if 1,345 is breached to the downside.

The Nasdaq was able to make back more of Wednesday’s lost ground, but left itself stalled at its 50-day MA. Volume was lighter than the S&P which suggests buying strength is weakening. The index is offering itself as another aggressive shorting opportunity with a stop above 6,107.  Technicals haven’t changed with the MACD trigger ‘sell’ still in play.

The Semiconductor Index was another recovery which looks to have run its course by Friday’s close. However, it doesn’t have a weak technical picture and a breakout in relative performance against the Nasdaq 100 is only a short hop away.

As for longer time intervals. The relationship between Consumer Staples and Discretionaries still has room for upside before the ratio reaches resistance and/or technicals become overbought.  Those on a buy-and-hold strategy have not got a clear ‘sell’ signal yet.

The relationship between the Dow Index and Dow Transports has also been very rocky throughout 2017. Transports have struggled to…
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Ron Paul Interviews Nassim Taleb: “We’ll Destroy What Needs To Be Destroyed”

Courtesy of ZeroHedge. View original post here.

Why do career bureaucrats in Washington keep pushing military interventionism and irresponsible monetary policies? Because they face zero risk from the consequences of their decisions, said Nassim Nicholas Taleb during an appearance on the Liberty Report with former Texas Congressman Dr. Ron Paul and his co-host Daniel McAdams.

The conversation focused on some of the themes from Taleb’s upcoming book, “Skin in the Game,” which will be out later this year, including how the homogenous intellectual elite who shape American foreign policy have managed to stay in power despite decades of persistently advancing foolish interventionist policies.

Taleb even offered this colorful comparison:

“Let’s imagine you have pilots who were absolutely unharmed by crashes. People are stupid enough to put them back on planes. Then they would crash a plane, kill all passenger and continue. Well, that system would lead to complete systemic destruction.”

“And that’s what we have now with our foreign policy.”

Since World War II, the U.S. has embarked on military interventions in Vietnam, Iraq, Libya, Syria that have led to hundreds of thousands of unnecessary deaths. Even President Trump, who at one point promised an “America First” foreign policy of nonintervention, instead launched 59 tomahawk missiles at Syria based on unsubstantiated intelligence reports that the Syrian Army used chemical weapons against civilians in the country’s north.

Just how homogenous is the U.S. foreign policy elite? Remember that through the end of Hillary Clinton’s tenure as Secretary of State in 2013, either a Bush or a Clinton held one of the three highest offices in the U.S.  – the presidency, vice presidency or secretary of state – for eight straight terms.

Another reason why interventionist foreign policy often fails is because federal-government bureaucrats and other outsiders don’t have “skin in the game” – an entrenched interest, financial or of another sort, in the conflict -  and therefore, are incapable of achieving a comprehensive understanding of the situation. That goes for both elected leaders, beauracrats, and the media.

“We have today so many people sitting in the New York Times Washington office, in an air conditioned office, who can dictate foreign policy with zero risk.”

Dr. Paul seized the opportunity to criticize the “Chickenhawks” who advocate interventionism, but avoided serving


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Collecting $1 Of Student Debt Costs American Taxpayers $38

Courtesy of ZeroHedge. View original post here.

Authored by Jim Quinn via The Burning Platform blog, 

Your government at work with your tax dollars.

Loan billions to brain dead teenagers so they can pretend to get smart in college. When they fail miserably due to the fact after twelve years of public school government indoctrination they can’t read, write or add, the government pays slimy collection agencies to get these unemployed dolts to pay up.

Not only has $600 billion of your tax dollars been pissed down the drain on loans to dumbasses, you now get to spend billions trying to collect the billions that will never be collected.

College

Clusterfuck is too kind of a word to use for this program Obama initiated to pump money into the economy and fake the true unemployment rate.

I bet you can’t wait until the government has full control of your healthcare.

While Congress originally approved the IDR plans in the 1990s and 2000s, Obama used executive actions, starting in 2010, to extend the most-generous terms to millions of borrowers which is precisely when loan volumes under the program started to skyrocket.

Student Loans

Congrats, taxpayers…you’ll soon have the privilege of repaying $137 billion worth of debt spent by entitled millennials on binge-drinking trips Cancun and drugs…life, after all, is just a little bit better when we spread the wealth around…

As Bloomberg’s Shahien Nasiripour reports, the federal government has, in recent years, paid debt collectors close to $1 billion annually to help distressed borrowers climb out of default and scrounge up regular monthly payments. New government figures suggest much of that money may have been wasted.

Nearly half of defaulted student-loan borrowers who worked with debt collectors to return to good standing on their loans defaulted again within three years, according to an analysis by the Consumer Financial Protection Bureau. For their work, debt collectors receive up to $1,710 in payment from the U.S. Department of Education each time a borrower makes good on soured debt through a process known as rehabilitation. They keep those funds even if borrowers subsequently default again, contracts show. The department has earmarked more than $4.2 billion for payments to its debt collectors since the start of the 2013 fiscal year,


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EU Shocked to Discover UK May Walk Away With No Deal

Courtesy of Mish.

The EU now faces the shocking discovery that the UK is not Greece, the EU does not hold all the cards, and the UK is able and willing to simply walk away from ever-escalating EU demands.

Bloomberg reports U.K. Threatens to Quit Brexit Talks If It Faces Massive Bill.

The U.K. will quit Brexit talks unless the European Union drops its demands of a divorce payment of 100 billion euros ($112 billion), Brexit Secretary David Davis said.

Britain’s negotiations on leaving the EU would otherwise be plunged into “chaos,” and even a 1 billion-pound settlement would be “a lot of money,” Davis said in an interview published in the Sunday Times.

The size of Britain’s exit bill, and which types of negotiations can begin before it has been agreed, has been a source of debate for weeks.

European Commission President Jean-Claude Juncker has said the U.K. will have to pay about 50 billion pounds, while Luxembourg’s Prime Minister Xavier Bettel has signaled a figure between 40 billion euros and 60 billion euros. The Financial Times estimated the cost could balloon to 100 billion euros, while a study by the Institute of Chartered Accountants in England and Wales put the cost at as little as 5 billion pounds ($6.5 billion).

“We don’t need to just look like we can walk away, we need to be able to walk away,” Davis said. “Under the circumstances, if that was necessary, we would be in a position to do it.”

Brexit Talks Could Collapse Over UK Divorce Bill

The Guardian reports Brexit talks could collapse over UK divorce bill, says EU negotiator

The EU’s chief Brexit negotiator, Michel Barnier, fears the refusal of member states to soften their demands over the size of Britain’s “divorce bill” could lead to a collapse in talks and the UK crashing out of the EU without a deal, minutes of a meeting of the European commission reveal.

Barnier has told the commission president, Jean-Claude Juncker, and other senior officials that the stakes are so high because Berlin and Paris are refusing to pay more to cover the UK’s departure, while those governments who receive the most from EU funds are opposed to any cuts in


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We Now Know “Who Hit The Brakes” As Loan Creation Crashes To Six Year Low

Courtesy of ZeroHedge. View original post here.

The wheels are falling off the US bank loan market.

After we first showed in early March the steep drop in bank loan creation for both Commercial and Industrial, auto and total loans – all traditionally leading indicators to economic contraction and recession as business and consumers halt spending, even with borrowed money – numerous other analysts and pundits have attempted to explain, and justify why one should not be particularly concerned about this tumbling indicator. Most notable among them Goldman, who in late March “explained” that there was nothing ominous about the crash in loan creation, and instead it was just a function of a base effect, and a shift from loan to corporate bond issuance.

Two months later we can confirm that not only was Goldman wrong, but so are all the Pollyannas who assert there is nothing troubling about the ongoing collapse in loan creation.

According to the latest Fed data, the all-important C&I loan growth contraction has not only continued, but over the past two months, another 50% has been chopped off, and what in early March was a 4.0% annual growth is now barely positive, down to just 2.0%, and set to turn negative in just a few weeks. This was the lowest growth rate since May 2011, right around the time the Fed was about to launch QE2.

At the same time, total loan growth has likewise continued to decline, and as of the second week of May was down to 3.8%, the weakest overall loan creation in three years.

Another loan category that has seen a dramatic slowdown since last September, when Ford’s CEO aptly predicted that “sales have reached a plateau.”  Since then auto loan growth has been slashed by more than 50% and at this runrate, is set to turn negative some time in late 2017.  Needless to say, that would wreak even further havoc on the US car market.

For a while, despite numerous attempts at explanation, there was no definitive theory why this dramatic slowdown was taking place. It even prompted the WSJ to inquire “who hit the brakes?”

Well, after the latest Fed Senior Loan Officer Survey, we may have the answer.

First, recall that in


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Commodities Bust Hits Farm Lenders, Delinquencies Surge 225%

Courtesy of ZeroHedge. View original post here.

Submitted by Wolf Richter via WolfStreet.com,

Just as the deflating Farmland bubble leaves its marks.

When it comes to agricultural debt, the numbers aren’t huge enough to take down the global financial system. But this shows how much pain the commodities rout is producing in the farm belt just when the farmland asset bubble that took three decades to create is deflating, and what specialized lenders and the agricultural enterprises they serve – some of them quite large – are currently struggling with in terms of delinquencies.

This is what delinquencies on loans for agricultural production – not including loans for farmland, which we’ll get to in a moment – look like:

From Q4 2014 to Q1 2017, delinquencies have soared by 225% to $1.4 billion, according to the Board of Governors of the Federal Reserve, which just released its report on delinquencies and charge-offs at all banks. This is the highest amount since Q1 2011, as delinquencies were falling after the Financial Crisis. That amount was first breached in Q4 2009.

The delinquency rate rose to 1.5%, the highest since Q3 2012. On the way up, going into the Financial Crisis, delinquencies breached that rate in Q1 2009.

These were the loans associated with agricultural production. In terms of loans associated with farmland, delinquencies have soared by 80% from Q3 2015 to Q1 2017, reaching $2.15 billion:

Farmland values have surged for three decades but are now in decline in many parts of the US. For example in the district of the Federal Reserve of Chicago (Illinois, Indiana, Iowa, Michigan, and Wisconsin), prices soared since 1986, in some years skyrocketing well into the double-digits, including 22% in 2011, and nearly tripling since 2004. It was the Great Farmland Bubble that had become favorite playground for hedge funds. But starting in 2014, prices have headed south.

This chart from the Chicago Fed’s AgLetter shows farmland prices in its district in two forms, adjusted for inflation (green line) and not adjusted for inflation (blue line):

Adjusted for inflation, farmland prices in the district fell 9.5% over the past three years. The exception is Wisconsin:

  • Illinois -11%
  • Indiana -7%
  • Michigan -12%
  • Iowa (since their 2012 peak) -15%
  • Wisconsin +4%

The Chicago Fed adds this about


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Speculators Have Never Been This Short VIX (As Volatility Hits Record Low)

Courtesy of ZeroHedge. View original post here.

This is not how it’s supposed to work…

“Buy low, Sell high” they say. But in the new normal of risk-parity strategies, momentum igniters, and trend-following CTA flows, its “Buy high, buy more higher… and never sell until you’re forced to liquidate”

Amid the longest period of low volatility complacency in US stock market history, which saw realized volatility and VIX (expectations for future volatility) collapse to near-record lows…

Speculators decided that this was the perfect time to add to speculative short VIX positions…

Having twice surged to new record highs (in September 2016 and Jan 2017), VIX speculators have now pushed their net short position (implicitly bullish for stocks) to its largest in contract history.

What is even more intriguing is speculators added to net dollar longs (as the dollar dumped)…

And dumped Eurodollar shorts (folding on rate-hike bets)…





Predictions Are A Fool’s Errand – Some Notable Examples

By Investing Caffeine. Originally published at ValueWalk.

Making bold predictions is a fool’s errand. I think Yogi Berra summed it up best when he spoke about the challenges of making predictions:

“It’s tough to make predictions, especially about the future.”

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While making predictions might seem like a pleasurable endeavor, the reality is nobody has been able to consistently predict the future (remember the 2012 Mayan Doomsday?), besides perhaps palm readers and Nostradamus. The typical observed pattern consists of a group of well-known forecasters bunched in a herd coupled with a few extreme outliers who try to make a big splash and draw attention to themselves. Due to the law of large numbers, a few of these extreme outlier forecasters eventually strike gold and become Wall Street darlings…until their next forecasts fail miserably.

Like a broken clock, these radical forecasters can be right twice per day but are wrong most of the time. Here are a few examples:

Peter Schiff: The former stockbroker and President of Euro Pacific Capital has been peddling doom for decades (see Emperor Schiff Has No Clothes). You can get a sense of his impartial perspective via Schiff’s reading list (The Real Crash: America’s Coming Bankruptcy, Financial Armageddon, Conquer the Crash, Crash Proof – America’s Great Depression, The Biggest Con: How the Government is Fleecing You, Manias Panics and Crashes, Meltdown, Greenspan’s Bubbles, The Dollar Crisis, America’s Bubble Economy, and other doom-instilled titles.

Meredith Whitney: She made an incredible bearish call on Citigroup Inc. (C) during the fall of 2007, alongside her accurate call of Citi’s dividend suspension. Unfortunately, her subsequent bearish calls on the municipal market and the stock market were completely wrong (see also Meredith
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The Perfect Storm Hits Used-Car Values: The Foundation Of The Auto Industry Is Faltering

Courtesy of ZeroHedge. View original post here.

Submitted by Daniel Ruiz via Blinders Off blog,

The Perfect Storm

The following topics all have their part in fueling the storm to come:

1) Trade Cycles and How They Affect New Vehicle Sales Velocity

Used car values determine in large the velocity of new car sales. Most new car transactions involve a trade. The level of equity in the trade oftentimes determines whether a new vehicle transaction will be successful or not. Inclining used car values lead to faster trade cycles while declining used car values lead to slower trade cycles. Dismal new car sales volume during our last recession created a shortage of used cars. This created a large supply and demand imbalance that made used car values soar from 2009 till 2014 as seen on this chart.

This time period was extremely favorable for new car sales because consumers found themselves in an equitable position on their vehicles in a very short period of time. To illustrate this, consider this chart of a 60-month loan.

The black line represents the principal balance owed. An optimal trade cycle occurs when the principal balance owed on a loan intersects with the market value of the vehicle. The bullish used car cycle for passenger cars ended in 2014 as a result of extreme pricing pressure from new car leases. Since 2014, used passenger car values have corrected and continue to underperform. This underperformance is largely due to the effects that falling used car values have had on new car sales velocity. A longer trade cycle results in a slower velocity of new car sales. Today, we’ve seen data suggesting that used car values can drop as much as 50% from current levels. Refer to the above loan chart and consider what a drop that large would mean for new car sales velocity in terms of trade cycles.

2) Increased Dependency on Leasing

Used car values also determine the effectiveness of leasing. The most significant component of a lease is the gap between the residual value and the sale price of the vehicle. A residual value is little more than a guess at the future value of a vehicle. Manufacturers and third party companies like ALG use current and historic used car value data to


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Phil's Favorites

Oil companies are thinking about a low-carbon future, but aren't making big investments in it yet

 

Oil companies are thinking about a low-carbon future, but aren't making big investments in it yet

Oil pump jacks in Williston, N.D. AP Photo/Eric Gay

Courtesy of Lewis Fulton, University of California, Davis and Daniel Sperling, University of California, Davis

The global oil industry stands at a crossroads. Corporate leaders are weighing how closely to stay wedded to their legacy business ...



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Zero Hedge

EU Reportedly Pushes Decision On Brexit Delay Until Friday

Courtesy of ZeroHedge View original post here.

Amid rumors that UK PM Boris Johnson might capitulate and agree to delay Brexit Day until the end of January, reports have surfaced claiming that the EU won't release its decision on postponement until Friday.

  • EU DECISION ON BREXIT DELAY WILL PROBABLY COME FRIDAY: OFFICIALS

Sources from within No. 10 Downing Street have reportedly been talking with reporters all day, claiming that if there is an extension, the Johnson government will opt to push for an election, and that the conservatives will campaign on their plan.

...



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Kimble Charting Solutions

S&P Needs This Key Indicator To Experience A Breakout!

Courtesy of Chris Kimble

Is a leading Tech sector about to send the broad market a key message? In our opinion, yes!

This chart looks at the Semiconductor/S&P ratio over the past couple of years.

When the ratio peaked around March of last year at (1), numerous indices in the states (NYSE, Mid-Caps, Small Caps) and around the world (EEM & EFA) started to create a series of lower highs.

The SMH/SPY ratio is again testing the highs of early 2018 at (2).

Many indices in the states and around the world, need this ratio to continue to move higher/experience if the...



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Insider Scoop

A Peek Into The Markets: US Stock Futures Down; Crude Oil Falls 1%

Courtesy of Benzinga

Pre-open movers

U.S. stock futures traded lower in early pre-market trade. The FHFA house price index for August will be released at 9:00 a.m. ET.

Futures for the Dow Jones Industrial Average dropped 27 points to 26,736 while the Standard & Poor’s 500 index futures traded fell 2.75 points to 2,991.75. Futures for the Nasdaq 100 index fell 5.25 points to 7,853.50.

...



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Digital Currencies

Blockchain voting is vulnerable to hackers, software glitches and bad ID photos - among other problems

 

Blockchain voting is vulnerable to hackers, software glitches and bad ID photos – among other problems

How secure is online voting with blockchain technology? WhiteDragon/Shutterstock.com

Courtesy of Nir Kshetri, University of North Carolina – Greensboro

A developing technology called “blockchain” has gotten attention from election officials, startups and even Democratic presidential candidate Andrew Yang as a ...



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Lee's Free Thinking

Repo Market Bank Regulations and the Slings And Arrows of Outrageous Leverage

 

Repo Market Bank Regulations and the Slings And Arrows of Outrageous Leverage

Courtesy of 

Are repo market regulations really behind the money market’s problems? That’s what bankers and their hired mouthpieces are saying.

So I need to get a few things off my chest about this notion that post financial crash Dodd-Frank bank regulations are the cause of the current repo market problems.

It’s total bullsh*t. The bankers and their superleveraged hed...



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The Technical Traders

Daily Market Forecast and Trading Patterns

Courtesy of Technical Traders

CLICK HERE TO GET REAL TIME TRADE ALERTS!

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Chart School

Gold Stocks Review

Courtesy of Read the Ticker

Gold stocks are swinging back forth between the range, and a break out swing higher is due. Gold stocks are holding a near perfect Wyckoff accumulation pattern. All should get ready to play this sector. Yet we must recognize that gold stocks are a one of the most crazy rides at the stock market fair, so play very carefully.

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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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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:

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