Archive for January, 2019

How Rich Is Rich?

Courtesy of ZeroHedge. View original post here.

With an ever-growing chorus of 'soak the rich' rising from the left-er of the leftists, it is becoming increasingly important to know what "rich" is – How much would you have to earn in a year in the U.S. before someone considered you rich?

Statista's Niall McCarthy has the answer. According to a recent YouGov poll, that depends heavily on you ask…

The research found that the American public considers an annual income between $90,000 and $100,000 necessary to be deemed rich. The fieldwork for the survey was carried out in September 2018 and it found that 76 percent of respondents think an annual income of $10,000 constitutes being poor.

That label gets shaken off once yearly earnings hit $30,000 with half of the population saying someone in this income category is neither rich nor poor.

Infographic: How Rich Is Rich? | Statista

You will find more infographics at Statista

While there is a sense of division as to whether a $90,000 paycheck makes someone rich of poor, a majority of 56 percent of respondents agree that a person earning $100,000 a year is rich. The survey also asked people how rich or poor they consider themselves with 64 percent saying they are neither.

According to the Department of Health and Human Services, the 2019 poverty line for a family of four in the U.S. is an income of $25,470 a year. 12.3 percent of the population, 39.7 million people, were classed as living in poverty in 2017.





Loan Fund Outflow Streak Extends To 11 Weeks As Apollo Is Forced To Pay Up For Frozen Loan

Courtesy of ZeroHedge. View original post here.

While credit spread and leveraged loan prices rebounded sharply in the past month, the pain for leveraged loan funds has continued with another $935 million in outflows in the week ended Jan. 30, extending the losing streak to 11 weeks. According to Lipper, $718 million was pulled from mutual funds and $216 million from ETFs. In total, investors have pulled $3.15 billion from the funds year-to-date.

This week’s exodus is the latest in a string of outflows for leveraged loan funds which started in mid-November, and which included four of the biggest weekly withdrawals on record. The 11 week stretch of outflows is the longest such streak since 2017 according to Bloomberg data.

While in recent years loan funds saw persistent inflows on expectation of rising interest rates, this has now changed with the Fed's tightening phase now largely seen as over and the market expecting the next move from the Fed to be a rate cut.

The leveraged loan market was slammed by four record-setting outflows in December, as existing loan prices plunged sharply to a more than two year low and some liquid names fell multiple points as the market was, on occasion, bidless. While the moderation of fund outflows from December's records  has allowed the loan market to stabilize in January, the continuous run has hamstrung the recovery. While the S&P/LSTA Leveraged Loan Index is returning 2.6 percent this month, most of the gain came in the first six sessions.

And, as Bloomberg notes, with the stabilization in prices, the capital market machine has revved back into gear. Even though the volume is slighter lower than January 2018, new loan launches hiked to $32.8 billion this month, with new money making up the bulk. CLOs, the largest buyer of loans whose purchases ground to a halt in December, have also seen new issuance come back.

Even so, some new deals struggled to attract enough buyers, forcing some banks to fund underwritten deals themselves or push syndication to 2019. In fact, as Bloomberg reported earlier today, private equity giant Apollo let some of its lenders off the hook as it agreed, or rather was forced to put up more equity to close its acquisition of…
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January Payrolls Preview: 100 Straight Months Of Job Creation

Courtesy of ZeroHedge. View original post here.

Tomorrow at 830am, the BLS is expected to announce that in January the US added 165k payrolls, a sharp drop from December's 312K, while both average hourly earnings and unemployment are expected to remain unchanged at 3.2% and 3.9%, respectively. More importantly, absent some unexpected shock, if the jobs number is positive it will represent the record 100th month of job creation.

That said, the 800,000 furloughed workers in the past month and recent hard data makes the post-shutdown jobs report more of a focus than usual.

Below, courtesy of RanSquawk are the key highlights of what Wall Street expects:

  • Non-farm Payrolls: Exp. 165k, Prev. 312k
  • Unemployment Rate: Exp. 3.9%, Prev. 3.9% (the FOMC projects unemployment will stand at 3.5% at the end of 2019, and 4.4% in the longerrun)
  • Average Earnings Y/Y: Exp. 3.2%, Prev. 3.2%
  • Average Earnings M/M: Exp. 0.3%, Prev. 0.4%
  • Average Work Week Hours: Exp. 34.5, Prev. 34.5
  • Private Payrolls: Exp. 170k, Prev. 301k
  • Manufacturing Payrolls: Exp. 17k, Prev. 32k
  • Government Payrolls: Prev. 11k
  • U6 Unemployment Rate: Prev. 7.6%
  • Labour Force Participation: Prev. 63.1%

EXPECTATIONS: The Street is expecting a slower pace of payroll additions (165k) at the February release when compared to both the 12-month average of headline nonfarm payrolls (202k for Feb 2018-Jan 2019) and the previous blowout figure of 312k. Capital Economics notes that the release will only be partly affected by the Federal shutdown as those affected who will now receive pay for the reference period will be counted as employed. As such the main impact may be felt in the private payrolls component as a result of jobs contingent on Federal contracts, alongside the unemployment rate due to employees who stayed home during the shutdown. ING expects slower payroll growth in 2019 vs. 2018 because of “fading support from the fiscal stimulus, lagged effects of higher interest rates and the strong dollar plus ongoing fears about trade protectionism at a time of weaker external demand”. These analysts also cite a nearterm lack of availability of workers to employ, as evidence by the NFIB reporting that 39% of US small businesses have vacancies that they cannot fill.…
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Tim Cook Gets Personal With Zuckerberg, Blocks Google Developers

Courtesy of ZeroHedge. View original post here.

A day after taking similar action against Facebook, Apple has unleashed developer-hell on Google by pulling important app-development tools from the internet giant for breaking the iPhone-maker's rules.

Bloomberg reports that Google employees can’t access test versions of iPhone apps they’re making, or use internal apps related to transportation scheduling and food, the people said. Security alerts are limited too, one of the people said. They asked not to be identified discussing private matters.

"We’re working with Apple to fix a temporary disruption to some of our corporate iOS apps, which we expect will be resolved soon," a spokeswoman at Alphabet Inc.’s Google said in a statement. Apple restored Facebook’s privileges on Thursday.

This comes less than 24 hours after Facebook’s app development was hobbled in a similar way in a sign that many say suggest Apple is wielding power as operator of the most-lucrative U.S. app store to push its approach to user privacy (note: Apple restored Facebook's privileges late Monday, but the social media giant is still working to get its internal apps back up and running).

Apple offers an "enterprise certificate" that helps some companies work on iPhone apps without going through the usual app review process. Facebook and Google used this to collect data on user activity for internal research.

Bloomberg notes that when this was reported earlier this week by TechCrunch, both companies stopped the activity. Apple said Facebook had broken its rules and pulled the social-media company’s certificate until Thursday. It’s now punishing Google, too.

And specifically, Google and Facebook rely on the enterprise certificate to test the iPhone versions of the apps they’re making. Without this option, some of the companies’ most important app-development work is disrupted.

“They have no problem flexing their power with us,” Paulo Andrade, a software developer who builds apps for Apple operating systems,said.

“It’s a good sign. It’s Apple drawing the line with these big companies.”

But, there may be more to this sudden show of force by Tim Cook (who has rarely missed an opportunity in the past year to hit Facebook about its privacy issues. As NBC
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Capturing carbon to fight climate change is dividing environmentalists

 

Capturing carbon to fight climate change is dividing environmentalists

Environmental activists are teaming up with fresh faces in Congress to advocate for a Green New Deal, a bundle of policies that would fight climate change while creating new jobs and reducing inequality. Not all of the activists agree on what those policies ought to be.

Some 626 environmental groups, including Greenpeace, the Center for Biological Diversity and 350, recently laid out their vision in a letter they sent to U.S. lawmakers. They warned that they “vigorously oppose” several strategies, including the use of carbon capture and storage – a process that can trap excess carbon pollution that’s already warming the Earth, and lock it away.

In our view, as a political philosopher who studies global justice and an environmental social scientist, this blanket opposition is an unfortunate mistake. Based on the need to remove carbon from the atmosphere, and the risks in relying on land sinks like forests and soils alone to take up the excess carbon, we believe that carbon capture and storage could be a powerful tool for making the climate safer and even rectifying historical climate injustices.

Global inequality

We think the U.S. and other rich countries should accelerate negative emissions research for two reasons.

First, they can afford it. Second, they have a historical responsibility as they burned a disproportionate amount of the carbon causing climate change today. Global warming is poised to hit the least-developed countries, including dozens that were colonized by these wealthier nations, the hardest.

Consider this: The entire African continent emits less carbon than the U.S., Russia or Japan.

Yet Africa is likely to experience climate change impacts sooner and more intensely than any other region. Some African regions are already experiencing warming increases at more than twice the global rate. Coastal and island nations like Bangladesh, Madagascar and the Marshall Islands face near or total destruction.

But the world’s richest nations have been slow to endorse and support the necessary research, development and governance for negative emissions technologies.

Bad track record with


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Yuan Plunges After China Caixin PMI Tumbles To 3 Year Low; Biggest Drop On Record

Courtesy of ZeroHedge. View original post here.

One day after China’s official manufacturing PMI number printed in contraction territory for the second month in a row, moments ago the Caixin/Markit China manufacturing PMI confirmed that China’s manufacturing sector is effectively in recession, when it tumbled from 49.7 in December to 48.3 (from 51.5 a year ago), its second consecutive month in contraction territory, and missing estimates of a 49.6 print. This was the lowest print in the series of the revised index which came online in March of 2016.

The 1.4 post slump may not sound like a lot, but it was the biggest drop in the series’ 3 year history.

Among the key indicators, output fell to 48.1 from 50.3 in Dec, the lowest reading since June 2016 and reverses the recent expansion trend; Meanwhile, new orders also fell vs prior month, sliding to the lowest reading since Sept. 2015.

In the monthly report, Caixin said that the latest survey data signaled subdued overall operating conditions in the Chinese manufacturing sector at the start of 2019. Production and total new work were both slightly down at the start of the year, despite a renewed increase in export orders. Relatively muted demand conditions underpinned the first fall in purchasing activity for 20 months, while firms also registered lower inventories of both purchased and finished items.

There was a silver lining in the employment and confidence indicators: workforce numbers at manufacturing firms in China fell only slightly in January. Furthermore, the rate of reduction was the slowest seen for nine months. At the same time, companies reported a further modest increase in the amount of outstanding orders. The softer fall in employment was accompanied by a slight improvement in business confidence. Notably, sentiment regarding the 12-month business outlook was at its most positive since May 2018. Some firms anticipate new products and planned company expansions to boost output over the next year.

That said there was no mistaking what was an almost uniformly negative print, as manufacturers also adopted a cautious approach to inventories, as firms reduced their holdings of both stocks of purchases and finished items at the start of 2019. After broadly stabilizing at the end of 2018, average suppliers’ delivery times also increased across China’s manufacturing sector in January. 

More concerning is that deflation appears to be re-emerging, because…
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More Alarm Bells As 440 Chinese Companies Issue Profit Warnings In One Day

Courtesy of ZeroHedge. View original post here.

Alarm bells are ringing in China as Beijing continues its relentless crackdown on shadow banking.

Hundreds of Chinese companies issued profit warnings, telling their investors that earnings for the full year were going to be below expectations, according to Bloomberg. No less than 440 zombie companies disclosed the bad news on Wednesday, still one day before the deadline for such disclosures. The companies cited the country's economic slowdown (which is also catalyzing sales of Chinese-held U.S. real estate), as well as recent accounting changes that followed a $2.3 trillion equity market selloff last year. 

The change is stunning: out of more than 2400 mainland listed companies, 373 have said they're going to post a loss – and what's more concerning, 86% of those companies were profitable in 2017.

There may be more bad news on the way: Thursday is the official deadline for companies to disclose whether or not they expect "substantial changes" in their financial results, so expect even more guidance cuts.

Meanwhile, fears about China's economy, and corporate profitability in a time of record bankruptcies now that the government is no longer backstopping every corporation, has become a collective concern among market participants.

Lv Changshun, a money manager at Beijing Dajun Zhimeng Investment Management Co., told Bloomberg: "Private companies are particularly vulnerable to the economic downturn. The deleveraging campaign and the deterioration of their corporate health is normal for any economy that is shifting gears and slowing down."

Among those issuing the concerning guidance are companies like Ford's biggest partner in China, Changan which warned that 2018 profit was likely going to tumble 93%. China Life, a massive insurer by market share in China, said its net income could be lower by 70%. 

Beijing HualuBaina Film & TV Co., cloud-storage operator Gosun Holding Co. and First Tractor Co. also all said they'd post billions of yuan in losses for the year after having profitable 2017s. Anhui Shengyun Environment Protection Group Co. and Anhui Ankai Automobile Co. disclosed that their net losses would be twice as big as they were in 2017. Guangdong Homa Appliances Co. was halted limit down during Wednesday trading after guiding…
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Sharpening Pencils On Global Valuations: “Cheap For A Reason”

Courtesy of ZeroHedge. View original post here.

Via DataTrekResearch.com,

Whenever I hear the phrase “sharpening a pencil” to do some detailed analytical work, I think about the Eberhard Faber Blackwing 602 – the most famous pencil in the world. Developed during the Great Depression as a premium writing instrument, the Blackwing became the preferred daily instrument for everyone from John Steinbeck to Quincy Jones, Truman Capote to Stephen Sondheim. Production stopped in 1998, and vintage examples go on eBay for +$30 apiece. If you want to delve into pencil-geekdom, there is a link at the end of this section with more information.

Today we’ll sharpen only the proverbial pencil on the question of global equity valuations. After last year’s parlous performance in both Emerging Markets (down 19%) and EAFE (non-US developed equities, down 15%), how do the world’s stock markets shape up in terms of relative valuation to US equities?

Three points on this topic:

#1. The rest of the world’s equities markets do, in fact, trade at a significant discount to US stocks just now. The data from MSCI (link here):

  • US stocks trade for 15.4x forward earnings; non-US stocks trade for 12.0x the same measure.
  • Breaking down the rest-of-world valuations, EAFE (developed Europe, Asia, Far East) stocks trade for 12.4x forward earnings. Within that region, Europe (11.8x) and Japan (11.7x) show similar forward valuations and are slightly cheaper than the rest of the EAFE index.
  • Emerging Markets trade for 11.0x forward earnings, but the regional variations are wider than EAFE: Asia (11.3x), Eastern Europe (6.3x), and Latin America (12.6x).

Summary: non-US stocks trade for a 19% (EAFE) to 29% (Emerging Markets) discount to US equities.

#2. The disparity between US and non-US stocks has been growing since the Great Financial Crisis.

  • Both US and non-US equities bottomed at 14x forward earnings in 2009.
  • The valuation gap between these two asset classes peaked in late 2017/early 2018 at just over 4 points. At that time “rest-of-world” equities traded for 14x forward earnings while US stocks sported an 18.5x multiple.


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The PhilStockWorld.com Weekly Trading Webinar – 01-30-19

 

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here.

 

Major Topics:

00:01:31 – Checking on the Markets
00:02:31 – DJI | BA
00:06:03 – APPL
00:09:30 – Money Talk Portfolio
00:14:17 – IBM
00:16:18 – ALK
00:18:04 – CAT | TZA
00:32:00 – GE
00:35:15 – MJ
00:48:40 – MU
00:58:24 – Market Indexes | FED
01:03:31 – APPL
01:20:21 – Trade Techniques
01:40:53 – CMG
01:46:00 – MTP | LTP
01:51:00 – VOD
01:54:36 – AT&T
 

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. Subscribe to our YouTube channel and view past webinars here. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – click here to join us at PSW!





Tim Cook Wields Apple’s App-Store Power: Blocks Google Developers, Gets Personal With Zuckerberg

Courtesy of ZeroHedge. View original post here.

A day after taking similar action against Facebook, Apple has unleashed developer-hell on Google by pulling important app-development tools from the internet giant for breaking the iPhone-maker’s rules.

Bloomberg reports that Google employees can’t access test versions of iPhone apps they’re making, or use internal apps related to transportation scheduling and food, the people said. Security alerts are limited too, one of the people said. They asked not to be identified discussing private matters.

“We’re working with Apple to fix a temporary disruption to some of our corporate iOS apps, which we expect will be resolved soon,” a spokeswoman at Alphabet Inc.’s Google said in a statement. Apple restored Facebook’s privileges on Thursday.

This comes less than 24 hours after Facebook’s app development was hobbled in a similar way in a sign that many say suggest Apple is wielding power as operator of the most-lucrative U.S. app store to push its approach to user privacy.

Apple offers an “enterprise certificate” that helps some companies work on iPhone apps without going through the usual app review process. Facebook and Google used this to collect data on user activity for internal research.

Bloomberg notes that when this was reported earlier this week by TechCrunch, both companies stopped the activity. Apple said Facebook had broken its rules and pulled the social-media company’s certificate until Thursday. It’s now punishing Google, too.

And specifically, Google and Facebook rely on the enterprise certificate to test the iPhone versions of the apps they’re making. Without this option, some of the companies’ most important app-development work is disrupted.

“They have no problem flexing their power with us,” Paulo Andrade, a software developer who builds apps for Apple operating systems,said.

“It’s a good sign. It’s Apple drawing the line with these big companies.”

But, there may be more to this sudden show of force by Tim Cook (who has rarely missed an opportunity in the past year to hit Facebook about its privacy issues. As NBC News reports, some observers of the two companies believe the fight has become personal between Zuckerberg, the 34-year-old from New York who founded Facebook, and Cook, 58, an Alabama native who was a largely anonymous tech executive until he took over Apple in 2011.

“The heart of this is ego. These two hate each other,”


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Phil's Favorites

How Does the Stock Market Bottom?

 

How Does the Stock Market Bottom?

Courtesy of 

Despite the recent selloff, things are still relatively fine. I know nobody wants to hear this right now, but the S&P 500 is still up double digits over the last year and 36% over the last three years. What has people shook, understandably, is the speed of this decline.

Depending on where stocks close today, we could be looking at a 10% haircut in just five sessions. Over the last 20 years, this only happened during the Yuan devaluation in 2015, the Eurozone crisis in 2011, the GFC (global financial crisis) in ’08 and ’09, and the dotcom bubble in ’00, &rsqu...



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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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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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Chart School

Oil cycle leads the stock cycle

Courtesy of Read the Ticker

Sure correlation is not causation, but this chart should be known by you.

We all know the world economy was waiting for a pin to prick the 'everything bubble', but no one had any idea of what the pin would look like.

Hence this is why the story of the black swan is so relevant.






There is massive debt behind the record high stock markets, there so much debt the political will required to allow central banks to print trillions to cover losses will likely effect elections. The point is printing money to cover billions is unlikely to upset anyone, however printing trillions will. In 2007 it was billions, in 202X it ...

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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.