Archive for May, 2019

Nearly One-Quarter Of Americans Worry About Money ‘All Of The Time’

Courtesy of ZeroHedge. View original post here.

It’s a question that the financial press – not to mention millions of struggling Americans – have returned to time and time again (recently, it even received its own Vox explainer): If we are truly in the middle of an economic boom, then how come so many Americans, even members of the vaunted middle class, feel like they’re barely treading water?

According to the Fed, roughly 40% of Americans couldn’t cover an emergency $400 expense. Wage growth has been stagnant for decades. Meanwhile, our monetary policy makers point to a lack of inflation in the economy as an excuse for keeping interest rates on hold, even as the man on the street, and even a growing number of economists, contend that prices have been climbing much more quickly than the official data let on.

And we’re not just talking about the obvious factors like rising tuition, rent and health-care costs. It increasingly appears that the central bank is underestimating food inflation, even as the prices of many agricultural commodities remain in a slump (of course, Trump’s trade war isn’t helping).

To the growing list of distressing data points, we can now add one more: Gallup has published a poll showing that roughly 45% of Americans would rate their financial situation as “fair” or “poor” – and that a staggering 70% expected they would be financially better off. And while two-thirds of Americans say they have enough money to live comfortably, another one-third do not. But even more concerning is the 25% of respondents who say they’re constantly worried about not having enough money to cover their household expenses. Roughly the same number said they’re only just making ends meet.

In a ranking of Americans’ financial anxieties, the overwhelming majority of respondents said they’re at least a little worried about being able to afford health care costs and having enough money for retirement.

Health Care

Gallup synthesizes the polling data into what it calls a “Personal Financial Worry” index. This year, 22% of respondents said they were worried about six or seven of the seven items, qualifying them for the “highly worried” category. Another 24% worry about three to five items and are classified as “moderately worried.” The remaining 55% said they have few financial worries, while 30%
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Trade Wars: A Real-Life Game Of Thrones

Courtesy of Bruce Yandle via The American Institute for Economic Research

It’s ironic, to say the least, that the Chinese government chose to deny a national broadcast of “Game of Thrones”’ last installment recently, signaling to both its own people and to the United States that the ongoing trade war is far from over.

After all, Mr. Trump’s much cherished trade wars are a game where one powerful leader confronts another – a game of thrones, so to speak, where skirmishes and battles occur and the innocent become victims in an inescapable field of combat.

Unlike marvelously created made-for-television episodes where someone usually emerges victorious, in trade wars, everyone loses.

Those Chinese who looked forward to seeing the final episode may have instead seen some of the last few weeks’ televised propaganda and concluded that the United States is not to be trusted. At the same time, Americans – Kansas grain farmers who previously shipped crops to China; South Carolina auto workers who built China-bound BMWs, Volvos, and Hondas; or ordinary U.S. Walmart shoppers paying slightly higher prices – are not doing quite as well as they were before Mr. Trump’s game of thrones started.

Of course, we’ve all heard the justifications: China has not played by the rules, its enforcement of intellectual property rights leaves much to be desired, and its government-owned enterprises are subsidized unfairly. But we must also recognize that the “victimized” American businesses who still chose to do business in China did so voluntarily. In spite of its well-known imperfections, they saw China’s marketplace as attractive and profitable.

Of course, it would be great if we could compel China to improve its practices without subjecting American workers and consumers to friendly fire. And we might all wish to call Camelot home. The situation is much like when a landowner buys a fine home at a discount next to an industrial plant and then brings suit to force a clean-up. One cannot voluntarily come to the nuisance and then expect a court of law to provide a windfall. But it doesn’t hurt to try.

Those who think that the ongoing trade wars with China and other countries are making America great should look closely at what is happening to U.S. industrial production, which has fallen for three…
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As Quant Funds Shutter, Stevie Cohen Doubles Down

Courtesy of ZeroHedge. View original post here.

It’s not just humans who have no idea how to trade this market: math PhD’s are just as clueless, and as a result quants are having a deja vu of December when they suffered jarring losses in a short period of time, just like their human peers.

For evidence, look no further than HBK Capital Management, which is closing its quant unit, adding to the recent pile up of hedge funds that wagered on algorithmic trading… poorly.

According to Bloomberg, the Dallas-based firm which manages a total of $8 billion, is liquidating a more than $400 million quant fund and returning capital to investors, based on a statement Friday. HBK is also cutting its allocation to a statistical arb fund. The quant strategy was one of seven that HBK employed, alongside corporate credit, emerging markets, event-driven equities, structured credit, developed markets fixed income and volatility.

“HBK’s decision was prompted by a reevaluation of its equity statistical arbitrage effort, which performed exceptionally well through 2014 but less well in recent periods,” according to the statement from the $10 billion firm. “Although recent performance compared favorably with many similar funds, it did not meet HBK’s return objectives.”

HBK is the latest fund to fall amid hard times, struggling to make money amid bouts of market volatility. Investors yanked $8 billion from quant funds in the first four months of this year, according to data from eVestment. That’s on top of the $19 billion they pulled in 2018.

Even iconic investors such as billionaire Cliff Asness who manages one of the world’s largest funds, has faced losses and redemptions, admitting earlier this month that quant stock selection has been “terrible.” Amplitude Capital, which lost money for two straight years and saw investor withdrawals, is returning outside money. And BlueMountain Capital Management is liquidating its $1 billion computer-driven portfolio and refocusing on human-run investing.

One of the main reasons for the quant underperformance: the nature of stock gyrations. As Bloomberg explained, risk appetite and economic growth expectations haven’t been strong enough to help revive a factor like value, which tends to be made up of cheaper and thus riskier equities. Others, like quality and low-volatility, have looked out of tune with the new year rally, even after they became expensive thanks to their haven appeal in late 2018.

Even the momentum factor,…
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Saudi King Urges Global Coalition To ”Use All Means To Stop Iran” At Emergency Summit

Courtesy of ZeroHedge. View original post here.

Perhaps sensing that the US “maximum pressure” campaign against Iran is fast deflating, with even ultra-Hawk John Bolton late this week saying American military build-up had successfully “deterred” imminent Iran threats – suggesting the crisis has been averted – the Saudis are now going on the offensive

Image source: AP via Al Jazeera

Saudi Arabia’s aging King Salman went on an anti-Iran tirade during an emergency meeting of Arab leaders hosted in Mecca on Thursday, saying the Shia country is the greatest threat to global security for the past four decades. He also echoed past US and Israeli charges that Tehran is currently developing nuclear and ballistic missiles in order to threaten its neighbors and extend its influence over the region. 

He said Iran’s leaders were “harboring global and regional terrorist entities and threatening international waterways.” He called for “using all means to stop the Iranian regime” from its regional “interference”. Iran for its part rejected these as “baseless accusations” and has denied it had any role in a spate of recent “sabotage” attacks in the Gulf region. 

The king further condemned Iran’s tactics to disrupt maritime trade and global oil supplies in “glaring violation of UN treaties” following Riyadh’s blaming Iranian operatives for using underwater mines to attack and “sabotage” four tankers near the Strait of Hormuz weeks ago, two of which were Saudi flagged. 

The Iranian regime has been interfering in other countries’ affairs, developing their nuclear programs and threatening international navigation,” King Salman said during his speech, according to a translation by Saudi-owned Al-Arabiya.

Iran has been “supporting terrorism, undermining stability, and looking to expand its influence over the past four decades,” Saudi Arabia’s King Salman said at the GCC Summit in #Mecca. https://t.co/8TMXsarPPK pic.twitter.com/GdQ20I64r2

— Al Arabiya English (@AlArabiya_Eng) May 30, 2019

The Saudis are attempting to build a strong consensus of Arab states which will stand aggressively against Iran and its allies in the region; however, these efforts could be crippled by the ongoing inter-GCC economic and diplomatic war involving Qatar. 

The US welcomed the move toward “Arab unity” to confront Iran, with a State Department spokesperson saying Thursday, “Gulf unity is essential in confronting Iran, to confronting their influence, to countering terrorism writ…
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“Largest Foreign Bribery Case In History” Claims New Scalp: Former Pemex CEO

Courtesy of ZeroHedge. View original post here.

Authored by Don Quijones via WolfStreet.com,

His lawyer suggests if the price is too high, he may be willing to take his friend, former president of Mexico, down with him…

Emilio Lozoya, a former chief executive of state oil company Petróleos Mexicanos (Pemex), was issued with an arrest warrant on Wednesday for financial irregularities, in particular his alleged dealings with scandal-plagued Brazilian construction firm Odebrecht.

Lozoya, formerly a one-time senior election campaign advisor to Mexico’s current president, Enrique Peña Nieto, is accused of receiving “tips” from Odebrecht worth some $10 million in exchange for his support in obtaining public work contracts. The money allegedly passed through shell companies in the British Virgin Islands before coming to rest in private bank accounts belonging to Lozoya in Switzerland, Liechtenstein, and Monaco.

Lozoya is one of countless public figures and business leaders in over a dozen Latin American and African countries, including Venezuela, Colombia, Argentina, Peru, Angola and Mozambique, to be accused of having his pockets lined by Brazil’s largest construction company. Some of those figures have even ended up in jail, including the former CEO of Odebrecht, Marcelo Odebrecht, and former Brazil president Luiz Inacio Lula da Silva, who is accused of accepting money from Odebrecht for his family’s vacation home.

The scandal has done extensive damage to Brazil’s state-owned oil behemoth Petrobras and has so far cost Odebrecht $2.6 billion in fines, $2.39 billion of which went to Brazil, $93 million to the U.S. and $116 million to Switzerland.

But in Mexico the investigation into Lozoya’s alleged acceptance of financial inducements seemed to be going nowhere — perhaps no surprise given the former attorney general, Raúl Cervantes Andrade, is a very close friend of President Peña Nieto, who is in turn a very close friend of Lozoya’s. But now that Mexico has a new government and a new attorney general that have pledged to combat corruption at Pemex, that friendship may be about to be seriously tested as Lozoya threatens to drag Peña Nieto with him through the dirt.

“Nothing in this country moved unless there were instructions from the president,” Lozoya’s lawyer, Javier Coello said on Wednesday, adding that the ministries of finance, economy and energy all had seats on the company’s board.

Lozoya was CEO of Pemex from 2012 to 2016, during which time…
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How soybeans became China’s most powerful weapon in Trump’s trade war

 

How soybeans became China's most powerful weapon in Trump's trade war

Courtesy of Ian Sheldon, The Ohio State University

Soybeans may not seem all that useful in a war. Nonetheless they’ve become China’s most important weapon in its ever-worsening trade conflict with the U.S.

China, the world’s biggest buyer of the crop, has reportedly stopped purchasing any American soybeans in retaliation for the Trump administration raising tariffs on US$250 billion of Chinese goods. This is very bad news for U.S. farmers.

While China’s targeting of soybeans may have come as something of a surprise to most Americans, to a professor of agricultural economics who studies international commodity markets for a living, this was not at all unexpected.

Even before the conclusion of the 2016 presidential race, trade analysts were already weighing the possibility that China might impose an embargo on U.S. soybean imports based on protectionist rhetoric from both candidates.

As a result, with the trade war in full swing, American soybean farmers are now among its biggest losers. Here are a few figures that show why.

Soybeans, by the numbers

Soybeans are a crucial part of the global food chain, particularly as a source of protein in the production of hogs and poultry.

The importance of China as a market for soybeans has been driven by an explosion in demand for meat as consumers switch from a diet dominated by rice to one where pork, poultry and beef play an important part. Chinese production of meat from those three animals surged 250% from 1986 to 2012 and is projected to increase another 30% by the end of the current decade. However, China is unable to produce enough animal feed itself, hence the need to import soybeans from the United States and Brazil.

In 2017, the U.S. accounted for $21.4 billion worth of global soybean exports, the second largest after its main competitor Brazil, which exported $25.7 billion.

Meanwhile, in 2017 China accounted for the lion’s share of global soybean imports at $39.6 billion, or two-thirds of the total.


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MacKenzie Bezos’ $17 billion pledge tops a growing list of women giving big

 

MacKenzie Bezos' $17 billion pledge tops a growing list of women giving big

Courtesy of Elizabeth J. Dale, Seattle University

Shortly after her divorce from Amazon founder Jeff Bezos became final, MacKenzie Bezos promised to give at least half of her assets away.

By divorcing the world’s richest person, the novelist and former accountant became the third-richest woman in the world and the wealthiest woman to sign onto the Giving Pledge, a commitment to give away the bulk of big fortunes.

“I have a disproportionate amount of money to share,” she declared. “I will keep at it until the safe is empty.”

MacKenzie Bezos’ commitment to give away at least half of her wealth, about US$17 billion in today’s dollars, marks her as more generous than her ex-husband.

Jeff Bezos has not yet signed the pledge. And he never signaled much interest in giving away billions until the couple jointly made public their plans to donate $2 billion to help the homeless and fund a network of preschools in 2018.

MacKenzie Bezos is the most visible emblem to date of an important philanthropic trend. As a scholar of giving by and for women, I’ve studied how high-net-worth female donors are taking the reins of their family’s giving and, in many cases, charting their own course through philanthropy. Until recently, most have kept their profiles relatively low.

Giving while female

Some of today’s biggest female givers still tend to be overshadowed by their corporate-leader husbands. Although the Bill and Melinda Gates Foundation has always promoted its work as the couple’s joint effort, it wasn’t until Melinda Gates published her 2019 book about her leadership role that her personal efforts to empower and educate women and girls worldwide gained prominence.

Similarly, Priscilla Chan, the physician married to Facebook founder Mark Zuckerberg, is the one running the couple’s Chan Zuckerberg Initiative. They founded their limited liability corporation in…
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I’m an MLK scholar – and I’ll never be able to view King in the same light

 

I'm an MLK scholar – and I'll never be able to view King in the same light

According to FBI memos, King witnessed and encouraged a rape in a hotel room. AP Photo

Courtesy of Jason Miller, North Carolina State University

David Garrow, the Pulitzer Prize-winning biographer of Martin Luther King Jr., has unearthed information that may forever change King’s legacy.

In an 8,000-word article published in the British periodical Standpoint Magazine on May 30, Garrow details the contents of FBI memos he discovered after spending weeks sifting through more than 54,000 documents located on the National Archive’s website. Initially sealed by court order until 2027, the documents ended up being made available in recent months through the President John F. Kennedy Assassination Records Collection Act of 1992.

The most damaging memos describe King witnessing a rape in a hotel room. Instead of stopping it, handwritten notes in the file say he encouraged the attacker to continue.

King was once thought of as a saint beyond reproach. After his death, it eventually emerged that he was a womanizer.

If these FBI memos are accurate – and I have good reason to believe they are – we now have to ask the unthinkable: Was King an abuser? And what might this mean for his legacy?

Other outlets balk

The FBI files contained some other notable information.

Garrow writes that King may have fathered a daughter with Dolores Evans, a girlfriend of his who is still alive and living in Los Angeles. The memos also detail the closeness of his relationship with Dorothy Cotton, a longtime associate of King’s in Atlanta and director of his organization’s Citizen Education Program. It appears that the two were romantically involved.

Many of these transcripts were based on audiotapes that are still sealed under a court order.

Garrow had taken his findings to other outlets, but each decided against publishing them. The Guardian initially agreed to take the story, edited the piece, paid Garrow for his work and then decided the story was too risky to run. Editors at the Atlanta Journal-Constitution …
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Why The Creator Of The Bond Volatility Index Believes “This Will End In Tears”

Courtesy of ZeroHedge. View original post here.

The legendary creator of the MOVE bond volatility index and the iconic Merrill Lynch RateLab, Harley Bassman, has opined on the biggest inversion in the yield curve since the financial crisis (3M-10Y dipped as low as -22.5bps this morning), and his view is hardly favorable.

As Bassman notes in his latest note "Can you hear me Knocking", he reminds his readers that in his February 6, 2019 commentary titled "Wall Street Jenga", he noted that "December’s initial Yield Curve inversion flashed a signal for a market or economic disruption in Q2-2020 (Eighteen months ahead)." Fast forward to today when he cautions that "this week, these two rates finally inverted." And in response to those "best and brightest who are bleating how "it is different this time", Bassman has a one-word answer: "Puff!"

But before being accused of becoming the "next headline seeking pundit calling for a crash" he explains that he is "just saying that important risk vectors are now in disequilibrium, and these cannot be excused by QE, Trump, or the proximity of MMT."

Additionally unlike skeptics who believe they know the next surprise will germinate; Bassman declines such as task as "such is the definition of a surprise.That said, well-heeled investment professionals are effectively willing to purchase five-year bonds to be issued in 2024 (five years hence) at a rate below today’s risk-free overnight rate."

This, as he further notes, is "different than a low print on the VIX, which is a derivative of a derivative; these are two of the most heavily trafficked interest rates in the unfettered US Dollar market."

As such, he adds, "unless this was a ‘quick kiss’ during the holiday shortened Hamptons summer kick-off, I am starting to prepare for a macro-political or -economic disturbance."

In short, one of the most respected men in financial analysis is bracing for chaos.

So what is he doing?

First, he urges readers "let's keep out heads clear, it is not time to panic." That said…

I am not explicitly reducing risk exposure, per se, rather I am adjusting the manner in which I touch it. I am covering (embedded) out-of-the-money option shorts and seeking ways to be long convexity–unbalanced risk in


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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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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.