Archive for the ‘Phil’s Favorites’ Category

A 2019 Earnings Recession?


A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize here.

The shutdown will harm the health and safety of Americans, even after it’s long over


The shutdown will harm the health and safety of Americans, even after it's long over

Courtesy of Morten Wendelbo, American University

With the U.S. federal government shutdown now the longest in history, it’s important to understand what a shutdown means for the health and safety of Americans.

The good news is that in the short run, the consequences are relatively few. But, as a researcher who studies natural disaster planning, I believe that Americans should be worried about the federal government’s long-term ability to ensure good public health and protect the public from disasters.

As the shutdown draws on, it increasingly weakens the government’s ability to protect Americans down the road, long after federal workers are allowed to go back to work. Many of these effects are largely invisible and may feel intangible because they don’t currently affect specific individuals.

However, the shutdown poses a very real threat to preparedness for future emergencies, such as natural disasters and disease outbreaks. It also damages the government’s ability to recruit and retain the experts needed to work at the cutting edge of public health.

Disaster preparedness and response

Much funding for disaster recovery that is already underway is funded in appropriations separate from those that fund the shuttered parts of government.

On Dec. 26, however, the Federal Emergency Management Agency, which contracts private contractors for a large share of their work, ordered its contractors to cease working on several projects. Even for programs with funding, progress is made difficult by a shortage of several thousand staff members.

When President Trump signaled to the Senate that he would not sign into law the appropriations bills that had passed the House, leading to the shutdown, funding with bipartisan support for disaster recovery died too. This impedes disaster relief efforts in the states that experienced disaster in the past two years. Among others, it leaves victims of the forest fires in California and victims of Hurricane Florence in the Carolinas waiting for crucial help needed to recover.

The shutdown also weakens the government’s ability to foresee, prevent and respond to upcoming natural disasters. For…
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Brexit: what are Theresa May’s options for a ‘plan B’?


Brexit: what are Theresa May's options for a 'plan B'?

Courtesy of Christopher Kirkland, York St John University

All options raise more questions. Melinda Nagy/Shutterstock

If, as expected, Theresa May loses the Brexit “meaningful vote” on January 15, the UK government will have three days to prepare a “plan B” and present it to parliament. MPs would then have the chance to scrutinise this plan.

As the UK’s withdrawal date of March 29 is written into UK law, time is of the essence. There are six possible options for the prime minister at this stage.

Renegotiate with the EU27

Since postponing the first vote on the withdrawal agreement in December, May has sought reassurances from the heads of the other 27 member states about the UK’s future relationship with the bloc and the nature of the so-called “Irish backstop” to prevent a hard border on the island of Ireland.

While such discussions could continue should May lose the vote, the timescale makes this unlikely. If the assurances the prime minister has sought from Brussels in the four weeks since December are not sufficient to get the deal through parliament, it’s unlikely she would be able to make significant further progress within three days that could revive the deal. Many EU member states have insisted the text of the agreement cannot be changed at this stage.

There is equally unlikely to be sufficient time to agree an alternative deal based, for example, upon a Norway plus or a Canada model.

Extend article 50

Rather than focus on the nature of a new type of deal, the prime minister may ask the EU for more time to restart negotiations, extending the two-year article 50 deadline which governs the UK’s withdrawal process. This would need the approval of other member states and MPs, but it could potentially avoid the hard deadline of March 29.

Even if such an extension were to be agreed, it’s unclear what changes to the existing deal would be acceptable to the EU27, who have consistently refused to discuss options to alter the text. Any further negotiations would also have an added complication by overlapping…
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Why privatizing the VA or other essential health services is a bad idea


Why privatizing the VA or other essential health services is a bad idea

Courtesy of Sebastian Jilke, Rutgers University Newark and Wouter Van Dooren, University of Antwerp

The seal affixed to the front of the Department of Veterans Affairs building in Washington. AP Photo/Charles Dharapak

The Trump administration wants to shift billions of dollars from government-run veterans’ hospitals to private health care providers. That’s true even though earlier this year the administration vehemently denied it would privatize any part of the Department of Veterans Affairs.

The privatization of essential government services is nothing new, of course. Over the years, countries have privatized dozens of services and activities that were once the sole domain of governments, such as the provision of electricity and water, road operations and prisons and even health care, with the ostensible aim of making them more efficient.

But before going down that road, the question needs to be asked whether privatizing essential human services such as those for military veterans serves the public interest. New research we recently published suggests that privatization may come at a social cost.

Economic incentives of privatization

Privatization theory assumes that organizations, including those that deliver social services, thrive on competition and monetary gain.

Supporters of privatization argue that companies can perform government functions more efficiently. More competition and more choice for clients are expected to put pressure on providers to be more innovative and aware of financial costs.

In the public sector, however, competition is almost by definition absent, either because users of services cannot be excluded from the service – breathing clean air, for example – or because there is little monetary gain to be made – such as with services to the homeless.

So in situations where there is no real market, governments have attempted to mimic their conditions, such as by giving citizens the freedom to choose a public service provider or negotiating contracts that include certain performance incentives.

But this reliance on performance contracts can lead business providers to focus on short-term financial targets – such as the number of people processed per dollar spent – often at the expense of…
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Mucking through the Wall Street Banks’ Earnings This Week

Courtesy of Pam Martens

Wallstreet Bull-ThumbnailIf you’ve ever mucked horse stalls full of smelly manure, you’re better prepared for this week.

Yesterday, the inscrutable Citigroup ushered in the week of mind-numbing fourth-quarter earnings reports from the financial supermarkets/commercial banks/insurance companies/brokerage firms/investment banks/derivative warehouses that have combined under one highly combustible roof, using the simple moniker Wall Street bank. There is so much going on under one roof that you’d need your own team of 100 accountants to have any clue as to whether the bank is doing well or not.

JPMorgan Chase, a component of the Dow Jones Industrial Average, was out with its disappointing earnings this morning. Goldman Sachs and Bank of America report on Wednesday, followed by Morgan Stanley on Thursday.

Citigroup’s big reveal was that it had missed analysts’ revenue expectations by half a billion dollars – not exactly small change. The bank reported $17.1 billion in revenue in the fourth quarter versus average analyst expectations for $17.6 billion. That was mostly owing to a 21 percent decline in fixed income trading.

Its net profits were clearly helped by its report that it had used a big chunk of its capital not to make loans to worthy businesses but to repurchase 74 million shares of its own stock in the fourth quarter and a whopping 212 million shares for all of 2018. Fourth quarter net earnings came in at $4.3 billion or $1.64 per share. Excluding the impact of President Trump’s generous tax cut gift to corporations, net income was $4.2 billion or $1.61 per share.

For the full year of 2018, Citigroup reported net income of $18.0 billion on revenues of $72.9 billion, compared to a net loss of $6.8 billion on revenues of $72.4 billion for the full year of 2017.

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Why Big Pharma must disclose payments to patient groups


Why Big Pharma must disclose payments to patient groups

File 20190110 43520 v171l8.jpg?ixlib=rb 1.1

The Chronic Pain Association of Canada has received money from Eli Lilly Canada Inc., Purdue Canada Inc. and Merck Frosst Canada. A blog post on the association’s website contains messages favourable to increased opioid use. (Flickr/Ajay Suresh), CC BY-SA

Courtesy of Itai Bavli, University of British Columbia and Joel Lexchin, University of Toronto

A United States congressional report revealed last year that five opioid manufacturers made more than $10 million in payments to patient advocacy groups and professional societies between 2012 and 2017.

Initiatives from these advocacy groups and professional societies often echoed and amplified recommendations to increase opioid use. For example, they promoted opioid for chronic pain, minimized the risk of addiction and criticized the Center of Disease Control and Prevention (CDC) guidelines to limit opioid prescriptions.

In addition, opioid manufacturers used these groups to lobby Congress to change laws directed at curbing opioid use. This, according to the report, “may have played a significant role in creating the necessary conditions for the U.S. opioid epidemic.”

Patient advocacy groups play an important role in democratic societies, giving voice to vulnerable populations, shaping health policy debates and acting to influence public policies to promote their members’ interests and needs.

When funded by the industry, however, they often serve merely as a marketing tool — promoting corporate interest.

To date, there has been no attempt to systematically investigate the relationships between opioid manufacturers and pain advocacy groups and societies in Canada. However, evidence shows that, similar to the U.S., opioid manufacturers fund such organizations in Canada.

Advocacy groups echo corporate interest

In Health Advocacy Group Inc: How Pharmaceutical Funding Changed the Breast Cancer Movement, bioethicist Sharon Batt explores the alliance between patient-group advocacy and pharmaceutical companies in Canada. She suggests that this relationship can distort policies that have been put in place to protect public health.

Batt questions the ability of such groups to speak on behalf of people who need help, and shows how advocacy groups today echo the demands of pharmaceutical companies that are often counter to its members interests.

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Who are the federal workers affected by the shutdown? 5 questions answered


Who are the federal workers affected by the shutdown? 5 questions answered

Courtesy of Nevbahar Ertas, University of Alabama at Birmingham

The current government shutdown is now the longest in American history, affecting about 800,000 federal employees out of 1.8 million full-time civil servants, not counting military personnel and postal workers.

Of those, about 380,000 have been furloughed, meaning that they cannot work or get paid. The rest, whose positions are categorized as essential, are working without pay.

Here’s a closer look at some quick facts about the U.S. federal workers.

1. Who are they?

According to the U.S. Office of Personnel Management’s federal employee database, about 57 percent of federal workers were male and 43 percent were female in 2017. About 63 percent were white and 19 percent were black. Over half of the workforce had a college degree and about a quarter also had an advanced degree.

The federal civilian workforce has grown older than the American workforce overall. The average federal worker was 47.5 years old in 2017. Just about 16 percent of federal workers are under 35 years old, compared to 40 percent in the private sector. More than a quarter of federal employees are over 55.

2. Where do they work?

They might be your neighbors. More than 80 percent of the federal workers work or live outside of the Washington, D.C. metropolitan area.

According to Governing magazine’s calculations, nearly every state has a least a few thousand affected employees. OPM shows that California tops the list with 152,466 federal workers, followed by Virginia, Texas, Maryland and Florida.

More than 18 percent work for the Department of Veterans Affairs. In fact, almost 60 percent of the federal workforce is employed by just five agencies: the VA, Army, Navy, Homeland Security and Air Force.

3. How much do they make?

Under open government transparency guidelines, records of most public employees of the U.S. federal government is public record.

As of 2017, the average salary among 375 agencies was US$69,344.22. In fiscal year…
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The 2019 government shutdown is just the latest reason why poor people can’t bank on the safety net


The 2019 government shutdown is just the latest reason why poor people can't bank on the safety net

File 20190114 43510 fx8i4t.jpg?ixlib=rb 1.1

Unreliable policies can make poverty more stressful. Rawpixel/

Courtesy of Jamila Michener, Cornell University

I conduct a lot of in-depth interviews with people like a woman I’ll call Angie as part of my work as a political scientist who studies poverty and public policy. When I asked the low-income mother of two, who works multiple jobs but still struggles to care for her family, about her experience with government assistance programs, she expressed dismay over benefit cuts.

“The people who make these rules … they don’t have any poor people in their family,” she told me. “That is why they are willing to chop so many services for the poor.”

People living in poverty are now bracing for that kind of chopping as a result of the partial government shutdown that began in December. By the three-week mark, most safety-net benefits were still being funded. But should the impasse drag on, that could change.

In my view, the added economic hardship brought on would highlight an enduring aspect of American public policy: Government benefits can be unreliable. They can be cut or eliminated arbitrarily.

Fragmented help

As I’ve explained in a book published in 2018, the nation’s systems for aiding Americans who have trouble making ends meet are fragmented. Different programs housed in multiple agencies serve distinct populations, with all of this happening in different ways across states and localities.

That means government shutdowns do not sever all assistance at once. In this instance, Congress has already passed the appropriations bills funding agencies like Health and Human Services, so Medicaid, Medicare and many other programs that agency runs are relatively safe.

Other federal agencies are more likely to see their funds dry up during this particular shutdown, especially the departments of agriculture and housing.

USDA and HUD are responsible for many programs that directly and indirectly keep low-income Americans fed and housed. The USDA’s Supplemental Nutrition Assistance Program, more commonly called SNAP, helps more than 19 million low-income households. HUD’s Housing Choice…
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If Trump declares a national emergency, could Congress or the courts reverse it?


If Trump declares a national emergency, could Congress or the courts reverse it?

Courtesy of Chris Edelson, American University School of Public Affairs

If President Donald Trump declares a national emergency to fund some portion of a wall along the U.S.-Mexico border without congressional authorization, what would happen next?

Would the courts step in? What is Congress’ role?

As I explain in my book “Emergency Presidential Power,” presidents generally claim emergency power two ways: through inherent or implied authority under the U.S. Constitution or under statutory authority granted by Congress.

Relying on the Constitution as a basis for emergency power is controversial, and less likely to stand up to meaningful congressional or judicial review. The U.S. Constitution says nothing specific about presidential emergency power: Presidents can only claim such authority is implied or inherent.

The emergency powers the Constitution does describe are actually assigned to Congress. Congress has delegated some emergency powers to the president through statutes, including the National Emergencies Act. But Congress retains the power to reject a president’s declaration of a national emergency.

If President Trump does declare an emergency, the question is: Will Congress use the power available to it, or will it play the role of passive spectator?

Gaining congressional approval

Since presidents lack any specific constitutional emergency power, they often find it necessary to gain congressional authorization. For instance, at the start of the Civil War, with Congress out of session, President Abraham Lincoln suspended habeas corpus and took other unilateral actions. He later sought and gained retroactive approval from Congress for these actions.

President Harry Truman in his White House office in Washington Dec. 16, 1950 signs a proclamation of a state of national emergency, summoning the nation to marshal its strength against the threat of AP Photo/William J. Smith

This precedent of gaining congressional approval was put to the test nearly 100 years later. In 1952, President Harry Truman claimed emergency power to take control of steel factories during the Korean War in response to a labor strike. He invoked a “very great inherent power to meet great national emergencies.” Congress took no specific action to…
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There Goes The Chinese Consumer: Alibaba Is Latest Company To Warn About Slowing Growth

Courtesy of Zero Hedge

Hours after the Wall Street Journal published a story speculating about who would be next to upend an equity rally with a warning about faltering sales in China (after Apple's quarterly revenue guidance cut rattled markets during the opening days of the year) – citing Starbucks, Nike, Texas Instruments and a host of chipmakers and luxury retailers as potential culprits – the answer has arrived perhaps more swiftly than the paper's editors had expected. And the answer is: None of these.


As it turns out, the latest warning about "near-term headwinds" in the Chinese market comes from a company that's so deeply interwoven into the fabric of the Chinese economy, even the hint of a sales slowdown should be enough to trigger anxieties about slowing global growth – even as its CEO tries to put a positive spin on things. And that company is: Alibaba.

According to a separate story published by WSJ Monday afternoon, as the ramp in equities spurred by Trump's positive trade talk faded into the close, the president of the Chinese e-commerce giant reportedly said during a presentation at the National Retail Federation's trade show in New York that he's still confident in the long-term potential of the Chinese economy despite data showing a deepening slowdown.

"This is a market that requires patience," Alibaba President J. Michael Evans said in a presentation at the National Retail Federation’s annual trade show in New York on Monday. "But if you think about where the country is going in the long-term…The future I think looks very good, notwithstanding some troubling headwinds."

As WSJ reminds us, Alibaba, whose Taobao and Tmall marketplaces are some of the most widely used e-commerce platforms by Chinese consumers and merchants, cut its full-year revenue forecast by 4% to 6% back in November over concerns about the slowing Chinese economy's impact on sales growth, as well as the possibility that the burgeoning trade war could also hurt sales.


Alibaba President J. Michael Evans

Yes, China's economy may be slowing – something that recently prompted the Communist Party to rethink its GDP growth projections – but it's still growing much more quickly than its developed rivals in…
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Phil's Favorites

A 2019 Earnings Recession?


A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...

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Zero Hedge

How Will The Pound React To Tuesday's Brexit Deal Vote? FX Traders Weigh In

Courtesy of ZeroHedge. View original post here.

Months of extreme volatility have taken their toll on the pound, with traders declaring the G10 currency "untradeable" during the worst of the withdrawal-deal related chaos last year, as daily swings of multiple percentage points became increasingly common, prompting some traders to muse once again about how the pound - one of the world's most liquid, heavily traded currencies, was behaving more like the Turkish lira than a designated global reserve currency (as its membership in the IMF's SDR basket would suggest). 

Now, after months o...

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

By ActivistInsight. Originally published at ValueWalk.

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

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Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...

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Insider Scoop

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

Courtesy of Benzinga.

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

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...

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Members' Corner

Why Trump Can't Learn


Bill Eddy (lawyer, therapist, author) predicted Trump's failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...

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Opening Pandora's Box: Gene editing and its consequences

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


Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.


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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...

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Swing trading portfolio - week of September 11th, 2017

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


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Free eBook - "My Top Strategies for 2017"



Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:


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


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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>