Posts Tagged ‘bonuses’

How Do We Deal With The Banks Now?

How Do We Deal With The Banks Now?

Courtesy of Tom Lindmark at But Then What

There’s so much comment on the bankers’ bonus plans and now the still vague plan from the administration to pull back some of the banks’ profits that I’ve been hesitating to join the chorus. A lot of the commentary has been good if perhaps a bit too much knee jerk without a lot of thought.

Generally, I am going against my Libertarian/Free Market tendencies and siding with the apparently overwhelmingly large group that’s saying, “Hell yes, stick it to them.” The banks have just gone over the top this time around and probably established the case that  having amassed more power, independence and disregard for the general society they have to be brought down.

Having said that, I do want to quibble with a pair of my favorite bloggers.

Felix Salmon writes:

Might the fee at least reduce the amount of cash that the banks have available for lending? Yes. But this is a large reason for levying the tax in the first place. America’s fiscal and monetary policy during the crisis involved recapitalizing the banks in the hope and explicit expectation that they would turn around and lend that money into the real economy. They didn’t do that, so it makes sense to take some of that money back — certainly that part of it which is basically just windfall due to Fed policies.

I viewed those fiscal and monetary steps as having been taken in order to shore up depleted balance sheets. In essence a move that trumped the need to declare a few of the behemoths insolvent. While its success rendered them capable of lending to the real economy, the fact that they have not is not necessarily grounds for condemnation. As I have pointed out before, loan demand has been anemic and the credit profiles they see walking in the door today are not stellar.

If anything, I think they might deserve some credit for changing their habits and not shoveling money out the door in order to stave off political retribution. I agree with Felix in his assessment of the windfall nature of their profits but don’t agree that their lack of lending as a particularly good reason to claw back money from them.

Yves Smith


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Wall Street, Meet Ken Feinberg, the Pay Czar

Wall Street, Meet Ken Feinberg, the Pay Czar

By Stephen Gandel, courtesy of TIME

Ken Feinberg 

Ken Feinberg at his office in Washington
Charles Dharapak / AP, courtesy of TIME

Ken Feinberg is a close talker. Feinberg, a lawyer who in June was named the Treasury Department’s special master for executive compensation, starts his sentences about 18 inches from your face and, with a thick Boston accent, leans in to make his point.

It’s an unusual trait for a guy who has to deliver the type of news that most of us would prefer to dispense from across the room or, better yet, by e-mail from a do-not-reply address. On Oct. 22, he told 136 top executives of seven bailed-out firms that effective immediately, he was cutting their total compensation 50% from what they received a year ago. Feinberg’s previous public position was the administrator of the September 11th Victim Compensation Fund. In that job, he had to put a price tag on the dead.

"Dollars are a surrogate for worth," says Feinberg, leaning back in his chair before bouncing forward again on the next sentence. "So when you start talking about dollars, what people hear is a ruling on their overall integrity and value to society. It gets difficult."

Feinberg, 64, holds a unique position in American society. He decides what people — their pain as well as their day-to-day roles — are worth. Appointed 25 years ago to distribute about $200 million to Vietnam vets poisoned by the herbicide Agent Orange, he has become the Solomon of settlement. As head of the 9/11 fund, he held town-hall meetings and met one on one with countless grieving relatives to explain his bottom line on the lost years of mothers and fathers and daughters and sons. "He recognized the astounding amount of sensitivity of the assignment," says former Senator Charles Hagel, who supported Feinberg for the position. "By all the different assessments you can take of these things — victims’ reactions, cost to the taxpayer, political issues — he did a great job with the 9/11 fund."

His current task may be even more complex. Feinberg’s mid-October report reassessed not only what the top 25 executives of each of the seven firms that received the most government assistance should be paid but also how. Unlike his job with the 9/11 fund, Feinberg’s position as pay…
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Goldman Adviser Resurrects Trickle-Down

Goldman Adviser Resurrects Trickle-Down

Courtesy of Adam Sharp’s Bearish News

footinmouthWe have to tolerate the [pay] inequality as a way to achieve greater prosperity and opportunity for all -Brian Griffiths, Goldman Sachs International Adviser

Griffiths made the remarks while arguing that outsized banker pay will boost the economy, via increased spending. Bloomberg is the source, and unfortunately they didn’t provide too much more info. Lord Griffiths made the statement during a panel titled “What is the price of morality in the marketplace?”.

“Smartest Guys in the Room” Defense Not Working Anymore

Looks like now everyone realizes Goldman is getting tremendous benefits from the Feds, they’ve been forced to switch-up their defense tactics. They can’t use the old “hey, we’re awesome at what we do” defense anymore.

But I don’t think the trickle-down argument is fly either. Too much populist outrage for the “We pay taxes on our Porsches, and that helps everybody” case to work.

Alms For the Poor

The charitable-giving angle isn’t working either. Goldman recently pledged $200m to charity in an attempt to generate some good PR. Doesn’t look like it was successful so far, and it may even be fueling the Goldman-haters’ fire. But Mr. Griffiths mentioned the “alms for the poor” message too:

To whom much is given much is expected. There is a sense that if you make money you are expected to give.

There is a sense?! These guys are ripping off the world, and there’s only a sense they should give something back? How about everything? All bonuses from the last 5 years clawed back? That would be a good starting point for negotiations.

When a bank has access to the discount window, has raised $50b in taxpayer-guaranteed debt, and benefits in other ways from the Feds’ actions, it’s ridiculous that they’re handing out record bonuses. They shouldn’t be getting bonuses at all. The balls of a guy like Griffith are mind-boggling.

Related:

Letting Goldman Roll The Dice


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Pay Czar Defangs Himself, Won’t Set Pay Caps

Pay Czar Defangs Himself, Won’t Set Pay Caps

AIG bonus new york post Courtesy of Lawrence Delevingne at Clusterstock

Relax TARP execs, the mobs aren’t coming for you.

Reuters: President Barack Obama’s "pay czar" said on Friday he will not cap compensation for the top employees at bailed-out companies, and will not reveal names, when he releases the first wave of decisions within a few weeks.

"We don’t want specific names next to dollars," said Kenneth Feinberg, who was appointed in June to decide compensation packages for the highest-paid personnel at companies that received U.S. government bailouts.

So Kenneth Feinberg has probably taken the first step towards making his office irrelevent, though theoretically he still has the power to intervene when a pay package is somehow excessive or likely to induce risk. In reality, he probably won’t do much of anything.

Folks, the pay issue is fading, even if the G20 promises a "coordinated effort ."

At least until Michael Moore’s "Capitalism" drops in October…

See Also:

Obama's man, the "Pay Czar," Kenneth Feinberg

Citi Is Pissed Off About The Pay Czar’s Comp Restrictions (C)

Obama’s Pay Czar Ready To Crack Heads On Wall Street

Pandit Says He’s Embarrassed By Andrew Hall’s $100 Million Bonus (C)

 

 


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Bankrupt Auto Parts Suppliers Seek $100 Million In Executive Bonuses

This is the kind of thing that makes me disgusted with whatever our politico-economic system has become, whatever you want to call it. – Ilene

Bankrupt Auto Parts Suppliers Seek $100 Million In Executive Bonuses

Courtesy of Mish  

In every corner, greed continues to amaze. Please consider Bankrupt suppliers seek exec bonuses.

A growing number of bankrupt auto suppliers are seeking court approval to pay tens of millions of dollars in bonuses to key executives, as they shed employees and cut costs.

Some of the bonuses have come under sharp criticism from General Motors Co. and Ford Motor Co., as well as the trustees named by the Justice Department to monitor bankruptcy cases.

"Considering the condition of the automotive industry and the adverse effect on auto suppliers, it is unclear why payments are even needed to retain employees who may have limited options to find employment elsewhere," said Diana G. Adams, the U.S. trustee in objecting to a plan by Lear Corp.

Southfield-based Lear, which is in the process of cutting costs by $350 million, won approval Tuesday to pay $20.6 million in bonuses to 29 execs.

Congress rewrote the bankruptcy code in 2005 in an attempt to prevent executives from rewarding themselves during bankruptcy, while rank-and-file workers make significant sacrifices.

Yet Visteon, which sought bankruptcy protection on May 28, wants to give bonuses of up to $80.1 million to top execs — as much as 250 percent of base pay, for some of them.

Ford, in court documents, said it "cannot see how, in a market with mass layoffs, salary reductions and bonus program curtailments occurring daily, anyone can justify a bonus program of $80.1 million when job retention should be enough."

And Northville-based wheel producer Hayes Lemmerz International Inc. wants permission to pay more than $10 million in bonuses, including as much as $6.7 million to its top five execs.

Just Friday, however, Hayes proposed canceling its retiree health and life insurance coverage for households covering 2,200 families.

Hayes has proposed creating a Voluntary Employee Beneficiary Association, which would allow retirees who are ineligible for Medicare to keep coverage at a cost of $900 to $2,100 a month. Hayes would contribute as much as $4.8 million over four years to cancel its accrued liability of $147.5 million.

That last paragraph takes the cake. Hayes would "allow" retirees to keep medical coverage…
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Infamia e Disgrazie: Is Sheila Bair an Unsophisticated Hick?

In defense of "unsophisticated hicks,"

Infamia e Disgrazie: Is Sheila Bair an Unsophisticated Hick?

Sheila BairCourtesy of Jesse’s Café Américain

"Flagrant evils cure themselves by being flagrant; and we are sanguine that the time is come when so great an evil…cannot stand its ground against good feeling and common sense…" John Henry Newman

The reporter on Bloomberg television just mentioned as a snide, smirking editorial aside, that Sheila Bair feels that a million dollars is a lot of pay for one year, and that ten million is excessive for a deposit taking institution. He noted that she is obviously a Washingtonian, and not a New Yorker.

That’s right. A million dollars annual pay is ‘nothing.’ Even ten million is not much pay for an average Wall Street banker that is taking billions in public funds and gaming the financial system.

The obvious implication is that Ms. Bair is some hick regulator who is not as sophisticated as, let’s say, Larry Summers, Tim Geithner, or Ben Bernanake when it comes to rewarding their Wall Street cronies for allowing the economy to continue unimpaired.

Perhaps he was attempting to sneak a bit of irony into the propaganda that passes for news in the States these days, but it was not obvious.

But he might be right. When the monetary inflation from all this financial corruption hits, a million dollars per year might yet be a ‘livable wage.’

And so goes the "downward spiral of dumbness." Keep these metrics in mind when you look at your next credit card bill, mortgage payment, and paycheck, rubes, and send your tribute to Caesar.

Bair Says U.S. Regulators Should Set Pay Standards for Banks

By Alison Vekshin and Erik Schatzker

Aug. 5 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said regulators should set pay standards for U.S. banks to ensure incentives encourage long-term performance without setting specific dollar limits.

Banking agencies should “become more active” in using existing authority to set compensation standards that are “principles-based,” Bair said today in an interview with Bloomberg Television in Washington.

“We do need to revamp the system to make sure that the incentives are long-term,” Bair said. “I do wish some of these firms would exercise better restraint and common sense on what they’re paying their folks.”

Bair echoed concerns of House Financial Services Committee Chairman Barney Frank and other lawmakers…
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All The Juicy Bank Bonus Details Compliments Of Cuomo

All The Juicy Bank Bonus Details Compliments Of Cuomo

Courtesy of Tyler Durden

With a title like “The ‘Heads I win, Tails you lose’ bank bonus culture“, what’s there not to like about Cuomo’s latest. Also, sheds some light on why perpetuating a grossly inflated Ponzi market is where it’s at come December.

In summary, number of employees making over $1 million:

  • Bank of America: 172
  • BoNY: 74
  • Citi: 738
  • Goldman: 953
  • JP Morgan: 1,626
  • Merrill: 696
  • Morgan Stanley: 428
  • State Street: 44
  • Wells Fargo: 62

Bonus Report

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Bonuses.jpg 110.49 KB

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Paul Krugman: The Joy of Sachs

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Paul Krugman: The Joy of Sachs

Goldman Sachs New World HeadquartersCourtesy of Mark Thoma at Economist’s View

What can we learn from the fact that Goldman Sachs earned record profits despite the stagnation in the broader economy?:

The Joy of Sachs, by Paul Krugman, Commentary, NY Times: The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?

First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.

Second, it shows that Wall Street’s bad habits — above all, the system of compensation that helped cause the financial crisis — have not gone away.

Third, it shows that by rescuing the financial system without reforming it, Washington has … made another crisis more likely.

Let’s start by talking about how Goldman makes money.

Over the past generation — ever since the banking deregulation of the Reagan years — the U.S. economy has been “financialized.” The business of moving money around, of slicing, dicing and repackaging financial claims, has soared…

Such growth would be fine if financialization really delivered on its promises — if financial firms made money by directing capital to its most productive uses, by developing innovative ways to spread and reduce risk. But can anyone, at this point, make those claims with a straight face? …

Goldman’s role in the financialization of America was similar to that of other players, except for one thing: Goldman didn’t believe its own hype. … Goldman, famously, made a lot of money selling securities backed by subprime mortgages — then made a lot more money by selling mortgage-backed securities short, just before their value crashed. All of this was perfectly legal, but the net effect was that Goldman made profits by playing the rest of us for suckers.

And Wall Streeters have every incentive to keep playing that kind of game.

The huge bonuses Goldman will soon hand out show that


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Goldman Blow Out Q2 Revenues On Principal Trading; VaR Hits New All Time Record: $245 MM Total VaR

Hope no one misses this summary of Goldman Sach’s blow out earnings, by Tyler at Zero Hedge (below).  – Ilene

Goldman Blow Out Q2 Revenues On Principal Trading; VaR Hits New All Time Record: $245 MM Total VaR

As if anyone expected less than one of the most ridiculous beats ever.

Some amusing Q1 over Q2 comparisons:

  • Equity Underwriting: $48 million vs $736 million
  • Equities Trading (not commissions): $1,027 vs $2,157 million
  • Total Trading and Principal Investments: $5,706 vs $9.322 million
  • ICBC: ($151) vs $948 million

Notable: VaR hits what looks like another record high at $245 million, higher by $5 million from the last March record. Also, the fudge "diversification factor" is almost at $100 million: excluding it the company has a VaR of almost $345 million. One can barely hold their breath to see the number of $100 MM+ trading days in the quarter.

Goldman Sachs Group Inc., selected financial data

Also, for those curious what comp will be like at Goldman, here is some color:

Compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as payroll taxes, severance costs and benefits) were $6.65 billion, which was higher than the second quarter of 2008, primarily due to higher net revenues. The ratio of compensation and benefits to net revenues was 49% for the first half of 2009. Total staff decreased 1% during the quarter.

FYI: $6.65 billion for the quarter, $4.712 billion for Q1, annualized this is $22.7 billion, divided by 29,400 employees, means an average comp of $772,925/employee. Enjoy, dear taxpayer.


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Does the Obama Plan for Reforming Wall Street Measure Up?

Courtesy of Robert Reich, our nation’s 22nd Secretary of Labor, at Robert Reich’s Blog

Does the Obama Plan for Reforming Wall Street Measure Up?

[IMG_0516.JPG] In a word: No.

The plan doesn’t stop stop bankers from making huge, risky bets with other peoples’ money. It does increase capital requirements and oversight, but it doesn’t require bankers to take their pay in long-term stock options or warrants, and it doesn’t even hint that banks should go back to being partnerships instead of publicly-held corporations.

All this means traders still have very incentive to place big and often wildly risky bets as long as the potential winnings are big enough, and top executives have very little incentive to monitor what traders are up to as long as the traders are collecting large commissions on the bets.

Nor does the plan do anything to prevent banks from becoming too big to fail. It doesn’t hint at a return to the days before the late 1990s when commercial banks were separate entities from investment banks — before mammoth bank supermarkets like Citigroup came to be so tied up with so many other commercial and investment vehicles that they couldn’t be allowed to go under. And there’s not the slightest mention of antitrust, to break up the largest banks.

The plan does focus on a few conflicts of interest, such as how credit rating agencies are paid. And it does establish a new agency to oversee all forms of consumer loans — thereby helping make sure borrowers know what they’re getting into, and can comparison shop. But these are small potatoes relative to the size of the overall problem. The Fed is given new oversight powers, but there’s no suggestion that regional Fed bank presidents, who already have a substantial oversight role, should be recruited from the ranks of people who are not bankers and don’t have a big financial stake in keeping oversight to a minimum.

In short: It’s a mere filigree of reform, a sheer gossamer of government. Wall Street must be toasting its good fortune. Unless Congress shows some spine, the great Wall Street meltdown of 2007 and 2008 — which lead to the biggest taxpayer bailout in history, very likely the largest taxpayer losses on record, and the largest investor losses since 1929 — will repeat itself within a decade, if not sooner.

In fact, the banks that have repaid


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Phil's Favorites

Trump Tweeting As Much As Ever Amid Twitter Standoff

 

Trump Tweeting As Much As Ever Amid Twitter Standoff

By , Statista

President Trump has signed an executive order which aims to remove some of the legal protection given to social media companies, though it is expected to face significant legal hurdles. In a nutshell, it sets out to clarify the Communications Decency Act, handing regulators the power to file legal proceedings against social media companies for the way they police content on their platforms. Trump's decision to take action comes two days after Twitter attached a fact check to one of his tweets lambasting mail-in voting. He then threatened to close ...



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ValueWalk

Gold supply chain in recovery mode after pandemic shutdown

By Michelle Jones. Originally published at ValueWalk.

The gold supply chain was largely shut down as the COVID-19 pandemic spread around the world. However, things are starting to open back up, and production is beginning again. The World Gold Council studied the gold supply chain, how it was impacted by the pandemic, and how the disruption of the supply chain has affected investment demand for the yellow metal.

Q1 2020 hedge fund letters, conferences and more

Disruption to the gold supply chain

The World Gold Council said the gold supply chain is entirely global because the metal is mined on evert continent except Antarctica and refined in nume...



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Biotech/COVID-19

Antigen tests for COVID-19 are fast and easy - and could solve the coronavirus testing problem despite being somewhat inaccurate

 

Antigen tests for COVID-19 are fast and easy – and could solve the coronavirus testing problem despite being somewhat inaccurate

Antibodies are incredibly good at finding the coronavirus. Antigen tests put them to work. Sergii Iaremenko/Science Photo Library via Getty Images

Courtesy of Eugene Wu, University of Richmond

In late February, I fell ill with a fever and a cough. As a biochemist who teaches a class on viruses, I’d been tracking the outbreak of...



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Zero Hedge

Ted Cruz Accuses Twitter Of Violating Sanctions Against Iran, Demands DoJ Probe

Courtesy of ZeroHedge View original post here.

We've mentioned in nearly every single one of our posts about this week's dustup between the president and Twitter that the Ayato...



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Kimble Charting Solutions

Tech Indicator Suggesting A Historic Top Could Be Forming?

Courtesy of Chris Kimble

Tech stocks have been the clear leader of the stock market recovery rally, this year and since the lows back in 2007!

But within the ranks of leadership, and an important ratio may be sending a caution message to investors.

In today’s chart, we look at the ratio of large-cap tech stocks (the Nasdaq 100 Index) to the broader tech market (the Nasdaq Composite) on a “monthly” basis.

The large-cap concentrated Nasdaq 100 (only 100 stocks) has been the clear leader for several years versus the ...



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The Technical Traders

M2 Velocity Collapses - Could A Bottom In Capital Velocity Be Setting Up?

Courtesy of Technical Traders

M2 Velocity is the measurement of capital circulating within the economy.  The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth.  When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.

The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market colla...



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Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due

 

US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...



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Chart School

Is this your local response to COVID 19

Courtesy of Read the Ticker

This is off topic, but a bit of fun!


This is the standard reaction from the control freaks.








This is the song for post lock down!







What should be made mandatory? Vaccines, hell NO! This should be mandatory: Every one taking their tops off in the sun, they do in Africa!

Guess which family gets more Vitamin D and eats less sugary carbs, TV Show



...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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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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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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