Posts Tagged ‘printing money’

TOLDJA!! The Dollar Broke Lower—So Now What?

Courtesy of Gonzalo Lira

Excerpt:

If QE-2 ends in June like it’s supposed to, and interest rates rise in the face of a weakened dollar, what do you think Timothy Geithner will be looking at? He’ll have to issue Treasury debt for the trillion-plus fiscal year 2012 deficit, and additional Treasury debt for the interest on the FY 2012 deficit—and then even more Treasury debt to cover theinterest on the interest!
 
Tiny Timmy’s pin-head would explode into a million pieces, if interest rates were to rise. 
 
Benny and the Eccles Jackals are not unsympathetic to Tiny Timmy’s plight. But it’s not enough for the Federal Reserve to decree (via the Fed Funds Rate) that interest rates will not rise, in the face of rising Treasury yields. The Fed—in order to keep those yields low—has to dosomething. Something, in order to keep the Federal government funded. 
 
Therefore, here is another one of GL’s Fearless Predictions™: 

Once Quantitative Easing-2 ends this coming June, the Treasury bond purchases will be extended indefinitely—call it QE-3. The amount of each month’s purchase of Treasury bonds by the Federal Reserve will be at least $75 billion—but don’t be surprised if it’s as high as $100 billion to $125 billion. Per month. 

Yes.

This is the only way that the Federal Reserve and the Treasury department will be able to achieve their contradictory objectives of fully funding the Federal government’s debt, and maintaining low interest rates in order to “stimulate lending”. 
 
So to answer the question, How low will the dollar go?
 
This go-around? I don’t know, but in the near-term I’d guess 73.5 on the dollar index, the euro topping out at $1.47, the yen to ¥77.50, gold to $1,450, silver $39 maybe. Maybe in the next three to four weeks, but perhaps even sooner. 
 

In the long term? If the clowns running the circus remain in place, my guess is the dollar will soon enough hit The Big Bagel.  

Read the whole article here > 


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Bernanke Lies: The Fed IS Printing Money

Courtesy of Jr. Deputy Accountant who confirms that which we may suspect, semantics aside, "Bernanke Lies: The Fed IS Printing Money." – Ilene 

In March of 2009 when Ben Bernanke first appeared on 60 Minutes, he was bold enough to admit that the Fed was effectively printing money. Those balls are long gone (maybe they got caught in the printing press) and he’s back to lying through his beard in the hopes that we’re all too stupid to notice. 

Lies like this:

"One myth that’s out there is that what we’re doing is printing money. We’re not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way. What we’re doing is lowing interest rates by buying Treasury securities. And by lowering interest rates, we hope to stimulate the economy to grow faster. So, the trick is to find the appropriate moment when to begin to unwind this policy. And that’s what we’re gonna do."

Oh yeah? Is that your final answer?

I beg to differ, Mr Chairman. Please consult the Fed’s latest balance sheet for more details:

Perhaps ole JDA is losing it and has lost the ability to add zeroes correctly but if I’m reading that right, our friends at the Fed printed $3,738,000,000 in a week and has printed $55,134,000,000 in new money since December 2, 2009.

I remind dear reader that footnote 16 which follows "Currency in circulation" disclaims that number as "estimated". So it could be more, it could be less. Knowing those lying rat b*st**ds at the Fed, that number is way undershot but hey, what do I know?

Is that right? Maybe we should go back a few more balance sheets just to make sure. Let’s see how much they’ve been printing, shall we?

November 18th, 2010: $2,575,000,000
November 12, 2010: $6,209,000,000 (wow, busy week for Zimbabwe Ben!)
November 4, 2010: $3,385,000,000
Oh look! Finally! A week with fewer dollars! Good for them!
October 28, 2010: -$378,000,000

If that’s not printing money, I don’t know what is. Go, Zimbabwe Ben, go!!

 


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GIVING NEW MEANING TO “HERDING INVESTORS”

GIVING NEW MEANING TO “HERDING INVESTORS”

Courtesy of The Pragmatic Capitalist

Cows on pasture

We all know the Federal Reserve is trying to herd investors into equities as they keep asset values “higher than they otherwise would be”, but how’s this for herding investors?  One well known hedge fund manager has altered his entire strategy because of the Fed’s persistent actions (via the WSJ):

“A former hedge-fund manager who made a fortune shorting stocks has switched to the long side, and is raking in money in the process.

William von Mueffling surprised clients and competitors last June by announcing he would close his hedge funds and return $3.5 billion to investors. His firm, Cantillon Capital Management of New York, kept managing $1 billion in long-only assets, typically considered the unsexy piece of the business.

Now, the 42-year-old stock picker controls more money than he did before he closed his hedge funds. Cantillon has raised billions of dollars from pension funds in the U.S. and abroad, and from sovereign-wealth investors, according to clients and other people familiar with the matter.”

Von Mueffling couldn’t justify running the short end of the book as the Fed was priming the pump:

“After years of “long-short” investing, Mr. von Mueffling and his analysts and traders no longer short, or bet against, stocks at all. Instead, like a typical stock mutual fund, they stick to buying company shares they expect will rise. Mr. von Mueffling said the strategy is “the right long-term decision.”

“I’m not saying there aren’t overvalued stocks out there,” he said in an interview. “There are, but trying to short them when the government is printing money is a very, very challenging game,” he said, referring to, among other things, Federal Reserve programs to buy government bonds, which the Fed is widely expected to announce this week.”

That gives new meaning to “herding investors”.  I think sellers play an important role in the price discovery process.  After all, when the fundamentals of an asset are consistently in disequilibrium with its current valuation it makes the system that much more unstable.  Selling, and thus lower prices, can actually make the system more stable in the long-term.  This is just one more sign that nothing has really changed since the Greenspan Fed ended.  And that was a Fed run by a man who admitted that his model was flawed…. 


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QE2 Won’t Save Our Sinking Ship

Randall’s portrayal of Ben Bernanke’s thinking reminds me of a professor I knew who was trying to prove his own version of the Krebs Cycle.  He designed experiments that would theoretically prove he was correct, but – strangely – the students in his lab kept failing to achieve the proper results.  Rather than changing his theory, he realized that something must have gone wrong in the experiment, and he would have the students do it over, and over, until the right results were obtained.  A lot of rats were killed in the process, but no matter--no one really cared about the rats. – Ilene 

QE2 Won’t Save Our Sinking Ship

economy, ship By L. Randall Wray, courtesy of New Deal 2.0

The Fed is between a rock and a hard economic outlook.

Fed Chairman Bernanke is signaling that a second round of quantitative easing will soon begin. In the first round, the Fed’s balance sheet nearly tripled to nearly $2.3 trillion as it bought $1.7 trillion in Treasury securities and mortgage-related securities. Since the Fed appears to want to unwind its position in mortgages, QE2 will probably target federal government debt.

During Japan’s long stagnation, Bernanke was famous for arguing that the Bank of Japan could have done far more to fight deflation. Since the BOJ’s overnight interest rate target was effectively at zero, the conventional policy of lowering its interest rate target was not an option. Hence, Bernanke advocated quantitative, rather than price, activity — the BOJ would purchase assets from banks, driving up their excess reserves, until they would finally make loans to stimulate spending that would reverse the trend of prices.

So when he had the opportunity, he put theory into practice in the US, driving short-term interest rates effectively to zero and filling bank balance sheets with excess reserves by purchasing their assets. So far, the impact has not been significantly different than Japan’s experience. Indeed, Bernanke has been publicly warning of the dangers of a Japanese-style deflation, as US inflation has dropped nearly to zero, well below the Fed’s informal target of two percent.

And so we are now set for round two of QE — more of the same old, same old.

In truth, the Fed has done only two helpful things. First, during the liquidity crisis of 2007 and 2008, it lent reserves to financial institutions that faced a liquidity crisis.…
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Has the Fed Painted Itself Into a Corner?

Has the Fed Painted Itself Into a Corner?

Courtesy of Yves Smith

[unclescrooge.jpg]A couple of articles in the Wall Street Journal, reporting on a conference at the Boston Fed, indicates that some people at the Fed may recognize that the central bank has boxed itself in more than a tad.

The first is on the question of whether the Fed is in a liquidity trap. A lot of people, based on the experience of Japan, argued that resolving and restructuring bad loans was a necessary to avoid a protracted economic malaise after a severe financial crisis. But the Fed has consistently clung to the myth that the financial meltdown of 2007-2008 was a liquidity, not a solvency crisis. So rather than throw its weight behind real financial reform and cleaning up bank balance sheets (which would require admitting the obvious, that its policies prior to the crisis were badly flawed), it instead has treated liquidity as the solution to any and every problem.

Some commentators were concerned when the Fed lowered policy rates below 2%, but there we so many other experiments implemented during the acute phases that this particular shift has been pretty much overlooked. But overly low rates leaves the Fed nowhere to go if demand continues to be slack, as it is now.

Note that the remarks by Chicago Fed president John Evans still hew to conventional forms: the Fed needs to create inflation expectations, and needs to be prepared to overshoot.

This seems to ignore some pretty basic considerations. First, the US is suffering from a great deal of unemployment and excess productive capacity. The idea that inflation fears are going to lead to a resumption of spending (ie anticipatory spending because the value of money will fall in the future) isn’t terribly convincing. Labor didn’t have much bargaining power before the crisis, and it has much less now. Some might content the Fed is already doing a more than adequate job of feeding commodities inflation (although record wheat prices are driven by largely by fundamentals).

From the Wall Street Journal, “Fed’s Evans: U.S. in ‘Bona Fide Liquidity Trap’”:

The Federal Reserve may have to let inflation overshoot levels consistent with price stability as part of a broader attempt to help stimulate the economy, a U.S. central bank official said Saturday.

“The U.S. economy is best described as being in a bona


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Economic Nonsense from Ezra Klein at the Washington Post

Economic Nonsense from Ezra Klein at the Washington Post

jobsCourtesy of Mish

The only genuinely good news in Friday’s jobs report was the much needed shedding of 159,000 government workers of which only 77,000 were temporary census workers.

Shed another million government workers and you have a small start as to what needs to happen. Some don’t see it that way, including Erza Klein at the Washington Post.

Assuming you are able to stomach still more Keynesian claptrap please consider Welcome to the anti-stimulus

The good news: The private sector gained 64,000 jobs in September. The bad news? The public sector lost 159,000.

The government is now impeding an economic recovery. But it’s not for the reasons you often hear. It’s not because of debt or because of taxes. Nor has it scared the private sector into timidity. It’s because, at the state and local level, it’s firing people. There are more than 14 million Americans looking for work right now — to say nothing of the 9.5 million who have been forced into part-time jobs when they want, and need, full-time work — and the government just added 159,000 more to the pool. Consider this: If we only counted private-sector jobs, we’d have had positive jobs reports for the last nine months. As it is, public-sector losses have wiped out private-sector gains for the past four months.

Because the federal government has decided against backing up state and local governments, the bleeding continues, and that scares businesses away from investing in recovery. We create the stimulus that helped the economy survive 2008 and 2009, and we’ve created the anti-stimulus that’s keeping it from recovering in 2010.

Keynesian Claptrap At Its Finest

printing moneyGee, if only the government would hire everyone, there would be no unemployment.

Then again, countless cities, counties, municipalities and states are bankrupt because of absurd levels of spending.

Isn’t that what wrecked Greece?

Non-Solution #1- Raising taxes

Raising taxes burdens ordinary taxpayers for the sole benefit of government bureaucrats who like most of the rest of the population ought to be thankful they have a job at all.

Non-Solution #2 – Printing money and giving it away 

Ezra is clearly a fan of printing money and giving it away to government bureaucrats so the unemployment rate does not drop.

However, printing money and giving it away cheapens the US dollar, making goods and services…
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FOMC Update: Well I Guess the Fed IS That Stupid After All…

FOMC Update: Well I Guess the Fed IS That Stupid After All…

Courtesy of Jr. Deputy Accountant 

Last night, I guessed that the FOMC wouldn’t have the guts to do much of anything this time around simply because there is not an agreement on just how bad things are out there. Apparently I was wrong:

To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.

My guess is that a lone voice shot down a brand new round of Treasury buying with freshly-printed money (sorry, freshly-printed blips) just for kicks and that this was the best they could agree on without starting a shootout at the conference table.

Ahem:

Voting against the policy was Thomas M. Hoenig, who judges that the economy is recovering modestly, as projected. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and limits the Committee’s ability to adjust policy when needed. In addition, given economic and financial conditions, Mr. Hoenig did not believe that keeping constant the size of the Federal Reserve’s holdings of longer-term securities at their current level was required to support a return to the Committee’s policy objectives.

Hahahaha I’m all for dissent as you all know but not sure where this modest recovery is hiding out, must be cowering under the FOMC table where only they can see it.

Anyway, that’s that. 


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Gerald Celente on Global Trends – Interview by Bill Meyer

Gerald Celente on Global Trends – Interview by Bill Meyer

Courtesy of Mish 

Here are some Gerald Celente quotes from his interview by Bill Meyer on April 26, 2010.

"Median household income is below 1999 levels. What kind of imbecile is out there saying we have to raise taxes to keep things going more?"

"This is a stimulus recovery. They are printing phantom money out of thin air based on nothing, and producing practically nothing. It’s digital money not worth the paper it’s not printed on."

"It’s not only the US by the way, and that’s why I want to make this clear. It’s China, It’s Japan, It’s Indonesia, It’s Australia. It’s the UK and all of Europe." 

 
I do not care for Celente’s views on hyperinflation or the US breaking up, but the 48 minute long interview is interesting.

Mike "Mish" Shedlock


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Gerald Celente Predicts “Crash of 2010″

Gerald Celente Predicts "Crash of 2010"

Courtesy of Mish 

Inquiring minds are watching an interview with Gerald Celente who warns about the pending crash of 2010.

Celente: "The crash of 2010 is going to happen as we are forecasting. All the stimulus money from around the world is drying up and what are they going to do for an encore?

We need a productive capacity. You can’t print your way out of this. So whether it’s China, India, the UK, Japan, at some point the stimulus game runs out and the crash happens.

The Federal Reserve or anybody else in the United States Congress isn’t going to stop it from happening. They have Katrina quality rescue skills."

Mike "Mish" Shedlock


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Redoing the Kitchen While the House Burns Down

Redoing the Kitchen While the House Burns Down

Open Treasure Chest Containing Gold Bars

Courtesy of JOHN RUBINO of Dollar Collapse 

Wall Street Journal columnist Thomas Frank is by far the most interesting part of that paper’s dull gray Op Ed page. Back in January he suggested that the world’s governments smack down those wing-nut gold bugs by selling all the gold in their central bank vaults — a plan that most gold bugs found hilarious, since they doubt that central banks have much gold left to sell.

And last week he explained that our current troubles were due, get this, to a lack of trust in government’s ability to solve our problems. A few excerpts:

Once in office, the strategic thinking went, Democrats could slowly brighten the antigovernment mood by setting up various transparency and accountability programs. And they could turn that frown upside-down simply by doing what Democrats do, namely, by using government to solve big public problems, beginning with the grotesquely expensive health-care system.

But as the drama played out, these clever flanking maneuvers failed. Now it seems unlikely that Democrats will ever get their chance to change the public’s attitude toward government in this indirect way; the antigovernment animus struck first, bringing the health-care debate to an end with a summer of unanswered town-hall protests and a voter revolt in Massachusetts.

Bruised by the backlash, President Barack Obama came before the nation last month to address the problem. “We face a deficit of trust,” Mr. Obama observed in his State of the Union address, “deep and corrosive doubts about how Washington works that have been growing for years.”

But what will the president do to assuage those doubts? In his speech, he mentioned a crackdown on earmarks, implementing government transparency measures, and banning lobbyists from his administration’s high positions. They are all good and necessary reforms, of course. But one suspects they will do little to allay the grandiose fears of the broader antigovernment set.

A more daring course would be finally to confront the antigovernment catechism directly, to attack his opponents where they are strongest. For decades, conservatives have explained every episode of government failure by shrugging: What do you expect? That’s just the way government is. When government fails to do the job—even when it’s a government presided over by conservatives themselves—it automatically reinforces core assumptions of the right.

Although this explanation is hollow and a


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Phil's Favorites

Jack Dorsey's decision to quit Twitter is not a vote of confidence in future of social media

 

Jack Dorsey’s decision to quit Twitter is not a vote of confidence in future of social media

Courtesy of Theo Tzanidis, University of the West of Scotland

When Jack Dorsey made the sudden public announcement that he had quit as CEO of Twitter, it was only ever going to have happened in one place – Twitter itself. It reminded me very much of Elon Musk’s entertaining tweet adventures, as Dorsey tossed his resignation letter onto the social medi...



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Zero Hedge

Biden To Impose Tighter Travel Restrictions On Foreigners

Courtesy of ZeroHedge View original post here.

Update (0900ET): More reports about the new CDC-recommended travel restrictions have hit on Wednesday as the Biden White House has all but confirmed its plans to impose new restrictions on travel despite the WHO's pleas that South Africa not be penalized for warning the world about the new variant.

To be sure, the restrictions being considered by the administration would still allow travelers with up-to-date COVID testing (within the last 24 hours) to enter the country. Presently, vaccinated travelers must get tested within three days of boarding their fligh...



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Biotech/COVID-19

Omicron and market sell-off: don't be surprised if there's more turbulence to come

 

Omicron and market sell-off: don’t be surprised if there’s more turbulence to come

shutterstock.

Courtesy of Arturo Bris, International Institute for Management Development (IMD)

Until the Omicron variant hit the headlines, the signs were that 2021 was going to close with a stellar stock-market performance. Most markets have been on the rise since the beginning of the year, with the S&P500 up about 25% and the FTSE All Share index up by about 10%.

There had ...



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Politics

The first Thanksgiving is a key chapter in America's origin story - but what happened in Virginia four months later mattered much more

 

The first Thanksgiving is a key chapter in America’s origin story – but what happened in Virginia four months later mattered much more

In the 19th century, there was a campaign to link the Thanksgiving holiday to the Pilgrims. Bettman/Getty Images

Courtesy of Peter C. Mancall, USC Dornsife College of Letters, Arts and Sciences

This year marks the 400th anniversary of the first Thanksgiving in New England. Remembered and retold as an allegory for perseverance and cooper...



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Chart School

Gold and Silver still working higher

Courtesy of Read the Ticker

Using Gann Angles from zero we can time the next run up, and it is near.

The last two days gold and silver are down on the back of central bankers talking the US Dollar higher in a attempt to off set inflation. A rising dollar is a form of tightening. Also the talk of a faster 'taper' has sent interest rates higher. But Luke Gromen knows this cant not last.

@LukeGromen Externally-financed twin deficit nations with insufficient external financing (ie the US, not Japan) cannot abide rising real rates for long.


RTT Comments: What this means a higher US Dollar makes it harder for those outside the US to buy the vast quantity of US Treasuries. 


U...

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Digital Currencies

Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

 

Stablecoins: these cryptocurrencies threaten the financial system, but no one is getting to grips with them

Safe as houses? iQoncept

Courtesy of Jean-Philippe Serbera, Sheffield Hallam University

Cryptocurrencies have had an exceptional year, reaching a combined value of more than US$3 trillion (£2.2 trillion) for the first time in November. The market seems to have benefited from the public having tim...



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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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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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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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