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Bigworld, With the energy / mining type plays, they tend to get hit along with the broader markets when there is a big market selloff. And they can drop more than the S+P 500, since these sectors tend to be sensitive to the economy. I figure sitting in the money market makes the most sense, it's paying ~5%, and the funds will be available to take advantage of bargains later. Fwiw, I'm thinking of just sitting in cash until the election. While traditional buy / hold has been the best approach over time, it requires a 'faith in the system' that I just don't have anymore, sorry to say.
The irony to the ongoing unraveling of the US is that our would be overlords still need a strong US, since they are challenged like never before by such a potent rival --> China-Russia-BRICS. The US/West globalists can't weaken the US too much since that will mean defeat. They must know this, but they seem hell bent on bringing the US down, so go figure. There has always been a degree of deliberate destabilization of the US population (via stoking divisions, etc), but the current lunacy doesn't make sense. Weaken the fiber of the US too much, and you might as well just hand the 'keys to the kingdom' over to China-Russia-BRICS.
'Whom the gods would destroy, they first make mad'
gfp; We crossed an important milestone this year. We now spend more on debt service than we do on our military. That's usually the beginning of the end for an empire. They now have to continue printing. They can't raise rates like Volker did. Nobody has the guts to do that anymore. The Government isn't going to cut spending. That never happens. They'll just inflate our deficits away. But our days are running short now. We're in a 4th Turning and look at what we have in Washington DC guiding our path. Idiots. Spineless jellyfish. And liberal activists. I'm once again casually looking at real estate alternatives overseas as a potential escape valve. We're probably too old to act on my impulse. But if we were younger we would be in the market for an overseas getaway and a possible 2nd passport. America is just about finished.
GFP: The McALvany Weekly Commentary talked about this in yesterday's episode. They think it's inevitable due to high number of people between 20 and 40 they need to keep employed. If they are not employed they might want to upset the apple cart. It will be good for gold. Shanghai is becoming the most important gold exchange in the world. The Chinese aren't stupid, unlike the asshats that inhabit Washington DC that are purposefully sending us down the drain.
gfp: There is the possibility of using your equity percentage on hard asset plays. Something like Enbridge (ENB) Pays > 7% dividend. RIO Tinto (RIO), another high dividend play with diversified mining. Newmont (NEM) 2.46% dividend yield while you wait for gold and silver to explode to the upside. The precious metal royalty companies are a good risk/reward play. I own Franco-Nevada (FNV), Wheaton (WPM) and Sandstorm (SAND) and some funds i have own Royal Gold (RGLD) and Osinko (OR). You could make up your entire equity investments in hard asset plays, some with decent dividend yields. That's the way to play this marker at this time. We've entered an era of Stagflation for sure. Job opening are down. Layoff are up. Inflation is trending back up. The FED will resume buying Treasuries to keep interest rates low....which is monetizing the debt, which will add gasoline to the inflation fire. Look for guidance to the previous stagflation era. What worked then will probably work now.
gfp: It's all bought and paid for by Soros or other Deep State actors. And Speaker Jellyfish Johnson allowed over $3 Billion in this last Ukraine waste of money to fund NGOs that are going to speed up the importation of more Muslims from the Middle East, as if there aren't enough potential enemies pouring through our southern border, again facilitated by NGOs funded by us taxpayers. Never in the history of mankind has the world seen a country committing suicide in one lifetime like our's is in the process of doing. This is all by design.
Bigworld, Well, the Fed meeting came and went, so what next I wonder? All things considered, it's hard to not have a queasy feeling about the rest of the year. With the Fed now apparently on the sidelines, the uncertainty and angst over the election will grow in importance. Beyond that will be the ongoing economic and inflation data, and the geopolitical / war landmines and potential black swan events.
Fwiw, I used the brief afternoon Powell 'bump' to reduce the stock allocation even more, down to a measly 5%. So just a token exposure to stocks, but will hopefully get back up to a 15-20% allocation after the election. Of course if Trump is elected, all bets are off since the mega freak out by the media and Deep State will be just beginning. They'll likely have the impeachment process rolling even before the inauguration. If Biden wins there could be a sigh of relief on Wall St, until people remember that he'll be 83-87 years old during the 2nd term, yikes.
But after the election the Fed will be free to lower % rates as needed, so the bull market in stocks could resume. Trump is reportedly talking about reining in the Fed's independence, being able to fire Powell, etc. That gives the Establishment even more reason to see that Biden wins the election. Anyway, looks like no shortage of angst in the period ahead. Probably best to watch from the sidelines imo.
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WSJ - Timiraos - >>> Fed to Signal It Has Stomach to Keep Rates High for Longer
The Wall Street Journal
by Nick Timiraos
4-30-24
https://www.msn.com/en-us/money/markets/fed-to-signal-it-has-stomach-to-keep-rates-high-for-longer/ar-AA1nUQof?cvid=482d5eba932247e68c1fe028770906b5&ei=51
An ancient Chinese proverb that counsels “do nothing, and everything will be done” could sum up the Federal Reserve’s latest approach to interest-rate policy.
Fed officials will hold their benchmark federal-funds rate steady at its highest level in more than two decades, around 5.3%, at their two-day policy meeting that begins Tuesday.
Firmer-than-anticipated inflation in the first three months of the year has likely postponed rate cuts for the foreseeable future. As a result, officials are likely to emphasize that they are prepared to hold rates steady, at a level most of them expect will provide meaningful restraint to economic activity, for longer than they previously anticipated.
With no new economic projections at this meeting and minimal changes expected to the Fed’s policy statement, Fed Chair Jerome Powell’s press conference will be the main event on Wednesday. Here’s what to watch:
The inflation setback
Since officials’ meeting in March, the economy has continued to demonstrate strong momentum. But inflation has disappointed after a string of cool readings in the second half of 2023 stirred optimism the central bank might be able to lower rates.
In March, Powell held out the prospect that strong price pressures in January had been a bump on the road to lower inflation. Firm readings for February and March (even if not quite as hot as January) punctured that optimism. They raise the prospect that inflation might settle out closer to 3%. The Fed targets 2% inflation over time.
Powell is likely to repeat a message he delivered two weeks ago, when he said recent data had “clearly not given us greater confidence” that inflation would continue declining to 2% “and instead indicate that it’s likely to take longer than expected to achieve that.”
The focus at this meeting will be how Powell characterizes the interest-rate outlook. While most Wall Street strategists think one or two rate cuts are still possible later this year, the prospect of such a recalibration without clear evidence of economic weakness remains a bigger wild card than it did just a few weeks ago. Some think the Fed might not cut at all.
The Fed’s rate outlook hinges on its inflation forecast, and the most recent data raises two possibilities. One is that the Fed’s expectation that inflation continues to move lower but in an uneven and “bumpy” fashion is still intact—but with bigger bumps. In such a scenario, a delayed and slower pace of rate cuts is still possible this year.
A second possibility is that inflation, rather than on a “bumpy” path to 2%, is getting stuck at a level closer to 3%. Without evidence that the economy is slowing more notably, that could scrap the case for cuts altogether.
Rate policy remains “well-positioned”
Powell is likely to acknowledge that officials have less conviction about when and how much to reduce interest rates. In March, most officials projected two or more rate cuts would be appropriate this year, and a narrow majority penciled in at least three cuts.
Even though officials won’t submit new projections this week, at other meetings without them, Powell has taken the opportunity to reaffirm those one-meeting-old projections or, alternatively, declare them out of date. Wednesday’s meeting is more likely to yield the latter outcome.
At the same time, Fed officials have indicated that they are broadly comfortable with their current stance. This makes a hawkish pivot toward entertaining rate increases unlikely.
“Policy is well-positioned to handle the risks that we face,” Powell said on April 16. If inflation continues to run somewhat stronger, the Fed will simply keep rates at their current level for longer, he said.
As financial-market participants anticipate fewer cuts, longer-dated bond yields will rise. In effect, this achieves the same kind of tightening in financial conditions that Fed officials sought when they raised interest rates last year. Higher yields across the Treasury yield curve should ultimately hit asset values, including stocks, and slow the economy’s momentum.
If inflation stays firm “that is what they will want to see, ultimately,” said Subadra Rajappa, head of U.S. rates strategy at Société Générale.
Low risks of a hawkish pivot
The difficulty for Fed officials in communicating their outlook right now boils down to the conditional nature of the “if/then” statements volunteered by Fed officials, which are premised on one set of outcomes. When the economy performs in ways that officials don’t anticipate, their past statements may no longer be valid.
To that end, Powell might be hard-pressed to rule out any additional increases, even though it is likely premature for officials to meaningfully move in that direction.
But a hawkish pivot, suggesting an increase in rates is more likely than a cut, appears unlikely, for now. Any such shift is likely to unfold over a longer period. It would require some combination of a new, nasty supply shock such as a significant increase in commodity prices; signs that wage growth was reaccelerating; and evidence the public was anticipating higher inflation to continue well into the future.
A key measure of wage growth released Tuesday showed that a sustained cooling in wage growth last year may have stalled in the first quarter. Compensation for private-sector workers rose 4.1% in the first quarter from a year earlier, essentially unchanged from the fourth quarter, the Labor Department said.
Signs that wage pressures had been easing were an important factor allaying some Fed officials’ concerns about stickier service-sector inflation. Additional evidence in the coming months that wage growth is accelerating could trouble officials.
The balance sheet
Fed officials have said they could announce “fairly soon” their plan to slow the runoff of their $4.5 trillion in holdings of Treasury securities, which are part of their $7.4 trillion asset portfolio. That has led analysts to expect a formal plan announcing the slowdown at their meeting this week, though some see a chance this happens at their subsequent meeting in June.
At issue is a program the central bank initiated two years ago to passively reduce those holdings by allowing bonds to “run off” its balance sheet without buying new ones. It acquired trillions in Treasurys and mortgage bonds to stabilize financial markets in 2020 and to provide additional stimulus in 2021.
Every month, officials have allowed as much as $60 billion in Treasury securities and as much as $35 billion in mortgage-backed securities to mature without being replaced. The process is designed to shrink the Fed’s balance sheet, which topped out at nearly $9 trillion two years ago.
At the March meeting, officials appeared to coalesce around a plan to reduce the pace of runoff “by roughly half.” Because high interest rates have kept mortgage-bond runoff at a subdued level, officials wouldn’t change that part of their program and instead lower the cap on monthly Treasury redemptions.
The latest changes aren’t related to the setting of interest rates and are instead designed to avoid a messy upheaval in overnight lending markets that occurred five years ago.
The reduction in assets is also draining the financial system of bank deposits held at the Fed, which are called reserves. Officials don’t know at what point reserves will grow scarce enough to push up yields in interbank lending markets. Slowing the process now is seen as preferable by many officials because it could allow the portfolio runoff to continue for somewhat longer without risking the same kind of market ruckus that occurred in 2019.
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Bigworld, Looks like a devaluation of the Chinese yuan might be in the offing. Observers call this the 'nuclear option' for getting China's export oriented economy moving again, and could also explain their extremely aggressive purchases of gold and oil in recent months. In the past, Chinese devaluations of the yuan have caused turmoil in the US stock market (mid-late 2015) -
>>> Yuan Devaluation Debate Surfaces as Traders Weigh Next FX Shock
Bloomberg
4-28-24
https://www.bloomberg.com/news/articles/2024-04-29/yuan-devaluation-debate-surfaces-as-traders-mull-next-fx-shock
Supporters say sharp currency drop can help China’s economy
But such a move is controversial as it can trigger outflows..
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Bigworld, On the investing side, it's becoming harder to figure out a sensible strategy for the rest of the year. With so many landmines and uncertainties, I decided to lower the stock allocation to 10% for the time being, and also went with the S+P 500 exclusively instead of individual stocks. I figure this keeps things a lot more flexible and liquid, while still earning the ~ 5% in the money market.
Looking at the rest of 2024, it looks like the Fed % policy will no longer be much of a tailwind for the markets, at least until after the election. The ongoing geopolitical / war stuff will be lurking out there, but the election angst will start looming ever larger as the months go by. Regardless of who wins, it's tough to see a great outcome for the markets. If Trump wins then the media and Establishment will go nuts on steroids, so a Biden win might be the best for the financial markets, at least in the shorter term. Anyway, I figure no sense sticking your neck out very far in this environment.
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Bigworld, We know that a key objective is to keep the public perpetually divided and squabbling among ourselves (Red / Blue), and they've done a great job on that front. Another social control method is to maintain an ongoing atmosphere of fear and confusion. These protests and riots have been appearing like clockwork ~ 6 months before every Presidential election.
What needs to happen is for the public to come together and become united, with Red and Blue coming to realize that they are being played against each other. The public has a lot more in common with each other than we do with the would-be overlords (globalist schemers and finance ghouls).
>>> Divide and Rule policy (Latin: divide et impera), or divide and conquer, in politics and sociology is gaining and maintaining power divisively. This includes the exploitation of existing divisions within a political group by its political opponents, and also the deliberate creation or strengthening of such divisions.
- Creating or encouraging divisions among the subjects to prevent alliances that could challenge the sovereign and distributing forces so that they overpower each other.
- Fostering distrust and enmity
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https://en.wikipedia.org/wiki/Divide_and_rule
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GOLD/Copper Developer Ready To Rally; https://www.barchart.com/stocks/quotes/ESM.TO/overview
trades on the OTC as well
https://crweworld.com/article/news-provided-by-globenewswire/3364861/romania-government-announces-strategy-to-align-mining-legislation-to-the-eu-s-critical-raw-materials-act
gfp: Everything about Uklraine is secretive. Biolabs, money laundering, grift.....it's a cesspool. And all the Congress critters that keep voting them more money while allowing open borders into our country should be rounded up and sent to the guillotine for public execution.
GFP: YOU KNOW THE OLD SAYING...THERE IS NEVER JUST ONE COCKROACH. I expect more failures to happen. Commercial Real Estate is not recovering. In some cities it's actually getting worse. And the FDIC is Trillions of Dollars underfunded.
gfp: I don't want riots in the streets either. But the Deep State and minions like George Soros are certainly funding that ultimate result. I think fostering upheaval is all they have left as their Presidential campaign. If T trump wins the left will unleash havoc with their Hamas groups, ANTIFA, BLM, etc. If the Deep State steals the election and Dementia Joe is reinstalled to allow Obama's 4th term then all bets are off. There will be calls for a Constitutional Convention to disband the country. And I would certainly support that outcome. I don't want to share governance of what remains of this country with the likes of liberal politicians from Commiefornia. Illinois, Oregon, New York, Taxachussetts, etc. I want as little to do with liberals as I possibly can. We share almost nothing in common. We aren't even living in the same reality. I'd rather be done with them. Family members included.
Slippery slope - >>> US secretly sent long-range missiles to Ukraine
BBC
4-25-24
https://www.msn.com/en-us/news/world/us-secretly-sent-long-range-missiles-to-ukraine/ar-AA1nBlTl?cvid=6b93c10a85934001d09ebb1984bad317&ei=58
Ukraine has begun defending territory with long-range ballistic missiles secretly provided by the United States, US officials have confirmed.
The weapons were part of a $300m ($240m) aid package that was approved by US President Joe Biden in March, and arrived this month.
They have already been used at least once to strike Russian targets in occupied Crimea, US media report.
It is not clear how many of the weapons have been sent to Ukraine.
The US had previously supplied Ukraine with a mid-range version of the Army Tactical Missile Systems (ATACMS) but had been reluctant to send anything more powerful, partly over concerns about compromising US military readiness.
However, Mr Biden is said to have secretly given the green light to send the long-range system - which can fire missiles distances of up to 300km (186 miles) - in February.
"I can confirm that the United States provided Ukraine with long-range ATACMS at the president's direct direction," State Department spokesman Vedant Patel said.
He added that the US "did not announce this at the onset in order to maintain operational security for Ukraine at their request".
The longer-range missiles were used for the first time last week to strike a Russian airfield in occupied Crimea, Reuters quoted an unnamed US official as saying.
And the new missiles were also used in an attack on Russian troops in the in the port city of Berdiansk overnight on Tuesday, the New York Times reported.
Kyiv has recently stepped up its calls for Western assistance as Russia makes steady gains in its invasion.
News of the weapons shipments comes after Mr Biden signed a new $61bn military aid package for Ukraine into law following months of congressional gridlock.
"Now we will do everything to make up for half a year spent in debates and doubts," Ukrainian President Volodymyr Zelensky said of the newly approved aid.
"What the Russian occupier was able to do during this time, what Putin is now planning, we must turn against him."
Mr Zelensky recently warned that a full-scale Russian offensive is expected in the coming weeks after Ukraine's loss of the city of Avdiivka during the winter.
Ukrainian officials have previously blamed recent delays in military aid from the US and other Western allies for the loss of lives and territory in the war.
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Another regional bank failure - Republic First Bank -
>>> Regulators close Philadelphia-based Republic First Bank, first US bank failure this year
Associated Press
4-26-24
https://www.msn.com/en-us/money/companies/regulators-close-philadelphia-based-republic-first-bank-first-us-bank-failure-this-year/ar-AA1nK8gv?cvid=8494263e32044cc8dd2049b02657979f&ei=23
WASHINGTON (AP) — Regulators have closed Republic First Bank, a regional lender operating in Pennsylvania, New Jersey and New York.
The Federal Deposit Insurance Corp. said Friday it had seized the Philadelphia-based bank, which did business as Republic Bank and had roughly $6 billion in assets and $4 billion in deposits as of Jan. 31.
Fulton Bank, which is based in Lancaster, Pennsylvania, agreed to assume substantially all of the failed bank's deposits and buy essentially all of its assets, the agency said.
Republic Bank’s 32 branches will reopen as branches of Fulton Bank as early as Saturday. Republic First Bank depositors can access their funds via checks or ATMs as early as Friday night, the FDIC said.
The bank's failure is expected to cost the deposit insurance fund $667 million.
The lender is the first FDIC-insured institution to fail in the U.S. this year. The last bank failure — Citizens Bank, based in Sac City, Iowa — was in November.
In a strong economy an average of only four or five banks close each year.
Rising interest rates and falling commercial real estate values, especially for office buildings grappling with surging vacancy rates following the pandemic, have heightened the financial risks for many regional and community banks. Outstanding loans backed by properties that have lost value make them a challenge to refinance.
Last month, an investor group including Steven Mnuchin, who served as U.S. Treasury secretary during the Trump administration, agreed to pump more than $1 billion to rescue New York Community Bancorp, which has been hammered by weakness in commercial real estate and growing pains resulting from its buyout of a distressed bank.
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Bigworld, Yes, the rest of the year looks unpredictable to say the least. Fwiw, I decided to switch the stock allocation away from the individual stock side, and will just use the S+P 500 exclusively. I figure this will allow for a 'fast exit' if needed.
Btw, on the political front, have you noticed that Jamie Dimon is suddenly all over the news? It appears they may be positioning him as an eventual replacement for Biden (?) Just a guess, but looks like something is up.
Beyond the usual Rep vrs Dem stuff, it's obvious there is a growing rift within the ruling elite factions, with the Neocon wing increasingly at odds with the traditional Trilaterals / Bilderberg side. The Neocon faction desperately want the 'US bombs Iran' scenario, since Iran is on the cusp of getting a nuclear weapon. Meanwhile the Trilaterals (Biden & Co) are adamantly opposed to 'US bombs Iran', and instead are focused on using the Ukraine war to wear down Russia.
So there is an 'internecine' struggle going on within these policy factions, and the outcome of the US election will determine which side wins. Therefore the possibility exists for some desperate measures by these factions in the months ahead. The Neocon side needs the Reps back in so the 'US bombs Iran' can happen, while the Trilateral / Bilderberg side wants Biden / Dems to remain in power. Since they (Trilaterals) have the ability to fix a close election, the Neocon side might have to resort to other means out of desperation. For them the bottom line is existential -- ie that Iran must not get nuclear weapons, and this overrides all other considerations.
Anyway, let's hope sanity prevails, and the most extreme scenarios don't happen. Having lived through the JFK / RFK / MLK period, we definitely don't want a repeat of 1963 / 1968.
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https://nypost.com/2024/04/26/us-news/george-soros-maoist-fund-columbias-anti-israel-tent-city/
George Soros. The dark money behind almost every plot to destroy the Country. The real life embodiment of the Anti-Christ. I hope he suffers a gruesome death as soon as possible. And his son Alex with him.
gfp; I am of the opinion that the Deep State will try to create as much upheaval this summer and into the fall leading up to the election as they can. You look at the college campus pro-Hamas protests. There is no way that has organically spread like a cancer. It is orchestrated, paid for, promoted and enabled by the Deep State using NGOs, dark money pools, and government operatives. They will either make thing so bad that the election is put in jeopardy, or they will steal the election AGAIN thereby triggering a civil war. Or they will resign themselves to Trump winning and once again use everything at their disposal to thwart his Presidency. More phony impeachments, more attacking his nominees, policies, etc. The trouble in a 50-50 country is that the Democrats stick together probably under threat of kiddie porn being found on their laptops. While the Republicans themselves are split 60-40. ^0% being conservative with some principles and 40% are gutless, self serving RINOs that would sooner vote with the Democrats than support Trump.
gfp: California is a beautiful place. It's too bad the liberals took it over and ruined it. The longer Democrats completely control Commiefornia the more unlivable it becomes.
>>> GDP: US economy grows at 1.6% annual pace in first quarter, falling short of estimates while inflation increases
Yahoo Finance
by Josh Schafer
Apr 25, 2024
https://finance.yahoo.com/news/gdp-us-economy-grows-at-16-annual-pace-in-first-quarter-falling-short-of-estimates-while-inflation-increases-123328820.html
The US economy grew at its slowest pace in nearly two years last quarter as inflation topped Wall Street estimates.
The Bureau of Economic Analysis's advance estimate of first quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 1.6% during the period, missing the 2.5% growth expected by economists surveyed by Bloomberg. The reading came in significantly lower than fourth quarter GDP, which was revised up to 3.4%.
Meanwhile, the "core" Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 3.7% in the first quarter, above estimates of 3.4% and significantly higher than 2% gain in the prior quarter.
The data's release comes as investors try to gauge when the Federal Reserve will start cutting interest rates and if the central bank can achieve a soft landing, where inflation comes down to its 2% target without a significant economic downturn.
“This report pours cold water on the misleading narratives of a reaccelerating economy," EY chief economist Gregory Daco wrote in a research note following the print. "As we enter the spring, the underlying growth mix continues to signal robust momentum, but demand growth is gently cooling leading to easing inflationary pressures.”
Economists pointed out that a large reason GDP for the first quarter came in softer than expected was weaker data in trade and exports, which together weighed on GDP growth for the quarter by about 1.2 percentage points.
"The deceleration in GDP growth will not worry the Fed as the details are better than the headline would suggest," Oxford Economics chief US economist Ryan Sweet said.
"The headline number really belies the underlying strength," Deutsche Bank senior US economist Brett Ryan told Yahoo Finance.
Ryan said the print doesn't cast further overall concern on a potential slowdown brewing in the US economy and believes areas like inventories and exports, which feed into GDP, will rebound next quarter.
He noted that the surprise rise in inflation was the "big story" from Thursday's data release, and markets seemed to agree.
The 10-year Treasury yield (^TNX) added nearly seven basis points to reach above 4.7% for the first time since early November 2023. All three major indexes shot lower after the release. In morning trading, the S&P 500 (^GSPC), Dow Jones Industrial Average (^DJI) and Nasdaq Composite (^IXIC) were all off more than 1%.
"The recent firmness in inflation will keep interest high for longer," Sweet wrote.
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Bigworld, It looks like Jamie Dimon may be right about the return of 1970s type stagflation. Rickards has also been predicting a recession later this year, combined with stubborn inflation.
Fwiw, I dropped the stock allocation down to 18% (from 28%), so will try to go with that. On the geopolitical front, while we managed to avoid the 'US bombs Iran' scenario (for now), the Ukraine situation appears even more dangerous than ever. Add in the upcoming election angst and uncertainty, and I figure it makes sense to limit the stock exposure.
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Ombow, Looks like LWLG may have broken key support over the last two days. The short position was already over 16%, per Yahoo Finance.
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Bigworld, Calif still has the best year-round weather in the country, which is a big plus as you enter the retirement years. Imagine a place where almost every day has perfect weather. Not having the cold winters and summer humidity would be enough for me. It might get boring, but I'll take it :o)
San Luis Obispo looks especially nice, and has been called 'the happiest place in America'. My dad went out there frequently (Vandenberg AFB), and loved the area. The politics, who cares really, although it has meant higher taxes, and real estate out there is expensive. But ---> no cold / snow and no sweltering summer humidity, and lots of tan beach babes :o)
GFP: Nice place there in Commie-fornia. But I could never live there. We have some rich friends who live in Santa Barbara. You can see the Pacific from their living room. Zillow says it's worth about $6 Million. They also have a house in Tahoe. Their main house in SB is spectacular. But it would not surprise me if they eventually sell both California places when they retire and moved to a more tax friendly (red) state.
Bigworld, With the stock market, it's hard to argue with its resilience over very long periods. But while it's rare for a really long drought, it does happen. One of the longest 'nowhere' periods for stocks was from 2000 --> 2013, where it took 13 years for the S+P 500 to finally get above its 2000 peak. During the period from 1966 - 1982 it took even longer --> 16 years for the DJIA to get back to its peak from 1966.
The approaching debt bomb crisis represents something that hasn't happened before --> the US dollar losing its status as the world's main reserve currency. When the British pound lost its world's reserve status between WW1 and WW2, the US dollar was there to gradually take over that role. As the US dollar system begins teetering in earnest, some possible scenarios could include the new BRICS currency stepping in, and / or the SDR - Special Drawing Rights of the IMF taking a key role as the world's reserve currency.
The timeline is the big unknown, but I'm figuring things start to hit the fan as the US debt enters the $40-50 trillion range. Just a guess, but if so then investors would want to start reducing their bond allocations in a few years from now (2026-27), and move away from financial assets toward more hard assets. Fwiw, I figure we still have a couple years, but the debt reaching $40 tril will be the signal that the debt bomb is approaching the global 'confidence is lost' level for the US dollar.
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Bigworld, Your new place seems like a great choice, and the 3 acres allow for plenty of 'elbow room' :o) And being fairly rural will spare you the many urban problems, traffic, etc. Plus your real estate taxes are ultra low. N. Carolina does have a 4.75% income tax rate, but they don't tax Social Security benefits. Here in PA the income tax rate is a little less (3.07%), but we are one of only six states with an inheritance tax, so that's a bummer.
Real estate seems like the best way to keep up with inflation. There are expenses and maintenance hassles, but you have to live somewhere. Fwiw, I skipped the 'big house' stage and went right to a condo (for 32 years), but a house would have been a better investment. But the condo is still up 4-5 fold since 1992, so can't complain too much.
Check out the view from this place in San Luis Obispo Calif. Kind of pricey out there, but those warm sunny winters would be great for the retirement years -
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gfp: For now it looks like the Magnificent 7 have peaked and will return to earth. NVDA is actually in a bear market now, down over 20% from its peak. Tesla is faltering. The markets were expecting 6 rate cuts. They may not get a single one. Inflation is coming back, led by oil prices. And since Dementia Joe sold off our Strategic Oil Reserve to help with the mid term elections in 2022 we have no cushion to combat geopolitical displacement of oil production. Under the wrong Middle East outcome we could see oil surpass the previous highs near $150 a barrel.
With gold I see it as a reserve of purchasing power. Its apparent rise is really just the Dollar getting weaker. The DXY is not an accurate measure as it is the Dollar being compared to other currencies that are themselves being debased.
As the Treasury rolls over all our short term debt that was sold at ZIRP levels and now must pay out over 4% the Interest on our debt is going to balloon from $1 Trillion to about $1.5 Trillion per year. The treasury can't afford to pay it, so they will adopt Japan style Yield Curve Control mechanism to kick the can a few more years down the road. That's monetization, and the Dollar's value will plummet accordingly. So the current level of inflation might soon be viewed in hindsight as "the good old days". All fiat currencies eventually go to zero. Gold retains value.
gfp: The way I view one's primary residence is as a cost deferral vehicle. What I mean is that if you own your home or condo outright you free yourself from the burden of mortgage or rent payments, allowing your income to stretch farther. But for this scenario to work at its best that residence needs to be in a favorable location....and area where law enforcement is promoted and not handicapped by misguided liberal notions, where the taxpayer is factored into spending decisions by government thereby keeping real estate taxes low to moderate. In some high tax locations owning a residence there is a net negative. Places like New Jersey, Connecticut, Commiefornia, etc. I feel very good about our situation. Small acreage should I feel compelled to do more food production. Conservative county with ultra low taxes and where law enforcement is prioritized. Good neighbors with weapons they have grown up using since childhood. Close enough to necessities but outside any city limit with no public transportation options to get here. Our little subdivision of only 4 houses is on a one way private road that we can close off by parking one vehicle at the only entrance that would have drainage ditches on either side. M wife and I actually own the smallest house (3,000 sq ft) on he smallest lot (3.04 acres). Across our private road the owners are selling their 20 acre with about a 4500 sq ft mini mansion for about $1.5 million. The neighbors on the other side are finishing new construction of a 3800 sq ft house on a lot over 5 acres, and the neighbors at the end of the private road have about a 4,000 sq ft house with pool on at least 10 acres. They have horses and a barn to keep them in. That's it. Semi rural. This is our last stand. We will meet the nation's collapse on our own ground.
Bigworld, It looks like the Middle East tensions could start subsiding, with both sides looking to back away from the precipice. Last night the S+P 500 futures tanked to near 4950, then recovered by morning, so I'm thinking that was most likely the near term bottom for the stock market. Time will tell, but I decided to move back up to 28% with the stock allocation, so will try to hold on to that for the recovery.
Fwiw, my strategy for this year is evolving into a Core / Flex approach, with 12% as the Core LT buy / hold, and the rest (~16%) as 'Flex', which can be traded depending upon market conditions. I'm hoping to not have to trade very much, but will take profits as they build up if it's clear the market will be tanking, as happened recently. This drop was pretty easy to see coming, and looks like the rest of the year could be choppy.
I figure there will be 5 main factors (below), with the geopolitical side hopefully fading in relative importance. It looks like Fed policy may no longer be a big plus for a while since they are moving away from their dovish narrative. So the economic / inflation numbers and corporate earnings will need to be decent. Meanwhile the election uncertainty will provide a queasy background vibe. Anyway, I'm hoping for an oversold bounce in the weeks ahead, and then probably a choppy market for the remaining year. Just a guess though..
- Fed Policy
- Corporate Earnings
- Economic / Inflation
- Geopolitical
- Election
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Bigworld, Another aspect to this Middle East situation is that it can potentially affect the upcoming election dynamics in a big way. If the 'US bombs Iran' scenario is in fact an absolute necessity for halting Iran's nuclear weapons program, and that program is now very close to its goal, then there could be a strong existential incentive within Netanyahu's extreme coalition to see the Rep Party return to power in the US. But since the main globalist factions want nothing to do with Trump again, this potentially sets up some hair raising internecine scenarios right out of 'The Day of the Jackal'. Let's hope not, but logic says there could be even more election related intrigue than usual.
Btw, speaking of that 'Day of the Jackal' novel / movie --> back in college (1973-75) in the dorm I met a student from France whose father was in a French prison for his supposed role in that military plot against de Gaulle. His dad was a French military officer (major or colonel I think), and ended up in the slammer. Anyway, people in the US tend to dismiss 'conspiracies', but in Europe they have been part of the fabric for centuries.
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Bigworld, Thanks. The McAlvany commentary makes a good case for not having too much in financial assets (stocks, bonds, cash), and for increasing the hard asset side (real estate, land, gold, silver, commodities, etc).
Upping the hard assets definitely seems like a good idea. Along those lines, it could make sense to start counting one's home / real estate as an 'investment class', and include it in the allocation mix. So maybe a 50-50% mix between financial and hard assets, and then as the debt bomb approaches, the hard asset side can be increased. Bonds seem like the most vulnerable class over the long haul. Since the debt bomb timeline may be longer than we think, I figure it makes sense to have all bases covered, but the hard asset side will become more important for long term wealth preservation.
In addition to the rapidly growing debt bomb (34 tril and rising fast), another factor in the demise of the dollar reserve system is BRICS expansion and their planned gold-linked BRICS currency. However it appears the timelines have been slipping, since Saudi Arabia and Argentina have backed out of joining BRICS (for now). It also appears the gold-linked BRICS currency has encountered headwinds from India, since they see it as favoring China too much.
Anyway, I figure we have a period of years before things unravel in earnest, but shifting more into hard assets seems like the logical path.
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gfp: Insiders are privy to more information than the average investor. And if they are selling 50:1 over buying there must be a lot of Insiders who see real trouble on the horizon. At one point Wall Street was predicting 6 interest rate cuts. Then it was 3 cuts. Now it looks doubtful that there will be any cuts. And I've read article suggesting the Fed will be forced into a Japan style Yield Curve Control to keep what the Treasury has to pay in interest on our unpayable debt from eating up 50% or more of the budget. Interest is already the largest line item in the Budget, and with the Treasury having to roll over Trillions at higher rates the interest expense will approach %1.6 Trillion by the end of the year. That's 1/3 of tax receipts. And that's only the carrying cost of all our debt.
gfp: Listen to this weeks McAlvany Weekly Commentary. Insider selling is 50:1 over Insider buying. That's not a good sign for equities going forward.:
https://mcalvany.com/executive-insiders-unloading-their-own-stocks/
Rickards - >>> AI, Gold and Nuclear War
BY JAMES RICKARDS
APRIL 16, 2024
https://dailyreckoning.com/ai-gold-and-nuclear-war/
AI, Gold and Nuclear War
So-called artificial intelligence (AI) is taking the world by storm. Meanwhile, gold has shot up like a rocket over the past couple of months.
In mid-February, gold was trading at $1,990. Two months later, gold is trading above $2,400 — a $410 gain in just two months.
So here’s a question:
Is there a connection between AI and gold? It seems like an odd question. But as it turns out, the answer is yes. And surprisingly, there has been for decades. It involves the Cold War between the U.S. and the Soviet Union.
In the early 1980s, the KGB was deeply concerned about the possibility of a nuclear first strike by the United States. At the time, Yuri Andropov was head of the KGB.
Andropov’s fear of a nuclear first strike by the U.S. was based in part on the 1980 election of Ronald Reagan and Reagan’s plan to install Pershing II intermediate-range missiles in Europe.
Those missiles could be armed with nuclear warheads and could strike the Soviet Union within minutes of being launched. This put Soviet nuclear forces on a hair-trigger alert. They adopted a “launch on warning” posture.
This means that as soon as credible evidence of a planned first strike was discovered, the Soviet Union would launch its own first strike to avoid destruction of its forces.
The irony was that the U.S. had no actual plans to launch a first strike, but the Soviet Union didn’t know that. Reagan’s speeches about the “evil empire” did nothing to calm Soviet concerns.
AI and Nuclear Readiness
In response, the Soviets developed a primitive (by today’s standards) AI system called VRYAN. That’s a Russian acronym for: sudden nuclear missile attack.
VRYAN took about 40,000 military, economic and political inputs and computed the relative strength of the Soviet Union compared with the United States expressed as a percentage output. The model used a value of 100% for equivalence of the USSR to the U.S.
The Soviet leadership was comfortable that the U.S. would not launch a nuclear first strike if the USSR could maintain a value of 60%, although they viewed 70% as providing a more comfortable margin.
A VRYAN output of 40% was considered the critical threshold at which the U.S. might feel it could launch a first strike with acceptable risk that the Soviets would not be able to mount a successful second strike.
VRYAN output values were in steady decline in the dangerous period from 1981–1984 (in 1984, the VRYAN output had declined to 45%).
The VRYAN AI system relied on by the KGB and the Soviet Politburo was an important factor in the Soviet decision in 1981 to vastly increase intelligence collections aimed at detecting U.S. preparations for a first strike.
Close Call
This intelligence collection effort was complicated to the point of extreme danger by the fact that the U.S. and NATO were conducting a war game in late 1983, code-named Able Archer 83. This war game was to practice a nuclear strike on the Soviet Union.
It turned out that the U.S. was rehearsing a nuclear first strike at the same exact time that the KGB was looking for evidence of a nuclear first strike. Able Archer 83 provided the KGB with more than enough reason to suspect the U.S. was indeed preparing for a first strike under cover of a war game.
VRYAN’s AI output on relative U.S. strength was compounded by massive U.S. intelligence failures regarding Soviet intentions. U.S. intelligence analysts assumed that the future would resemble the past, and that Soviet alerts were really propaganda designed to halt the U.S. deployment of Pershing II intermediate-range nuclear missiles in Europe.
U.S. intelligence analysts were also guilty of what’s called mirror imaging: the belief that because you know your own intentions, your opponents must share your view. In this case, the U.S. assumed that because they had no intention to launch a first strike, the Soviets must have understood that intention and would therefore have no cause for concern.
In fact, the Soviets had the opposite view based in part on VRYAN AI output.
The world came extremely close to World War III and a nuclear holocaust as a result of this sequence of events and misperception of intentions. It was only when one U.S. general decided not to escalate in the face of Soviet first strike preparations that both sides deescalated, and the crisis eventually receded.
The information above wasn’t fully understood by either side at the time of the escalation. On the U.S. side, it wasn’t until the 1990 publication of a study entitled The Soviet War Scare by the President’s Foreign Intelligence Advisory Board (PFIAB) that something like the full story was revealed.
Nuclear War Threats: Good For Gold
This study was originally classified above TOP SECRET. (Most citizens assume that TOP SECRET is the highest level of classification. But there are secret access codes that limit circulation of certain documents even among those cleared with TOP SECRET access.
In the case of The Soviet War Scare, those restrictions had the code names UMBRA, GAMMA, ININTEL, NOFORN, NOCONTRACT, ORCON. I can’t discuss my own TOP SECRET clearances, but I can inform you that very few intelligence operatives would have been able to view the PFIAB report based on those restrictions.
So what does all this have to do with gold?
Buried inside The Soviet War Scare was this passage about the U.S. assessment of KGB collection requirements related to a potential nuclear war:
VRYAN Collection Requirements – Throughout the early 1980s, VRYAN requirements were the No. 1 (and urgent) collection priority for Soviet intelligence… They were tasked to collect:… monitoring of the flow of money and gold on Wall Street as well as the movement of high-grade jewelry, collections of rare paintings and similar items. (This was regarded as useful geostrategic information.) (Emphasis added)
And there it is! The U.S. assessed that the KGB tracked the movement of gold as a leading indicator of nuclear attack.
I didn’t find this completely surprising. From 2004–2010, I was co-director of a CIA effort called Project Prophesy that looked at capital markets activity as an early warning of an enemy attack.
Gold was one of the valuable assets that was on our list of items to track. The idea was that if a general or political leader had advance information about an attack, they’d convert their wealth to gold in safekeeping in order to financially survive the fallout.
The bottom line is that this intelligence reporting and AI system are not ancient history. Today, the world is closer to nuclear war than at any time since the Able Archer scare in 1983. Gold is once again on the move, having risen from $1,830 per ounce on Oct. 5, 2023, to over $2,400 today. That’s a 31% gain in six months.
Is this a coincidence? Hardly. A close correlation of huge gains in gold with serious threats of nuclear war is exactly what one should expect.
Unfortunately, those threats of nuclear war are not going away soon. One need only look at the Iranian attack on Israel this past weekend and the possibilities of further escalation.
There are also situations in Ukraine, Russia, NATO, Gaza, the Red Sea and the Suez Canal revealing that the world is a more dangerous place than it has been for decades.
That’s bad news for the world but good news for gold investors. The rally we’ve seen in the past six months is just getting started.
<<<
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Bigworld, In addition to RSI for the main stock indices, another indicator I'm using is the $VIX, since when its RSI approaches or reaches overbought (RSI of 70), this has consistently identified stock market bottoms (see below). The $VIX had an RSI reading over 70 yesterday, and is currently ~ 68, so this suggests that a near term bottom could be near.
I figure a lot will depend upon Israel's response to the Iranian bombing. Since the US has told Netanyahu pretty bluntly that the US will not support his retaliatory efforts, it seems doubtful that he'll do anything really big. Who knows, but I figure that after a few more days the financial markets will go back to concentrating more on corporate earnings. Anyway, I re-upped my stock allocation to 20%, so will go with that for now. I figure a conservative approach might be 12.5% as Core (LT buy/hold), and 7.5% as Flex, but still a 'work in progress'.
2022 - late Sept / early Oct
2023 - March
2023 - August
2023 - late Sept thru Oct
2024 - mid Feb
2024 - April
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Chart-wise, the main stock indices are nearing oversold, based on the RSI (under 30 is oversold) -
DJIA ------ 31
S+P 500 - 39
Nasdaq -- 42
Russell --- 37
Wall Street is waiting to see Israel's response to the Iranian bombing, but if nothing happens soon then the near term bottom in stocks might be in (?)
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Bigworld, Concerning that repo market news (previous post), the Fed will soon be easing back on the current QT policy, with the monthly QT being reduced from $60 bil to 30 bil (see below). So even if there are no % cuts until later in the year, the reduction of QT provides some added liquidity to the system.
But since the longer term Treasury auctions have not been going well, they are reportedly "shifting to financing America’s deficit mostly with short-term debt". Not being able to sell longer term bonds does sound ominous. With my own Treasury bond allocation, I only went out 2.5 years (to Dec 2026), in part because the US debt monster is growing so fast, and might conceivably reach 40 trillion by late 2026. Fwiw, I figure that is the debt level (40 trillion) where the growing debt bomb could really become a problem, so my tentative strategy is to have the bond allocation much reduced by 2027. I figure the major problems start as the US debt moves from 40 ---> 50 trillion. But what to use instead of bonds? Hard assets, real estate, commodities would be the logical place, as you have already done.
>>> “We’ve been losing liquidity as people and companies pull out money to pay taxes,” said Thomas Tzitzouris, head of fixed-income research at Strategas. “We’re in a bit of an air pocket that’s letting the bond market float more freely and yields rise.”
One line of support is likely to come from the Fed. Minutes from the Fed’s March meeting, released last week, showed that policymakers are looking to slow the pace of running down the central bank’s large holdings of bonds accumulated to prop up the economy. They would likely reduce the rate at which they let Treasurys mature to $30 billion a month, half of the current $60 billion pace.
Balance-sheet runoff, known as quantitative tightening, is meant to drain the banking system of reserves and increase the market’s share of the sovereign-debt pile. With the Fed paring back that program, and prepping to stop it sometime in the future, investors will have to absorb a smaller net share of Treasury securities. That could support bond prices and remove some upward pressure on yields. <<<
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174235707
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>>> Fed's reverse repo facility plummets to lowest level in nearly three years
Reuters
Apr 15, 2024
By Michael S. Derby
https://finance.yahoo.com/news/feds-reverse-repo-facility-shrinks-174128320.html
NEW YORK (Reuters) - A key Federal Reserve facility that takes in cash from money market funds and others saw inflows drop sharply on Monday.
The U.S. central bank's reverse repo facility took in $327.1 billion, down $80.2 billion from Friday, marking the lowest level of inflows since the facility took in $293 billion on May 19, 2021.
The Fed's reverse repo facility exists to put a floor underneath short-term rates, taking in cash from eligible firms in loans collateralized with Treasuries held by the central bank. Inflows have been contracting for some time as the Fed withdraws liquidity from the financial system by allowing its holdings of bonds to shrink.
Monday is the deadline for most U.S. tax returns and a key settlement date for Treasury debt auctions, which can influence activity at the reverse repo facility. Scott Skyrm, executive vice president at money market trading firm Curvature Securities, says money is coming out of reverse repos to deal with financing the Treasury's debt issuance.
<<<
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ABC News - >>> US to Israel: If you strike back at Iran, you'll do it alone <<<
https://www.yahoo.com/news/us-israel-strike-back-iran-162024611.html
Finally some sanity prevails. Next, Biden & Co need to ditch their ultra risky Ukraine strategy. Unlike Iran, Russia has 6000 nuclear weapons, including hypersonic missiles, and everything is on a hair trigger. A week ago the lunatic Zelensky bombed the Zaporizhzhia nuclear powerplant (!) Enough of the madness -- > return to Kissinger's détente strategy before we bumble into WW 3 -
>>> Russia test-launches an intercontinental ballistic missile <<<
https://abcnews.go.com/International/wireStory/russia-test-launches-intercontinental-ballistic-missile-109172270
>>> Attacks on Zaporizhzhia nuclear plant significantly increase accident risk, IAEA head says <<<
https://apnews.com/article/russia-ukraine-war-zaporizhzhia-nuclear-drone-a28710a691f3259b5dd6586787838b60
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Bigworld, Yes, the debt bomb is entering the later innings, but I figure the finance magicians can likely hold things together for a number of years. I figure the US debt hitting 40 trillion could be a key turning point, and then sometime prior to it reaching 50 trillion the debt / dollar crisis will arrive. But just a guess.
Fwiw, I used this morning's bounce to reduce the stock allocation a little more, down to 12.5%. So that should do it (hopefully). I sold off the liquid S+P 500 index portion, and kept the individual stocks and sector ETFs. 200 plus individual stocks are too cumbersome to sell, so the idea is to keep them (12.5%) as long term buy / hold. Anyway, that was the original plan, so I'll try to stick to it. I figure the cash proceeds will earn ~5% with no risk, and can be re-deployed later. Buying a 1X short ETF (SH) to hedge the remaining stock exposure is an option at some point, but I figure that earning 5% in cash is good enough. The permanent 12.5% in stocks will benefit as the stock market eventually recovers. Anyway, I figure it's best to have all bases covered, and never go to zero in any asset class.
Anyway, still a work in progress, but it turned out that 28% in stocks was clearly too high for an aging nervous nellie like me. Buffett and Bogle both said that the key is finding the right allocation you can live with (without insomnia or daily Tagamet). I thought the old rule of subtracting your age from 100 might work, but 31% in stocks is clearly too high on the 'Tagamet scale'.
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gfp: The underlying fundamentals of the economy are horrific. The only thing holding up the whole house of cards is that the Federal government is still able to pull future revenues into present era spending. The Federal government will spend about $3 Trillion this fiscal year ABOVE what they take in in taxes. Lots of those Dollars find their way to Wall Street one way or another. Hence we have a speculative bubble in almost all asset classes. At some point....next week, next month, next year....the debt bomb is going to explode and take our way of life down with it.
Ed Dowd is one of the elite number crunchers in the world. His analysis of the mortality and morbidity caused by the Codid vaccines is unparalleled:
https://www.zerohedge.com/political/lies-are-just-unreal-ed-dowd-rages-govts-media-continue-pretending-massive-health-crisis
Ombow, Looks like LWLG is teetering again at key support (descending triangle formation). It fell through 4, but chart-wise the actual support level is ~ 3.90, and this is the fifth time it has tested this key support in the last six months (plus an additional four times earlier in 2023). So it could soon be 'bombs away' time, but we'll see if it can hold again, or if some news flow might arrive to give it a saving bounce. The descending triangle is a classic bearish chart formation -
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Bigworld, Amazingly the stock market futures are currently up, so go figure. Possibly Fed / PPT activity, as happened around Oct 7. But the market had already sold off considerably, so perhaps there's a relief rally before the market weakens again (?)
I figure 28% was too much to have in stocks anyway, so will roll with 15% for now. There are plenty of reasons to be wary -
1) Geopolitical / war risks
2) Fed delaying % rates cuts due to persistent inflation
3) Growing election angst
4) Stock market has already runup big since Oct, so no sense watching those gains evaporate
5) Black swan events
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gfp; This should be an interesting week in the markets.
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