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Bigworld, Thanks for the Rinear update. The bottom line with the made-up economic data is that it still moves the financial markets as if it was legit data, at least in the near / mid term. Longer term, the actual economic situation (debt bomb, etc) will win out, but that might take years. So for us investors to make money in the market in the near / mid term, we need to act on the bogus data as if it was real. So we basically live in a financial 'twilight zone', lol.
Since the Fedsters routinely cook the data to fit their desired goals, the main question for us investors is to determine what the Fedsters want at any given time. If we assume they want the incumbent to win the upcoming election, then the Fed should logically want the financial markets fairly buoyant over the next 6 months, or at least stable. The Fed has to balance their main job of getting lower inflation, with the added goal of helping Biden. Juicing the stock market will help Biden, but hurt the inflation battle, so I figure we're likely in for a sideways market with a modest upside bias.
That may be the Fed's goal, but they can't control everything, and numerous landmines are lurking out there beyond their control. But assuming nothing blows up, the next question for investors is whether the modest potential upside over the next 6 months is worth the risk? 6 months in the money market will produce a profit of 2.5%, so the stock market return will have to beat that enough to make it worth enduring the risk and volatility.
Fwiw, I may decide to stay in stocks with 5%, but probably no more than 10%. Once the election is over, assuming Biden wins, then the stock allocation can return to 15-20%. The election angst and uncertainty will be over, and the Fed will be free to start lowering % rates. If Trump somehow wins, then the drama is just beginning, and all bets are off. Very unlikely though imo, since they clearly don't want Trump, and can presumably just tweak the vote count (again).
The wild card that worries me is that a neocon wingnut will want Biden removed to ensure a Rep administration, since that's they only way to get the 'US bombs Iran' scenario. Iran is reportedly very close to getting a nuclear weapon, and Biden & Co appear adamantly opposed to 'US bombs Iran'. So from the perspective of the extreme neocon wing, something has to give. But it's possible that Biden has already secretly agreed to 'US bombs Iran' for sometime after the election, in which case all sides will be satisfied. The Trilateral and Bilderberg crowd keep Trump out of office, and the neocon side gets the US to destroy Iran's nuclear program. So that might ultimately be what happens, and the election is a sleeper, with Biden either winning outright with a slight margin, or via a certain amount of vote tweaking if necessary. But just a guess, and we'll see what happens.
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More on New Zealand. Looks like Jacinda Ardern implemented some of the world's harshest Covid lockdowns and vaccine mandates (article below). So she is praised by the globalists, but was opposed by enough New Zealanders that she retired from politics -
>>> Ardern’s covid policy was her ‘greatest legacy’ — but also her undoing
New Zealand’s prime minister says she slept well 'for the first time in a long time’ after announcing resignation
The Washington Post
By Michael E. Miller
January 20, 2023
https://www.washingtonpost.com/world/2023/01/20/jacinda-ardern-new-zealand-covid-resignation/
SYDNEY — Jacinda Ardern was on a work trip to a beach town in northern New Zealand almost exactly a year ago when her van was suddenly surrounded by anti-vaccine protesters. They called the prime minister a “Nazi” for requiring some workers get a coronavirus vaccine, and chanted “shame on you.” Some screamed obscenities. When a car tried to block Ardern’s exit, her van was forced to drive onto the curb to escape.
When asked about the incident a few days later, Ardern chuckled and shrugged it off.
“Every day is faced with new and different experiences in this job,” she said. “We are in an environment at the moment that does have an intensity to it that is unusual for New Zealand. I do also believe that with time it will pass.”
A little more than a month later, however, protests outside Parliament against vaccine mandates literally exploded into flames. Demonstrators set their own tents and gas canisters ablaze. Protesters pelted police with the same paving stones on which they’d written warnings to Ardern and other politicians that they’d “hang them high.” More than 120 people were arrested.
This time, Ardern didn’t shrug. Instead, she seemed angry and baffled.
“One day, it will be our job to try to understand how a group of people could succumb to such wild and dangerous mis- and disinformation,” she said.
In the end, New Zealand’s new era of intense rhetoric and dangerous disinformation will outlast Ardern, who announced Thursday that she was stepping down after more than five years in office.
“I know what this job takes,” the 42-year-old said in an emotional resignation speech. “And I know that I no longer have enough in the tank to do it justice.”
On Saturday, the ruling Labour Party announced that it had nominated cabinet minister Chris Hipkins to replace Ardern, after he was the only lawmaker to enter the contest. Hipkins will still need an endorsement from his Labour Party colleagues in parliament — a vote that will take place Sunday.
In her speech, Ardern didn’t mention the protests or the extreme rhetoric or the threats she faced. But she did mention the coronavirus pandemic. And in many ways, her management of the health crisis was her greatest success, but it also made her a divisive figure in New Zealand.
“I think it will probably be her greatest legacy,” said Michael Baker, an epidemiologist who served as an outside adviser to Ardern’s government during the pandemic. He likened Ardern to Winston Churchill, who shepherded the United Kingdom through World War II only to lose the 1945 election.
“It’s very hard to even imagine navigating through such an extreme threat that has been so prolonged,” he said. “At the end of it there was a deep bitterness over the experience people had been through, and unfortunately to some extent it’s been directed at her even though she’s done an extraordinary job.”
Ardern acted quickly at the outset of the pandemic, closing her country’s borders to foreigners even though tourism is one of New Zealand’s biggest industries. That decision, coupled with stringent quarantine requirements for returning New Zealanders and snap lockdowns, kept her country largely covid-free until early last year.
By the time the virus did become widespread in New Zealand, the vast majority of adults had been immunized. As a result, the country of about 5 million people has recorded fewer than 2,500 covid-19 fatalities — the lowest covid-related death rate in the Western world, according to Johns Hopkins University.
New Zealand’s mortality rate is still so low that fewer people have died than in normal times, Baker noted.
For almost two years, the charismatic Ardern was the global face of “zero covid”: an approach that drew admiration from other countries and also seemed to dovetail with her personal style of consensus-based governance. In the fight against covid, she referred to New Zealanders as “our team of 5 million.”
But that sense of team unity began to fray in late 2021, when Ardern introduced requirements that some types of workers be vaccinated, and that proof of vaccination be shown to enter gyms, hairdressers, events, cafes and restaurants.
“From a public health view it saved many lives, but it had this political cost,” Baker admits. “It probably contributed to the intensity of the anti-vaccine movement in that it was seized on by some groups who called it the ‘overreach’ of the state.”
The same policies that made New Zealand and its prime minister a zero-covid success also made Ardern a lightning rod for anti-lockdown and anti-vaccine ardor.
“Because she was such a global and public symbol, she did become the focus of a lot of those attacks,” said Richard Jackson, professor of peace studies at the University of Otago in Dunedin, New Zealand.
“Their opinion was that she was destroying New Zealand society and bringing in ‘communist rule,’ and yet the whole world seemed to be praising her and lauding her,” he added. “It irritated the hell out of them.”
Protesters began following her around the country, from the van incident in the northern seaside town of Paihia in January last year to a similar incident in the South Island a few weeks later, when Ardern visited an elementary school only to be called a “murderer” by protesters waiting outside.
Hundreds of anti-mandate and anti-vaccine protesters also gathered on the lawn of Parliament in Wellington. Some put up signs that mocked Ardern in misogynistic fashion or compared her to Hitler. Others hung nooses reminiscent of the Jan. 6, 2021, assault on the U.S. Capitol.
The rise in extremist rhetoric and baseless theories in New Zealand has been partly fueled by far-right movements in the United States and Europe, Jackson said, including pundits such as Tucker Carlson, who often took aim at Ardern. The prime minister herself called it an “imported style of protest that we have not seen in New Zealand before.”
After increasingly aggressive behavior by the protesters, including some hurling feces at police, officers in riot gear began to clear Parliament grounds on the morning of March 2. Some protesters fought back, turning their camping equipment into incendiary weapons.
Ardern reminded people that “thousands more lives were saved over the past two years by your actions as New Zealanders than were on the front lawn of Parliament today.”
In the eyes of some, however, the moment marked a turning point for the country.
“The nooses, the misogyny, the hate, the level of people advocating violence, people threatening to hang politicians, that’s not part of the New Zealand tradition of politics,” said Alexander Gillespie, professor of law at the University of Waikato.
“It was a huge shock to the country,” said Jackson, who described the protests as the most violent since clashes during the 1981 visit of the apartheid-era South African rugby team. “The way it ended, I think, kind of brought home to everyone that what we thought of as quite moderate and peaceful and tolerant politics might have ended, and we now have a much more intense, polarized and extreme” atmosphere, he said.
The vitriol continued even after her announcement Thursday: The owner of a bar in Nelson posted a doctored photo of Ardern in a wood chipper being towed by a hearse, but took it down after receiving complaints.
In recent months, Ardern’s broader popularity had begun to slip. The Labour Party she led to a sweeping and historic victory little more than two years ago now trails its rival in the polls, and her party is widely expected to lose this year’s election.
Like Churchill, Ardern had led her country through a dark time, but eventually lost the support of a crisis-weary populace, Baker said.
But the decision appears to have removed a weight from the prime minister’s shoulders. She told reporters Friday morning that she’d “slept well for the first time in a long time.”
<<<
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Bigworld, >> New Zealand <<
Check out that Prime Minister's bio (Jacinda Ardern) -
>>> In 2008, Ardern was elected president of the International Union of Socialist Youth <<<
https://en.wikipedia.org/wiki/Jacinda_Ardern
Just great. And then she became the world's youngest head of government. What I remember about her was the ultra quick banning of semi-auto firearms after this convenient shooting event (below). The ban went into effect less than a week after the shooting event, so some fast moving. New Zealand doesn't have that pesky 2nd Amendment problem, so poof, the guns could be made illegal in record time -
>>> In March 2019, in the aftermath of the Christchurch mosque shootings, Ardern reacted by rapidly introducing strict gun laws, winning her wide recognition <<<
https://en.wikipedia.org/wiki/Christchurch_mosque_shootings
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Rinear. 5/5/24
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Financial Intelligence Report
The Newsletter for people willing to take control of their financial future
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Greetings Friends!
This is today's issue of the Financial Intelligence Report
Contributing Editors: Bob Rinear, Ted, Chuck and the Crew!
Wall Street Lunacy donated by Jerome Powell, and Central Bankers the world over! Who else can print money and buy stocks?!
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Part 1: General Commentary
Part 2: Market Commentary
Are you ready for this?
If you ever wondered just how badly our nation has been handled, it is IMPERATIVE that you watch this 1.3 minute clip.
Jared Bernstein is literally the Chair of the Council of Economic Advisers, the main agency advising Biden on economic policy. Listen to him reply to a very simple question...
https://video.twimg.com/ext_tw_video/1786049431478939649/pu/vid/avc1/640x360/aeGhMl9mu7IYA4sr.mp4?tag=12
Are ya gettin this? Can you believe this guy? He can't explain it, because it would expose how fake everything is. Speaking of fake, did you see the jobs report and the Services PMI Friday morning? Better works of fiction are never to be found.
Let's start with the jobs. The big "bugaboo" for the fed, according to Powell is that the labor market is still really tight and that's adding inflation. So, the wink and the nod was given to the BLS, to produce numbers that are much more "fed friendly."
Boy, did they deliver.
So the headline jobs number was that we gained 175K jobs, Much lower than anticipated. Now, first off let me chat about that for a minute. The fed's job is to lie to us. It's all a show. On one hand they have to make you believe things are better than they are, but not make it look so good that you question them about it.
The BLS's "birth/death" model added 363K jobs in April. Whoa! So Bob, if the headline says we gained 175K jobs, but the fake, made up, phantom jobs from the B/D added 363,000 to that "official" number, didn't we really LOSE like 188,000 jobs? YES we did.
But, the BLS can't put out the real jobs number, because if the news stations started broadcasting that in April we LOST 188K jobs on top of the actual loses in Jan-March, it would look VERY bad for Biden and the Fed. Don't forget one of their so called "mandates" is Maximum sustainable employment. Well it wouldn't look too damn maximum sustainable if you're puking up 200K jobs in a month. So, they lie about it. All of it.
Look at the unemployment rate. The market got all warm and fuzzy because it "rose" to 3.9%, again very favorable for a fed rate cut. But the real number is over 16%. They can't broadcast that, everyone would know the economy is in trouble. So they toss out a number that satisfies the fed and the market, and make it look better for the fed and Biden.
It's all lies. All of it.
Which brings us to the services PM. First up, what is it? Well, it's The Purchasing Managers' Index (PMI) and it is an index of the prevailing direction of economic trends in the manufacturing and service sectors. It consists of a diffusion index that summarizes whether market conditions are expanding, staying the same, or contracting as viewed by purchasing managers. The purpose of the PMI is to provide information about current and future business conditions to company decision-makers, analysts, and investors.
Well when that report hit, and it was weaker than expected, once again the market simply adored it. But should they have? In their view, it suggests slowing of the economy and thus again...rate cut friendly. But there's an issue.
ISM Services, like manufacturing, came in weaker than all the (57) forecasts that form the Bloomberg consensus forecast. The composite fell from 51.4 to 49.4, its lowest level since the end of 2022. Business activity witnessed the most significant drop -- to its lowest point since May 2020 -- while the employment component also exhibited weakness. So yeah, that sounds pretty ugly and gloomy, and would make for a good argument for a rate cut.
But wait a second... Isn't Powell's first agenda to stomp out inflation? Didn't he say we might have to have "higher for longer" to see if things are heading to his vaunted 2% target? Indeed he did, many times. Well there's a fly in that ointment, because while business activity slowed, Conversely, prices paid rebounded to their January levels, increasing from 53.4 to 59.2. Oh and that's just what they tell us. What's the real number? 65? More lies.
Whoa! Yeah Mr. Market, it would be best to just parade that slowing headline number around, because a jump that big in prices paid, is about as inflationary as it gets and is absolutely not Fed friendly.
We are definitely in the first stages of stagflation folks.
Now, people ask me all the time... doesn't the market know all the numbers are made up lies? If the jobs numbers are really that bad, and the inflation numbers are really that bad, why would the market ignore that, and run with the made up BS numbers?
They have no choice. Ever since the 80's they've had to come up with ways to hide the fact that our dollar was going to crap, inflation was eating our wages, and our manufacturing base was in the toilet. NO president wants to be the guy in charge of that, so the wink and nod was sent out to the bean counters, to come up with "new and improved ways" of measuring activity and inflation. Wall Street wasn't going to be the party pooper and expose the baloney, because 1) it would crater the market and 2) they'd have the intelligence agencies up their butt.
For instance, let's take inflation. In the early 80's if the prices in the CPI example list went higher, it was reported pretty honestly. But there were times when it was pretty ugly, and again, no administration wants ugly economic reports on their watch. So they dreamed up "hedonic"measurements. What's that? A way to hide inflation.
Let's say a gadget you want to buy is 1000 dollars. But by the time you actually buy it, the price has gone up to 1100. The reporting manager to the CPI might tell them that actually the price went down.
WHAT?? Yep, they'll say it's a newer, improved model, with more features and benefits. So while the price in dollars went up, the value to the user went up more, therefore the overall reported number would be....the price fell. I'm not making this up folks, I'll give you an example from their own website:
This is for men's shirts. Here all shirts are either short sleeve or long sleeve and either cotton/poly or 100% cotton. After doing the statistical processing BLS might estimate that v1 = 0.15 and v2 = 0.25. This indicates that a long sleeve shirt is 15 percent more valuable than a short sleeve one and that a 100% cotton shirt is 25 percent more valuable than a cotton/poly blend shirt.
If the BLS data collector is forced to replace a short-sleeve cotton/poly shirt in the CPI sample with a long sleeve 100% cotton shirt, the CPI would adjust the price of the old item by the features in the new item, leading to a price adjustment of about 49 percent (e0.15+0.25).
If the price of the original shirt had been $20 and that of the replacement shirt $30, rather than using a $10 increase in price for that sample observation, the CPI would adjust the original shirt for sleeves and cotton content resulting in a price estimate of $29.84 (20*e0.15+0.25). This adjustment attributes most of the price difference between the shirts to the change in characteristics and an increase of only $0.16 is shown.
Ya get that? Shirt went up 10 bucks, they report it up 16 cents. Anyone still think inflation is 3%???? Well they do it with everything, along with "substitution" equations. If steak for example gets too high, they'll simply remove steak and substitute ground beef for the equation. It's all a game, a big fat lie and yes, Wall Street is well aware of it and plays right along.
Just understand that our system is wrecked. The fraud has gone on so long, it's so broken, it cannot be fixed. They just have to keep pushing the lies and borrowing from the future to keep the wheels on. One day, the axle will snap. Oh and it won't be pretty.
gfp: Nothing would surprise me any more. The Deep State and the globalists are capable of anything. They would welcome in nuclear war if they were assured of surviving it.
gfp: The next Plandemic. It will probably strike in late September and worn in October thereby necessitating ONLY mail in ballots for the Nov Election. Another steal for the Deep State.
gfp: The western nations are finished. I have a friend in Germany with 2 kids. They homeschool. But she sent me an article that children from Christian families are so outnumbered by muslin kids that they are converting to Islam so as to better fit in with their classmates. In Europe all the countries that accepted mass migration will be caliphates in 2 more generations. Needless to say I'm glad my wife and I were able to travel extensively in Europe before the 3rd world hordes ruined it and back when the US dollar still held good value. We have been to Germany several times, Italy 3 times, France, Belgium, the Netherlands, Austria, Luxembourg, Switzerland, and the UK. We never made it to Scandinavia but I don't like heir weather or their cuisine.
New Zealand was my favorite country in the world. But they went totalitarian when Jacinta Adhern was PM. Australia is the same. Unlivable if you value personal liberty. So if we feel we absolutely must leave we would probably flee to the mountains of Panama around Boquette. Or a coastal community in Costa Rica. There are some gated ex-pat communities with a mix of Americans, Canadians, and a few Europeans and Australians. I don't see either place going 100% to digital currencies. Too many peasant level unsophisticated people. I really hope it doesn't come to that. I'm content here for now. But I won't live in a country that is as totalitarian as China or North Korea.
(cont) In the 'what can go wrong' category, some obvious possibilities include the economy, geopolitics / war, organized opposition to a Biden victory, and unexpected black swan events. The 'Rumsfeld categories' would include -- known knowns, known unknowns, and unknown unknowns.
1) Economic / Financial - this seems to be under control, at least for the next 6 months leading up to the election. A few years after that could be a different story, but the next 6 months look OK. A return of regional bank failures is a possibility, but the Fed's lowering of QT reduces that risk.
2) Geopolitics / War - plenty of landmines here, but the US has made it clear that a US / Iran war is off the table. Ukraine looks like the bigger risk - they now have additional funding, longer range US missiles, and unstable leadership who actually bombed the Zaporizhzhia nuclear power plant.
3) Opposition to Biden - while the Rep side includes some avid Trump followers, I figure a lot of the casual Trump supporters from past elections have cooled on the Donald, and just want the country to return to some semblance of normalcy. These people don't like Biden, but may just stay home on election day. Imo, a significant risk to Biden comes from extreme factions within the broader 'neocon' camp, who see the Rep administration as the only hope of stopping Iran's nuclear program.
4) Black Swan Events - here's where things get complicated, and there are many scenarios. Since both candidates are elderly, a serious age related health problem could crop up out of the blue (real or induced), so this is a possibility. Rickards says that the Establishment / Deep State will stop at nothing to keep Trump out of office, they simply will not allow it. So there are many possible permutations, but I figure what they want to see happen is a close election that Biden wins, or can win via relatively minor 'tweaking' of the vote count.
Here's a potential plot for a novel or movie --> a neocon extremist takes out Biden, believing that only the Rep Party can stop Iran's nuclear program. Since this makes a 'fixed' US election impossible, the Deep State is forced to also remove Trump. So both Biden and Trump are out of the picture, and the candidates end up being backups or the VP candidates. But this restores plausibility to the ability to fix the vote count, and the Dem replacement wins.
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Looking at things from the Fed's perspective, I figure Powell would ideally like to take some of the buoyancy out of the stock market, as a 'brake' on the stubborn wage growth and consumer spending that are keeping inflation elevated. But on the other hand, he doesn't want to really tank the markets since that could take on a life of its own and create bigger problems, as well as hurt Biden's reelection.
So, I figure the Fed's goal will be a sleepy stock market, range bound, between now and the election. This keeps the 'wealth effect' in check, which otherwise drives too much spending and inflation, but also keeps things buoyant enough to help Biden get reelected.
As usual, they can use forward guidance, media spin, etc to set the desired tone and expectations, and even massage the actual economic and inflation data to fit the narrative. I wonder how much of that 'data fixing' already goes on? We know inflation data has been downplayed for decades in order to reduce the annual Social Security inflation increases. So the Fed already does this, so what's a little more? Same with election results in close elections, which is relatively easy to do with digital vote tallying.
Anyway, if the desired outcome for the 'Establishment' is a relatively sleepy runup to a relatively sleepy reelection of Sleepy Joe, what can go wrong? Next post..
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Bigworld, On the investing side, figuring out how much to have at risk in stocks over the next 6 months is a challenge. On the bullish side is the Fed's reduction in QT starting in June (from 60 bil to 25 bil / month). This not only helps the Fed avoid 'repo' liquidity problems within the banking system, but it's a lower visibility way to help Biden's reelection.
Trump's coming out vocally against the Fed doesn't seem like a smart move. Politically he already has the hard core 'anti-Fed' type vote anyway, and it probably won't resonate that much with the broader public. What it does do though, is to make the Establishment even more determined to keep him out of office. If there was any doubt in their minds, it was removed by Trump saying that he wants to fire Powell and rein in the Fed's independence. And the millions of voters with 401K and IRAs increasingly don't want to rock the boat too much, so it seems like a bad strategic move for Trump.
One would think that the 'Establishment' want the economy and stock market on an even keel leading up to the election, since that will help the incumbent. Towards that end, they would go into kumbaya mode, and sugar coat the financial and economic news, and even massage the inflation and economic data to fit the desired 'stable' narrative. On the non-financial / economic side, they could try to stir up the identity politics aspects, but this could backfire and result in a higher MAGA voter turnout too. So they might go with a low key approach, with the current college unrest being an aberration, with a separate motivation.
Anyway, assuming the geopolitical events don't blow up big, it may be wise to keep a modest allocation in stocks, despite the many landmines. But best to stay nimble since the above analysis could be way off. But logically, if pre-election turmoil (as in 2020) is bad for the incumbent Party. then they may strive for relative kumbaya. Then the election is close, and they just digitally massage the numbers if needed to get the desired result. So Trump is effectively out of the picture, things chill out, the CBDC rollout can proceed unimpeded, etc.
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Bigworld, Like clockwork, every four years during the lead up to a national election, highly organized protests and riots (of the Soros variety) suddenly break out in the US. And if that's not enough, a viral pandemic also breaks out (?). That remains to be seen this time, but the appearance of H5N1 looks suspicious.
Another similarity is the appearance of problems in the 'repo' market, leading to a surge of liquidity provided by the Fed. In 2019 this was happening in the months leading up to the appearance of Covid. Back then (Fall 2019), not only did the Fed re-start QE to ease the worsening 'repo crisis', but in the prior month (Aug 2019) the Blackrock 'Going Direct Reset' proposal was approved at the G-7 meeting in Jackson Hole. Under this Going Direct Reset, the idea was to get ahead of the next financial crisis by pre-approving how the country would respond to the next crisis. In 2008 it took way too long to get Congress to OK the bailout measures, so under the 2019 Going Direct Reset proposal, the Congress would basically be removed from the process, and the bailout funds could be approved directly by the central bank itself, thus saving months of political wrangling.
How convenient, because 3 months later Covid first appeared (Nov 2019), and by March the Fed was able to immediately jump into mega bailout mode (per the Going Direct Reset). So very convenient timing, to say the least.
There's more though, since within weeks of the G7 approval of the Going Direct Reset (Aug 2019) the Fed's response to the 'repo crisis' in Sept suddenly began injecting hundreds of billions to ostensibly re-liquify and unfreeze the repo market. Blackrock was likely a big recipient of this free 'Going Direct Reset' money, and shortly thereafter, with the help of the Covid crisis, Blackrock emerged as the biggest owner of residential real estate in the US.
So Covid turned into a bonanza for crooks like Blackrock. In retrospect, the chronology of events may seem a little too obvious, but once again --> nothing to see here folks..
>>> Blackrock Authored The Bailout Plan Before There Was A Crisis <<< -
https://wallstreetonparade.com/2020/06/blackrock-authored-the-bailout-plan-before-there-was-a-crisis-now-its-been-hired-by-three-central-banks-to-implement-the-plan/
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QT taper - >>> The Fed announced a big change today. And no, we’re not talking about interest rates
CNN
by Nicole Goodkind
May 1, 2024
https://finance.yahoo.com/news/fed-could-big-change-today-113528226.html
Wednesday’s Federal Reserve policy decision was fairly boring for investors — officials kept interest rates the same, just as they have since July 2023.
But some savvy traders are excited about another key decision. The Fed announced that it will significantly curtail its quantitative tightening (QT) program — that’s the selling off of its assets to decrease money supply and increase interest rates — beginning in June.
US Treasury yields fell on the news. Yields on the 10-year and 2-year both dropped by .05 percentage points.
What’s happening: The Fed bought a ton of government-backed bonds between 2020 and 2022 to help support economic recovery after the pandemic-induced recession. Those purchases ended up pushing down interest rates in certain parts of the economy, like housing and auto sales.
In mid-2022, as inflation soared higher, the Fed reversed that and began unloading those bonds.
The Fed currently lets up to $60 billion in Treasuries mature each month without replacing them, reducing the amount of money circulating in the economy. The idea is that QT can help exert some downward pressure on prices.
But there’s also some downside to the practice — changing the amount of liquidity in the economy and redirecting that money could have some major consequences.
As JPMorgan Chase CEO Jamie Dimon pointed out in his annual letter to shareholders last month, “we have never truly experienced the full effect of quantitative tightening on this scale.” The current pace of QT is draining more than $900 billion in liquidity from the system annually, he said, adding, “I am more worried [about it] than most.”
QT reduces the amount of money in the banking system, leading to higher interest rates and tighter monetary conditions, but last time the Fed implemented such a program in 2019, some banks fell very short of reserves.
That led to a “repo crisis”, where the interest rates for overnight loans between banks spiked unusually high. The Fed had to intervene and provide liquidity to bring down those repo rates.
Fed Chair Jerome Powell doesn’t want a repeat of 2019 and said at his last press conference that QT would be scaled back soon.
On Wednesday, officials announced that they will lower the rate of QT to $25 billion, more than half of where it currently sits.
What it means: “May 1 is set to be a big day in the bond market,” Evercore ISI’s Krishna Guha and Marco Casiraghi wrote in a recent note.
If the Fed does ease up its tightening policy, “financial markets will likely see the taper of the QT program as bullish for riskier investments like stocks and bonds at the margin,” wrote Bill Adams, chief economist for Comerica Bank, in a note on Tuesday.
That’s because a taper should send bond prices higher, and interest rates lower.
The risk, wrote Bank of America analysts on Tuesday, “is skewed to the upside for stocks, in our view, especially given a potential QT taper announcement".
<<<
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H5N1 - the next pandemic?
>>> What a US farmworker’s case of bird flu tells us about tracking the infection
CNN
by Brenda Goodman
5-3-24
https://www.msn.com/en-us/health/other/what-a-us-farmworker-s-case-of-bird-flu-tells-us-about-tracking-the-infection/ar-AA1o5Z6a?OCID=BingNewsSerp
A US farmworker who caught bird flu after working with dairy cattle in Texas appears to be the first known case of mammal-to-human transmission of the virus, a new study shows.
The dairy worker sought care in late March after developing painful red, swollen, weeping eyes with burst blood vessels. He had no fever, however, and his lungs were clear, according to a letter about the case that was published in the New England Journal of Medicine on Friday.
He reported no contact with sick or dead birds or other animals, but he did have repeated direct close contact with dairy cows in the same part of the state with other infected herds.
Even though the man didn’t become seriously ill, his case is important because it confirms that humans can be infected with H5N1 after contact with cows. At the same time, it also leaves critical questions unanswered about a virus that the study authors said has “pandemic potential,” and it illustrates how hard it will be to track the infection in this vulnerable population of workers, where testing positive for an infectious disease might mean losing days of work and pay.
“For farmworkers specifically, certainly these are folks that are that are living in a state of economic desperation, and what they’re not going to do is, they’re not going to test for something if they don’t have paid sick leave, because they cannot afford to be sent home and told to stay home and not work,” said Elizabeth Strater, director of strategic campaigns for United Farm Workers.
Strater says UFW, like other groups, has heard rumors that there are dairy workers who are sick but don’t want to be tested, but she said it’s nothing that they’re able to confirm.
Health officials in Texas said they did test other sick dairy workers, including some with red eyes, but they turned out to have other illnesses, not bird flu.
“The people tested volunteered to be tested,” said Lara Anton, senior press officer with the Texas Department of State Health Services.
“It’s likely there were other people with symptoms who did not want to be tested so we cannot say with absolute certainty that no one else contracted H5N1. We can say for sure some of the people on dairy farms tested positive for other respiratory viruses that are commonly circulating in the human population,” Anton said.
In the case of the man who did test positive for bird flu, he took antiviral medications and recovered without any lasting problems, and his close family members received the drugs as a precaution, the letter says.
Swabs of the patient’s eyes and lungs revealed something interesting, too: His eyes were teeming with the H5N1 virus, but there was hardly any virus in his lungs. That could mean the worker was infected through his eyes – either by rubbing them with contaminated hands or through splashes of contaminated milk – rather than through his lungs, and the virus never migrated there, or that the virus couldn’t get a foothold in his lungs because it was adapted primarily to infect birds, not cells in the human airway.
The letter on the case was written by researchers at the US Centers for Disease Control and Prevention along with doctors at the Texas Department of State Health Services and researchers at the Texas Tech Bioterrorism Response Laboratory.
Health officials said they couldn’t do further investigation of how the man was infected because “epidemiological investigations were not able to be conducted at the farm” where he worked. They were also unable to test other workers at the same farm.
That kind of testing is critical to answer questions about how the worker became infected, whether others were being infected and if so, for how long they were infected and what kind of symptoms they had, if they had any at all.
The CDC is looking for farms that will allow it to conduct such a detailed study.
“Understanding the current avian flu outbreak among dairy cattle is a vital priority to help protect human health,” the agency said in a statement to CNN. “Discussions are under way with farms in multiple jurisdictions to participate in CDC-led epidemiological studies. In the meantime, states continue to test symptomatic farm workers and monitor those who have been exposed to infected animals. CDC also continues to closely monitor a robust, nationwide flu surveillance system. To date, it has not detected any unusual flu activity.”
At a news briefing Friday, White House spokesperson Karine Jean-Pierre said the administration was monitoring the situation “very closely and taking this very seriously.”
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Bigworld, >> reevaluate our strategy of remaining in the USA <<
Based on Rickards' info (below), the UK related countries seem to be going 'full Orwell' first -- Canada, Scotland, New Zealand, Ireland. I visited Scotland back ~ 2005, and even then it was one of the most surveilled places on Earth, with a zillion CCTV cameras at every intersection. In Edinburgh I walked across a quiet street and a local guy pointed up to the cameras and said to be careful since 'they' (Big Brother) will send you a penalty / fine for not crossing correctly at an intersection. The UK is just crawling with surveillance cameras everywhere.
The main reason 1984 hasn't happened already is that the technology to implement it didn't exist. But now it does, and the CBDC will be the ultimate enforcement tool ---> total behavioral control over the population since they can just switch off your use of money. Unfortunately it's just a matter of time.
>>> When we look around at places like New Zealand and Scotland, there seems to be a bizarre competition to see which country can pass the most fascist laws and imitate George Orwell’s dystopia in Nineteen Eighty-Four in the least amount of time.
Scotland has imposed so-called hate crime laws that subject you to imprisonment for exercising free speech if it happens to offend a long list of protected parties. No actual violence or physical act is needed. If you simply say the wrong thing, you can be arrested, fined and imprisoned for “inciting hate.”
A similar law has just passed in Ireland. The Polish government wants to pass a law that makes it a crime to “defame” members of the LBGT community. Of course, the term “defame” is ill-defined and is in the eye of the beholder. Any choice of words, even if derogatory or hurtful by some standard, should be protected by free speech provisions. But in Poland, it may soon land you in jail.
I’ve never understood hate crime laws anyway (and I’m a lawyer). If you murder someone, it’s murder. If you assault someone, it’s assault. Subject to due process of law, you should go to jail if convicted or perhaps face capital punishment.
Prosecutors have to show intent, but what does “hate” have to do with it? The perpetrator may, in fact, hate the victim but that’s not the crime. The crime is assault or murder. Those crimes have been considered crimes for millennia.
Nineteen Eighty-Four Was Supposed to Be Fiction
Adding hate to the definition just blurs the line between thought and action in ways that make it easier for fascist governments to target political enemies with flimsy allegations of “hate” when no actions were involved.
The most egregious example of this trend toward thought crimes is Canada. The chief neo-fascist there is Prime Minister Justin Trudeau. He has proposed a law called the Online Harms Act that expands the definition of “discrimination” to include online speech “likely to foment detestation or vilification of an individual or group.”
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gfp: All the Deep State tactics just put us incrementally closer to an all out civil war. We're heading that way. States are announcing that they will no longer follow certain Federal laws and Regulations on issues like Transexuals in women's sports, not allowing surgical gender procedures for minors, border issues, etc. The longer we allow a totalitarian minority to circumvent what's left of our Democracy the more entrenched it becomes. Trump, love him or hate him, is the last stand. If they take him out it might be time to reevaluate our strategy of remaining in the USA, despite our ages. I can't imaging living here under North Korean conditions.
gfp : Cash is not a bad route to take. A least you sleep better. I expect a lot of volatility this year and into next year. The markets could go higher if the Fed buys enough Treasuries to suppress interest rates. But job losses are mounting. The economy is weakening. Take away the contribution of all the deficit spending and GDP would be negative. We are entering an era of Stagflation. Hard assets have, in the past, done well in that macro scenario. Despite the sell off in Gold is does seem to be holding the $2300 level, at least so far. I like having some high dividend paying hard asset or pipeline plays like ENG and RIO. The yields are higher than you get in MM funds or Treasuries. And in the long run those types of stocks tend to do well in stagflationary times.
Bigworld, Rickards talks about the latest Orwellian assaults on the Constitution (see below), including 'de-banking' of political opponents, and also the expanding 'hate crime' laws. Once the CBDC is in place, the job will be complete --> Amerika.
>>> Will Trump Survive This?
BY JAMES RICKARDS
APRIL 30, 2024
https://dailyreckoning.com/will-trump-survive-this/
Will Trump Survive This?
This is a highly consequential election year, to say the least. The policy differences between Biden and Trump are enormous. Whether it’s taxes, regulation, borders, energy or foreign policy, the differences couldn’t be clearer.
And though I prefer to focus my analysis on markets alone, I can’t. These days especially, politics plays too great a role in how markets behave.
But this year’s election is about far more than policy.
In the past, the D.C. establishment could live with a typical Republican or Democrat. They knew neither candidate would rock the boat too much if he got elected. Both candidates were cut from the same basic cloth and played by the accepted rules.
But all that goes out the window with Trump.
He’s the most polarizing political figure we’ve seen in our lifetimes. You’d probably have to go back to Andrew Jackson to find a parallel.
And it’s clear that Trump’s political enemies will stop at nothing to keep him out of the White House this time.
Lawfare
“Lawfare” is their primary tactic. They just want to get Trump convicted of a felony before the election so they can brand him a criminal, believing that the American public won’t elect a convicted felon.
They don’t care if the conviction is subsequently overturned by a higher court. The damage will already be done. And if it trashes the Constitution, Trump’s political enemies are prepared to live with that.
They’re convinced that Trump is the equivalent of Hitler and that he’ll destroy democracy if he’s elected. So in their minds, the ends justify the means. They’ll justify any action, legal or illegal, to ensure his defeat.
They don’t seem to realize that the harder they go after Trump with bogus charges, the more popular he becomes.
Whether you like Trump or not, voters don’t expect a billionaire real estate magnate from New York City to be a saint. They vote for him because they think he can get things done.
And under honest democratic elections, the administrative state, or deep state, whatever you want to call it, stays out of it. But that’s not the system we have today.
And that should concern every American, regardless of his or her political affiliation.
Again, it doesn’t matter if you love Trump or hate him. But in a democracy, the people rule. Not the bureaucrats. And if the people elect Trump, then he should be allowed to enact the policies that got him elected. That didn’t happen when he won in 2016.
Stop Trump!
The first two years of his administration were hobbled by the fake Russian collusion hoax and the numerous investigations that resulted. Those investigations showed that there was no collusion between Trump and Russia, but Trump’s enemies didn’t care (and certainly did not apologize).
They just moved on to the next fake scandal, which was the first impeachment over a brief phone call to Ukrainian President Zelenskyy asking about Biden family corruption. It turns out that Biden family corruption was rampant in Ukraine, but that didn’t stop phony “whistleblowers” (actually lawbreakers) like Eric Ciaramella from leaking classified transcripts to Adam Schiff to get the impeachment process going.
Trump was acquitted by the Senate. Then came the second impeachment where Trump was also acquitted. Since leaving office, Trump has been hit with federal criminal charges relating to Jan. 6 and the Mar-a-Lago raid, as well as state criminal charges in New York and Georgia.
Trump’s enemies never quit. They’re also going after Trump’s advisers and confidants. It’s meant to isolate Trump because anyone who advises him will fear they’ll be hauled into court on some bogus charge and have to spend a fortune on lawyers, win or lose.
The latest lawfare tactic has been unveiled against Trump attorney John Eastman. It’s called “debanking.”
Good Luck Living Without a Bank
In Eastman’s case, it started with Bank of America closing his bank accounts for no good reason and with no recourse. Then he turned to his accounts at USAA, which specializes in accounts for military veterans and their families. Shortly thereafter, USAA also closed Eastman’s bank accounts.
We tend to take banking services for granted and don’t think much about what would happen if we were shut out of the banking system. No checks, no savings accounts, no wire transfers, no ATMs, no bank-issued credit cards, no lines of credit or mortgages, etc.
It’s like trying to survive without food or water. It’s impossible. And that’s the whole point. It’s designed to make the victim’s life miserable.
The same thing happened in the U.K. when NatWest and Coutts debanked Nigel Farage, leader of the Brexit movement. Farage fought back and the CEO of NatWest was eventually fired over the incident. But it was a brutal fight and a tough transition for Farage when he suddenly found himself debanked.
Unfortunately, debanking is just an extension of the “woke” cancel culture that’s taken root in much of the West.
Shut up, Bigot!
When we look around at places like New Zealand and Scotland, there seems to be a bizarre competition to see which country can pass the most fascist laws and imitate George Orwell’s dystopia in Nineteen Eighty-Four in the least amount of time.
Scotland has imposed so-called hate crime laws that subject you to imprisonment for exercising free speech if it happens to offend a long list of protected parties. No actual violence or physical act is needed. If you simply say the wrong thing, you can be arrested, fined and imprisoned for “inciting hate.”
A similar law has just passed in Ireland. The Polish government wants to pass a law that makes it a crime to “defame” members of the LBGT community. Of course, the term “defame” is ill-defined and is in the eye of the beholder. Any choice of words, even if derogatory or hurtful by some standard, should be protected by free speech provisions. But in Poland, it may soon land you in jail.
I’ve never understood hate crime laws anyway (and I’m a lawyer). If you murder someone, it’s murder. If you assault someone, it’s assault. Subject to due process of law, you should go to jail if convicted or perhaps face capital punishment.
Prosecutors have to show intent, but what does “hate” have to do with it? The perpetrator may, in fact, hate the victim but that’s not the crime. The crime is assault or murder. Those crimes have been considered crimes for millennia.
Nineteen Eighty-Four Was Supposed to Be Fiction
Adding hate to the definition just blurs the line between thought and action in ways that make it easier for fascist governments to target political enemies with flimsy allegations of “hate” when no actions were involved.
The most egregious example of this trend toward thought crimes is Canada. The chief neo-fascist there is Prime Minister Justin Trudeau. He has proposed a law called the Online Harms Act that expands the definition of “discrimination” to include online speech “likely to foment detestation or vilification of an individual or group.”
What exactly does this law mean by “foment”? Who defines “vilification” or “detestation”? What’s the definition of “group”?
All of these questions will be answered by a new Digital Safety Commission, which will not be bound by “any technical or legal rules of evidence.” If accused, you can be ordered to pay $20,000 to any “victim” and $50,000 to the state with no limit on how many victims might crawl out of the woodwork.
This is practically an invitation for grifters and activists to attack political enemies with fake claims of having been subject to “detestation.” It gets worse. If a court believes you are likely to commit a “hate crime” under this law, you can be placed under house arrest and held in isolation.
In other words, just thinking the wrong thing as imagined by an unaccountable magistrate is enough to put you under house arrest. This is actually worse than what the Thought Police did in Orwell’s novel.
You can expect censorship in the U.S. to increase as we get closer to the November election. Get ready for it.
Nineteen Eighty-Four was supposed to be fiction. Unfortunately, it’s becoming reality.
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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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