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Lance Roberts

Lance Roberts

Lance Roberts has sharpened that lens with 30 years in the investing world from private banking and investment management to private and venture capital. Lance Roberts’ perspective and common sense analysis is sought after by media outlets such as Fox 26 News in Houston, CNBC, CNN and Fox Business News along with numerous publications including the Wall Street Journal, USA Today, Reuters and the Washington Post. Roberts is the Editor of the X-Factor report and publishes the blog Daily X-change.

Articles by Lance Roberts

S&P 3300 – The Bull Vs. Bear Case 07-13-19

2 days ago

Review & Market Update
The Case For 3300
Sector & Market Analysis
401k Plan Manager
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Market Review & Update
We had suggested last week to our PRO SUBSCRIBERS (Get a 30-day FREE Trial) 

Last week, we suggested the current setup, “suggests a bit more rally could occur next week.”
That remains the case this week.
We may be at the limits of that rally for now, but given that last week was an extremely light trading week due to the holiday, we will hold until Monday to see what happens next.
The market is back to very overbought short-term so a bit of a correction is needed to add to our position.
Short-Term Positioning: Bullish
Stop-loss adjusted to $275

Monday and Tuesday were indeed a bit sloppy, as shown below, but

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#WhatYouMissed On RIA: Week Of 07-12-19

3 days ago

We know you get busy and don’t check on our website as often as you might like. Plus, with so much content being pushed out every week from the RIA Team, we thought we would send you a weekly synopsis of everything that you might have missed.

The Best Of “The Lance Roberts Show”

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Podcast Interview Of The Week

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Our Best Tweets Of The Week

The Real Fed Mandate: Avoid recession at all cost. Clearly they are scared that a normal and healthy cyclical economic cleansing will be disastrous.— Michael Lebowitz, CFA (@michaellebowitz) July 10, 2019
So core CPI is 2.1% and above the Fed target. Jobless claims and unemployment are at or near 50+ year lows and the Fed is going to ease because of BREXIT, Federal Debt Ceiling, and trade

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Questions About The “Stellar” June Jobs Report (Which Also Confirm The Fed’s Concerns)

4 days ago

On Wednesday, Jerome Powell testified before Congress the U.S. economy is “suffering” from a bout of uncertainty caused by trade tensions and slow global growth. To wit:
“Since [the Fed meeting in mid-June], based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”
That outlook, however, would seem to be askew of the recent employment report for June from the Bureau of Labor Statistics last week. That report showed an increase in employment of 224,000 jobs. It was also the 105th consecutive positive jobs report, which is one of the longest in U.S. history.
However, if employment is as “strong” as is currently believed, which should be a reflection

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Recession Probability Charts: Current Odds Now About 33%

5 days ago

The New York Fed has the odds of a recession within the next year at 33%. Some of the other models are humorous.

New York Fed Treasury Spread Model

The New York Fed Recession Model is based on yield curve inversions between the 10-year Treasury Note and the 3-Month Treasury Bill.

I added the highlights in yellow and the dashed red line.

The model uses monthly averages.

Smoothed Recession Odds

I do not know the makeup of the smoothed recession chart but it is clearly useless. The implied odds hover around zero, and are frequently under 20% even in the middle of recession.

GDP Recession Model

The GDP-based recession model is hugely lagging. The current estimate is 2.4%. This model will not spike until there is at least one quarter of negative or near-zero GDP.

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Technically Speaking: Monthly S&P 500 Chart Update & Review

6 days ago

With June now officially in the books, we can take a look at our long-term monthly indicators to see what they are telling us now.
Does the recent breakout to “all-time highs” mean the bull market is finally back?
Or, is this breakout doomed to failure as the previous breakouts have been?
That’s the answer we all want to know.
Each week on RIA PRO we provide an update on all of the major markets for trading purposes.
(See an unlocked version here. We also do the same analysis for each S&P 500 sector, selected portfolio holdings, and long-short ideas. You can try RIA PRO free for 30-days.)
However, as longer-term investors and portfolio managers, we are more interested in the overall trend of the market. While it is fundamental analysis derives “what” we buy, it is the

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Shelton, The Fed, & The Realization Of A Liquidity Trap

7 days ago

Last week, President Trump nominated Judy Shelton to a board seat on the Federal Reserve. Shelton has been garnering a lot of “buzz” because of her outspoken and alternative stances, including “zero interest rates” and a “gold standard” for the U.S. dollar.
But, Shelton is full of inconsistent and incongruous views on monetary policy. For instance, in 2017 she stated:
“When governments manipulate exchange rates (by changing interest rates) to affect currency markets, they undermine the honest efforts of countries that wish to compete fairly in the global marketplace. Supply and demand are distorted by artificial prices conveyed through contrived exchange rates. Businesses fail as legitimately earned profits become currency losses,”
In short, when the Fed, or any central bank/government,

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Quick Takes: Some Things I Am Thinking About 07-05-19

9 days ago

Quick Takes
Sector & Market Analysis
401k Plan Manager
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Quick Takes
Market
While the market rallied last week and continues to flirt with all-time highs, not surprisingly, volume was exceedingly light because of the July 4th holiday on Thursday. As Carl Swenlin noted:
” SPY has formed a bearish rising wedge, and the VIX penetrated the upper Bollinger Band, which is short-term bearish. The wedge looks particularly weak because price rose off the bottom of the wedge this week, but it failed to reach the top of the wedge before touching the bottom of the wedge again today.”

With a majority of short-term technical indicators extremely overbought, look for a correction next week. What will be important is that any

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#WhatYouMissed On RIA This Past Week: 07-05-19

10 days ago

We know you get busy and don’t check on our website as often as you might like. Plus, with so much content being pushed out every week from the RIA Team, we thought we would send you a weekly synopsis of everything that you might have missed.

The Best Of “The Lance Roberts Show”

[embedded content]
Podcast Interview Of The Week

[embedded content]
Our Best Tweets Of The Week

IF the #Fed is TRULY #independent, they are going to be very hard-pressed to #cut #rates in #July with a 224,000 employment number. Even using the 3-month trend, their preferred measure, there is no evidence of a sharp slowdown in hiring that would warrant a rate cut….yet!— Lance Roberts (@LanceRoberts) July 5, 2019
Interesting stats related to birth/death adj to BLS data: 2016 (latest data)5.6m

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The Manufacturing Sector is Rolling Over But Inventories Keep Piling Up

11 days ago

Factory new orders are down year-over-year and barely afloat excluding transportation. Inventories are a concern.

The monthly report on Manufacturers’ Shipments, Inventories and Orders, shows strong signs of a manufacturing sector that has peaked.

New Orders

New orders for manufactured durable goods in May, down three of the last four months, decreased $3.1 billion or 1.3 percent to $243.5 billion, unchanged from the previously published decrease. This followed a 2.8 percent April decrease. Transportation equipment, also down three of the last four months, drove the decrease, $3.8 billion or 4.6 percent to $80.0 billion. New orders for manufactured nondurable goods decreased $0.5 billion or 0.2 percent to $250.1 billion.

Shipments

Shipments of manufactured durable goods

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Technically Speaking: The Bull Is Back, Bonds Say “No”

13 days ago

For the fifth time, since the end of 2017. the market hit an all-time high. Each previous all-time high has led an almost immediate sell-off. 
Will this time be different? This was the question I asked last Tuesday:

“Such is the belief currently which is being driven primarily by the ‘Pavlovian’ response of a more ‘accommodative’ Federal Reserve which is expected to cut rates sharply by the end of this year. It is also the ‘hope’ there will be a resolution to the ongoing ‘trade war’ with China at the G-20 Summit next week.” 

However, while the markets rallied on Monday on the news of a “cease-fire,” as I noted in this past weekend’s newsletter, nothing has really changed.

“As we suggested previously, the most likely outcome was a truce…but no deal.  
While the markets will likely react

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Everything You Are Being Told About Saving & Investing Is Wrong – Part 3

14 days ago

This assumption on expanding inflationary pressures later in retirement is correct, however, it doesn’t take into account the issue of taxation. So, let’s adjust the chart and include not only the impact of inflation-adjusted returns but also taxation. The chart below adjusts the 8% return structure for inflation at 3% and also adjusts the withdrawal rate up for taxation at 25%.

By adjusting the annualized rate of return for the impact of inflation and taxes, the life expectancy of a portfolio grows considerably shorter. 
However, we must also consider the impact of variable rates of returns in retirement as well.

The Impact Of Variability

As evidenced by the graph, as valuations rise future rates of annualized returns fall. This should not be a surprise as simple logic states that

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The “Art Of The Deal” Vs. The “Art Of War” 06-28-19

16 days ago

Review & Update
The “Art Of The Deal” vs. The “Art Of War”
Margin Debt & Market Reversions
401k Plan Manager

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Review & Update
On Thursday and Friday, the markets mustered a “Pre-G20 rally” in anticipation of a positive outcome from the meeting between President Trump and Xi. I will discuss the outcome of this meeting in just a moment. 
The good news is that June was one of the best performing months for the Dow Jones Industrial Average over the past 80-years.  

That certainly was an impressive rally if you bought into the markets on June 1st. 
Unfortunately, what the headlines don’t tell you is that the “strongest June rally in the last 80 years” failed to recover the losses from one of the worst May months on

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1995 Rate Cut & The Case For The Final Leg Of The Bull Market

18 days ago

Market participants want to believe today’s bull market is similar to 1995.
In 1995, July to be specific, the Fed cut rates as the stock market was setting a new record high. The next Fed meeting is July 31st, and the market is currently trading near record highs.
As Upfina recently tweeted:

Powell stated, “An ounce of prevention is worth a pound of cure.” That implies the Fed is going with insurance cuts like it did during 1995 in which it successfully prevented a recession.
— UPFINA (@UPFINAcom) June 22, 2019

That is correct, and, when the Fed cut interest rates as a preventative measure, U.S. equity markets have historically done very well. However, a quick look at the history of Fed rate cuts, and subsequent market tantrums, suggests 1995 is more of an anomaly rather than the rule.

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Technically Speaking: Bull Market Or Bull Trap?

20 days ago

For the fourth time, since the end of 2017. the market has set an all-time high. Each previous all-time high has led an almost immediate sell-off. 
Will this time be different?
Such is the belief currently which is being driven primarily by the “Pavlovian” response of a more “accommodative” Federal Reserve which is expected to cut rates sharply by the end of this year. It is also the “hope” there will be a resolution to the ongoing “trade war” with China at the G-20 Summit next week. 
Nowhere was this “Pavlovian” response more evident than in Jeffry Bartash’s latest post for MarketWatch:

“A stream of negative news pointing to a slower economy has not only failed to halt the latest bull run on Wall Street, it’s actually encouraged investors to snap up more stocks.
In the sometimes wacky

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Everything You Are Being Told About Saving & Investing Is Wrong – Part 2

21 days ago

In Part I, we discussed the problems with the “savings” side of the equation as it relates to building wealth.
It is always interesting reading article comments as they are generally full of excuses why saving money and building wealth can’t be done. The general thesis is that as long as you have social security (which is threatening payout cuts over the next decade) and/or a pension (which only applies to 15% of the country currently,) then you don’t need to save as much. 
Personally,  I don’t want my retirement based on things which are a) underfunded 2) subject to government-mandated changes, and 3) out of my control. In other words, when planning for an uncertain future, it is always optimal to hope for the best but plan for the worst.
However, the premise of the article was to clear

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What The Fed Said, Didn’t Say, & What Happens Next 06-21-19

23 days ago

Review & Update
What The Fed Said & Didn’t Say
What Happens Next?
Sector & Market Analysis
401k Plan Manager

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Wednesday, June 26th from 12:30-1:30 pm.
Review & Update
Every week, we are fortunate enough to gain numerous subscribers to our weekly newsletter. So, first, I certainly want to welcome you to our missive, but I also need to brief our newest readers where we have been positioned over the last couple of months. 
On May 4th, we penned: “It Never Hurts To Ring The Cash Register:” we suggested taking profits and reducing risk in portfolios after a stellar run from the beginning of the year. We made specific recommendations to our RIA PRO Subscribers (Try Free For 30-Days) at the time:

“A common theme through

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The 3-Big Lies About Tax Cuts & The Economic Impact

25 days ago

“The greatest trick the Devil ever pulled was convincing the world he didn’t exist.” – The Usual Suspects (1995)
Just recently, Politico ran a story by Brain Faler entitled: “Big Businesses Paying Even Less Than Expected Under GOP Law.” To wit:
“The U.S. Treasury saw a 31 percent drop in corporate tax revenues last year, almost twice the decline official budget forecasters had predicted. Receipts were projected to rebound sharply this year, but so far they’ve only continued to fall, down by almost 9 percent or $11 billion.

Though business profits remain healthy and the economy is strong, total corporate taxes are at the lowest levels seen in more than 50 years. Analysts agree they can’t yet explain the decline in corporate tax payments.“
Uhm, excuse me?
This is where I get to say, “I

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Technically Speaking: COT Positioning – Volatility, Oil, Dollar, & Rates

28 days ago

Over the last three weeks, we have discussed the “sellable rally” in the markets. However, one of the more stunning movements in the market was in interest rates which have fallen sharply in recent months as “deflation” and “economic weakness” have become points of concern for the Federal Reserve.
Just last year, the Federal Reserve was hiking rates with the expectations of stronger economic growth and rising inflationary pressures from a tight labor market. Almost a year later, the markets, and the White House, are begging for the Fed to cut rates, and stop reducing their balance sheet, as the economic data has weakened substantially.
Despite these concerns, the markets remain within reach of all-time highs as the market continues to ignore the risks under the assumption “this time is

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Everything You Are Being Told About Saving & Investing Is Wrong – Part I

28 days ago

Let me start out by saying that I am all for any piece of advice which suggest individuals should save more. Saving money is a huge problem for the bulk of American’s as noted by numerous statistics. To wit:
“American have an average of $6,506 in credit card debt, according to a new Experian report out this week. But which expenses are adding to that balance the most? A full 23% of Americans say that paying for basic necessities such as rent, utilities and food contributes the most to their credit card debt. Another 12% say medical bills are the biggest portion of their debt.”
That $6500 credit card balance is something we have addressed previously as it relates to the ability of an average family of four in the U.S. to just cover basic living expenses.
“The ‘gap’ between the ‘standard of

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Bear Markets: Understand Them, Don’t Fear Them 06-14-19

June 15, 2019

Is The Sellable Rally Done?
Some Comments On The Fed Cutting Rates
Sector & Market Analysis
401k Plan Manager

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Wednesday, June 26th from 12:30-1:30 pm.
Review & Update
This week I want to step back and talk about some misconceptions with concerning markets, cycles, and investing. However, before we get to that, let me give you a quick review and update on where we are following the “sellable rally,” we have discussed over the last couple of weeks.
In review, we said last week: 

“We remain primarily long-biased in our portfolios, but are also slightly overweight in cash, and portfolio weight in fixed income. We are also carrying some hedge by having overweighted “defensive” stocks a couple of months ago which have

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One Trick Pony: The Fed Is Pushing On A String

June 13, 2019

Last week, I discussed the Fed’s recent comments suggesting they might be closer to cutting rates and restarting “QE” than not.

“In short, the proximity of interest rates to the ELB (Effective Lower Bound) has become the preeminent monetary policy challenge of our time, tainting all manner of issues with ELB risk and imbuing many old challenges with greater significance.  
“Perhaps it is time to retire the term ‘unconventional’ when referring to tools that were used in the crisis. We know that tools like these are likely to be needed in some form in future ELB spells, which we hope will be rare.”
After a decade of zero interest rates and floods of liquidity by the Fed into the financial markets, it is not surprising the initial “Pavlovian” response to those comments was to push

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Technically Speaking: The “Sellable Rally” Chart Review

June 11, 2019

Over the past couple of weeks, we have been discussing a “sellable rally” following the sell-off during the month of May. To wit:
“This week we are going to look at the recent sell-off and the potential for a short-term ‘sellable’ rally to rebalance portfolio risks into.
The markets only need some mildly positive news at this point to spur a ‘short-covering’ rally. I would encourage you to use it to reduce risk, rebalance holdings, and raise cash until the ‘trade war smoke’ clears.
The market did indeed rally last week. While the initial sell-off in the market was attributed to potential tariffs on Mexico, which were indefinitely suspended on Friday, the real reason was the dismal employment report of just 75,000 jobs.”
As I said, there was more room to go on the upside, and yesterday the

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Socialism Rises Due To The Great American Economic Growth Myth

June 10, 2019

There is little denying the rise of “socialistic” ideas in the U.S. today. You can try and cover the stench by calling it “social democracy” but in the end, it’s still socialism.
Since 1775, millions of Americans have given their lives in defense of the American “idea.” The tyranny and oppression which arise from communism, socialism, and dictatorships have been a threat worthy of such sacrifice. I am sure those patriots who died to ensure the “American way of life” would be disheartened by the willingness of the up and coming generations adopt such ideals.
But such shouldn’t be a surprise. It is the cycle of all economic civilizations over time as we “forget our history” and become doomed to repeat. it.
Scottish economist Alexander Tytler, who, in 1787, was reported to have commented on

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Is The “Sellable Rally” Done? 06-07-19

June 8, 2019

Is The Sellable Rally Done?
Some Comments On The Fed Cutting Rates
Sector & Market Analysis
401k Plan Manager

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Are YOU: Age 60 and over. • Concerned about retirement health care expenses. •Recently retired, or planning to retire soon. • Wanting to understand how to begin making important Medicare decisions. 
Then this “Lunch & Learn” is for you. Class size is very limited so register now
Is The Sellable Rally Done?
In last weeks missive, I noted the oversold condition of the market and the likelihood of a bounce:

“This week we are going to look at the recent sell-off and the potential for a short-term ‘sellable’ rally to rebalance portfolio risks into.
The markets only need some mildly positive news at this point to

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The Fed, QE, & Why Rates Are Going To Zero

June 6, 2019

On Tuesday, Federal Reserve Chairman Jerome Powell, in his opening remarks at a monetary policy conference in Chicago, raised concerns about the rising trade tensions in the U.S.,
“We do not know how or when these issues will be resolved. As always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective.”
However, while there was nothing “new” in that comment it was his following statement that sent “shorts” scrambling to cover.
“In short, the proximity of interest rates to the ELB has become the preeminent monetary policy challenge of our time, tainting all manner of issues with ELB risk and imbuing many old challenges with greater significance.  
“Perhaps it is time to retire the term ‘unconventional’ when

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Technically Speaking: Tops Are Processes, Bottoms Are Events

June 4, 2019

In April of 2018, I posted an article laying out 10-reasons why the “bull market” had likely ended for a while. To wit:
“I highly suggest you use any substantial rally to reduce risk and rebalance portfolios accordingly. Why? Because I am going to out on a limb and making a call.’I think the 9-year old bull market may have ended in February.’” 
As I stated then:
“In 2015, the market plunged as Fed Chair Janet Yellen brought QE3 to its conclusion and started hiking interest rates for the first time in 9-years. Again, this correction would likely have been substantially deeper as the Eurozone faced ‘Brexit’ which sent shocks through the market. The well-timed phone calls to the Bank of England and the European Central Bank by then Fed Chairman Yellen, to take over liquidity operations

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Hope For The Best, Plan For The Worst

June 3, 2019

Around 46 BC, Cicero wrote to a friend saying, “you must hope for the best.” To be happy in life we must always have “hope.” It is “hope” which is the beacon that lights the pathway from the darkness that eventually befalls everyone at one point or another in their life.
However, when it comes to financial planning and investing we should consider Benjamin Disraeli’s version from “The Wondrous Tale Of Alroy:”
“I am prepared for the worst, but hope for the best.” 
During very late stage bull markets, the financial press is lulled into a sense of complacency that markets will only rise. It is during these late stage advances you start seeing a plethora articles suggesting simple ways to create wealth. Here are a few of the most recent ones I have seen:
The Power Of Compounding
The New Math

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Selloff Overdone, Looking For A Sellable Rally 05-31-19

June 1, 2019

Selloff Overdone, Looking For A Sellable Rally
Sector & Market Analysis
401k Plan Manager

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Selloff Overdone, Looking For A Sellable Rally
On Friday morning, we posted the following commentary for our RIA PRO subscribers:

“In a surprising move Thursday night, Donald Trump slapped Mexico with a 5 percent tariff on all goods and set in place a schedule to ratchet it up to 25% over the next four months. The new tariffs are not in retaliation for trade, but a punishment designed to get Mexico to halt illegal immigration into the U.S. The dollar index is relatively flat, but the Mexican peso is down 3 percent versus the dollar, and bond yields have declined by 5-6 percent.
Mexico is the United States third largest trade

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Powell Channels Bernanke: “Subprime Debt Is Contained”

May 30, 2019

I recently discussed one of the biggest potential “flash points” for the financial markets today – corporate debt.
What I find most fascinating is how quickly many dismiss the issue of corporate debt with the simple assumption of “it’s not the subprime mortgage market.”
Correct, it’s not the subprime mortgage market. As I noted previously:
“Combined, there is about $1.15 trillion in outstanding U.S. leveraged loans (this is effectively “subprime” corporate debt) — a record that is double the level five years ago — and, as noted, these loans increasingly are being made with less protection for lenders and investors. Just to put this into some context, the amount of sub-prime mortgages peaked slightly above $600 billion or about 50% less than the current leveraged loan market.”

Every bubble

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Technically Speaking: Rothschild’s Investing Rule

May 28, 2019

Since the markets were closed yesterday for “Memorial Day,” there isn’t much for us to update technically from this past weekend’s missive. 
However, I did provide an update yesterday for our RIAPRO subscribers (Try 30-days FREE) with respect to where the S&P 500 is currently trading and why we expect a short-term bounce. To wit:
As noted previously, SPY tested, and failed, at the bottom of the uptrend line from both the 2017 post-election bounce and the 2016 lows.
SPY has now corrected the overbought condition and is testing support from the January highs with the 200-dma close below.
The “buy” signal in the lower panel was also massively extended, as noted several weeks ago, suggesting the reversal we have seen was coming as we warned then.
The correction last week has set up a tradeable

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