Thursday , November 21 2019
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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

Technically Speaking: COT Positioning – Volatility, Oil, Dollar, & Rates (Q3-2019)

2 days ago

As discussed in the past weekend’s newsletter, we have been laying out the basis for a market correction. What has been most stunning is the rapid reversion in sentiment from “bearishness” this summer, to outright excess “bullishness” in just a few short weeks. 

“But it isn’t just the more extreme advance of the market over the past 5-weeks which has us a bit concerned in the short-term, but a series of other indications which typically suggest short- to intermediate-terms corrections in the market.
Historically, when all of the indicators are suggesting the market has likely encompassed the majority of its price advance, a correction to reverse those conditions is often not far away. Regardless of the timing of that correction, it is unlikely there is much upside remaining in the

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Which Secular Bull Market Is It – 1950’s or 1920’s?

3 days ago

The following comment was recently making its way around the “twittersphere” suggesting a “new secular bull market” has started.

10. Some longer term perspective on the S&P500 vs the US 10yr Bond Yield. h/t @jfahmy $SPX $TNX pic.twitter.com/Q7ezYTFWyS
— Callum Thomas (@Callum_Thomas) November 9, 2019

This isn’t the first time such a call has been made. 
“Despite concerns in the third quarter, bears never had a strong argument for why stocks were overvalued and the major indexes simply traded sideways for much of the last six months, wrote Robert Sluymer, technical strategist at Fundstrat Global Advisors.
“We ‘continue to view the market cycle as being a normal pause in an ongoing secular bull market similar to what developed in 2016, 2011 and the ‘cycle’ pullbacks that developed during

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Too Fast, Too Furious – Hedging For A Short-Term Correction 11-15-19

5 days ago

The “QE, Not QE” Rally Is ON
Too Fast, Too Furious
Why We Are Hedging
New: Financial Planning Corner
Sector & Market Analysis
401k Plan Manager
Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha

The “QE, Not QE” Rally Is On
Last week, we discussed the “QE, Not QE” rally:
“Just recently, we released a study for our RIAPro Subscribers (30-Day Free Trial) on historical QE programs and what sectors,  markets, and commodities perform best. (If you subscribe for a 30-day Free Trial you can read the entire report ‘An Investor’s Guide To QE-4.’)”
‘On October 9, 2019, the Federal Reserve announced a resumption of quantitative easing (QE). Fed Chairman Jerome Powell went to great lengths to make sure he characterized the new operation as something different than QE. Like QE 1,

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#WhatYouMissed On RIA: Week Of 11-11-19

6 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 Week In Blogs

The Best Of “The Lance Roberts Show”

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Video Of The Week

Interview with Pedro Da Costa from the Economic Policy Institute on the Fed, monetary policy, and the “Greatest Economy Ever.”

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Our Best Tweets Of The Week

Here is the headline for next Tuesday- ADMINISTRATION GETS PENS READY FOR PHASE ONE SIGNING- MARKET SURGES— Michael Lebowitz, CFA (@michaellebowitz) November 15, 2019
“During an argument, have you ever found yourself unable to speak because you’re so overwhelmed by

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David Robertson: “Best Used By”

6 days ago

Most people have had an experience or two with something that is out of date. Whether gulping down some spoiled milk, biting into some moldy bread, or sipping a glass of wine that has turned to vinegar, the experience tends to be shocking, unpleasant, and memorable, all at the same time. The lesson quickly learned is that you need to pay attention to how “fresh” certain things are to avoid an unpleasant experience.
The same thing happens with social norms, albeit with a longer time frame. Historical practices that were once met with widespread acceptance are today considered unreasonable and uncivil. The main point is that times change; some can adapt, but others either cannot or do not. Since business success depends on resonating with customers, employees and investors, it matters

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Consumers Are Keeping The US Out Of Recession? Don’t Count On It.

7 days ago

Just recently, Jeffry Bartash published an interesting article for MarketWatch.
“Like a stiff tent pole, consumers are keeping the U.S. economy propped up. And it looks like they’ll have to do so for at least the next year.
Strong consumer spending has given the economy a backbone to withstand spine-tingling political fights at home and abroad. Households boosted spending by 4.6% in the spring, and nearly 3% in the summer, to offset back-to-back drops in business investment and whispered talk of recession.”
That statement is correct, and considering the consumer makes up roughly 70% of economic growth, this is why you “never count the consumer out.” 
The most valuable thing about the consumer is they are “financially stupid.” But what would expect from a generation whose personal motto is

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Technically Speaking: A Correction Is Coming, Just Don’t Tell The Bulls…Yet.

9 days ago

In this past weekend’s newsletter, I discussed the rather severe extensions of the market above both the longer-term bullish trend and the 200-dma. To wit:
“Currently, it will likely pay to remain patient as we head into the end of the year. With a big chunk of earnings season now behind us, and economic data looking weak heading into Q4, the market has gotten a bit ahead of itself over the last few weeks.
On a short-term basis, the market is now more than 6% above its 200-dma. These more extreme price extensions tend to denote short-term tops to the market, and waiting for a pull-back to add exposures has been prudent..”

But it isn’t just the more extreme advance of the market over the past 5-weeks which has us a bit concerned in the short-term, but a series of other indications which

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The One Chart Every Millennial Should Ignore

10 days ago

The media is full of articles about the financial situation of Millennials in today’s economy. According to numerous surveys, they are saddled with too much debt, can’t secure higher wage-paying jobs, and are financially distressed on many fronts. Moreover, this is occurring during the longest financial and economic boom in the history of the United States.
Of course, the media is always there to help by chastising boot-strapped Millennials to dump their savings into the financial markets to chase overvalued, extended, and financially questionable stocks.
To wit:
“Only about half of American families are participating in some way in the stock market, according to research from the St. Louis Fed. When it comes to millennials (ages 23 to 38), about 60% have no direct or indirect exposure to

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The QE Rally Is On – How To Play It & What Happens Next 11-08-19

12 days ago

The “QE, Not QE” Rally Is ON
How To Play It
What Happens Next
Sector & Market Analysis
401k Plan Manager
Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha

The “QE, Not QE” Rally Is On
Just recently, we released a study for our RIAPro Subscribers (30-Day Free Trial) on historical QE programs and what sectors,  markets, and commodities perform best. (If you subscribe for a 30-day Free Trail you can read the entire report “An Investor’s Guide To QE-4.”)
“On October 9, 2019, the Federal Reserve announced a resumption of quantitative easing (QE). Fed Chairman Jerome Powell went to great lengths to make sure he characterized the new operation as something different than QE. Like QE 1, 2, and 3, this new action involves a series of large asset purchases of Treasury

Read More »

What We Bought & Sold In Our Equity Portfolio

13 days ago

Each week on RIAPRO (Try For Free For 30-Days) we produce a series of chart books which cover buy/sell/hold recommendations for:

Monday – Major MarketsTuesday – Major SectorsWednesday – Our Portfolio HoldingsThursday Rotation – Commodities, Sub-Sectors, Breadth/Participation, or our Watch List.We also produce daily market commentaries, portfolio action alerts, and a variety of special reports for our subscribers.

RIAPRO is a robust “Do-it-yourself” research platform which uses our technical and fundamental parameters to screen, research, and develop ideas for your own portfolios and investment strategies. From macro analysis to individual stock analysis, there is a wide range of tools available to help you manage your investment portfolio better.

The following are the latest

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#WhatYouMissed On RIA: Week Of 11-04-19

13 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 Week In Blogs

The Best Of “The Lance Roberts Show”

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Video Of The Week

John Dorfman On Value Investing

Sometimes it’s good to get back to the basics: The essence of value trading, and what makes a value stock so; commentary on the rise of ETF’s, and the myth of passive investing; the price distortion in share buy backs; how to factor in the Fed.

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Our Best Tweets Of The Week

Massive fiscal spending and massive monetary stimulus. That is all you need to know. Everything else is just a

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Corporate Profits Are Worse Than You Think

14 days ago

Corporate profits are worse than you think.
In a recent post, I discussed the deviation of the stock market from corporate profitability. To wit:
“If the economy is slowing down, revenue and corporate profit growth will decline also. However, it is this point which the ‘bulls’ should be paying attention to. Many are dismissing currently high valuations under the guise of ‘low interest rates,’ however, the one thing you should not dismiss, and cannot make an excuse for, is the massive deviation between the market and corporate profits after tax. The only other time in history the difference was this great was in 1999.”

It isn’t just the deviation of asset prices from corporate profitability which is skewed, but also reported earnings per share. As I have discussed previously, the

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Technically Speaking: Everyone Is Swimming In The “Deep End.”

16 days ago

With the market breaking out to all-time highs, the media has started to once again reach for their party hats as headlines suggest clear sailing for investors ahead.
After all, why not?  
The Federal Reserve cut rates for the 3rd time this year.
The Fed is also back in the “QE” game of buying bonds.
President Trump has “surrendered” to China in order to end the “trade war.” 
Corporate stock buybacks are on track for the second largest year on record.
Earnings, due to buybacks, are beating lowered estimates, 
Consumer sentiment remains near record highs; and,
Economic data is weak, but not terrible.
With those supports in place, markets are pushing new highs as we discussed would likely be the case last month:
“Assuming we are correct, and Trump does indeed ‘cave’ into China in mid-October

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15-Extreme Risks & How You Can Navigate Them

17 days ago

Willis Towers Watson’s Thinking Ahead Institute (TAI) recently revealed what it considers the 15-extreme risks facing investors for 2019, as well as for the years ahead. The risks run the gamut from climate change to nuclear contamination.

TAI’s research suggests, broadly, there are three hedging strategies available to institutions:
Hold cash. Over long historical periods cash has held its real value through both episodes of deflation and inflation but there is no guarantee that this will be the case in the future.
Derivatives. It is worth mentioning that cost and usefulness are often in opposition. The cost of derivatives protection can often be reduced by specifying more precise conditions – but the more precise the conditions, the greater the chance that they are not exactly met and

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Fed Gives Up On Inflation, Welcome To The U.S. of Japan 11-01-19

19 days ago

Retest Confirms Bullish Breakout
Fed Gives Up On Inflation
Welcome To The U.S. of Japan
Sector & Market Analysis
401k Plan Manager
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Retest Confirms Bullish Breakout
“If you are a bull, what is there not to love?”
That was the message from two weeks ago, and the reasoning behind increasing our equity exposure in portfolios as we head into the end of the year. With the Fed cutting rates on Wednesday, and companies winning the “beat the estimate game” as earnings season progresses, the markets finally broke out to new “all-time” highs this past week.

This breakout is consistent with the “revival of the bulls” which is needed as there is too much attention focused on a “recession” and “bear market.” (If a recession/bear

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#WhatYouMissed On RIA: Week Of 10-28-19

20 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 Week In Blogs

The Best Of “The Lance Roberts Show”

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Video Of The Week

What the Fed really said. Interview with Michael Lebowitz on latest Fed statement.

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Our Best Tweets Of The Week

Once again QE is not QE.. Maybe if he says it enough it will change.— Michael Lebowitz, CFA (@michaellebowitz) October 30, 2019
Why is this happening?1) Too much work.2) Porn is easier3) Lack of economically viable partners4) Lack of "actual men." 5) Otherhttps://t.co/ngjKt0LkEx— Lance Roberts (@LanceRoberts)

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S&P 500 Monthly Valuation & Analysis Review – 11-1-19

20 days ago

J. Brett Freeze, CFA, founder of Global Technical Analysis. Each month Brett will provide you their valuable S&P 500 Valuation Chart Book. This unique analysis provides an invaluable long term perspective of equity valuations. If you are interested in learning more about their services, please connect with them.

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Dow 650,000? We Are Already There!

21 days ago

Just recently, CNBC ran an article touting the call of “Billionaire Investor Ron Baron” of the Dow reaching 650,000 in just 50-years.

Billionaire investor Ron Baron sees the Dow at 650,000 in 50 years https://t.co/oPElm0nrHT
— CNBC (@CNBC) October 25, 2019

As noted in the article:
“Speaking from his annual investment conference in New York, Baron predicted the Dow Jones Industrial Average, based on historical moves over decades, will reach 650,000 in 50 years, with an over $500 trillion U.S. economy.”
Doing some quick math, that assumption is for a 6.6% annualized return on both the Dow and the U.S. economy, as noted by Ben Carlson.

This is roughly a 6.6% annual return to get to Dow 650k
7% gets us to Dow 790k
8% would be Dow 1.2 million
Even 5% returns would be Dow

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Technically Speaking: 4-Risks To The Bullish View

23 days ago

When I was growing up, my father, probably much like yours, had pearls of wisdom that he would drop along the way. It wasn’t until much later in life that I learned that such knowledge did not come from books but through experience. One of my favorite pieces of “wisdom” was:
“A sure-fire ‘no lose’ proposition is doing exactly the opposite of whatever ‘no lose’ proposition is being proposed.”
Of course, back then, he was mostly giving me “life advice” about not following along with my stupid-ass friends who were always up elbows deep in mischief.
However, that advice also holds true with the financial markets currently. As I have noted over the last couple of weeks (read this and this) the “bulls” certainly seem to regained control of the markets as new highs were reached on Monday. As I

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Margin Debt Is Declining. Are The Bulls In The Clear?

24 days ago

In a recent weekly newsletter (Subscribe for free e-delivery), I discussed the rather dramatic decline of short-interest in the S&P 500 which suggests a high degree of complacency by investors.

As Wolf Richter recently noted:
“Of the total shares outstanding of the SPDR S&P 500 ETF, only 2.6% were out on loan to short-sellers this week, the lowest since early October 2018, and down from 7% during the summer, according to IHS Markit data cited by Bloomberg. Meaning that short-sellers who want to short the entire market, and not specific companies, are worried that the market will break out, powered by a Brexit deal or a miraculous US-China trade deal as per presidential tweet, or whatever, and rip their faces off if they’re short the market.”
In other words, optimism about the “bull

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The Fed’s “Not QE” And How We Are Playing It 10-25-19

26 days ago

Market Review & Update
Playing The Fed’s QE
Sector & Market Analysis
401k Plan Manager
Follow Us On: Twitter, Facebook, Linked-In, Sound Cloud, Seeking Alpha

Market Review & Update
“If you are a bull, what is there not to love?”
That was the message from last week, as we discussed the reasoning for our increase of equity exposure in portfolios on an opportunistic basis.
Of course, besides the fact we are moving into the seasonally strong period of the year, the primary reasons for the increase in equity really came down to two simple factors:
Trump moving the put the “trade war” to rest (as we previously anticipated.)
The Fed moving to increase bond purchases and effectively launch QE4 (more on this in a moment.)
As noted in Tuesday’s discussion:
“Readers are often confused by our more

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#WhatYouMissed On RIA: Week Of 10-25-19

27 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 Week In Blogs

The Best Of “The Lance Roberts Show”

[embedded content]
Video Of The Week

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Our Best Tweets Of The Week

In an efficient market should stocks fall 15-20% on bad earnings? I would think that in most cases investors would be aware of the situation and slowly price it in weeks and months before.— Michael Lebowitz, CFA (@michaellebowitz) October 24, 2019
In other words, not only are we now funding trillion dollar deficits entirely domestically but also purchasing over $100bn of debt sold by

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Strongest Economy Ever? Americans Receive More In Benefits Than Pay In Taxes

28 days ago

At the beginning of August, I discussed the following tweet from the President:

What the Market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world….
— Donald J. Trump (@realDonaldTrump) July 31, 2019

“But if it is the ‘strongest economy ever,’ then why the need for aggressive rate cuts which are ’emergency measures’ to be utilized to offset recessionary conditions?”
The following chart should quickly put that claim to rest.

While the claims of an exceptionally strong economy rely heavily on historically low unemployment and jobless claims numbers, historically high levels of asset prices, and strong consumer spending

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Technically Speaking: It’s Crazy, But We’re Adding Equity Risk

October 22, 2019

In last week’s update, I discussed the case of why it was “now or never” for the bulls to take control of the market. To wit:

The ECB announced more QE
The Fed reduced capital requirements and initiated QE
The Fed is cutting rates
A “Brexit Deal” has been reached.
Trump, as expected, caved into China
Economic data is improving
Stock buybacks
If you are a bull, what is there not to love? 

Despite a long laundry list of concerns, as stated, we remain equity biased in our portfolio models currently for two primary reasons:
The trend remains bullishly biased, and;
We are now entering into the historically stronger period of the investment year.

With the volatile summer now behind us, being underweight equities paid off. As I discussed in Trade War In May & Go Away:

“It is a rare occasion

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CEO Confidence Plunges, Consumers Won’t Like What Happens Next

October 21, 2019

There is a disparity happening in the country.
No, it isn’t political partisanship, but rather “economic confidence.”
The latest release of the University of Michigan’s consumer sentiment survey rose to a three-month high of 96, beat consensus expectations, and remains near record levels. Conversely, CEO confidence in the economy is near record lows.
It’s an interesting dichotomy.
The chart below shows our composite confidence index, which combines both the University of Michigan and Conference Board measures. The chart compares the composite index to the S&P 500 index with the shaded areas representing when the composite index was above a reading of 100.

On the surface, this is bullish for investors. High levels of consumer confidence (above 100) have correlated with positive returns

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For The Bulls, It’s Now Or Never 10-18-19

October 19, 2019

Now Or Never For The Bulls
Bearish Case Has Teeth
Sector & Market Analysis
401k Plan Manager
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It’s Now Or Never For The Bulls
In April of this year, I wrote an article discussing the 10-reasons the bull market had ended.
“The backdrop of the market currently is vastly different than it was during the ‘taper tantrum’ in 2015-2016, or during the corrections following the end of QE1 and QE2.  In those previous cases, the Federal Reserve was directly injecting liquidity and managing expectations of long-term accommodative support. Valuations had been through a fairly significant reversion, and expectations had been extinguished. None of that support exists currently.”
It mostly fell on “deaf ears” as the market rallied

Read More »

#WhatYouMissed On RIA: Week Of 10-14-19

October 18, 2019

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 Week In Blogs

The Best Of “The Lance Roberts Show”

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Video Of The Week

Excellent interview with Daniel LaCalle on “Freedom Or Equality.” This is a great video to share with kids who are buying into the ideas of “Socialism vs. Capitalism.”

Also Read: Capitalism Is The Worst, Except For All The Rest

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Our Best Tweets Of The Week

Remember its not the yield curve inversion that signals a recession, its the un-inversion/re-steepening that should be worrisome.— Michael Lebowitz, CFA

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Why The Measure Of “Savings” Is Entirely Wrong

October 17, 2019

In our recent series on capitalism (Read Here), we were discussing how the implementation of socialism, by its very nature, requires an ability to run unlimited deficits. In that discussion was the following quote:

“Deficits are self-financing, deficits push rates down, deficits raise private savings.” – Stephanie Kelton

On the surface, there does seem to be a correlation between surging deficits and increases in private savings, as long as you ignore the long-term trend, or the reality of 80% of Americans in the U.S. today that live paycheck-to-paycheck.
The reality is the measure of “personal savings,” as calculated by the Bureau of Economic Analysis, is grossly inaccurate. However, to know why such is the case, we need to understand how the savings rate is calculated. The website

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Technically Speaking: Bulls Get QE & Trade, Remain “Stuck In The Middle”

October 15, 2019

“Clowns to the left of me,Jokers to the right, here I am,Stuck in the middle with you” – Stealers Wheels
__________________________
The lyrics seem apropos considering we have Trump, China, Mnuchin, the Fed, along with a whole cast of colorful characters making managing money a difficult prospect recently. 
However, the good news is that over the last month, the bulls have had their wish list fulfilled.
The ECB announces more QE and reduces capital constraints on foreign banks.
The Fed reduces capital requirements on banks and initiates $60 billion in monthly treasury purchases.
The Fed is also in the process of cutting rates as concerns over economic growth remain.
Trump, as expected, caves into China and sets up an exit from the “trade deal” nightmare he got himself into. 
Economic data

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Capitalism Is The Worst, Except For All The Rest – Part 3

October 14, 2019

Part 1 – How Wall Street Destroyed Capitalism
Part 2 – The Myths Of “Broken Capitalism”
In Part 1, we discussed how “Capitalism” was distorted by Wall Street. In Part 2, we reviewed some of the “myths” of capitalism, which are used to garner “votes” by politicians but are not really true. Most importantly, we discussed the fallacy that “more Government” is the answer in creating equality as it impairs economic opportunity.
I want to conclude this series with a discussion on the fallacy of socialism and equality, and provide a some thoughts on how you can capitalize on capitalism.
Socialism Requires Money
The “entire premise” of the socialist agendas assumes money is unlimited. Since there is only a finite amount of money created through taxation of citizens each year the remainder must

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