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The Silver Lining of Market Corrections: Opportunity or Threat?

Rates and inflation are rising for an extended period, QT is operating automatically in the background, and for the first time in a long time, stocks are on their own after being supported by the Fed since 2008—a situation that isn't working out well for them.

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Can The Consumer Save the Economy, Again?

The mainstream media exults every time retail sales come in higher than anticipated as evidence of how robust and powerful the American consumer is. According to Peter Schiff's podcast, these retail sales figures don't indicate a robust economy. They just represent how Americans are getting less for more money. And to make matters worse, they are drowning in debt as a result.

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Reverberations of Reality

With all the smoke and mirrors the government throws at us every day, it can be pretty hard to tell what is real, and what is not. Follow me on a journey to get a handle on what some believe is real inflation.

The Consumer Price Index (CPI) has been calculated differently by the Bureau of Labor Statistics (BLS) since 1980 in order to take product substitution and quality improvements into consideration.

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Continuing Resolutions Are Not Desirable

Federal spending is so out of control that it only took three months for the federal debt to increase by one trillion dollars to over 33 trillion dollars. In contrast, it took almost 200 years for the federal debt to reach one trillion dollars. So the federal government racked up more debt in the last three months than it did from the ratification of the US Constitution until Ronald Reagan’s first term! There will be even more shocking increases in the future since, according to some experts, federal debt is increasing by approximately 14 billion dollars a day.

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Lessons from America's Resilient History

Given the current economic trends marked by inflation and high valuations, a normal market correction could be on the horizon. The subsequent recovery cycle is likely to reward those who exercise patience and long-term vision.

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Navigating Economic Uncertainty in 2023

Navigating the economic landscape these days is more like white-water rafting than a serene paddle downstream. While uncertainty is the only constant, staying well-informed can serve as your lifejacket. Keep tabs on both the domestic and global economies, pivot your investment strategies as needed, and above all, remain patient. These challenging times will pass, and those who have armed themselves with knowledge and flexibility will be in the best position to reap the rewards. Stay tuned for more timely insights, and until then, keep your financial seatbelt fastened.

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Why Emotions Are Your Worst Enemy in Bad Markets

The topic of behavioral economics and its impact on investment decisions, particularly in turbulent times, is both fascinating and crucial for investors to understand. During periods of market instability, emotions like fear and greed can easily take the driver's seat, often leading to impulsive decisions that could harm long-term investment goals. Whether it's panic selling during a market dip or getting caught up in the euphoria of a bubble, emotional choices tend to be reactive and can result in missed opportunities or significant losses.

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Is The Fire of Inflation Being Extinguished?

In my latest blog post, I dig into the thorny issue of America's current inflation mess, taking cues from Ronald Reagan's take back in 1980. I spotlight the vicious cycle where more spending and borrowing by the government only fuel further inflation. The situation's pretty dire, with recent data showing inflation rates veering way past the Fed's 2% target, and most Americans are feeling it. The economy and inflation are emerging as hot-button issues for the 2024 Presidential race. I also touch on how Biden administration policies, particularly around energy, are contributing to the problem.

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The Fed Giveth, and The Fed Taketh Away

The U.S. government debt has reached nearly $33 trillion, fueled by extensive issuance of Treasury securities to both fund deficits and roll over maturing securities. Amid this, the Federal Reserve has raised interest rates, making short-term Treasury bills cost around 5.5% in interest to the government, while longer-term borrowing rates hover above 4%. However, these new, higher interest rates only apply to newly issued Treasury securities; those issued years ago continue to carry their original, lower interest rates. Consequently, the average interest rate on all government debt has gradually increased from 1.57% in February 2022 to 2.84% in July, and it's projected to continue rising.

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Central Bank Issues, And Other Relevant Stuff

In a recent interview with Bloomberg, Cleveland Federal Reserve Bank President Loretta Mester expressed concerns over the potential for inflation to remain above the 2% target for an extended period. Mester indicated that, although economic growth has been stronger than expected and there are signs of inflation coming down, the data is still insufficient to be certain. She also mentioned that higher long-term rates would put downward pressure on inflation.

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Inflation is Affecting Everyday Lives

During their two-day July meeting, Federal Reserve officials expressed worry about the pace of inflation and hinted at potential future rate hikes unless conditions change. The discussions led to a quarter percentage point rate hike, which markets expect to be the last one of the current cycle. However, the minutes showed that most members believe the fight against inflation is far from over, requiring potential further action from the Federal Open Market Committee.

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More Than Just Numbers: The Real-World Impact of Soaring Inflation

Perhaps one of the most bizarre recent developments in economic news has been the attempt by establishment media (and the White House) to declare US inflation “defeated” despite all the facts to the contrary. Keep in mind that when these people talk about inflation, they are only talking about the most recent CPI, which is supposed to be a measure of current inflation growth, not a measure of inflation already accumulated. But, the CPI is easily manipulated, and focus on that index alone is a tactic for misleading the public on the true economic danger.

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The Fable of Fred and George, Two Contrasting Investors

Once upon a time, there were two investors, one named Fred and the other named George. Fred was a believer in the perpetual market boom theory. He was a risk taker, known for his quick trading decisions, always chasing the hottest trends. He firmly believed that no matter how dire the economy got, the Federal Reserve would always be there to bail him out.

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Bidenomics: A Question of Stats?

Economic issues are some of the most politically abused issues often because the data politicians exploit is easy to present out of context. The vast majority of the public doesn’t spend their time immersed in the intricacies of monetary policy, unemployment stats and the processes of inflation vs deflation. They hear a soundbite on the news or social media once in a while, assume it must be true and then go on with their day.

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Why the Housing Market Hit the Brakes

Every facet of the economy, from consumer sentiment to government policies, plays a pivotal role in shaping the landscape of investment market cycles. By closely observing each economic element, we can gain a holistic understanding of underlying forces, potential risks, and emerging opportunities.

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Echoes of the Past: Analyzing How History Repeats Itself

During historic times, patience plays a crucial role in navigating the uncertainties and complexities of transformative events. It is essential to recognize that significant shifts and disruptions take time to unfold and resolve. Patience allows individuals and businesses to make informed decisions, adapt to changing circumstances, and weather the storms that often accompany historic periods.

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What Is The Truth?

We are being told things are just rosy, people are working lots of jobs and the economy is doing quite well. Maybe there is more cocaine in Washington than the stuff recently discovered in the White House.

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Will There Be Liquidity Problems in The Equity Markets?

It seems everyone has an opinion about the important things in life, and often those opinions don’t line up with reality. Some “experts” would have you believe that things are fine and dandy, and we are on a solid road to a bright future.

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The Market Still Doubts Fed’s Inflation Resolve

The market continues to doubt the Federal Reserve's commitment to controlling inflation, despite the Fed's revised interest rate estimates from 5.1 percent to 5.6 percent by year's end. The market's skepticism is also reflected in the Bloomberg consensus forecast, which shows rates remaining where they currently are by the end of the year. This skepticism persists despite the Fed's demonstrated commitment to fighting inflation, as shown by its consistent rate hikes, even in the face of potential recession.

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