Lawrence McDonald
@Convertbond
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NY Times Bestselling Author, pick up "When Markets Speak" on Amazon. Long-time @RealVision @CNBC Contributor, founder of the @BearTrapsReport
New York, NY
Joined March 2009
.@nfergus . Special thanks to the greatest financial historian that’s ever lived. #SummerReading .#Bestseller
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Midterm Election, Most House Seats Lost by President's Party in Power. 2010 Obama: -63.1994 Clinton: -52.1958: Eisenhower: -48.1974 Ford (Nixon): -48.1966 Johnson: -47.1946 Truman: -45.2006 Bush: -30.1950 Truman: -29.1982 Reagan: -26.2018 Trump: -26. *NY Times data since 1946.
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Met Charle Munger in Omaha in the years after Lehman - he said: . "Larry, never, ever tell anyone about your problems, 90% of the people really don't care. The other 10% are glad you have them.".
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Progress, Bitcoin - a $500B crash and no one is begging for a bailout. .
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When you see a sector like the Semiconductors, the hottest of all last 12 months, up 7% and down 7% in 24 hrs, this is a classic signal.
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If your third largest customer is committing fraud, is that bullish???. Nvidia $NVDA.Super Micro Computer $SMCI
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Bitcoin. Aug 2024: 62000.June 2024: 62000.April 2024: 62000.Feb 2024: 62000.Oct 2021: 62000.April 2021: 62000. *Inflation, up 30% since 2021.
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Is there a term for this?. GDP Economic Growth: -1.4%.CPI Inflation: 8.5%.
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Since 2021. Bitcoin . 59k to 59k. Gold. 1750 to 2500. *Last ten years - Gold’s largest drawdown? 21% vs. Bitcoin -82%, -58%, -65%, -75%. *A store of wealth holds its value. It doesn’t lose half its value or more every few years.
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Drawdowns. Facebook -75%.Disney -48%.Fedex -50%.Tesla -46%.Nvidia -60%.Nike -50%.Netflix -58%.Amazon -46%. All-Time Highs. T-Mobile .McDonald´s .Northrop Grumman .Amylyx Pharm.Pepsi .UnitedHealth.Merck. *You won´t see internal divergence like this more than once or twice a decade.
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Breaking news, when you pay human beings NOT to work it is very hard to get them back into the labor force.
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On Black Monday, October 19, 1987 — working with my Dad at his brokerage firm. He asked me to call the floor, phones ringing off the hook. Me: “I need to sell x shares of IBM.”. Trader: “98 bid.”. Me: “Well, my machine says $119.”. Trader: “Well, sell it to your machine then.”.
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After living through the Lehman fraud - there is one ultimate takeaway - this era will go down as a period where central banks fueled con-men and women - Saylor (MSTR) and Wood (ARKK) - to prey on retail investors - FACT - Mark my words.
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Black Monday - working for my Dad’s brokerage firm, on October 19, 1987:. Me: “I really need to sell x shares of IBM”. Trader: “$98 bid”. Me: “But. But, my machine says $122”. Trader: “Well, sell it to your machine then.”.
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*BIDEN ADMIN: CAN WORK WITH ENERGY COMPANIES TO SURGE SUPPLY - Bloomberg. *PIONEER'S SHEFFIELD: EVEN IF BIDEN REQUESTS MORE OIL, SHALE CANNOT RESPOND. - Bloomberg. *"VP Harris did indeed call for banning fracking during the primary campaign." - Axios.
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Market rally since @realDonaldTrump won the election now exceeds all other newly elected US Presidents since at least WW2, + up 25.4%.
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True Story - October 19, 1987. Me: “I need to sell x shares of IBM”. Trader: “$98 bid”. Me: “my machine says $119”. Trader: “Well, sell it to your machine then.”.
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Dow Jones Industrial Average. Nov 2017: 24,300.Nov 2016: 17,900.Nov 2014: 17,900. What’s going on here?.
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"When Markets Speak" - Best Seller on Amazon. The Epilogue -- Chapter #1. I was sitting there in Omaha, across the table from Charlie Munger, one of the all-time greats. I'll never forget this line. He said, . "Larry - if all you ever did was buy high-quality stocks on the
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Would You Desribe the State of the US economy in Excellent- Good shape?. 2017: 66%.2016: 29%.2015: 37%.2014: 31%.2013: 30%. Quinnipiac Poll. via @cvpayne.
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What happens to Gold when the Fed stops hiking rates?
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Never, ever forget. Buffett backing up the truck from 8x to 18x, dumping shares near 34x. $AAPL Apple
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Never forget, we live in a world where "insider trading" is illegal, but Fed policy path leaks to Wall. St. Journal reporters move asset prices in the hundreds of billions of dollars.
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There is only one reason why the Fed cut 50bps this week. They MUST get front-end rates lower as this colossal wall of debt matures.
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Market Capitalization . Trump Media $DJT $10.5B.New York Times $NYT $9.2B. Bloomberg data.
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The last time inflation was here, February 1982 - the Fed Funds Rate was 15%.
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Gold is money, everything else is credit. JP Morgan, during the panic of 1907.
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Serial Convertible Bond Issuers. SunEdison*.Chesapeake Energy*.SunPower*.Molycorp*.Lehman*.iStar Financial*.Calpine*.Fannie Freddie*.Enron*.Tyco*.Adelphia*.Six Flags*.eToys*.Avaya*.Worldcom*.Tesla.Coinbase.Microstrategy. *went bankrupt.
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Gold is money, everything else is credit. JP Morgan, the panic of 1907.
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Dear Equities,. $1M in T-Bills, Interest Paid. February . 2023: $51K.2022: $6k. Best regards,. Cash
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Gets very little coverage:. If @realDonaldTrump didn’t land the September Debt Limit - continuing budget resolution deal with “Chuck and Nancy”, there would be no tax reform (bill passage) in 2017.
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True Story - working for my Dad’s brokerage firm, October 19, 1987. Me: “I need to sell x shares of IBM”. Trader: “$98 bid”. Me: “My machine says $119”. Trader: “Well, sell it to your machine then.”
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How the Game Works. December 2020 - "Coinbase Picks Goldman Sachs to Lead Upcoming IPO". November 2021: November COIN was a "Buy" and Goldman raised the price target to $387. June 2022: GS Downgrades to Sell from Buy - price target now $45.
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Interest rates up --- bonds prices down. $1 million invested in this Apple AAPL bond is now worth $600k, duration risk is on stage here. Now think of all those mortgage-backed securities on bank balance sheets.
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Your 401k has been hijacked…. Largest 25 Stocks - Valuation . 2023: $18.4T.2013: $5.5T. *Ten years ago, no stock made up more than 3% of the S&P 500, today 5 do. - Bespoke data.
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Markets are Speaking. US YIELD CURVE TURNS POSITIVE FOR ONLY SECOND TIME SINCE 2022 - Bloomberg.
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The "Crash of 22" . *Carnage under the Nasdaq surface
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If you use the same metrics inside the CPI formula that Paul Volcker gawked at in the early 1980s, inflation is running at 14.145%, a real theft purchasing power.
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Never, ever forget - the fundamental foundation of capitalism is to let the charlatans, the hubris filled pretenders, and bad guys fail. For most of the last 20 years we are living in a society where this is NOT the case. There is a price to pay for this charade. It’s coming.
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November 2017 vs 2016. Dow Jones Industrial Average. 23,602 v 17,883 (+31.9% high to low). NFIB Business Optimism. 103.0 v 94.9. Consumer Confidence. 125.9 v 100.8. Bloomberg data. cc @DonaldJTrumpJr @stevenmnuchin1 @realDonaldTrump.
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All In - David Tepper just said he broke (risk) limits to own China, 15-20% is usually his limit, but we think he is higher than that. When asked about a "hedge" he said I have no hedge, valuation is the hedge. .
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A corrupt plutocracy on Stage - Nancy Pelosi’s husband purchased more than $2 million of $TSLA shares last week - ahead of this epic move - Theft in plain sight. “one of the lawmaker's biggest equity investments this year” - Forbes . cc @elonmusk
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*BLACKSTONE DEFAULTS ON €531M CMBS AFTER PROPERTY SALES DELAYED. *”Credit leads equities”, rinse repeat…
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I believe Bank of America is insolvent with a 6% Fed funds rate, leverage explodes. If your core capital is impaired, any losses on tertiary assets (credit cards, commercial real estate, asset backed securities) are exponential painful.
Veteran banker calling for "TARP 2.0" in Op-Ed to help banks with steep unrealized losses on their securities holdings . Proposal would lend up to $1 Trillion against securities that have lost value to Fed's "meteoric increase" in interest rates . 1/5
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Biden is now officially in Jimmy Carter territory. *Inflation is as high as the 1970s - 1980s. Using the CPI formula trafficked in those days, inflation is above 14%, matching the height of the worst consumer price pressure era.
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With US Treasuries at 5%, Bank of America is close to 45x levered, at 6-7% infinitely levered.
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The Federal Reserve is kicking off a rate-cutting cycle with core PCE NO-where even close to the 2014-2019 norm. Clearly, they have chosen a new, higher inflation target in reality. They will publicly say this in the coming years.
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*FED'S KAPLAN, ROSENGREN TO SELL ALL STOCKS AMID ETHICS CONCERNS - Bloomberg. Central Bankers trading stocks - Why in the name of God´s green earth did it take a public shaming on Twitter to inflict common sense?.
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.@MMFlint In 2001 Venezuela was the richest country in South America; it is now among the poorest. via @TheEconomist.
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October 19, 1987, a Day to Never Forget. Me: “I need to sell x shares of IBM”. Trader: “$98 bid”. Me: “My machine says $119”. Trader: “Well, sell it to your machine then.”.
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As a $3T company, Microsoft $MSFT and Apple $AAPL never got anywhere near 40x sales, but it's different this time?. Nvidia $NVDA
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October 19, 1987 - a Day to Never Forget. Me: "I need to sell x shares of IBM". Trader: "$98 bid". Me: "My machine says $119". Trader: "Well, sell it to your machine then".
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October 19, 1987. Me: I need to sell x shares of IBM. Trader: $98 bid. Me: My machine says $119. Trader: Well, sell it to your machine then.
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Be careful trading stocks when major developed market bonds are trading like this. There is NOTHING more dangerous, than academics who have NEVER taken a professional risk, never actually sat in a risk-taking seat - but now sitting on trillions of pounds and dollars of risk.
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CITIGROUP IS SAID TO EXIT DISTRESSED-DEBT TRADING BUSINESS. *talk about a signal, wow.
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In the History on Mankind . 1. A ton of coal has never been worth more than it is today. 2. The planet has never used more coal. 3. China is building more coal plants than exist in the Western world.
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U.S. 10-Year Treasury Bond Yield. From 3.62% to 4.62% since the Fed started the latest rate-cutting (monetary policy easing) cycle in September. The U.S. 30-year mortgage rate has moved from 6.5% to 7.3%. How unusual is this price action?
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.@JeffBezos Dear Jeff, one of the smartest human beings, who’s ever walked on two legs on this planet 🌏 is selling stock like it’s his last meal before the electric chair? What does he know?
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“There is nothing in this world which will so violently distort a man’s judgement more than the sight of his neighbor getting rich.”. JP Morgan, after the Panic of 1907. #Crypto.
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To all the Wall St. traders who were in college or diapers during the 2008 and 2000 credit and equity market drawdowns, what we've seen over the last week was definitely a taste. At your pinnacle, climax of fear, you must do the exact opposite of what you want to do. BUY!.
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Never, ever forget. Long-term track records on an asset class that implodes every few years are total BS. Anyone stating them needs to be called out as a pumper looking for a greater fool. Last 10 Years - Largest Drawdowns. Gold: -22%. Bitcoin: -78%, -82%, -55%. #StoreOfValue
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Interest on $1M in US T-Bills. Jan 2023: $46k.Jan 2022: $3k. * “56% of Americans can't cover a $1,000 emergency expense with savings” CNBC, January 2022. Wealthy investors just got a colossal pay raise vs. the lower / middle class consumer up against inflation.
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What do Global Yields Know?. 30 Year Bonds. UK 5.21%*.US 4.85%.Japan 2.30%**. *Highest since 1998. **Highest since 2010.
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Dear Mr. Powell,. Close to $11T US Treasury bonds maturing - next 24 months, need to be refinanced. Funding Rate . Current: 1.6% to 1.9%.New: 3.4% to 4.6%. *interest as a % of the budget explodes from 8% to nearly 17%. **interest (blue) below is a very conservative estimate.
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Friday was a Significant day - Bank of Japan intervention and a Federal Reserve Policy path shift, it was an inside job. Three things you need to know:.
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Markets are Speaking --- Nasdaq opens down 1%, to close up 2%, how rare is this neighborhood?
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Global mutations and personal freedom, tied at the hip.
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Everything you need to know about today´s Fed policy path adjustment.
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S&P 500 "All-Time Highs. 2019 - 2021: 117.2012: 0.2011: 0.2010: 0.2009: 0.2008: 0.2007: 9.2006: 0.2005: 0.2004: 0.2003: 0.2002: 0.2001: 0.2000: 4.1999: 35.1998: 47.1997: 45. via @charliebilello.
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It must be nice to be an airline CEO. You can recklessly engage in share buybacks to enrich yourself and when ur behavior catches up to u, np just tap the Fed & taxpayers. Capitalism without consequences is not capitalism. Via @tylerwinklevoss.
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US 30-Year Bond on Christmas Eve. 2024: 4.8%*.2023: 4.0%.2022: 3.8%.2021: 1.9%.2020: 1.6%.2019: 2.3%.2018: 3.0%.2017: 2.8%.2016: 3.1%.2015: 3.0%.2014: 2.7%. *Term premium, sustained inflation. Highest yield since 2007, on Dec 24.
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Private sector job creation has plunged, 6 year lows vs. government jobs surge to all time highs. Running $1T deficits every 90 days — while trying to influence election, buy votes, comes with a price — it’s NOT free. cc @zerohedge
The Federal Reserve is kicking off a rate-cutting cycle with core PCE NO-where even close to the 2014-2019 norm. Clearly, they have chosen a new, higher inflation target in reality. They will publicly say this in the coming years.
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Buffett always said - “trannies don’t lie.”. *Dow Transportation Index (real economy stocks) many economic bellwethers are found there.
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.@realDonaldTrump.U Michigan consumer confidence at 101.1 vs 95 expectations - Current conditions at 116.4, highest since 2000 - Bloomberg.
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Inflation - it's like trying to lose 20lbs. The first 10 come off like butter. The last ten are a root canal.
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Since Feb 9. VIX +39%.Bitcoin -15%. *Long crypto is a short equity volatility position, rinse repeat.
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Off the Recent Lows. Orange Juice +45%.Natural Gas +43%.Sugar +41%.Gasoline +33%.Uranium +28%.Oil +24%.Lean Hogs +22%.Soybeans +16%.Iron Ore +15%.Coal +14%.Wheat +14%. *Bloomberg terminal data, lows since Dec. **ALERT: Inflation expectations, US 5yr BEs, at a nine-year high.
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McDonald's is telling us the lower-income consumer is struggling vs. Chipotle CMG says all is well.
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September 2020: “Exxon Mobil replaced by a software stock CRM after 92 years in the Dow is a 'sign of the times'” - CNBC. Since. CRM -34%*.XOM +157%. *New lows. Via @BearTrapsReport.
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Working at my Dad’s broker-dealer on October 19, 1987. Me: I need to sell x shares of IBM. Trader: $98 bid. Me: My machine says $119. Trader: Well, sell it to your machine then. #BlackMonday .#Quotron.
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Apple $AAPL $3.9T. The Street hated the stock at 5.3x sales in 2022, despised the stock at 2.6x sales in 2018, but love the shares today at 10.1x sales in 2024?
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JGBs - NO trades for three days - first time ever. *a market in Japan, officially destroyed by a central bank holding close to 47% ($12.5T) of all government bonds. Coming to a country near you in 2032.
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EV Owners - in the Lithium Crosshairs . #teslastock .#TeslaCarriers .#ElectricVehicles .#lithiumionbattery
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A. Gold - All Time High. B. Barrick Gold $19.50 vs. all time high of $54. *Thoughts on gold vs. gold miners?.
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US Federal Reserve accepts $1.1T in daily reverse repo operation. All Lehman needed was a $15B repo on September 15, 2008. Never would have failed today, NOT a chance.
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Drawdowns from Recent Highs: . Oil: -53%.Bitcoin: -46%.Delta Airlines: -46%.Tesla: -42%.Goldman: -40%.JP Morgan: -38%.Transports: -36%.Russell 2000: -35%.FANGs: -28%.S&P 500: -27%.Nasdaq 100: -25%.Amazon: -23%.Consumer Staples: -19%.Gold: -7%.Cash: 0%. via: @BearTrapsReport.
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Over $2T is needed to rebuild a 30-50-year-old power grid in the USA. Yet -. a) We are supposed to put millions of new electric vehicles on this broken-down highway. b) Dutch scientists tell us "ChatGPT Uses 17,000 times more Electricity than US Households.". c) U.S.
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One Year Ago - "Yellen advises G7 to "Go Big" in stimulus measures.".
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Once again, credit leads equities - high yield has been leaking (wider spreads, higher yields, risk off) for weeks while stocks marched higher - listen to credit.
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Oil is back on the 2018 highs with the US rig count left in the dust, handing control over price to the Russians and Saudi's comes with a high price. *US oil production is -15% off 2020 levels. Stealth middle-class tax hike is on stage here.
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They will throw some poor guy from Queens in the slammer for 3 years for buying a stock on a tip from his father-in-law, but hey, those "Super Users" of CPI data, no worries, all good.
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