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Registered Investment Adviser Caleb Lawrence

 

The major averages continued their upward trajectory began yesterday despite little real news. The latest regional Fed manufacturing index to show surprising strength is Richmond with a 5 point gain to 22 in March on strength in new orders and shipments. Other noteworthy items from the report March was the 7th straight month of increase for the index and represented a six standard of deviations beat. Why the regional data is not reflected in the national Industrial Production and Durable Goods reports is beyond me as they continue to muddle along about even.

The Census Bureau reports that the advance international trade deficit slipped 5.9% in February to 64.8 billion on a big drop in imports. Wholesale and retail inventories both gained .4%, as the report, like so many others shows an economy just getting by at best.

The recent political shocks represented by the Brexit vote and Trumps electoral win as populism surges both here and abroad as a result of failed economic policies that have left far too many in society disenfranchised at the margins. The debt based growth model of the last 40 or so years that was substituted for earned income has left an unsustainable trail of debt, foreclosures and bankruptcies in its wake for the 95% while what income and wealth gains that have been achieved have almost all accrued to the top 5% and many would argue the top 1% resulting in record wealth and income disparity in the developed economies. The data on this is quite clear and can be found in the Fed Flow of Funds Report, data on national income, homeownership, business creation, productivity, employment participation ratios, and others. Add lack of enforcement of existing rules and regulations, and an environment featuring zero interest rates that have crucified savers and pensioners, while encouraging reckless boom and bust economic bubble speculation make clear the record wealth and income inequality and allure of populist themes and leaders.

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