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Registered Investment Adviser Caleb Lawrence 

The major averages struggle into the final hour with small losses following mixed early trade. Since Monday the Standard and Poors 500 Index has gained 49 points or 1.9% while the NASDAQ has increased 171 points or 2.5%. A decent finish to one of the best weeks in some time for the major averages.

There is little economic data today. McClatchy News Service looked at Trumps trade war tariffs using information from the Brookings Institute that singled out 40 American industries that would be affected by Chinese retaliatory tariffs, which together employ 2.1 million people across the country. Of those, 441,000 or over 20% are based in California and Washington state. Broken down by county and Los Angeles is most at risk facing a loss of about 40,000 jobs, but Ventura, Fresno, San Diego, Kern, Alameda, Napa, Sonoma, and Monterey counties are all in the top 25 facing employment losses.

More shades of 2007-2009 appear in the large national banks exposure to sub-prime mortgage lending in addition to the auto loan and credit card delinquency rates as both are rising markedly. While the large national banks have largely avoided making sub-prime loans in the post bust period directly, they have lent heavily to companies that do and have made sub-prime loans. The Wall Street Journal recently took a look at this and concluded that Wells Fargo had some 81 billion in indirect sub-prime loan exposure, followed by Citi Group and Bank of America at 30 billion each, next up is JP Morgan chase with 28 billion, Goldman Sachs 22 billion and Morgan Stanley 16 billion. History may not repeat, but it often rhymes, lets hope it’s different this time.

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