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Registered Investment Adviser Caleb Lawrence 

More war and a couple of currency devaluations over the weekend in response to our trade tariffs were good for a very strong market open to begin the week.

Retail sales beat expectations in March with a solid .6% gain as auto and parts sales rebounded strongly after a string declines. This marks the first increase in retail sales since November of last year.

The New York regional manufacturing index slipped in April with a 6.7-point decline to 15.8. Price data moderated somewhat, but remains high, new orders fell by nearly half. But the real standout detail was a 25.8-point plunge in the 6-months ahead component as it hit 18.3.

A recent piece in Grant’s Interest Rate Observer noted the increasingly unstable debt funded nature of our economy. Notable was the description of Hedge, Speculative and Ponzi financing structures that were described as self-sustaining with positive cash flow, structures that can pay the bills but not retire the debt, cash flow neutral. Lastly structures that can’t pay their bills or retire their debt, because they are cash flow negative. The article concluded by noting that the Standard and Poors 500 Index contained a more than 20-year high 14.6% of companies that fell into the Ponzi category because they were cash flow negative. Given valuation and debt levels and all I can say is that the earnings season better go down as one for the record books.

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