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Registered Investment Adviser Caleb Lawrence 

The major averages enter the final hour mixed ahead of the Fed’s latest decision
on interest rates due out tomorrow. The November PPI or Producer Price Index
gained .4%, slightly ahead of expectations. The year ago rate hit 3% just below
the long run average of 3.1% but sharply higher than the Fed’s desired 2%
target. Once again energy prices are the culprit up 4.6%, after gasoline costs
jumped 15.8%, following what is now a well-established pattern. Given that food
prices have fallen for 4-straight months, and not insignificantly, while energy
prices are high in the face of weak demand and oversupply I would expect these
price pressures to prove transitory.

A recent piece in Bloomberg quoting real estate entity Redfin noted that there
was no housing bubble in sight based on purchase data and pricing trends. No
mention was made of the more generally accepted housing valuation metrices like
the ratio of median price to median annual income, painfully high. Median
monthly housing cost to median monthly income, also painfully high, I could go
on but as Mark Twain said, “there’s lies, dam lies and statistics”.

Cryptocurrency mania hits the big time with people taking out mortgages to
invest etc., and the SEC or Securities and Exchange Commission warning of scams
and criminal activity. Very reminiscent of the late Dot-Bomb period at the
beginning of 2000 when people went all in with credit cards and anything else
they could get their hands on to buy tech and internet stocks with, no questions
asked, no concern about fundamentals or valuations as everybody swore that it
was “different this time”. On the other side portfolio losses of 70-90% were
sadly all to common, an unmitigated financial disaster, particularly if borrowed
money was used. Also of note it seems the regulators have designated
cryptocurrencies as commodities from a regulatory perspective.

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