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Registered Investment Adviser Caleb Lawrence

Uneven early trade sent the major averages into the final hour mixed. The Institute for Supply Management non-manufacturing or services index increased 4.5 points in September to beat expectations on strength in deliveries and new orders. Likely a hurricane induced bump will see if these levels hold.

Vehicle sales jumped 15% in September to 18.57 million units annualized, most likely due to the hurricanes. While this advance erases the declines seen since late 2016, sales haven’t really gone anywhere since late 2015 and this advance is all but certain to prove transitory along with the record high dealer incentives of $4,048 on average per vehicle sold.

The recent Bank Credit Conference featured the usual array of financial luminaries including the rumored future Fed President Kevin Warsh, Larry Summers, Society General’s Albert Edwards and others. Amongst other items discussed was the failure of the Yellen Fed’s policies that like its predecessors failed to spot the looming debt based asset bubbles, and then through the magic of Quantitative Easing or QE went on to try and fix the problems caused by too much debt with even more debt. I have always said that debt is not a substitute for income and trying to fix the problems caused by too much debt with even more debt was at best illogical and at worst downright stupid because contrary to popular belief in Central Banker, Economist, and other circles debt does in fact matter. Amongst other items we have a record Debt to Assets ratio and a near record Debt to Equity ratio based on the ex-energy and financials of the Standard and Poors 1500 index, as per the conference. Let’s all hope it really is different this time.


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