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Keep in mind that approximately 80% of all stock trades are executed by algorithms. Also that most computer driven funds have underperformed the market this year. Seems odd since they are 80% of the market, but it is the case.  Hedge funds have also way underperformed the market. Nobody should panic with the substantial drop in stock prices in October. This is the month when major stock prices always occur. The economy remains on a very strong track at 3.5% growth and consumer and business confidence are at or near historic highs, and unemployment is at a historic low if you consider the last times it was this low was the Korean War and Vietnam when a large segment of the male working population was drafted into the army thereby lowering the unemployment rate artificially. Many companies report that the only reason they are delaying new capital expansion is they cannot find anyone else to hire to work on new production lines or in new offices. The ten year remains stable around 3.1% and oil prices continue to fluctuate between $66 and $71, and look to be stable for a long time as the Saudis committed to increase production.  Likely Trump agreed to not put too much pressure on for the murder if the Saudis keep oil around $66-$70.

Inflation measured by the more accurate Personal Consumption Index (PCE) that the Fed uses, it only at 1.6% for core inflation. There is a long way to go before core inflation is materially above 2%. Meantime, pressure is mounting from Trump and Wall St to slow rate increases maybe in March, and to give the stock market some hope for a lower rate going into later 2019 than what everyone has been led to expect by the Fed.  The political and fiscal battle in the EU over Italy, the US election in November- if the Dems get the House it is a big negative on the economy- and the slowing economy in France and Germany. Combined with the chance Brexit will go hard in March and the very likely exit of Merkel next year, means the EU will be unstable for a long time. That has to give the Fed pause. Add on a real slowdown in China, the slowdown in US housing, and the Fed will be under increasing pressure not to raise three times in 2019. In summary, there is a reasonable possibility the Fed will not raise in March, but way too early to predict.

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Joel Ross

Joel Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf. In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.

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