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At the end of the day,
what has happened the last eighteen months is

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that, more than anything, the
rate of inflation has actually been what has

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dictated FED policy, and not the
other way around. The FED has been

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reactionary. And I think that the
rate of inflation is really what's in the

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driver's seat here. And obviously the
market had to swallow it after March's inflation

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rate printed, and here, you
know, there was some concern that we

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were going to have as high of
a rate of inflation as we did last

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month. You were listening to Carrie
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Your nose, scary Lutz. Well, hey, inflation is proving to be

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sticky? Is that the next step
from transitory? What comes after sticky?

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That's what I'd like to know.
Well, Ted Thatcher is with us now,

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Ted, great having you back,
so sticky. What does that mean?

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Is sticky as like, you know, you go to the movie theater

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and you're walking through the aisles and
your feet kind of stick to the floor.

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That's what I think about what's sticky. I don't think of inflation as

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being sticky. Sure, I can
actually feel the soles of my shoes.

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I think when you say that,
actually just grip the ground. I think,

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you know, you posed a really
nice question there, which is at

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first it was transitory, you know, then it was you know, peeking.

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Now it's sticky. Where do we
go from here? And I think

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we're in this place carry because at
the end of the day, what has

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happened the last eighteen months is that, more than anything, the rate of

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inflation has actually been what has dictated
FED policy and not the other way around.

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The FED has been reactionary, and
I think that the rate of inflation

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is really what's in the driver's seat
here. And obviously the market had to

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swallow it after March's inflation rate printed, and here, you know, there

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was some concern that we were going
to have as high of a rate of

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inflation as we did last month.
It's all will a little less than expected

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or a little less than that last
month rather, but it's not gone.

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And as much as I think that, you know, there's this political pressure

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and the markets desired at lower rates, it's just not happening. And so

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what comes after, you know,
what comes next, I think is we're

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in these dol drums. You know, we've said so long interest rates are

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going to be higher, you know, than we'd like, for perhaps longer

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than we anticipated. And I think
that this just proves that point continually.

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And you know, we kind of
joked beforehand saying it might be cemented,

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and I think we're kind of seeing
that, Yeah, well permanently a fixed

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in place, but they don't worry
about it. They're going to focus group

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test. Another term is it's prolonged
but it's easing, or something like that,

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where it's it was bad, but
it's getting better. It's all fed

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speak, are right. It's just
I think absolutely word salad as they say,

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you know, I've seen soothing,
you know soothing. Do you feel

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soothed? I'm not sure that I
do. I actually, well, not

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to go two in the weeds here, but I actually saw a really really

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interesting breakdown from Larry Summers the previous
Treasury Secretary. Of course, you know,

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you and I have discussed before how
the way they calculate the inflation CPI

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data now has changed so much from
the way it used to be calculated.

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Of course, nowadays they can use
proxies supplements for different you know, aspects

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of the underlying data. And one
thing that Larry Summer is released on x

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a couple weeks ago, I think
it was now a semi viral thread breaking

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down the way he tracks inflation the
rate used to be calculated. One of

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the significant considerations that they no longer
put in the CPI data is the cost

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of borrowing for consumers on top of
using these different proxies. And so by

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Larry's calculation the inflation rate, the
CPI rate did not peek around that nine

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percent figure that has been thrown around
so often, but closer to twenty percent.

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Of course, that just being over
one anum, not not the total

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total rate of inflation over the last
several years. And so that to me

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really matches much more with what I
would say I experience when I go to

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the grocery store or fill up my
vehicle at the pump, and certainly matches

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much more with what I find folks
experience just in day to day hoverstation John

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Williams, shadowstats dot Com. You
know, when you look at the numbers

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of governments putting out, he still
calculates it the way they did in the

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eighties, and it's not too pretty
here. And obviously it's very difficult to

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figure out inflation. You know,
we didn't have iPhones back in the eighties.

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Maybe that makes it easier to figure
out the inflation rate, or at

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least to see what the real rate
is. But things were a lot different.

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You know, they always talk about
substitutes. So state gets too expensive,

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then you substitute hamburger, it gets
too expensive, Then you do chicken,

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and then that gets too expensive,
and you substitute spam. But you

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know, it's ridiculous because your eyes
are not lying, and the felt they're

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not putting in debt payments in the
inflation rate just shows. But we do

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have an election year. They have
to cut rates, don't they. So

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this is absolutely I think where I
would take the conversation too, because you

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know, sure in its purest form, maybe the FED would only operate with

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the data itself, right, the
inflation rate and the unemployment rate. We've

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already discussed the issues the way they
calculate those numbers, that is to say

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nothing of what you just brought up, which is the incredible political pressure that

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is now placed on the FED,
a more and more politicized organization, unfortunately.

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And so now when we look at
the futures markets, the market is

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pricing in I think it's around a
seventy percent likelihood chance now that we will

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get a interest rate decrease literally in
September before the election cycle. Of course,

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I think President Biden would prefer that
to I would say, sort of

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put some proverbial lipstick on the pig
to prop up the value of financial assets

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going into election season. And you
know, I think that the market for

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a minute there after last months the
March inflation print data came out kind of

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corrected a bit because because of how
sticky inflation has been, it just makes

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it that much harder for Jerome Powell
to have a justification to lower rates up

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until I think it was two fridays
ago. Now the labor market data came

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out and the labor market had I
believe, lost more jobs than it had

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in six months, or the rate
of new job growth was as low as

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that had been in six months,
which is of course the other analytical piece

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that the FED looks at the unemployment
rate. And so I think that Jerome

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Powell will use the cover of those
types of soft jobs numbers to justify a

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what will end up being, in
my opinion, a reasonably likely political move

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of a rate decrease potentially later this
year. All right, well, hey,

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you know transitory. You know I
always say had the best things in

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life are transitory. I think Jerome
would agree with you. All right,

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hey, you know, looking at
the FEDS two conflicting, and I would

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argue they have three functions now.
Number one insure stable prices. Number two

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is ensure full full employment, and
number three is to make sure the stock

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market never goes down. Indeed,
it's three plates spinning in the air.

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And you know these Fed guys,
man, they could be in the circus

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juggling dishes, right, getting those
dishes to stay up in the air.

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I think that they would say that
their jobs are so hard. But I

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would say, look that they just
keep putting out. Like we said before,

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this word solid. Then yes,
I mean I effectively agree with the

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last, you know, joke of
the comment there a little bit that they

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are trying to keep the market up
again, and at the end of the

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day, it seems like it's been
a political game as much as an analytical

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one. Unfortunately, you know,
and ultimately I think that it really erodes

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confidence of the American consumer because you
and I, like you said before,

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our eyes aren't lying to us,
and so we have this huge discrepancy,

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this canism really that's been created between
what's happening on Wall Street and what's happening

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on Main Street. It's this huge
dichotomy, especially when you combine what we've

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discussed today, even just to put
a pin in it, of such high

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inflation combined with slowing job growth,
and so the average American is not seeing

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their wages increase coincidentally with the rate
of inflation, if there's less jobs available,

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if everything's more expensive. We're all
looking at each other asking what's happening

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here, and at the same time
we're getting headlines of the market reaching all

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time highs or approaching all time highs. All those things can only be separated

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for so long, at least in
my opinion. Yeah, something has to

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give, right absolutely, But my
things though, and I don't know if

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we have the perfect answer to that. Everyone has their for reveal Crystal Ball.

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I think if there is a likelihood
of such a large amount of political

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pressure this year, if we do
lower rates, you know, inflation aside,

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I think it's more likely that we
might get a sort of melt up

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in the markets before we actually saw
that crash down. Again, depends on

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how heavy handed the side wants to
be. All right, Okay, So

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when we have this conversation come January
first, Ted, where are we going

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to be? Well? The truth
is, Carrie, if I had to

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guess, I think we will see
at least one rate decrease this year,

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perhaps too. Again, it ultimately
comes down to how heavy handed that political

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pressure is and what the Fed does. But I'd be very surprised if we

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didn't still have some let's say,
sticky inflation and a lower albeit maybe slightly

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interest rate environment, to say nothing
of, you know, the potential banking

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consequences that might be on the horizon. Okay, So when we look at

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the sticky inflation, if you will, right uh a bed, you think

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it's going to be well, I
mean, essentially we've seen this annual year

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over year rates stick around the three
to three and a half percent mark.

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As of you know, this recent
month's print, it's at three point four

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percent year over year. Again,
that's not considering the other adjustments you and

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I have discussed today. How bad
can it get? Well, I think

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if they're willing to lower rates,
they're willing to have well, ultimately more

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moving money around any economy, chasing
the same goods and services. It wouldn't

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surprise me at all, although it
might take time to lag if we saw

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you know, rates certainly in the
high threes in terms of inflation with the

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way the CPI is currently calculated.
And I just think that that means that

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the Fed has said, you know, tongue in cheek perhaps or just in

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their own silence, that they are
betting that and the average American is willing

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to accept an inflation rate in the
three or four percent range instead of the

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you know, I guess alternative consequence
of dealing with rates that are on the

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interest rate side even higher than they
are today. All right, Hey,

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Ted, just tell us where we
find you, how we connect with you

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00:12:13,559 --> 00:12:16,159
on the web. Oh, I
appreciate it. You can find us at

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00:12:16,200 --> 00:12:20,159
bright Lake wealth dot com. All
right, And the link is in the

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00:12:20,159 --> 00:12:24,600
show notes this interview on Financial Survival
Network dot com. Please go there and

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00:12:24,600 --> 00:12:28,399
sign up to your free newsletter.
Click through to Ted's link and connect with

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00:12:28,480 --> 00:12:31,759
him. Ted appreciate you coming on
as always, and we'll talk to you

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00:12:31,759 --> 00:12:33,600
again real soon. Thanks, Kerry, have a great one. Thanks for

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00:12:33,679 --> 00:12:41,000
listening to Carrie Lets's Financial Survival Network, your solution to today's trying times.

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For the latest, go to Financial
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