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17 September 2021
20:57 hour

Quantitative Easing Makes Free Market Impossible

Reddit Stock Market

11/06/2021 - 17:15

Everyone knows that the Federal Reserve is engaging in quantitative easing. They are buying billions of dollars worth of bonds each month in order to suppress the yield and encourage investors to put their money into the stock market instead. However, the Fed isn't buying bonds at regular, consistent intervals or rates, they are bought depending on what the stock market is doing. The correlation between the stock market and bond yields is the highest it's been in 15 years (inverse relationship). Have you noticed how low stock market volatility is right now? That's because if the stock market drops, the Fed buys more bonds, the yield drops, people calm down and buy more stocks. If the stock market rises, the Fed allows the yield to rise a little, and excitement is subdued. The Fed is currently 'tuning' the bond yield to control the stock market, specifically keeping it flat. We do not currently have a free market, which means less opportunity for everyone, but nobody seems upset about it. Am I missing something? Anyone else have an opinion? Anyone have an idea what the Fed's end game is?   submitted by   /u/Length_Funny [link]   [comments]


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  1. Why are the feds allowed to do quantitative easing whenever they need to? (19/06/2021 - Reddit Stock Market)
    I am just wondering why is the federal reserve allowed to print as and when they deem fit without having to be accountable should I say. And why can’t the other countries just follow suit to aid them with their own domestic issues ? Is it just because the USD is currently the reserve currency hence it gives them the power to do so? Also, quantitative easing first began in 2009. I have taken a look at the charts and noticed that ever since then the stock market have not have a major correction. Am I right to conclude that a big reason why the stock market has been going up at such a pace as compared to pre 2009 is due to the feds QE?   submitted by   /u/Maxttilt [link]   [comments]
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  2. We have to thank 2008 for all the wealth in equities (12/09/2021 - Reddit Stocks)
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  3. The Dangers of Endless Quantitative Easing (03/08/2021 - Reddit Stock Market)
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  4. Bank of Canada maintains current pace of quantitative easing; rates unchanged (08/09/2021 - Seeking Alpha)

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  5. India’s very own Quantitative Easing (08/04/2021 - Financial Express)
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  6. Could someone ELI5 all this Fed, interest rates, inflation stuff? (02/06/2021 - Reddit Stocks)
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  7. Project Syndicate: How to safely break the housing and stock markets’ addiction to quantitative easing and the speculation it’s fueling (16/09/2021 - Market Watch)
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  8. Does quantitative easing increase house prices? (22/07/2021 - The Motley Fool UK)
    The Bank of England has undertaken an extensive ‘quantitative easing’ programme over the past year in response to Covid-19. But what is quantitative easing? And how does it impact house prices? Let’s break it down. House prices: How much have they increased? According to Rightmove, the average asking price for a home now stands at an all-time high of £338,447. This figure has grown by more than £20,000 since the beginning of 2021. So is house price inflation simply due to supply and demand, or is quantitative easing having an impact?  What is the Bank of England? The Bank of England is the UK’s central bank. It is responsible for setting the base rate – the interest rate at which banks lend to each other. It also exists to manage inflation, working with a 2% government-set target. In 2009, following the financial crisis, the Bank of England lowered its base rate to 0.5%. It has since lowered it further to 0.1%. Lowering the base rate enables cheaper lending, which can boost house prices. See our article on what the base rate means for your finances. What is quantitative easing? Aside from lowering the base rate, the Bank of England introduced quantitative easing (QE) in 2009. This is where the bank buys government and corporate bonds. To date, the Bank has purchased £895 billion worth of bonds. In layman’s terms, QE is another term for ‘printing money,’ even though it doesn’t involve printing physical banknotes.  QE hit the headlines earlier this month following a report from a committee in the House of Lords claiming the Bank of England is ‘addicted to creating money‘. The report highlighted that the bank lacks a plan to unwind its bond-buying programme and noted that the UK spent £8.7 billion in debt interest payments in June 2021 alone. Does quantitative easing affect house prices? QE increases the amount of money in the economy. This means banks can lend more cheaply, meaning mortgages also become cheaper. Many believe that cheaper mortgages, coupled with the fact that the housing supply is essentially finite (as it cannot be easily expanded), places upward pressure on the cost of housing. Critics of QE also claim that it leads to inflation, which can also increase house prices. For example, over the course of the pandemic, while the price of everyday goods hasn’t vastly increased, the prices of assets, including housing, has skyrocketed. In other words, many feel that the Bank of England’s newly created money is feeding into property and the stock market. It’s making the owners of such assets richer, and those without effectively poorer.  One reason for this may be because those who hold cash in inflationary environments are likely to see its value decrease. As a result, holding assets becomes more attractive, pushing up prices. But isn’t inflation currently low? The Bank of England has a duty to ensure inflation is as close to the government’s 2% target as possible. If inflation begins to take off, then the Bank should raise its base rate in order to cool the economy. However, while house prices have increased 8.8% in a year, the Bank of England considers the current rate of inflation to be 2.5%. That’s because it uses the Consumer Prices Index (CPI) to measure inflation. The CPI is calculated by looking at the prices of thousands of everyday items, from groceries to petrol. Crucially, however, the CPI ignores assets such as shares and house prices. Critics argue that by using the CPI to inform its monetary policy, the Bank of England is able to keep its base rate artificially low. It has been suggested that by maintaining a low base rate, the bank helps the government to service its debt, while simultaneously boosting house prices. High house prices may be seen positively among homeowners, who are more likely to vote than non-homeowners. 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  14. The last bear market explained (19/02/2021 - Reddit Stocks)
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  15. BYND (& Impossible Foods) - looking for insight (12/03/2021 - Reddit Stock Market)
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  16. Flagged as a pattern day trader (06/03/2021 - Reddit Stocks)
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  26. Trying to find the next big growth stock is absolutely moronic and a good way to lose money (11/05/2021 - Reddit Stocks)
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  28. If predicting the market is impossible then what should stock investors rely on? (29/08/2021 - Reddit Stocks)
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  32. How Does Transition from Libor to SOFR Affect T-Note Yields? (14/06/2021 - Reddit Stock Market)
    It seems like lately the Fed is trying harder and harder to ignore inflation in order to continue with Quantitative Easing. QE is necessary, not to help citizens out, but to keep the interest low on the federal debt. At the end of this year, we (in the U.S.) will transition from Libor to SOFR as the reference rate that is the basis for all consumer loans. I've read articles lately that the Fed is putting a lot of pressure on banks to complete this transition. My question is: will this transition also impact government bond yields? In other words, after the transition, will bond yields be kept low somehow without the need for QE? I don't really understand how they're related, but I find it very interesting that the Fed is putting so much pressure on banks to transition away from Libor. The banks know the deadline for the transition, so why pressure them?   submitted by   /u/Length_Funny [link]   [comments]
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  34. Will there be a big COVID induced crash soon? I know it’s impossible to predict the market but just curious... (18/04/2021 - Reddit Stock Market)
    I’m no economic expert but it just seems weird that the covid crash was so short lived. I guess that was because the us gov bailed out the economy with billions in stimulus. And now the markets are at all time highs. It seems weird that after more than a year of millions dying and millions not working and productivity down because the world went into hibernation, yet the stock market and other markets immediately went so high again like nothing bad ever happened. I know the federal reserve probably did this to prevent a big depression. It just feels like an artificial high and that all of that covid terribleness will catch up finally to the markets and the free gov money will stop and then things will crash. Is it possible that something terrible can happen like covid and the gov prints lots of free money and there will never be a crash caused by this pandemic, and that a future inevitable crash will be caused by something else? Has there ever been something like this in USA history, like a great flu in USA back in like the 1900s or 1800s and the government bailing out the economy and then it crashing or the government just letting it crash without a bailout? Or maybe that covid was something that affected the whole world it is different than something that just mainly takes place in America like the housing crisis or the dot com boom? Will it be a sudden big crash or a slow downturn? ​ Again, I’m a complete amateur when it comes to economics and know no one can predict markets like the stock market, but these are my thoughts (mainly regarding the USA economy because I live here and I don’t know much about markets in other countries). How about your thoughts?   submitted by   /u/poopyfacemcpooper [link]   [comments]
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  35. Can someone explain to me why halting trading of a stock is not market manipulation? (25/02/2021 - Reddit Stocks)
    What the title said. How is halting a stock, whether it is going up or down aggressively, not market manipulation? Is it really a free and open market if anyone (the exchanges) has the power to do this? It seems to me that there should be no central control of a "free" market and the right to cease trading should not be held by any party whatsoever. It is everyone's personal responsibility to take on the risks of the market and that includes volatility. I feel like a lot of the time these things are done under the guise of what is "in the best interest of retail investors" but in reality, it does nothing but make them powerless to either buy or sell super volatile securities (get out or get in at their will). I didn't touch GME, AMC, or any of those wsb stocks with a ten-foot pole because I knew the risks, but just because some people didn't do their due diligence and may get burnt doesn't mean a stock should get halted. That is simply the nature of an open market, no? If you don't want to experience such volatility then one should do their research and either not get involved in the stock market or not buy securities that are known to be volatile. Halting the market or the trading of any specific security is quite the opposite of a free and open capitalist marketplace. I don't buy any of the "halts are used to make the market safer" narrative. That is not a free and open marketplace then. Plain and simple. Am I crazy for having this opinion? I wish there was a way to create an autonomous marketplace that is not under the control of any party and runs freely. It seems to me the free market really isn't free or transparent at all.   submitted by   /u/lwc-wtang12 [link]   [comments]
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  36. Stock market rally: why I’d invest in shares to make a passive income (03/03/2021 - The Motley Fool UK)
    Despite the recent stock market rally, buying shares to make a passive income could be a logical strategy. In many cases, they offer high dividend yields versus other assets. They may also be able to deliver dividend growth, as well as capital growth, as the world economy likely recovers from its present woes. As such, now could be the right time to buy a diverse range of income shares and hold them over the long run. A generous passive income from shares Many shares now trade at significantly higher prices than they did following the 2020 market crash. However, a number of companies offer high yields relative to other assets. Certainly, a low interest rate environment makes this task easier for equities. But some stocks have dividend yields at the present time that are higher than their historic averages. This suggests they could offer an attractive income stream over the long run. Of course, there’s never any guarantee that a company will maintain recent dividend payouts in future. A whole host of challenges can crop up that causes them to reduce or even cancel shareholder payouts. However, by purchasing a wide range of dividend shares with high yields, it may be possible to build a resilient and generous passive income stream at the present time. Dividend growth opportunities As well as high yields, a number of shares could offer a growing passive income in the coming years. The world economy has always recovered from its declines to post positive growth in the past. Although the same outcome can never be assumed, the scale of monetary policy stimulus already announced suggests a return to growth is likely to be ahead. Through buying companies with affordable dividends and the potential to deliver rising profitability in the coming years, it’s possible to obtain a growing income return. This may become increasingly important over time. Certainly since low interest rates and quantitative easing in some major economies could spark a period of higher inflation in the long run. Capital growth opportunities As well as the potential for a high and growing passive income, dividend shares could deliver capital growth in the coming years. They could experience high demand as a result of limited opportunities to make a worthwhile income in other mainstream assets. This may drive their prices higher. Furthermore, a high yield can indicate that a stock offers good value for money and a wide margin of safety. Buying undervalued shares has been a relatively sound means of capitalising on the stock market’s long-term growth potential. As such, now may be the right time to buy dividend shares, since they could produce higher total returns than the wider stock market over the long run. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading A UK share and a US stock I’d buy in my Stocks and Shares ISA today 2 UK shares I’d buy for my ISA right now UK share investing: a cheap FTSE 250 stock I’d buy and hold until 2030 How I’d aim to find top shares to buy in March 2021 Do the highest-yielding dividend shares offer the best passive incomes? Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. The post Stock market rally: why I’d invest in shares to make a passive income appeared first on The Motley Fool UK.
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  37. Why I Sold Some of My Stocks for Bonds and Dollars (14/03/2021 - Reddit Stock Market)
    I decided to take some profits this last week and put them into bonds and dollars, here’s why: The retail market is 100% all in on the reflation//inflation trade. The most popular positions right now are growth tech stocks or commodities related stocks. The meme is “money printer go brrr” so there are going to be all these dollars chasing the same amount of goods, right? Simple... but not so fast. When the fed does quantitative easing they are purchasing treasuries from dealer banks (JPM, Citi etc.) and to pay for these treasuries they credit an account for these banks at the fed. I.e. there is basically a collateral account for JPM at the fed. But here’s the problem, that account is in JPM’s name but they can’t actually use it in the real economy, it just stays at the fed. So money printer doesn’t really go brrrr at all. So how does money get created? Mostly by lending from the commercial banks. Which isn’t happening because banks have tightened lending standards. Ok but what about the stimulus checks? Although this is actually mildly inflationary, if you look at surveys of what people plan to do with their checks many plan to pay down debt (or use towards their rent or mortgage payments that are now starting back up). So in the end I think this is more than already priced in the market. So what does this mean? I don’t know exactly how this will play out but I’d just say don’t get memed into thinking that cash and bonds have zero value and we are headed towards hyperinflation tomorrow. If you look into the details of how these things actually work, you’ll find the answer is much more complicated. I recommend checking out Steven Van Metre and Brent Johnson on YouTube on this. Disclosure: I still own a lot of gold and crypto but I just had my mind blown by some of the stuff I learned from these guys and I decided to up my cash position just incase   submitted by   /u/SeldonPlanet [link]   [comments]
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  38. Europe Markets: European tech stocks and Nasdaq 100 futures climb on bond yield easing as ECB meeting awaits (11/03/2021 - Market Watch)
    European stocks traded higher Thursday ahead of a European Central Bank meeting, as investors celebrated an easing in bond yields.
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  39. Is it too late to capitalise on a stock market rally after the 2020 market crash? (14/02/2021 - The Motley Fool UK)
    Since the 2020 market crash, a stock market rally has pushed the valuations of many UK shares to significantly higher levels. For example, the FTSE 100 is trading around 30% higher than it was at its lowest point during the crash. Despite this, many shares continue to trade at low prices versus their historic averages and when compared to other companies in the same index. This could present an opportunity to buy undervalued shares and hold them for the long run. They could benefit from a further market rise in the coming years. Undervalued shares after the stock market rally The recent stock market rally has left many shares trading at higher prices versus a number of months ago. But there could still be opportunities to access high-quality companies at low prices. Sectors such as financial services, housebuilding and media continue to contain a wide range of businesses that, in some cases, are a long way from fully recovering from the 2020 market crash. Some of those businesses may be trading at low prices because they have weak financial positions or strategies that may not be easily adapted to a changing world economy. However, in other cases low share prices are currently on offer for financially solid companies with good growth prospects. They could prove to be worthwhile buying opportunities on a long-term basis. Such firms may be able to capitalise on the potential for a stock market rally provided by the world economy. Further growth potential after the 2020 crash While many UK shares have made gains since the 2020 market crash, history suggests the stock market rally could have further to run. Clearly, no stock performance is ever guaranteed and the past is never repeated exactly the same way in future. However, indexes such as the FTSE 100 have always recovered from their declines to post new record highs. It currently trades around 10% on its price level from a year ago. This could mean there are further gains on offer over the long run. Monetary policy indicates that conditions for equity markets could remain favourable over the coming years. Interest rates are forecast to remain at or close to historic lows over the next few years. Meanwhile, negative interest rates have not yet been ruled out by the Bank of England, while further quantitative easing could be put in place should the economic recovery stall after coronavirus containment measures come to an end. Capitalising on the prospects for equity markets Therefore, the prospect of a further stock market rally could be relatively high. Through buying a diverse range of undervalued stocks, it may be possible to capitalise on it. Certainly, volatility and risks remain elevated – and are likely to continue to be high in the coming years. But, from a risk/reward perspective, a number of UK shares could offer appeal at the present time. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading 2 cheap UK dividend shares I’d buy for my Stocks and Shares ISA Why I think the FTSE 100 is a good place to start investing in UK stocks I’d buy this UK share in my Stocks and Shares ISA for a long economic downturn Stock investing: 2 of the best FTSE 100 shares I’d buy right now This UK share is up 1,900% in 5 years: why I’d still buy it today Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. The post Is it too late to capitalise on a stock market rally after the 2020 market crash? appeared first on The Motley Fool UK.
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  40. Sp500 pe 44 vs smh pe 36 are they too high (16/05/2021 - Reddit Stocks)
    I am looking at sp500 pe and it is current at 44, which is very high. When I look at smh , it is pe 36. I am not sure historical pe for smh, but does it look like spy more expensive than smh? I understand why we get here, but if fed does not stop printing money will spy keep going up at this rate this year? When the market feels fed will stop printing, will market have big correction? I know impossible to time the market, but I stop loss some positions during feb, so not sure what to do with the cash I have. The positions in the market are quite correlated to nasdaq, I am not sure which etf I should go with and which etf will should have best risk/reward ? Have been bleeding on some growth stocks and ark, cutting the loss there does not feel the right thing now, but concerned if market correction comes they will go down more. Maybe this is not the year to build long term positions? Any ideas?   submitted by   /u/hpad06 [link]   [comments]
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  41. Are there hidden undervalued stocks? (27/06/2021 - Reddit Stocks)
    Do you think there are stocks that perform really well in statistics (earnings, margin, debt, growth etc) but are "hidden gems" because no big investors found them? Do you know any stocks like that or its just impossible since there are millions of market analysts who browse the market as a full time job.   submitted by   /u/hefnertes [link]   [comments]
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  42. No One Knows When The Market Is At The Top (05/05/2021 - Reddit Stocks)
    As the Title Suggests, No One can accurately predict when the market is at the top or when it will crash. If people knew, they certainly wouldn't share on Reddit because they would be earning millions or billions of dollars. Timing the market is impossible and it's better to ride out the ups and downs. In many cases, most of your stock gains come from a few days of big gains. Imagine trying to time a stock and in a few days, it goes up 15%. Most of my gains have come from a few strong days. One of my favorite quote is: "The Markets Can Remain Irrational Longer Than You Can Remain Solvent". Sure the market can be "overvalued" (I am not saying it is), but the market may be like this for the next few years and stocks may keep going up. Just because you were trying to time the market, you missed out on these years of gains. Good luck investing!   submitted by   /u/moneytobemade8 [link]   [comments]
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  43. Can anyone explain 'market cap, free float market cap, free float, and shares outstanding' (07/04/2021 - Reddit Stock Market)
      submitted by   /u/EarlyPineapple [link]   [comments]
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  44. Futures Movers: Oil surges as traders await OPEC+ decision on easing production cuts (01/07/2021 - Market Watch)
    Oil futures jump Thursday as traders await a decision by OPEC+ members on further easing production curbs in response to growing demand as the global economy gathers momentum.
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  45. AMD v Intel, Considering Stock Shortages -- Will Intel's market share gain back what it has lost? (02/03/2021 - Reddit Stocks)
    It is my understanding that Intel still manufactures their own chips, where AMD does not. I am personally slightly more in favor of AMD's products (as a value proposition), but any newer products are very hard if not impossible to come by. Intel is reportedly soon to launch a new line of CPUs and also to come into the lower end GPU market. Given that both AMD and NVIDIA are struggling with supply, do you think Intel has a leg up for the next few quarters?   submitted by   /u/quantumcaper [link]   [comments]
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  46. The Extremely Obvious Reason the Market will Always March Higher: 401k Plans. (21/07/2021 - Reddit Stocks)
    Every major corporate and government entity has a 401k plan and every mid to small sized businesses has employees who contribute to IRA or other retirement plans. Basically all of these plans buy the market. This essentially guarantees that the market will continue to get bought and continue to move up. Aside from aliens landing on the planet and starting a war, and maybe not even then, nothing is ever going to cause a complete blow up. It's essentially impossible when 5-15% of employee paychecks get deposited into the market. Of course there have been and will be blips but unless you are retiring within the next 2-3 years, you've invested money you need, or are day/swing trading there is no reason to panic or worry about dips.   submitted by   /u/Super_Elk9030 [link]   [comments]
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  47. Did this sub get ruined? (30/03/2021 - Reddit Stock Market)
    I remember when this sub was a place you could have actual adult discussions about the market and stocks. Now ever since the WSB crowd spread all that ever makes it to my feed is moonshots and weird conspiracy theories. The word “manipulation” is being thrown around like a boomerang whenever something doesn’t go their way or someone wants gold. Everything is being controlled by these dark “hedgies” that want the market down... or up.. whatever hurts you more. Oh and any day this market is going to crash because so and so did something btw here’s my DD. It’s an hour long and makes no sense but I swear it’s going to the moon apes. I’m getting so tired of not having a place away from all this.   submitted by   /u/NeoGenMike [link]   [comments]
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  48. Tax automation: Easing GST compliance and taxation with technology solutions (17/06/2021 - Financial Express)
    Leveraging Artificial Intelligence, Avalara aims to make a mark in the Indian market by addressing dynamic taxation and accounting needs of businesses
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  49. Tax automation: Easing GST compliance and taxation with technology solutions (17/06/2021 - Financial Express)
    Leveraging Artificial Intelligence, Avalara aims to make a mark in the Indian market by addressing dynamic taxation and accounting needs of businesses
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