Well the Fed disappointed as I stated it would. How anyone could be surprised by this is beyond me. The Fed was admitting that the consequences of QE rendered it less “attractive” as an option as far back as May 2011.

Moreover, the last six months have shown the Fed to be relying heavily on verbal intervention rather than direct monetary intervention. Every FOMC meeting (and any time the market takes a dive) some Fed official steps forward and promises that the Fed stands ready to help if needed.

The reasons for this are three fold:

1)   Why bother with monetary intervention when you can get the same effect from verbal intervention?

2)   The Fed is too politically toxic now to simply unveil a massive new monetary scheme without a Crisis hitting first.

3)   The Fed is well aware of the consequences of QE (higher food and gas prices) and while it focuses on CPI as the measure of inflation, the political pressure engendered by higher costs of living are certainly on the Fed’s radar.

In plain terms, the bar for more QE is set much, much higher than the vast majority of analysts realize. The reason is that the Fed can no longer simply prime up the printing presses if the economy takes a dip.

We’ve seen this clearly in the last two Fed FOMC statements, in which the Fed downgraded its view of the US economy to posting “modest growth” (Fed speak for next to none) and then offered a “highly accommodative stance,” (Fed speak for “we’re out of ideas but can always hit the ‘print’ button”) as way of dealing with this.

Let’s cut the BS here. The Fed has maintained a more than highly accommodative stance for three years now and U-16 unemployment, food stamp usage, home prices, and virtually every other economic metric indicate that they’ve done little to boost the US economy in any meaningful way. QE has and always will be about boosting asset prices in the hope that the Fed can stimulate a recovery by getting the S&P 500 to some level.

The only problem with this is that people don’t engage in financial speculation to pay their bills. Incomes have and always will be the single most important metric for gauging consumer strength. And as the below chart from Morgan Stanley shows, the Fed’s policies of the last few years have done nothing to boost incomes (unless you work on Wall Street).

This chart goes a long way towards explaining the current political environment in which the Fed is about as popular as the bubonic plague. If you read headlines stating “Fed Gave Trillions to Banks” and you’ve been laid off and are living off food stamps, your blood pressure might tend to rise.

And you might tend to vote based on that.

Folks, the reality is that the Fed’s hands are tied. That’s why they keep issuing these innocuous policies (keeping interest rates low until 5056 or some insane future date) without actually doing anything. They know that additional easing means inflation soaring, which makes the Fed that much more a target of popular outrage.

So if you’re counting on the Fed propping the market up throughout 2012 as it did in 2011, you may be in for a rude awakening in the coming months. Every day that we get closer to the 2012 Presidential election, the bar for more QE goes higher and higher. Truly unless we get some kind of major Crisis, the Fed won’t be doing much of anything.

So let the traders run their “end of the month” games this week. But don’t be surprised if stocks start to take a dive in early February.

If you’re looking for actionable advice on how to play the markets I suggest checking out my Private Wealth Advisory newsletter.

Private Wealth Advisory is my bi-weekly investment advisory published to my private clients. In it I outline what’s going on “behind the scenes” in the markets as well as which investments are aimed to perform best in the future.

My research has been featured inRollingStone, The New York Post, CNN Money, the Glenn Beck Show, and more. And my clients include analysts and strategists at many of the largest financial firms in the world.

To learn more about Private Wealth Advisory and how it can help you navigate the markets successfully…

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Graham Summers

Chief Market Strategist

Phoenix Capital Research

The financial world seems to have adopted the idea that things will somehow work themselves out in Europe. I don’t know if it’s because people don’t like to think about negative things or if someone sent out a memo to everyone that math doesn’t exist or count in Europe, but somehow investors seem to have decided that as long as we think positive thoughts everything will be fine.

The reality is that every day, Europe is approaching a debt implosion.

First off, European sovereigns need to roll over 740 billion Euros’ worth of debt this year. The brunt of this is going to fall on the ECB which has become the de facto bond market for Europe: the ECB was intervening on an almost daily basis during the second half of 2011… and things still nearly cratered.

Indeed, with the prospect of default and 50%+ haircuts now on the table, private bondholders (hedge funds in particular) are going to be much less willing to pony up the cash for EU sovereign debt. So this means the ECB will be stepping up to the table a lot more.

The problem with this is that Germany, (the de facto sovereign backstop for the EU) is not going to tolerate rampant monetization. Thus far, Germany has been willing to permit the ECB to implicitly monetize various EU sovereigns’ bonds rather than face the damage that a series of sovereign defaults would cause to German banks.

However, at some point, the market will force the issue of whether or not the ECB is going to be monetizing everything or not. Germany, having already seen the ultimate outcome of monetization (Weimar) has already made it clear that it will not tolerate this.

Which means that at some point, push will come to shove and either the defaults come fast and furious as the ECB steps back, or the ECB monetizes everything and Germany walks.

Whichever option occurs, the European financial system as we know it will collapse.

Mind you, we’re only considering the sovereign debt issue here. Outside of this, European banks are facing their own Crisis.

To whit, within the next 11 months…

• Irish banks need to roll over 25% of their outstanding debt.
• Spanish banks need to roll over 20%+ of their outstanding debt.
• Italian banks need to roll over 15%+ of their outstanding debt.
• French banks need to roll over 15% of their outstanding debt.

Rolling over debt isn’t a problem under healthy market circumstances… but when you’re posting Lehman-like leverage levels (EU banks in general are leveraged at 26 to 1)… and sitting atop hundreds of billions of Euros’ worth of EU sovereign debt (much of which has declined dramatically in value), convincing investors to lend you money isn’t easy.

Indeed, European banks don’t even trust each other at this point: interbank liquidity has all but dried up. What are the odds they’ll convince outside investors to load up on their debt? Will the ECB be monetizing bank debt too?

In simple terms, the metaphoric “bill” is coming due for European sovereigns and banks this year. The world continues to believe that somehow money will magically fall from the sky and solve this situation, but the reality is that the ECB is the only thing standing between Europe and complete collapse. And every day that the ECB expands its balance sheet buying worthless sovereign bonds, it comes that much closer to blowing itself up.

Do not believe the consensus or the hype: Europe is not fine, not even close. And those investors who are investing based on the idea that it is are just like those who bought in late 2007/ early 2008.

If you’re looking for actionable advice on how to play the markets I suggest checking out myPrivate Wealth Advisory newsletter.

Private Wealth Advisory is my bi-weekly investment advisory published to my private clients. In it I outline what’s going on “behind the scenes” in the markets as well as which investments are aimed to perform best in the future.

My research has been featured inRollingStone, The New York Post, CNN Money, the Glenn Beck Show, and more. And my clients include analysts and strategists at many of the largest financial firms in the world.

To learn more about Private Wealth Advisory and how it can help you navigate the markets successfully…

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Graham Summers

Chief Market Strategist

Phoenix Capital Research

The market is rallying… again… on hopes of a Greek deal… and QE 3.

This is the very same game we’ve been playing for over two years now. Greece is broke. Everyone knows it. The Greeks know it. Greek politicians know it. EU politicians know it. Even the IMF knows it. The only people who don’t seem to “get it” are stock investors that invest for one reason only:

1)   The hope of more juice/ intervention from Governments/ Central Banks

That one sentence dictates ALL market action today: the hope of a stupid policy (spending more money), which has failed to solve anything. It’s amazing that this is what the markets have become. What’s even more amazing is that people are actually paid (large salaries) to engage in this stupid behavior.

Honestly, how many times have we heard rumors that Greece was solved? How many “officials” claimed a deal was close? How many investors bought based on these outright lies?

Moreover, it’s not as though the actual proposals that do get announced are worth the paper they’re written on. A 50% haircut on private bondholders of Greek debt accomplishes nothing (Greece’s Debt to GDP would still be north of 120%). The only way Greece gets back to some semblance of solvency is a complete and total wipe out of all debt other than that held by the Troika (though they should take a hit as well).

This whole mess will end terribly. Greece will default. The default will be bigger than 50% (likely 70-80%). Italy, Spain, and other EU members will default as well. This will happen. There is no question about it.

However, right this week, the market is waiting for more juice from the Fed’s Jan 25 FOMC and the hope of a Greek deal out of Europe. For that reason stocks have gone almost straight up for the last two weeks.

By the look of things we’ve got a messy bearish rising wedge here. We’re now testing resistance in the form of the upper trendline.

What’s truly interesting here is that the Emerging Market space has been lagging US stocks in a big way on this move: a marked difference from the market action that preceded QE lite and QE 2.

The same goes for commodities and other “Risk On” assets, which are not even close to exceeding recent highs:

So… are stock investors smarter than everyone else… or are they just gunning the market on low volume yet again regardless of reality? We’ll find out this week once we get past the Fed FOMC and Europe’s decision on Greece.

If you’re looking for actionable advice on how to play the markets I suggest checking out my Private Wealth Advisory newsletter.

Private Wealth Advisory is my bi-weekly investment advisory published to my private clients. In it I outline what’s going on “behind the scenes” in the markets as well as which investments are aimed to perform best in the future.

My research has been featured in RollingStone, The New York Post, CNN Money, the Glenn Beck Show, and more. And my clients include analysts and strategists at many of the largest financial firms in the world.

To learn more about Private Wealth Advisory and how it can help you navigate the markets successfully…

Click Here Now!!!

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Investors are getting strangely bullish.

If you’ll recall, the entire European banking system nearly imploded just 8 weeks ago. Things were so dire that we even had a coordinated Central Bank intervention among other measures to try and prop things up over there.

The Powers That Be have since launched the Long-Term Refinancing Operation or LTRO: essentially a program through which European banks can borrow from the ECB at just 1% for up to a year. The whole thing is essentially just another liquidity handout and it’s telling that those firms which do borrow from the LTRO are parking almost all the borrowed cash at the ECB soon after.

And while the LTRO has been beneficial in terms of some liquidity concerns, it’s done nothing to address Europe’s solvency issues. Case in point, European banks in general are leveraged at 26 to 1. At that level even a 4% drop in asset prices wipes out all equity.

In this environment, the ability to borrow more money doesn’t accomplish anything from a balance sheet perspective. It’s simply a matter of common sense: you cannot solve a debt problem with more debt.

But since the ECB cannot directly monetize EU bonds without Germany pulling out of the EU, and since the German rules Euro-bonds as illegal, the LTRO is about the best the ECB can do in these circumstances.

What’s truly concerning however, is the fact that investors have piled into risk assets based on the LTRO (and misguided hopes of more QE) as though none of these issues exist.

Folks, just a few months ago, no less than the IMF, Bank of England, and others warned that we were facing a global meltdown and the worst financial crisis in history. Do you really think a few liquidity programs have solved all of this?

Moreover, if a huge round of QE or other stimulus money were coming, shouldn’t commodities be exploding higher just as they did before QE 2 in 2010?

Gold is still in a downward channel well under resistance:

Agricultural commodities, which were the first asset class to predict QE 2 are struggling too.

These charts don’t scream, “more easing is coming” to me. Which makes the extreme bullishness of investors all the more disconcerting. Any time a trade grows too lopsided, there’s the opportunity for a sharp reversal. Right now, investors are piling into risk assets in anticipation of more QE from the Fed. But none of the fundamental issues that nearly took Europe down have been resolved. And the Fed has made it clear that it’s finding QE less and less “attractive” since as far back as May 2011.

The reality is that the EU in its current form is finished. There is simply no way we can muddle through the debt deleveraging that will take place. And when the smoke clears the EU in its current form will be broken and we will have passed through a Crisis far worse than 2008.

Many people see their portfolios go up in smoke with this. But you don’t have to be one of them. In fact, I’ve laid out a series of steps every investor can take to prepare for the coming European Collapse.

Many people see their portfolios go up in smoke with this. Don’t be one of them. The time to prepare your portfolio for the collapse is NOW before it starts.

I can show you how.

Indeed, while 99.9% of investors lost their shirts in 2008, my subscribers actually MADE MONEY.

We did the same thing during the first round of the Euro Crisis in 2010.

And so far we’ve locked in 34 straight winners in the last five months… including gains of 12%, 15% even 18%.

In fact we haven’t closed a SINGLE LOSING TRADE in the second half of 2011.

We just opened several new positions last week, all of them designed to profit beautifully from the coming collapse of the EU.

To find out what they are… and  take action to insure that the coming disaster will produce profits NOT pain for you and your portfolio…

Click Here Now!!!

Graham Summers
Chief Market Strategist
Phoenix Capital Research

I continue to see commentators claiming QE 3 is just around the corner. I don’t see how this is possible because all of the Fed’s excuses for more QE are no longer valid.

First off, interest rates are already at or near record lows. So the Fed cannot argue that it needs to lower rates. Moreover, it’s not like lowering rates via QE 1, QE lite, QE 2, and Operation Twist 2 did much to help the US housing market. So QE 3 can’t be presented as a solution to housing.

Secondly, the economic data coming out of the US has been massaged to the point of not looking so bad. So the Fed cannot use the “economy is collapsing” argument this time either. And it’s not as though the public isn’t totally aware that QE 2 did next to nothing for the economy.

Indeed, the Fed spent $600 billion on QE 2 and had at most three months’ of improved economic data as a result (QE 2 was announced in November and the US economy rolled over in February 2011). The public is well aware of this as well as the fact that QE 2 saw inflation exploding higher.

Despite end-of-year decline, 2011 food prices highest on record – UN

Global food prices declined in December, but the overall annual average was the highest ever on record, the United Nations Food and Agriculture Organization (FAO) reported today.

Last month, FAO’s Food Price Index level was 211 points – 27 points below its peak in February. The decline was driven by sharp falls in the international prices of cereals, sugar and oils due to a productive harvest coupled with a slowing demand and a stronger United States dollar.

However, despite the steady decline in prices during the second half of the year, the Index overall averaged 228 points in 2011 – the highest average since FAO started measuring international food prices in 1990. The second highest average occurred in 2008 at 200 points.

http://www.un.org/apps/news/story.asp?NewsID=40925&Cr=food&Cr1=prices

Food prices hit all time highs in 2011, resulting in numerous revolutions and riots throughout the world. The increased cost of living also drew a lot of negative attention to the Fed from the US populace. So it’s not like the Fed can use the “QE will stimulate the economy” argument anymore.

The final argument for QE is that Obama needs the economy to recover to win the 2012 election. This argument completely overlooks the fact that Bernanke and the Fed are now politically toxic.

If the Fed were not in trouble politically, why would it:

1)   Stage town hall meetings

2)   Open up to Q&A sessions

3)   Have “humanizing’ articles written about Bernanke in major media publications.

4)   Moving towards more transparency on its forecasts and projections

These are all defensive moves. And the Fed wouldn’t be making them if it wasn’t under pressure. Which makes it all the more unlikely that QE 3 would help Obama. The public is already outraged at the Fed moves. And QE 3 would send inflation through the roof.  How exactly would this benefit Obama’s Presidential campaign?

In the end, the bar for QE 3 is much, much higher than most people think. The days in which the Fed could do whatever it wanted are over. And there simply isn’t a decent argument for QE 3 at this time.

In the end, it’s not as though QE 3 would do much for the market anyway. Look at the recent coordinated Central Bank intervention in November… the benefits lasted less than a month.

And somehow QE 3 is going to send stocks through the roof? Give me a break. Look at earnings. They’ve been a disaster, and investors are pulling their funds from the market en masse.

On that note, I truly believe we’re on the verge of the next round of the Great Crisis. The credit and bond markets are already starting to predict another 2008 event. Only this time things will be even worse because the Fed has already used up its tools into combating the First Round of the Crisis.

Many people see their portfolios go up in smoke with this. Don’t be one of them. The time to prepare your portfolio for the collapse is NOW before it starts.

I can show you how.

Indeed, while 99.9% of investors lost their shirts in 2008, my subscribers actually MADE MONEY.

We did the same thing during the first round of the Euro Crisis in 2010.

And so far we’ve locked in 34 STRAIGHT WINNERS in the last five months… including gains of 12%, 15% even 18%.

In fact we haven’t closed a SINGLE LOSING TRADE in the second half of 2011.

We just opened several new positions last week, all of them designed to profit beautifully from the coming collapse of the EU.

To find out what they are… and  take action to insure that the coming disaster will produce profits NOT pain for you and your portfolio…

Click Here Now!!!

Graham Summers
Chief Market Strategist
Phoenix Capital Research

For months I’ve been warning that when push come to shove Germany will bail on the Euro.

The reasons for this are simple:

1)   The German public and court system won’t stand for QE from the European Central Bank

2)   Issuing Euro bonds goes against the German constitution

3)   Germany has its own share of domestic problems with a REAL Debt to GDP ratio north of 200% and its banks needing tens of billions of Euros in new capital

All of these factors lead me to believe that Germany would refuse to be the ultimate backstop for the EU. You could also see Germany preparing the legislation to allow it to walk if it wanted to:

German Chancellor Angela Merkel’s Christian Democratic Union party voted to allow euro states to quit the currency area, endorsing the prospect of a move not permitted under euro rules.

http://www.bloomberg.com/news/2011-11-11/german-cdu-is-set-to-back-motion-allowing-euro-member-exit-1-.html

The resolution reads:

“Should a member [of the euro zone] be unable or unwilling to permanently obey the rules connected to the common currency he will be able to voluntarily–according to the rules of the Lisbon Treaty for leaving the European Union–leave the euro zone without leaving the European Union. He would receive the same status as those member states that do not have the euro.”

I believe Germany implemented this legislation for itself… not some other country. And by the look of things, Germany’s getting a lot closer to walking.

BBK Thiele: Current ECB Government Bond Buys Violate Treaty

The European Central Bank’s government bond buys are a violation of the Maastricht Treaty, Bundesbank board member Carl-Ludwig Thiele said Monday.

Thiele’s comments depart form the official Bundesbank line. While the German central bank has warned that larger purchases may be illegal, it has said that current purchases do not violate the prohibition of monetary financing.

Thiele recalled that the decision to buy Greek government bonds had found no support from German ECB Governing Council members. “Germany was over-ruled on the Council,” Thiele said.

“These buys were a violation against the prohibition of monetary financing, that is the basic principle that a central bank should not give credit to a state,” Thiele said in a speech text provided by the Bundesbank.

https://mninews.deutsche-boerse.com/index.php/bbk-thiele-current-ecb-government-bond-buys-violate-treaty?q=content/bbk-thiele-current-ecb-government-bond-buys-violate-treaty

Bundesbanker says euro zone must forget idea of QE

Europe must abandon the idea that printing money, or quantitative easing, can be used to address the euro zone debt crisis, Bundesbank board member Carl-Ludwig Thiele said on Monday.

Thiele called for euro zone countries to exercise fiscal discipline and said that boosting the resources of Europe’s rescue funds would buy time to address the bloc’s debt woes.

“But lasting confidence cannot be bought with money alone,” he added in the text of a speech for delivery in Hamburg.

“One idea should be brushed aside once and for all – namely the idea of printing the required money. Because that would threaten the most important foundation for a stable currency: the independence of a price stability orientated central bank.”

http://www.sharenet.co.za/news/Bundesbanker_says_euro_zone_must_forget_idea_of_QE/d02483d59237b6eb2c6ae98f17b3e1ce

These are extremely strong statements coming from the Bundesbank. Remember, Merkel is the German political leader, but she doesn’t control the purse strings to Germany: the German courts and Bundesbank do. And if they don’t support more bailouts, there’s nothing Merkel can do.

We see similar warnings coming out of German CEOs:

Linde CEO says Germany should mull euro exit-paper

Germany should consider leaving the euro if efforts to impose fiscal discipline upon indebted euro zone countries fail, the head of industrial gases firm Linde (LING.DE) told German weekly paper Der Spiegel.

“I fear the willingness of crisis countries to reform themselves is abating if, in the end, the European Central Bank steps in,” Linde’s chief executive Wolfgang Reitzle was quoted as saying.

“If we do not succeed in disciplining crisis countries, Germany needs to exit,” said Reitzle who was previously a board member at carmaker BMW (BMWG.DE) and head of Jaguar and Land Rover.

http://in.reuters.com/article/2012/01/15/eurozone-linde-idINDEE80E07Z20120115

I firmly believe Germany is already makings moves to prepare for precisely this outcome. No EU member state is going to submit to German authority regarding fiscal policies. Indeed, virtually every EU legislation passed in the post-WWII era was aimed at limiting Germany’s power.

And Germany isn’t going to simply prop up the EU out of the goodness of its heart. As I mentioned before, Germany has its own domestic issues to deal with. And when push comes to shove, Germany will look after its own interests rather than Greece’s or Italy’s.

With that in mind I believe it’s only a matter of time before Germany walks out of the EU. When this happens the Euro will collapse a minimum of 20-30% and we will see numerous sovereign defaults.

When the smoke clears the EU in its current form will be broken and we will have passed through a Crisis far worse than 2008.

Many people see their portfolios go up in smoke with this. Don’t be one of them. The time to prepare your portfolio for the collapse is NOW before it starts.

I can show you how.

Indeed, while 99.9% of investors lost their shirts in 2008, my subscribers actually MADE MONEY.

We did the same thing during the first round of the Euro Crisis in 2010.

And so far we’ve locked in 34 STRAIGHT WINNERS in the last five months… including gains of 12%, 15% even 18%.

In fact we haven’t closed a SINGLE LOSING TRADE in the second half of 2011.

We just opened several new positions last week, all of them designed to profit beautifully from the coming collapse of the EU.

To find out what they are… and  take action to insure that the coming disaster will produce profits NOT pain for you and your portfolio…

Click Here Now!!!

Graham Summers
Chief Market Strategist
Phoenix Capital Research

As usual, bad news was released over the weekend when the least number of people are paying attention. In this particular instance the bad news was:

1)   S&P downgrading nine EU countries, including France and Austria which both lost AAA status

2)   S&P downgrading the EFSF to AA

3)   S&P’s head of sovereign ratings stating that a Greek default is coming soon

4)   Germany giving a definitive “NO” to the ECB on the option of Quantitative Easing (QE)

None of these should be a surprise to anyone who’s been paying attention. Germany signaled that it was against QE months ago. Having already experienced the end result of monetization (hyperinflation), German voters and courts are completely opposed to this option.

As for the numerous downgrades… these are just a natural consequence of EU leaders failing to face the facts. The facts are that Europe is insolvent and the only possible outcome for most EU members is to default.

However, because EU leaders continue to play for time by “kicking the can” down the road with half measures and pseudo-solutions, the debt contagion has spread rapidly from the PIIGS countries to other more stable members like France and Austria.

Put another way, by failing to address the core issues Europe faces (too much debt, too little capital, far too many entitlement programs relative to taxes), EU leaders are simply letting the debt contagion spread unchecked.

As a result of this, the Euro has broken into the gap down formed during the May 2010 Crisis. We now have one primary line of support before things get really ugly.

Indeed, the long-term chart of the Euro shows us in a massive downward channel that predicts the Euro breaking below 118.

Elsewhere in the world, traders gunned the S&P 500 to 1,300 in the overnight session. At that point buying power dropped and the market has begun to correct.

Truthfully the only reason to be long stocks right now is in anticipation of more QE from the Fed at its January 25 FOMC meeting. However, the likelihood of more QE being announced at that time is slim to none.

For starters, interest rates are already at record lows, so the Fed cannot use that excuse. Secondly the latest economic data out of the US, while heavily massaged, is showing some signs of improvement, which negates the need for more QE. And finally, Bernanke and the Fed are far too politically toxic for the Fed to begin another massive round of QE (the last one of $600 billion accomplished nothing) just for the sake of it.

Indeed, I fully believe that the Fed will not engage in another massive stimulus move until the financial system is in full-scale Crisis mode again.

With that in mind, this latest low volume melt-up on hype and hope has brought the S&P 500 up against the trendline formed during the summer top, as well as resistance at 1,300.

Whenever a market rallies hard based on hype and hope, the chance for a violent reversal increases dramatically. And given just how bad the fundamentals are for the US and Europe at this time, we could see a very sharp collapse in no time.

The only thing holding  the system together is hope of more QE from the Fed/ additional measures by other Central Banks. However, at this point it’s clear that the impact of Central Bank intervention is lessening with every new move. Consider the coordinated intervention that involved seven Central Banks in late November: the positive effects of that move were completely undone within a month.

And what happens when the Central Banks finally lose control of this mess (and they will, just as they did in 2008). The answer is a Crisis that will make 2008 look like a picnic.

This is coming… it’s only a matter of when.

On that note, if you have not already taken steps to prepare for the next round of the Crisis now is the time to do so while the system is still holding together.

I can show you how with my Private Wealth Advisory newsletter.

Private Wealth Advisory is my bi-weekly investment advisory designed to help investors outperform the market and avoid critical portfolio risks at all times.

Case in point, my clients MADE money in 2008. They also profited beautifully from the May 2010 Euro Crisis, outperforming the S&P 500 by 15% at that time.

And in last six months, while most investors were whipsawed this way and that, my Private Wealth Advisory subscribers locked in 34 straight winners. In fact, we haven’t closed a single losing trade since July 2011.

Every annual Private Wealth Advisory subscription comes with 26 bi-weekly investment reports (usually 15-20 pages each). These reports all feature my best research regarding macroeconomics, financial developments and geopolitical impact on the markets.

In plain terms I lay out what’s really happening in the markets as well as which investments to buy and sell to insure you’re maximizing your returns.

In this manner, my clients are always abreast of what’s happening behind the scenes in the markets. Even more importantly they’re making REAL money on their investments, while avoiding risk (again, we’ve just closed out 34 straight winners).

To find out more about Private Wealth Advisory and how it can help you grow your portfolio during these trying times…

Click Here Now!!!

Graham Summers

Greece is in big trouble.

I realize that 99% of commentators have completely missed this fact. After all throughout 2011 the mainstream financial media published stories claiming that the Greek Crisis was solved.

However, the reality is that Greece remains in Crisis mode. The country has only 37 billion Euros left from its first bailout package. And the second bailout package is anything but guaranteed.

Indeed, as the below story reveals, the two financial backstops for Greece (the IMF and Germany) are in no place to pony up more cash.

Analysis: IMF funds for Greece not assured

IMF chief Christine Lagarde is warning Europe that Greece’s economic prospects are deteriorating and the European Union will either have to pony up more money to rescue Athens or debt holders will have to stomach steeper losses.

Unless the private sector or the EU contribute more to Greece’s rescue, the International Monetary Fund will view the nation’s debt load as unsustainable and may be unwilling to deliver more funds, IMF sources told Reuters as Lagarde met with Germany’s and France’s leaders in Europe…

But talks aimed at getting private-sector creditors to shoulder a bigger part of a new Greek bailout are going badly, senior European bankers said on Wednesday, raising the prospect that euro-zone governments will have to increase their contribution.

If bondholders refuse to take larger losses and the EU does not agree to provide more aid, it is unlikely the IMF would come in to save the day, a senior diplomatic source said.

Already, concern is rising among IMF member countries about the Fund’s growing exposure to Greece, with lending already at 2,400 percent of the nation’s IMF quota — by far the largest on record since 2003.

U.S. Republican lawmakers are already taking aim at Washington’s support for the IMF, threatening to snatch back a loan approved for an IMF crisis fund in 2009. With a presidential election looming in November, the Obama administration has made clear it has no plans to provide further resources through the IMF to help Europe.

http://www.reuters.com/article/2012/01/11/us-greece-imf-idUSTRE80A2AL20120111

Let’s consider the IMF first. The IMF has already given Greece 2,400% more funds than its quota allows. Moreover, the IMF is essentially a US-backed organization. And what are the odds that Congress and Obama are going to “OK” hundreds of billions in funds to bailout Europe during an election year?

Next to none.

So the idea that the IMF will somehow save the day here is completely delusional. Indeed, you can even see this in the following paragraph:

Unless the private sector or the EU contribute more to Greece’s rescue, the International Monetary Fund will view the nation’s debt load as unsustainable and may be unwilling to deliver more funds, IMF sources told Reuters as Lagarde met with Germany’s and France’s leaders in Europe…

This is nothing more than a cop-out: the IMF knows private bondholders don’t want to eat more losses on their Greek debt holdings, so it’s using that as the reason why it cannot provide more funds. It’s actually pretty brilliant as it portrays the IMF as wanting to help, but blames others for the reason why it can’t.

Germany is pulling a similar stunt, promising to pony up more cash only if Greece meets certain conditions (conditions that Germany knows Greece won’t agree to).

Merkel warns Greece on second bailout

German Chancellor Angela Merkel has warned Greece it will not be able to receive further aid unless it makes rapid progress on its second rescue package, including reaching agreement with private bondholders over a voluntary write-down on Greek debt, Reuters has reported.

Speaking at a joint news conference in Berlin with French President Nicolas Sarkozy, Merkel told reporters,“The second Greek aid package including this restructuring, must be in place quickly. Otherwise it won’t be possible to pay out the next tranche for Greece.”

The scheme aims to cut Greece’s debt-to-GDP ratio from around 160 percent to 120 percent. However, last week European Central Bank (ECB) policymaker Athanasios Orphanides said the private sector deal should be scrapped, while on Saturday an adviser to Germany’s finance minister said a 50 percent “haircut” was insufficient to tackle Greece’s huge debt, Reuters reported.

http://www.globalpost.com/dispatch/news/business-tech/debt-crisis/120109/merkel-warns-greece-second-bailout

In plain terms, both the IMF and Germany have stated they will help Greece if and only if Greece agrees to various measures… which they KNOW Greece cannot agree to.

And so the Greek issue has become a kind of “hot potato” that no one wants to keep holding. Meanwhile, every day that this issues doesn’t get solved, the EU as a whole moves closer to systemic failure.

After all, the very same issues that are plaguing Greece (namely the inability to find additional bailout funds) are going to take down Spain, Italy, and the other PIIGS. And once they do, the EU in its current form will be broken up.

You can already see investors preparing for this as they flock to German bunds pushing yields negative there. On top of this, EU corporations and banks are so worried about the system that they are parking record amounts of cash with the ECB.

So if you’ve not already taken steps to prepare your portfolio for a Euro collapse, NOW is the time to do so. Because once the real fireworks start, it will be too late.

On that note, if you’re looking for investment ideas on how to profit from this, I strongly urge you to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is my bi-weekly investment advisory aimed at helping investors beat the market by anticipating major trends and avoiding the REAL risks to their portfolios.

Case in point, Private Wealth Advisory subscribers profited from the collapse in late July/ early August, having been warned weeks in advance that it was coming.

They’ve since locked in some 34 winning trades (and no losers)… at a time when 99% of investors (professional and otherwise) are getting whipsawed this way and that by the market’s volatility.

As a result of this, we crushed the market last year, which is why my clients (which include executives at Fortune 500 companies and some of the largest financial institutions in the world including UBS, Wells Fargo, Merrill Lynch, and others) are very, very happy.

But we’re not done by any stretch.

Indeed, we just opened seven new trades to profit from the next round of Deflation. All of these trades are positioned to explode higher in the coming weeks as the market comes unhinged.

To find out what they are… that the worry and uncertainty out of investing in today’s market… and start making serious returns from your investments (again, we’ve seen 34 STRAIGHT WINNERS in the second half of 2011)…

Click Here Now!!!

Graham Summers

I’ve received a number of emails regarding the fact that stocks continue to rally despite Europe being on the verge of Collapse. Once again, investors are forgetting that stocks are the most clueless asset class on the planet.

Indeed, here are three reasons why this latest stock market rally isn’t to be trusted.

1) Volume has fallen from awful to absolutely horrendous.

Stocks traded roughly nine billion shares on the second trading session of 2012. This marks a 36% decrease from trading volume for the second day of 2011 (nearly 14 billion shares).

Put another way, stocks are levitating on lower and lower volume. Indeed, volume on Monday of this week was the lowest volume of the year so far, even lower than that of last week.

This flies in the face of conventional market action (bull markets are marked by increasing volume) as well as the usual start of the year buying. And it serves as a major red flag that all is not well with the financial system.

Indeed, one wonders what the market would look like if volume were to pick up (hint every time that it has in the last year stocks have collapsed).

2) Bonds are forecasting an event worse than 2008

As I’ve noted countless times before, the bond market is much larger, much more liquid, and much better at forecasting developments than the stock market.

With that in mind, I’d like to point out that US Treasuries have in fact already exceeded their all time highs established during the 2008-2009 Crash. In fact, they’ve bounce off of their former all-time highs, indicating that former resistance is now support:

Mind you, Treasuries aren’t the only “safe haven” bond to be exploding higher: German bonds have actually gone negative indicating that investors are actually willing to pay to have their capital parked with the German government, based on it reputation for fiscal strength.

By the way… this has never happened before.

3) The likelihood of more juice coming from the Fed is getting lower by the day.

The number one driving force behind every stock market rally in the last two years has been the assumption that the US Federal Reserve will pump the system with more liquidity.

The only problem with this assumption is that it’s been dead wrong for over six months. Indeed, not only has the Fed disappointed at every FOMC since July (while always promising to do more, the Fed has in fact done next to nothing), but as far back as May 2011, Bernanke himself admitted that QE has become less “attractive” as a monetary policy.

See for yourself…

Q. Since both housing and unemployment have not recovered sufficiently, why are you not instantly embarking on QE3? — Michael A. Kamperman, Waco, Tex.

Mr. Bernanke: “Going forward, we’ll have to continue to make judgments about whether additional steps are warranted, but as we do so, we have to keep in mind that we do have a dual mandate, that we do have to worry about both the rate of growth but also the inflation rate…

“The trade-offs are getting — are getting less attractive at this point. Inflation has gotten higher. Inflation expectations are a bit higher. It’s not clear that we can get substantial improvements in payrolls without some additional inflation risk. And in my view, if we’re going to have success in creating a long-run, sustainable recovery with lots of job growth, we’ve got to keep inflation under control. So we’ve got to look at both of those — both parts of the mandate as we — as we choose policy”

http://economix.blogs.nytimes.com/2011/04/28/how-bernanke-answered-your-questions/

Pessimistic Bernanke Fed Admits QE Has Failed In FOMC Statement

In its latest FOMC statement, the Bernanke Fed has admitted the economy continues to remain depressed, essentially admitting that both programs of long-term asset purchases, or quantitative easing, have failed to prop up output after what has been the worst recession since the Great Depression.

http://www.forbes.com/sites/afontevecchia/2011/08/09/pessimistic-bernanke-and-fomc-practically-admit-qe-has-failed/

“Monetary policy can do a lot, but monetary policy is not a panacea.” — Ben Bernanke 9/29/11

U.S. “close to faltering,” Fed ready to act: Bernanke

Asked whether another round of bond purchases, known as quantitative easing, was in store, Bernanke was noncommittal.

“We never take anything off the table because we don’t know where the economy is going to go. We have no immediate plans to do anything like that,” he said.

http://www.reuters.com/article/2011/10/04/us-usa-fed-bernanke-idUSTRE79337C20111004

Central banks may need to burst bubbles: Bernanke

Federal Reserve Chairman Ben Bernanke said on Tuesday that central banks may need to resort to monetary policy to combat asset bubbles, although regulation should be a first line of defense.

http://www.reuters.com/article/2011/10/18/us-usa-fed-bernanke-idUSTRE79H5IR20111018

Look at the progression there. As far back as May 2011, Bernanke admitted the benefits of QE were less attractive. He’s since not only admitted that asset bubbles exist (something Greenspan never admitted) but that Central Banks may even need to “burst” them!?!?

And somehow, the Fed is going to reverse this attitude and unleash some mega-new QE effort… during an election year in which the Fed has become one of THE hot topics for the GOP?

The reality is that the financial system is once again teetering on the brink of collapse. The only thing holding stocks up is misguided hope that EU leaders will somehow solve a debt crisis with more debt (how’d that work out the last two years?) or that the Fed will somehow be able to print our way to growth (again, how’d that work out over the last two years?).

Look at the bond markets: they’re forecasting something worse than 2008. Look at commodities: they’re breaking down just as they did before the 2008 Crash. Look at stock market volume: it’s falling dramatically during rallies just as it did in 2008.

And people still believe that things are alright?

The reality is that we are rapidly heading into a Crisis that will make 2008 look like a picnic. It could erupt tomorrow or next week, or even in a month’s time. But the fact remains that there is no possible happy ending for the current EU Crisis. Interbank liquidity is drying up and banks are parking record amounts of cash at the ECB in anticipation of widespread bank failures.

Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. With the right set-up, the coming Collapse could be a time of profits and good fortunes… not pain.

So if you’ve not already taken steps for what’s coming, the time to do so is NOW before the real mess begins.

On that note, I’ve already alerted my Private Wealth Advisory clients to open 7 CRISIS trades in anticipation of the next leg down. Already several of them are up. And I fully expect we’ll see ALL of them in the double digits in the coming weeks.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 34 straight winners including gains of 12%, 14%, 16%, 18% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

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Best Regards,

Graham Summers

The Euro-zone in its current form is in its final chapter. Anyone who argues otherwise is not paying attention.

Consider the Greek situation. Greece’s debt problems first made mainstream media headline news at the beginning of 2009. The IMF/ EU/ ECB/ and Federal Reserve have been working on this situation for two years now. And they’ve yet to solve anything: after two bailouts, significant debt write-downs, and numerous austerity measures, Greece remains bankrupt.

Now, if the Powers That Be cannot solve Greece’s problems… what makes anyone think that they can address larger, more dangerous issues such as Italy or France, etc?

Consider that the world’s central banks staged a coordinated intervention in November… and Italy’s ten year is back yielding more than 7% less than two months later. Again, a coordinated intervention by the world’s central banks bought less than two months’ time for Italy.

And now we find the debt contagion spreading to France:

French Debt Costs Rise at Bond Sale as AAA Decision Looms

France sold 7.96 billion euros ($10.2 billion) of debt, with 10-year borrowing costs rising in the country’s first bond auction of the year as credit-rating companies threaten to cut the nation’s AAA grade.

The government sold 4.02 billion euros of the bonds maturing in October 2021 at an average yield of 3.29 percent, from 3.18 percent on Dec. 1. The euro fell to its weakest level against the dollar in 15 months, and the extra yield investors demand to hold French 10-year bonds instead of benchmark German bunds widened to the most in about six weeks.

“There’s still the threat of a downgrade hanging over France and until we get that situation cleared up you can’t signal the all-clear,” said Eric Wand, a fixed-income strategist at Lloyds Bank Corporate Markets in London.

France has the biggest debt burden of the six top-rated euro nations, at 85 percent of gross domestic product. Its 10- year yield spread to German debt widened to a 21-year high of 204 basis points on Nov. 17 amid concern Europe will struggle to contain the region’s debt crisis. Today, it reached 151 basis points, or 1.51 percentage points, the most since Nov. 25. It was at 149 basis points at 5:39 p.m. Paris time compared with a premium of 47 basis points for AAA rated Finland and 39 basis points for the Netherlands.

http://www.bloomberg.com/news/2012-01-04/france-takes-market-pulse-with-bond-offering-as-aaa-rating-decision-looms.html

The significance of this cannot be overstated. European nations need to roll over hundreds of billions if not trillions of Euros’ worth of debt in 2012. And this is at a time when even more solvent members such as France and Germany are staging weak and failed auctions.

Previously, EU sovereign nations would rely on European banks for these debt needs. However, European banks have their own debt issuance problems to deal with. To wit, before the end of 2012…

• French banks need to roll over 30% of their TOTAL debt.
• Spanish banks and Italian banks need to rollover more than 33% of their TOTAL debt.
• German banks need to roll over nearly 40% of their TOTAL debt.
• Irish banks need to roll over almost HALF (50%) of their TOTAL debt.

Thus, the question becomes: WHO is going to buy all this debt? China’s increasingly focusing on domestic issues. Japan is on the verge of its own solvency Crisis. And the US is running terrible Debt to GDP and Deficit to GDP ratios as well.

Again… who’s going to put up the funds to roll over this debt? The only player that could possibly do that would be the ECB. But Germany won’t stand for that level of debt monetization. And the Fed can’t monetize everything in today’s political climate

Thus, the fact remains: the EU in its current form will be broken up sometime in 2012. The Powers That Be are rapidly losing control over there. And once the stuff really hits the fan, it’s going to make 2008 look like a joke.

If you’ve not already taken steps to prepare for this, NOW is the time to do so.

I can show you how with my Private Wealth Advisory newsletter.

Private Wealth Advisory is my bi-weekly investment advisory aimed at helping investors beat the market by anticipating major trends and avoiding the REAL risks to their portfolios.

Case in point, Private Wealth Advisory subscribers profited from the collapse in late July/ early August, having been warned weeks in advance that it was coming.

They’ve since locked in some 34 winning trades (and no losers)… at a time when 99% of investors (professional and otherwise) are getting whipsawed this way and that by the market’s volatility.

As a result of this, we crushed the market last year, which is why my clients (which include executives at Fortune 500 companies and some of the largest financial institutions in the world including UBS, Wells Fargo, Merrill Lynch, and others) are very, very happy.

But we’re not done by any stretch.

Indeed, we just opened seven new trades to profit from the next round of Deflation. All of these trades are positioned to explode higher in the coming weeks as the market comes unhinged.

To find out what they are… that the worry and uncertainty out of investing in today’s market… and start making serious returns from your investments (again, we’ve seen 34 STRAIGHT WINNERS in the second half of 2011)…

Click Here Now!!!

Graham Summers