Yellen’s Setting Up the Markets For Their Third Fed-Fueled Crash

Janet Yellen is playing with matches next to a $20 Trillion Debt Bomb.

During her speech at the Gerald R. Ford School of Public Policy in Michigan, Yellen stated that the biggest risk to monetary policy is for the Fed to “get behind the curve” regarding inflation.

To that end, the Yellen Fed has already raised interest rates twice in the last six months.  And it is pushing for yet another rate hike in June.

However, Yellen as usual is missing the bigger issue: the risk of DEBT deflation triggered by the Fed’s rate hikes.

Since the 2008 Crisis, the US has been on a debt binge unlike anything we’ve ever seen before. Thanks to seven years of ZIRP and $3.5 TRILLION in QE, the US’s debt load has nearly doubled, bringing our Debt to GDP ratio well over 100%.

fredgraph

Now Yellen wants to raise rates even more, in her hopes of catching up with inflation…

But what happens to the US’s massive debt pile as the Fed keep’s raisings rates, making the debt MORE expensive to pay off?

In 2016, when rates were still 0.5%, the average US interest payment was already 1.9%. What happens to this when the Fed keeps raising rates, pushing the yield on the debt even higher?

The markets are already “smelling” this.

Already the 30-Year US Treasury bond has dropped sharply to critical support (the blue line). And that’s before the Fed even raises rates in June, let alone pushes to start shrinking its balance sheet later this year.

sc

Truth be told, we’re not that far off from a debt crisis. Greece’s Debt to GDP was 109% when it first began imploding in 2010. We’re only a hair’s breadth away from that now. And given the Fed’s track record with asset bubbles (the Tech Crash in 2000, the Housing Crash in 2008), what are the odds the Fed’s going to blow the system up once again, due to mismanagement of OBVIOUS risks?

We are already preparing our clients for how to make money from this. If you’d like to learn three simple investment strategies on how to navigate the coming US debt bomb, you can pick up a free Investment Report here:

http://phoenixcapitalmarketing.com/bondbubble2.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Disclaimer: The information contained on this website is for marketing purposes only. Nothing contained in this website is intended to be, nor shall it be construed as, investment advice by Phoenix Capital Research or any of its affiliates, nor is it to be relied upon in making any investment or other decision. Neither the information nor any opinion expressed on this website constitutes and offer to buy or sell any security or instrument or participate in any particular trading strategy. The information in the newsletter is not a complete description of the securities, markets or developments discussed. Information and opinions regarding individual securities do not mean that a security is recommended or suitable for a particular investor. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. 

Opinions and estimates expressed on this website constitute Phoenix Capital Research's judgment as of the date appearing on the opinion or estimate and are subject to change without notice. This information may not reflect events occurring after the date or time of publication. Phoenix Capital Research is not obligated to continue to offer information or opinions regarding any security, instrument or service. 

Information has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. Phoenix Capital Research and its officers, directors, employees, agents and/or affiliates may have executed, or may in the future execute, transactions in any of the securities or derivatives of any securities discussed on this email. 

Past performance is not necessarily a guide to future performance and is no guarantee of future results. Securities products are not FDIC insured, are not guaranteed by any bank and involve investment risk, including possible loss of entire value. Phoenix Capital Research, OmniSans Publishing LLC and Graham Summers shall not be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. 

Phoenix Capital Research is not responsible for the content of other websites or emails to which this one may be linked and reserves the right to remove such links. OmniSans Publishing LLC and the Phoenix Capital Research Logo are registered trademarks of Phoenix Capital Research. Phoenix Capital Management, Inc.
What Happens When the Everything Bubble Bursts?
  • By trying to corner the bond market (risk-free rate)
  • the Fed has created a bubble in everything
  • We call this THE EVERYTHING BUBBLE
  • Reserve your copy of our Executive Summary
  • To prepare for what's coming down the pike!