Can the Fed Stop Inflation From Kicking the Dollar Off a Cliff?

Janet Yellen has a BIG problem on her hands.

The Fed has been tapering its QE programs to the tune of $10 billion per month or so. The problem with this is that the Fed is once again behind the curve and the markets are already smelling inflation.

Indeed, the US Dollar just took out key support yesterday.

 

 

 

 

 

 

 

This is a HUGE problem for the Yellen Fed. They are already tapering QE but the markets continue to display inflationary tendencies. What is the Fed to do? Raise rates? It’s already said that won’t happen for another year. And tapering QE more aggressively could tank stocks.

Meanwhile, food prices are roaring higher. Wholesale beef prices are up 21% from this period last year. Pork prices are up 56%. Agricultural commodities in general have moved sharply since the beginning of the year.

 

 

 

 

 

 

 

The problem with inflation is that it is a lot easier to create than contain. The Fed continues with its dubious claims that inflation is too low, but the markets and prices are saying otherwise.

Buckle up, much higher prices are coming. The Fed is behind the curve again, just as it was in 2007. We all know what happened next.

Be aware, there are warning signs flashing throughout the financial system…

With that in mind, We’ve already urged Private Wealth Advisory clients to start prepping. We’ve opened three targeted trades to profit from the stock bubble bursting. As we write this, all of them are roaring higher.

We’ve helped thousands of investors manage their risk and profit from market collapses. During the EU Crisis we locked in 72 straight winning trades and not one loser, including gains of 18%, 28% and more.

All for the the small price of $179: the annual cost of a Private Wealth Advisory subscription.

To take action to prepare for what’s coming… and start taking steps to insure that when inflation rips through the system you don’t lose your shirt.

Click Here Now!

Phoenix Capital Research

 

 

On Closer Look, the Jobs Report Was In Fact a Disaster

About that jobs report.

Upon closer inspection, the report was a total disaster. You wouldn’t know this from the financial media’s coverage, but it was.

The establishment survey shows a gain of 288,000 jobs last month. However, the household survey shows that that the economy lost 73,000 jobs in April.

This is critical. The household survey does not allow for “duplication of individuals,” meaning that if someone holds more than one job, they’re only counted once. In contrast, if someone is working multiple low paying jobs, every single job will be counted in the establishment survey.

Put it this way. If you go from one solid full time job to working as a waiter, cab driver, and tossing pizzas, the establishment survey will show that the economy created TWO jobs (one job lost plus three started= two jobs net) whereas the household survey will show NO growth (one person lost a job and started working elsewhere).

With this in mind, you should be paying attention to the household survey. The household survey shows 73,000 jobs were LOST. This negates the claim that 288,000 were created.

Aside from this oddity, we find that 806,000 people left the labor force. Moreover, reentrants (folks returning to the labor force after being unemployed) fell 417,000. And new entrants (folks entering the labor force for the first time) fell 126,000.

So the number of people in the labor force fell as did the number of people returning to the labor force and the number of folks entering the labor force for the first time.

And yet somehow the jobs picture is supposedly rosy?

In all honesty, this report was totally abysmal. Anyone who spent 2-3 minutes digesting it knows this. But this doesn’t stop the media from trumpeting the drop in the unemployment rate (due to nearly 1 million people leaving the labor force), nor does it counter the claims that 288K jobs were created.

The economy is showing serious warning signs. The fact that stocks are holding up based on misguided hope and delusion makes for a very dangerous environment similar to that of late 2007.

Be aware, there are warning signs flashing throughout the financial system…

With that in mind, We’ve already urged Private Wealth Advisory clients to start prepping. We’ve opened three targeted trades to profit from the stock bubble bursting. As we write this, all of them are roaring higher.

We’ve helped thousands of investors manage their risk and profit from market collapses. During the EU Crisis we locked in 72 straight winning trades and not one loser, including gains of 18%, 28% and more.

All for the the small price of $179: the annual cost of a Private Wealth Advisory subscription.

To take action to prepare for what’s coming… and start taking steps to insure that when this bubble bursts you don’t lose your shirt.

Click Here Now!

Phoenix Capital Research

 

 

The Spin Free Economy is Toilet… Will the Markets Follow?

The financial media are gaga over the alleged great jobs numbers from last week.

We’ve been over this saga many times. The methodology for calculating jobs gains is not even close to accurate. The unemployment rate is now a marketing gimmick rather than an accurate economic metric.

Indeed, here are some staggering statistics that indicate just how messed up the US economy is right now.

• The labor participation rate is the lowest since 1978.
• There are over 90 million Americans without a job right now.
• An incredible 20% of all American families do not have a single member who is employed.
• There are over 47 million Americans on food stamps.

There is simply no way to spin these numbers. The US Federal Reserve has spent over $3.2 trillion and generated virtually no real job growth (accounting for population growth).

See for yourself:

When you account for how the potential labor pool has grown, the number of employed Americans has gone almost nowhere but down since the 2008 recession “ended.”

At the end of the day, spending money doesn’t create real job growth. An employer only hires someone if they believe that the person’s output will have a net benefit for the firm (meaning the money the person’s output brings in is larger than the money the firm pays them for their work).

That’s what creates a sustainable job. Spending money just to create some position where a person sits at work 50% of the time doing nothing is of no real long-term value to the economy, the person, or the firm.

In simple terms, the great attempt to prop up the US economy through spending and printing money is at an end. The world takes a long time to catch on to these changes, but the shift has already begun. It’s now just a matter of time before stocks figure it out

Be aware, there are warning signs flashing throughout the financial system…

With that in mind, We’ve already urged Private Wealth Advisory clients to start prepping. We’ve opened three targeted trades to profit from the stock bubble bursting. As we write this, all of them are roaring higher.

We’ve helped thousands of investors manage their risk and profit from market collapses. During the EU Crisis we locked in 72 straight winning trades and not one loser, including gains of 18%, 28% and more.

All for the the small price of $179: the annual cost of a Private Wealth Advisory subscription.

To take action to prepare for what’s coming… and start taking steps to insure that when this bubble bursts you don’t lose your shirt.

Click Here Now!

Phoenix Capital Research

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The Markets Just Sounded the Death Knell For QE

The Central Bank intervention fiasco continues to unravel before our eyes.

Globally all Central Banks have kept an eye on the Bank of Japan, which announced the single largest QE program relative to its GDP in history. That one single QE program announced in April 2013 is equal to over 20% of Japan’s GDP.

Japan experienced two brief quarters of improved economic activity, before things turned south again. Turns out that printing trillions of dollars to buy bonds doesn’t create growth.

The latest example is Sony, the Japanese electronics giant which just announced a 70% COLLAPSE in its profit outlook. Sony’s CEO had stated previously that a weak Yen, caused by the Bank of Japan’s QE program was actually a “disadvantage.”

We now have concrete proof as Sony’s profits outlook evaporates.

This is the death knell of QE. We now know for a fact that the Fed and other Central Banks are aware that QE doesn’t create jobs nor does it improve the broader economy.

All that leaves is stocks… which have benefitted enormously from QE, with the S&P 500 rising to new record highs boosted by the Fed’s money printing.

However, ultimately stocks react to profits. And as Sony has proven, QE hurts rather than helps profits. Indeed, Sony’s stock is down over 1.5% on the earnings outlook drop. And it’s essentially breakeven since the Bank of Japan announced its massive QE program.

 

 

 

 

 

 

The writing is on the wall. QE is good for very little these days. If the Bank of Japan can spend over $1.4 TRILLION and corporate profits fall while stocks go nowhere, it’s the end of the line for Central Bank money printing.

Be aware, there are warning signs flashing throughout the financial system…

With that in mind, We’ve already urged Private Wealth Advisory clients to start prepping. We’ve opened three targeted trades to profit from the stock bubble bursting. As we write this, all of them are roaring higher.

We’ve helped thousands of investors manage their risk and profit from market collapses. During the EU Crisis we locked in 72 straight winning trades and not one loser, including gains of 18%, 28% and more.

All for the the small price of $179: the annual cost of a Private Wealth Advisory subscription.

To take action to prepare for what’s coming… and start taking steps to insure that when this bubble bursts you don’t lose your shirt.

Click Here Now!

Phoenix Capital Research

The Yellen Fed Knows Stocks Are in a Bubble

Historically, the Fed has claimed to have two mandates: maintaining stable prices and maximum employment.

However, the Dodd-Frank bill, which passed in 2010, unveiled a new, third mandate for the Fed.

Dodd-Frank instituted a third official mandate for the Fed, empowering it to regulate systemic risk and preserve financial stability. The Fed is now required to present its findings on risky, non-bank financial firms to the Financial Stability Oversight Council, which instructs the Fed on how to sanction those institutions.

http://www.cfr.org/international-finance/role-us-federal-reserve/p21020

Bernanke, obviously didn’t take this mandate to heart as his policies helped increase financial instability rather than reduce it.

With Janet Yellen’s Fed, however, the focus is different.

While I am not necessarily a fan of Yellen or her policies, I have to give her credit that she did perceive the housing bubble in advance (unlike Bernanke). In fact, she even advocated raising interest rates at the time.

On some level Yellen is aware that the Bernanke Fed’s policies have run counter to the third mandate implemented by the Dodd-Frank bill. Indeed, during a key hearing in November 2013 before she was appointed next Fed Chairman, Yellen openly stated that QE created “potential risks for financial stability.”

This theme of increased focus on financial stability continued into her instatement as Fed Chairman. Indeed, the entire final portion of Yellen’s first semi-annual monetary policy report to Congress focused on strengthening the financial system AKA increasing financial stability.

Yellen is evidently aware that stocks are bubbling. As Fed Chairman she cannot admit it (no Central Banker will ever say the markets are in a bubble), but the signs that she is aware of this are present.

Yellen is also aware on some level that Wall Street believes she will be even more dovish than Bernanke was. For this reason, her first Q& A as Fed Chairman saw her even mentioning raising interest rates in the future.

The financial media lambasted Yellen as a fool who is damaging the markets. But the reality is that Yellen is attempting to talk stocks down without bringing about a collapse.

We get additional evidence of this from the fact that the Fed’s stress tests failed Citibank. The Fed also requested Bank of America and Goldman Sachs to resubmit their capital plans.

I am not naïve enough to claim that Yellen wouldn’t do anything to hold the system together if the stuff hit the fan again a la 2008. But the market right now is not in 2008 mode. It is in 2006-2007 bubble mode. And Yellen’s Fed is working to get this under control without creating a panic.

If you need additional evidence that Yellen is taking a different route from Bernanke, consider the recent speech from NY Fed President and uber-dove Bill Dudley in which he admitted that one could argue…

… that Fed policy has been too accommodative for too long, creating risks for financial stability worldwide.

This is Bill Dudley we’re talking about. A man who has done nothing in the last five years but clamor for more QE.

Be aware, there are warning signs flashing throughout the financial system…

With that in mind, We’ve already urged Private Wealth Advisory clients to start prepping. We’ve opened three targeted trades to profit from the stock bubble bursting. As we write this, all of them are roaring higher.

We’ve helped thousands of investors manage their risk and profit from market collapses. During the EU Crisis we locked in 72 straight winning trades and not one loser, including gains of 18%, 28% and more.

All for the the small price of $179: the annual cost of a Private Wealth Advisory subscription.

To take action to prepare for what’s coming… and start taking steps to insure that when this bubble bursts you don’t lose your shirt.

Click Here Now!

Phoenix Capital Research