Is Another Round of Lockdowns Coming? Two Stocks To Watch

Posted on July 30, 2021 by The Phoenix

Yesterday President Biden suggested that the U.S. might face another wave of lockdowns. Among the various policies he hinted at were:

1)    Mandating that all Americans get the Covid-19 vaccines.

2)    Shutting down businesses, schools, society like in 2020.

The question now is whether this is a political ploy or if the American people will go along with these proposed policies.

After all, the only reason we had lockdowns in 2020 was because people complied.

I’m not a psychic and cannot claim to have answers to this. But I do know that the stock market is forward­-looking and can provide us with some clues.

After all, back in 2020, stocks began to collapse in late February, several weeks before the country formally went into lockdown.

Chart Description automatically generated

Today, stocks are not collapsing (at least not yet).

We had the beginnings of a breakdown in mid-July, but that quickly reversed and gave way to new all-time highs. Moreover, that particularly breakdown wasn’t distinguishable from other corrections over the last six months.

Chart, histogram Description automatically generated

Still, it’s always good to keep an eye on things. So below are two stocks I’m watching for signs of whether or not another round of lockdowns is coming.

First is Delta Airlines (DAL).

Airlines were one of the hardest hit industries from the 2020 lockdowns. DAL was no exception with shares collapsing over 70% during the first wave of lockdowns (red rectangle).

If we’re heading into another round of lockdowns, I would expect this chart to breakdown BADLY in the coming days. DAL shares have begun to breakdown, but they’ve yet to really nosedive.

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Another company I’m watching is Alpha Pro Tech (APT).

This company makes masks, hazmat suits, shields and other infection control apparel. If we were going towards another round of lockdowns, I would expect to see APT shares start to explode higher as they did in February of 2020 (red rectangle).

Chart, histogram Description automatically generated

Is another COVID-19 shutdown coming? I don’t know. But if it does, we should experience another financial crisis.

With that in mind, we’ve reopened our Stock Market Crash Survival Guide to the general public.

Within its 21 pages we outline which investments will perform best during a market meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments returned TRIPLE digit gains during 2008).

We are making just 100 copies available to the general public.

To pick up your copy of this report, FREE, swing by:

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in It's a Bull Market | Comments Off on Is Another Round of Lockdowns Coming? Two Stocks To Watch

Buckle Up: Jerome Powell “Cut a Deal” And Inflation is Going Roar!

Posted on July 29, 2021 by The Phoenix

Over the last two days, we’ve outlined how the bond market is predicting a surge in inflation.

By quick way of review:

  1. Real rates, as measured by the difference between yields on Inflation Treasury Inflation-Protected Securities or TIPS and regular Treasuries have been surging higher (see the chart below).
  • This means that TIPS are dramatically outperforming Treasuries right now. Since TIPs trade based on inflation expectations, this suggests that the bond market is predicting much higher inflation.

What would cause this?

Another round of massive money printing.

We’ve already noted that the Biden administration hopes to sign a $2-$4 trillion infrastructure program into law in the next few weeks. And after that there is talk of a $1.7 trillion climate change program.

Today, I’d like to tackle the Fed’s role in all of this.

The Fed is currently engaged in a $120 billion per month Quantitative Easing (QE) program. This comes to over $1.4 trillion in month printing per year.

Recently the Fed has been hinting that it intends to taper this program, and possibly start raising rates sometime in 2022/ early 2023. But by the look of things, that will no longer be the case.

Why?

Because the Biden administration recently leaked that it intends to give Jerome Powell as second term as Fed Chair starting in 2022.

The story was leaked via Bloomberg, which has a close relationship with the Biden administration. And it suggests that Jerome Powell has “cut a deal” with Joe Biden to stay on as Fed chair. After all, the only way that Joe Biden would give Jerome Powell a second term would be if the latter “got onboard” with Biden’s agenda.

That agenda?

Keep the economy as strong as possible going into the 2022 mid-terms.

This means NO tapering, NO rate hikes, and NO tightening of monetary conditions for the foreseeable future. Sure, the Fed might jawbone things or stage verbal interventions here and there to provide political cover, but there is no way on earth Jerome Powell can tighten monetary conditions in the near future if he wants to stay on as Fed Chair.

Which means…

Inflation is going to ROAR in the coming months.

On that note, if you’re concerned about inflation, we have published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on Buckle Up: Jerome Powell “Cut a Deal” And Inflation is Going Roar!

Why Inflation is About to Get a Whole Lot Worse

Posted on July 28, 2021 by The Phoenix

Yesterday I outlined how real rates suggest gold will be moving MUCH higher in the coming months.

By quick way of review:

  1. Because we are in a fiat-based monetary regime, gold trades like any other asset.
  • Specifically, gold typically tracks “real rates” or the actual cost of money as illustrated by the difference between yields on Inflation Treasury Inflation-Protected Securities or TIPS and regular Treasuries).
  • Real rates typically lead gold at major turns. We saw this at the bottom in March 2020 and more recently in June 2021.

Recently a massive divergence has developed between real rates and gold with real rates rising and gold lagging (see the chart below).

This would suggest gold will be going MUCH higher in the coming months.

What would trigger this?

 Inflation.

Remember, real rates represent the difference between the yields on Treasury Inflation-Protected Securities (TIPS) and regular Treasuries. So, when TIPs outperform regular Treasuries, this line rises, and when regular Treasuries outperform TIPs, this line falls.

So, the fact real rates are rising so aggressively means that TIPS which focus on inflation are dramatically outperforming Treasuries right now. This means the bond market is predicting greater inflation is coming.

What would trigger this?

Two things:

  1. The $2-$4 trillion infrastructure program the Biden Administration is hoping to sign into law in the near future.
  • Jerome Powell’s continued tenure as Fed Chair in 2022.

Regarding #1, policymakers have already made it clear from their response to the 2020 shutdowns that their entire blueprint for dealing with crises, boils down to just two words.

PRINT MONEY.

Shutting down the economy triggers a depression?

Print money.

Stock market experiences fastest 30% crash in history?

Print money.

Municipal bonds collapse because the bond markets don’t believe cities and states will be able to meet their debt obligations?

Print money.

The economy still hasn’t come back because state officials continue to keep their economies on partial or complete lock downs?

Print money.

The economy isn’t coming back fast enough despite vaccines and states reopening?

Print money.

Indeed, policymakers printed so much money to combat the impact of the COVID-189 lockdowns that if you add up all of the money the U.S. has ever printed… over 40% of it was printed in 2020.

And the Biden administration doesn’t intend to stop anytime soon. It has already implemented a $1.9 trillion stimulus. It’s now attempting to get a $2-$4 trillion infrastructure program signed into law. And after that it hopes to implement a $1.7 trillion climate change program.

Inflation is already roaring. What do you think another $2-$4 trillion in money printing will unleash?

And bear in mind, that’s just the Federal Government. We’re not even accounting for the Fed here.

I’ll dive into that tomorrow.

In the meantime, if you’re concerned about inflation, we have published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on Why Inflation is About to Get a Whole Lot Worse

Is Gold About To Rip Higher?

Posted on July 27, 2021 by The Phoenix

On Friday we outlined the strange price action in gold.

As a quick recap:

  1. Because we are in a fiat-based monetary regime, gold trades like any other asset.
  • Specifically, gold typically tracks “real rates” or the actual cost of money as illustrated by the difference between yields on Inflation Treasury Inflation-Protected Securities or TIPS and regular Treasuries).
  • Recently a massive divergence has developed between real rates and gold.

Regarding #3 in the list above, the divergence between the two items is quite large, which means either real rates need to come down, or gold needs to catch up.

Chart, histogram Description automatically generated

I believe we will see gold begin it next leg up relatively shortly.

Why?

Because real rates usually lead gold on turns.

Let’s go back to the COVID-19 meltdown. Note that real rates (top box) bottomed a few days before gold did (bottom box). Real rates bottomed on March 12th, while gold bottomed on March 20th.

Chart Description automatically generated

We saw this same dynamic play out again more recently in June of 2021 when real rates bottomed on the 17th of June (red circle) while gold didn’t bottom until the 29th (blue circle).

Chart, waterfall chart Description automatically generated

This would suggest that real rates will in fact lead gold higher going forward. Again, real rates have been soaring while gold is struggling to ignite higher. The below chart suggests gold will eventually be running to $2,000 per ounce in the coming months.

Chart Description automatically generated

What would trigger a run like this?

Inflation.

I’ll outline how and why in tomorrow’s article until then.

In the meantime, if you’re concerned about inflation, we have published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on Is Gold About To Rip Higher?

Something BAD is Brewing in the Economy

Posted on July 21, 2021 by The Phoenix

Yesterday I noted that Friday’s action was very troubling. By quick way of review:

  1. It is unusual for stocks to close down on Friday.
  2. It’s even more unusual for stocks to finish the week down.
  3. Not only did stocks finish the day and week down but they did so near the lows. This too is highly irregular as typically the markets bounce hard off the lows even if they finish the session or week down.

Today I’d like to delve into the specifics of what the market is telling us.

The market is telling us that something BAD is brewing in the economy. While it’s true that stocks no longer have a close relationship with the economy (stocks will often rally on both bad and good economic news), certain sectors are HIGHLY correlated to economic activity. And they all are flashing major warnings.

First and foremost are Industrials (XLI). These are companies that either produce actual things like tractors, cranes, HVAC systems, etc. or that are involved in real economic activity (mail/shipping). As such, they represent a good gauge of how strong the real economy is doing: during economic expansions these businesses receive more orders.

The chart is downright awful. Industrials have rolled over and broken below their 50-day moving average (DMA).

Chart, histogram Description automatically generated

Next up are Materials (XLB). These are companies involved in producing things like concrete, copper, steel and the like. During economic expansions these companies receive more orders as they are the primary suppliers of commodities needed for construction, manufacturing and the like.

Here again the chart is awful. The breakdown is more severe than that of industrials. Not only is XLB further below its 50-DMA but the down days are powerful, wiping out weeks’ worth of gains in a single session.

Chart, histogram Description automatically generated

Finally, we have the Consumer Discretionary (XLY). The consumer accounts for 75% of the U.S. economy. The chart is not nearly as bearish as that of Industrials or Materials, but it is still awful.

XLY has effectively gone nowhere since April. The rally in June/ early July failed miserably and now it looks as though we’ll see a test of the 50-DMA. By itself this is an ugly chart, but in the context of what’s happening in Industrials and Materials it is very worrisome.

Diagram Description automatically generated with medium confidence

Add these charts up and they are telling us something BAD is happening in the economy right now. With that in mind, we’ve reopened our Stock Market Crash Survival Guide to the general public.

Within its 21 pages we outline which investments will perform best during a market meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments returned TRIPLE digit gains during 2008).

We are making just 100 copies available to the general public.

To pick up your copy of this report, FREE, swing by:

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Posted in It's a Bull Market | Comments Off on Something BAD is Brewing in the Economy

Why a Rising $USD is a Major Issue for the U.S.

Posted on July 14, 2021 by The Phoenix

The #1 issue for the markets this week is the $USD.

The U.S. dollar is strengthening. A strong dollar is not necessarily a bad thing, but it runs completely contrary to the Fed’s stated goal of creating inflation.

Following a brief spike during the deflationary episode of March, for most of 2020, the $USD dropped like a stone (see area highlighted by a red arrow in the chart below). However, it’s been a completely different era for 2021 as the $USD has been rangebound thus far (see blue rectangle in the chart below).

Chart, waterfall chart Description automatically generated

This is happening at a time when the Fed has explicitly stated that it wants to create inflation. It is also happening at a time when the U.S. is $28 trillion in debt, and the U.S. is attempting to run a $3+ trillion deficit.

And therein lies the problem.

The U.S. finances its spending via tax revenues. If tax revenues are not great enough to cover the costs, the U.S. issues debt. This is deficit everyone is always talking about. In simple terms the U.S. finances its massive spending sprees by issuing debt.

In order for the bond market to absorb the massive debt issuance the U.S. generated in 2020 (the U.S. ran a $3 trillion deficit that year), it required higher yields. In simple terms, this was the bond market saying, “if you want us to buy all of this debt, you need to pay us more.” You can see this in the chart below.

Diagram Description automatically generated

This changed in 2021, at which time bond yields began to roll over as it appeared Congressional gridlock would limit the Biden administration’s plans on spending some $6 trillion. Yields started to come down as the bond market began to process this information.

But that doesn’t mean the $USD at current levels isn’t a problem. Even if the Biden administration can’t run a $6 trillion budget, it will still run a $3+ trillion deficit. Indeed, the U.S. is already $2 trillion in the red for 2021 as of June.

The stronger the $USD is in this environment, the more “expensive” it is the U.S. to pay its debts. A big part of the Fed/ Federal Government’s scheme with inflation is that it means the U.S. can pay back its debts with dollars that are technically worth less.

But if the $USD stays strong, this means it becomes more expensive for the U.S. to finance its debt loads. And with total public debt north of $28 trillion, this can be a real problem.

Indeed, it’s possible the U.S. is finally approaching a potential debt crisis in the coming months. With that in mind, we’ve reopened our Stock Market Crash Survival Guide to the general public.

Within its 21 pages we outline which investments will perform best during a market meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments returned TRIPLE digit gains during 2008).

We are making just 100 copies available to the general public.

To pick up your copy of this report, FREE, swing by:

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Debt Bomb | Comments Off on Why a Rising $USD is a Major Issue for the U.S.

These Are the Two Most Horrifying Charts I’ve Seen in a Long-Time

Posted on July 1, 2021 by The Phoenix

Over the last three days, I’ve been outlining how the Fed “spooked” the bond markets into believing it will move to crush inflation sometime in the next 18 months.

Yesterday we detailed why the Fed would do this, namely because long-term bond yields represent the “growth expectations” against which stocks are priced. So provided these yields are falling to new lows, stocks can continue to rise to new highs.

Put another way, the primary means through which the Fed can keep the “music playing” for the bull market is by manipulating the markets into buying ever cheaper and cheaper debt.

This will allow stocks to go to truly spectacular bubble territory. Yesterday I posited that we could even see the S&P 500 rise to 5,000.

However, it’s important to note the risks associated with this monetary policy. And those risks are clearly illustrated in the below chart.

This is a long-term chart of the S&P 500 along with its 50-month and 200-month moving averages (MMAs).  

As you can see, the 50-MMA is of extreme importance to the stock market. During bull markets, the S&P 500 usually bounces hard off this line. And at the start of bear markets, a breakdown below this line is usually the first sign that a bull market is over.

The key item I want to draw your attention to is just how stretched the S&P 500 is above its 50-MMA. The below chart has an added lower box that shows stocks are currently 38% above this level. It’s also worth noting that the market has only been more stretched above this level two times: during the Tech Bubble of the late ‘90s and right before the 1987 Crash.

Suffice to say, both of those instances resulted in pretty dramatic drops.

It’s important to note that the fact stocks are this stretched above the 50-MMA doesn’t necessarily mean that stocks will crash right here and now. As I’ve just detailed, stocks have in fact been even more stretched than this before during other bubbles.

Moreover, with the Fed making it clear it wants stocks to roar even higher, we could indeed see stocks become even MORE stretched above their 50-MMA. It’s never smart to fight the Fed. And until stocks do “something wrong” I wouldn’t sell the farm just yet.

But for certain, when this bubble bursts, we’re in for a spectacular collapse to at least the 50-MMA, which would mean a drop to 3,000. And if stocks enter a new bear market, then we’re talking about a drop to the 200-MMA which would mean stocks falling by more than 50% to 2,000.

A crash is coming. Maybe not this week or next, but it’s coming… which is why we’ve reopened our Stock Market Crash Survival Guide to the general public.

Within its 21 pages we outline which investments will perform best during a market meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments returned TRIPLE digit gains during 2008).

We are making just 100 copies available to the general public.

To pick up your copy of this report, FREE, swing by:

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in It's a Bull Market | Comments Off on These Are the Two Most Horrifying Charts I’ve Seen in a Long-Time

Why the Fed’s Bluff Will Cost Investors’ Trillions, Pt. 2

Posted on June 29, 2021 by The Phoenix

Yesterday I outlined how the Fed is extremely late to curb inflation. 

As a brief recap, it only took CPI clearing 5%, multiple signals that inflation is running hot, housing entering a bubble, stocks roaring to new all-time highs, and signs of frothiness including: someone sold a Non-Fungible Token (NFT) of a fart, crypto-currencies including ones that were designed as a joke exploding higher, etc.

Put simply, it only took an extreme level of frothiness as well as some of the worst inflation prints in decades for the Fed to decide it needed to do something. 

We’ve already assessed how the markets initially reacted to the Fed’s move. But now it’s time to digest what the Fed actually did.

Did it actually hike rates?

No. 

Did it actually taper QE?

No.

Did it do anything besides change inflation expectations?

No again.

The Fed has clearly decided it is willing to stomach higher inflation in the near-term to sustain the bubble in stocks/ recovering economy. However, with inflation expectations rising (within 10 minutes they recovered over two years’ worth of declines)…

 and Treasury yields getting dangerously close to breaking their long-term downtrend (see the chart below)…

… the Fed was forced to temper these expectations.

So, the Fed did what it does best… it made a verbal intervention.

But was the Fed really serious?

I can’t claim to be psychic in the sense that I can read Fed officials’ minds. What I can tell you is that I don’t think it’s coincidence that within 48 hours of stocks selling off:

1)    The Biden White House convened a meeting with the President’s Working Group (the so-called Plunge Protection Team).

2)    There will be SIXTEEN (16) Fed official appearances this week, the vast majority of which have been to issue dovish statements about how the market overreacted to the Fed and that the Fed is nowhere near thinking about tightening monetary policy. 

Since that time, Fed Chair Jerome Powell has appeared before Congress during which he stated:

  • Fed Will Wait for Actual Inflation as Trigger for Rate Rise
  • Fed Won’t Raise Rate Preemptively
  • 5% Inflation Is Not Acceptable (We’re old enough to recall the 2% threshold)
  • Inflation Effects from Reopening Larger Than Expected
  • High Inflation Temporary, Will Abate
  • Factors Weighing on Labor Supply Should Abate 
  • May Take Some Patience to See What Is Really Happening
  • Hard to Say When Supply Bottlenecks Will Disappear
  • Enhanced Unemployment Benefits May Be Factor
  • Expects to See Strong Job Creation in the Fall
  • ‘Very, Very Unlikely’ U.S. Will Suffer 1970s Inflation Experience

So… Powell is basically telling us the Fed is NOT going to act preemptively concerning inflation… that the Fed still believes inflation will disappear by itself… and that the Fed is in “watch and wait” mode.

Put another way, the Fed spooked bond yields into dropping, and until they start rising again, the Fed is happy to let things bubble up in the markets.

In this sense, what the Fed has done is move to curb future inflation expectations without actually doing anything. This in turn has pushed long-term bond yields back down again… which has opened the door to stocks roaring to even higher levels before crashing down in a spectacular crisis.

I’ll explain why in tomorrow’s article… until then.

In the meantime, we have published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research​

Posted in Inflation | Comments Off on Why the Fed’s Bluff Will Cost Investors’ Trillions, Pt. 2

Why the Fed’s Bluff Will Cost Investors’ Trillions, Pt. 1

Posted on June 28, 2021 by The Phoenix

So the Fed finally moved… but what precisely did it do?

After a full year of the most extreme monetary policy in history, including…

  1. Over 12 months of ZERO interest rate policy despite the economy growing.
  2. Over $3 trillion in money printing.
  3. Buying corporate bonds, muni bonds, corporate bond ETFs, Treasuries, Mortgage-Backed Securities Student Loans, Certificates of Deposit, etc.

…the Fed finally announced it is thinking about tightening monetary conditions.

It only took CPI clearing 5%, multiple signals that inflation is running hot, housing entering a bubble, stocks roaring to new all-time highs, and signs of frothiness including: someone sold a Non-Fungible Token (NFT) of a fart, crypto-currencies including ones that were designed as a joke exploding higher, etc.

Put simply, it only took an extreme level of frothiness as well as some of the worst inflation prints in decades for the Fed to decide it needed to do something. That something?

The Fed announced that intended to start tapering QE in late 2021/early 2022 while also potentially raising rates late in 2022/ early 2023.

Regardless of whether or not the Fed will actually do any of this (more on that in a moment), what matters for us today is how the market reacted to the Fed announcement.

Treasuries, particularly long-term Treasuries (20+ years) caught a major bid on the news.

The long-term Treasury ETF (TLT) jumped 4% in the span of a few days. This forced widespread liquidations at hedge funds in their short bond positions. And when hedge funds start liquidating losses, they often will liquidate winners as well to free up capital.

You can see this in the stock market when compared to TLT: they are a mirror image of one another (blue rectangle in the chart below) with stocks falling in near perfect synchronization as TLT rallied.

Chart Description automatically generated

This suggests that the sell-off in stocks was collateral damage from the move in bonds, NOT necessarily a bearish development outright for stocks.

With all of this in mind, we need to take a look at what the bond market is currently doing for signs of where things are headed. Remember, it was Treasuries, that forced the Fed to act. And it was Treasuries that forced the sell-off in stocks last week.

So, what precisely did the Fed do?

We’ll address that in tomorrow’s article.

In the meantime, we have published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research​

Posted in Inflation | Comments Off on Why the Fed’s Bluff Will Cost Investors’ Trillions, Pt. 1

Warning: Both the Fed and the Treasury WANT Higher Inflation

Posted on June 10, 2021 by The Phoenix

​

Over the last week, we’ve been outlining the absurdity of Treasury Secretary Janet Yellen’s belief that higher inflation and higher interest rates would for the U.S.

By quick way of review:

1)    Secretary Yellen believes that President Biden’s $4 trillion spending program would be good for the U.S. even if it contributes to higher inflation and results in higher interest rates.

2)    Inflation is already roaring in the U.S. before President Biden’s $4 trillion spending program. Higher inflation would NOT be good at this point as Americans are already experiencing rising costs living.

3)    Higher interest rates would also be extremely problematic as the U.S. now has $28 trillion in public debt. This massive debt load requires extremely low interest rates for the U.S. to avoid a debt crisis. The last time interest rates spiked higher in 2018, the corporate debt market froze, and the stock market collapsed 20% in a matter of days.

Now, Yellen is one of the two most important and powerful figures in the financial world. As such her views on this are of extreme significance for determining what policymakers will be doing going forward. As far as the Treasury is concerned, inflation will be allowed to rage.

This leaves Fed Chair Jerome Powell as the only potential voice of sanity from a senior policymaker perspective. And unfortunately for us, Powell is likely to prove just as delusional as Treasury Secretary Yellen when it comes to issues of inflation.

The first sign of this came in 2018 when Powell used his first Jackson Hole symposium to glorify former Fed Chair Alan Greenspan’s economic insights and “considerable fortitude” in not raising interest rates back in the late ‘90s.

Yes, Powell believed Greenspan was a genius for not raising rates in the late’ 90s. If you don’t remember what stocks did at that time, it looked like this:

Considering this, the below quote from Powell’s 2018 speech is quite revealing.

The FOMC thus avoided the Great-Inflation-era mistake of overemphasizing imprecise estimates of the stars. Under Chairman Greenspan’s leadership, the Committee converged on a risk-management strategy that can be distilled into a simple request: Let’s wait one more meeting; if there are clearer signs of inflation, we will commence tightening.13 Meeting after meeting, the Committee held off on rate increases while believing that signs of rising inflation would soon appear. And meeting after meeting, inflation gradually declined.

Source: the Federal Reserve records

In this context, it is not surprising to see Fed Chair Powell now arguing that inflation is “transitory” and should be ignored. This is practically the exact policy he lionized in hits 2018 speech: ignore inflation, don’t raise rates no matter how frothy the markets become, and allow a massive stock bubble to form.

From Powell’s Q&A session in early May:

“We suspect transitory factors may be at work,” Powell said, adding inflation should return to the Fed’s target over time, and then be symmetric around its objective. Powell was commenting at a news briefing, following the Fed’s two-day meeting.

“If we did see inflation running persistently below, that is something the committee would be concerned about and something we would take into account when setting policy,” he said.

Source: CNBC

So, what does this mean?

That both the Treasury Secretary AND the Fed Chair, the two most important figures in finance, believe inflation is NOT an issue or even worse, is a good thing. Neither policymaker believes that they need to tighten monetary conditions. If anything, Treasury Secretary Yellen believes the government should print and spend even MORE money! 

So inflation is going to rage and rage, until this bubble bursts wiping out trillions in investor capital.

As I keep warning, inflation is going to ANNIHILATE investor portfolios. 

However, those investors who are properly positioned for it will make literal fortunes. 

On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research​

Posted in It's a Bull Market | Comments Off on Warning: Both the Fed and the Treasury WANT Higher Inflation

Stocks Are Preparing For a Major Breakout

Posted on June 2, 2021 by The Phoenix

Stocks continue to churn.

The S&P 500 has been in a consolidation phase since mid-April. Yes, we’ve had a few runs to new all-time highs, but as the below chart shows, most of the action has been sideways (see the blue box in the chart below).

Whenever markets enter a consolidation phase, the eventual breakout tends to be violent. And the longer the consolidation, the more violent the breakout.

Considered the last market consolation which took place from February through late March 2021. Stocks chopped back and forth in a significant box pattern before finally breaking out to the upside. They then ripped higher by 5% in the span of a little over a week.

Indeed, this has been the hallmark of this bull market since the March 2020 lows: stocks rip higher, then enter a six to eight week consolidation phase before breaking out to the upside again. I’ve identified the consolidation phases in blue boxes in the chart below. All of them resulted in breakouts to the upside.

With this in mind, I see no reason to overthink the current consolidation. Until the Fed begins to tighten monetary policy, it’s difficult to see a reason why stocks should collapse. It is clear the Fed has decided to let inflation run hot, and as I’ve outlined multiple times in the past, stocks initially LOVE inflation.

On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on Stocks Are Preparing For a Major Breakout

Three Charts Every Gold Investor Needs to See Right Now

Posted on May 25, 2021 by The Phoenix

Yesterday I noted that gold is telling us that the Fed is indeed going to let inflation run hot.

Remember, the Fed can stop inflation at any point by tightening monetary policy. If the Fed were to announce tomorrow that it is hiking rates 3% while ending its QE program, inflation would be DEAD.

With that in mind, the multi-trillion-dollar question over the last few months has been…

WILL the Fed act to stop inflation before it gets out of control?

I believe gold has finally given us the answer. It’s NOPE.

Gold has just broken out of a nine-month consolidation with conviction.

This is an extremely bullish development, particularly when you consider that gold had to break through both its 50-day moving average (DMA) and its 200-DMA to do this.

So, this begs the question… has gold finally bottomed? Because if it has… the upside target for that bull flag is north of $2,400 per ounce.

During major bull runs in gold, gold miners typically outperform the precious metal by a significant margin. The below chart shows the ratio between the VanEck Vectors Gold Miners ETF (GDX) and the price of gold bullion (GDX: $GOLD) 

When GDX outperforms gold, this line rises. And when GDX underperforms gold, this line falls. As you can see, since March of 2021, this line has been rising, which indicates GDX is outperforming gold by a significant margin.

Moreover, we have a clear rounded bottom (blue line in the chart above) forming here. 

That is a VERY bullish sign for this ratio. If it can break above resistance (red line in the chart above) then we have confirmation that THE bottom is in for gold.

When that happens, gold will begin its ascent higher to new all-time highs, eventually hitting north of $2,400 per ounce.

On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on Three Charts Every Gold Investor Needs to See Right Now

The Market Just Issued a MAJOR Warning of What’s to Come

Posted on May 24, 2021 by The Phoenix

Well, it’s confirmed, inflation is no longer just running hot… it is ROARING.

The Markit’s US Manufacturing PMI is a monthly survey that interviews managers in the private sector to see what they are experiencing in terms of business.

It’s widely considered to be one of the best gauges for the real state of the economy.

With that in mind the Markit’s US Manufacturing PMI for the month of May 2021 just revealed that the cost for input prices as well as new business at service providers have hit their highest levels since 2009. 

As one well known economist put it, “average selling prices for goods and services are both rising at unprecedented rates, which will feed through to higher consumer inflation in coming months.”                                                                                                         

Remember, inflation doesn’t just appear overnight. Instead, it slowly works its way into the financial system in phases.

1)    Phase 1: Raw material price spikes

2)    Phase 2: Factory gate prices spikes

3)    Phase 3: Retail prices

The first stage occurs in the manufacturing/ production segment of the economy when you see producers suddenly paying more for the raw goods and commodities they use to manufacture/ produce finished goods.

We first hit this stage several months ago as the below chart illustrates. The price of raw materials such as copper, lumber and even gasoline are all up triple digits in the last 12 months.

Now, one or two months of higher commodities or raw goods is no big deal, but once you’re talking 6-8 months of steadily rising prices it’s significant. At that point manufacturers/ producers are forced to start raising the prices of finished goods or face shrinking profit margins.

The Markit’s US Manufacturing PMI has confirmed that we are now officially at this point, revealing that the prices managers are paying for goods are rising at unprecedented rates.

Put another way, managers at real businesses in the U.S. are seeing the prices they must pay to obtain commodities/ raw goods and services, rise faster than ever before!

Again, NEVER before in the history of this data set have prices exploded this rapidly.

This means inflation is now ROARING.

It also explains why gold has suddenly caught a bid,  exploding out of a nine-month downtrend.

The above chart is telling us that gold was confused as to whether or not the Fed to stop inflation for most of the last year.

No longer.

Gold is now telling us that the Fed is not going to stop inflation. It is telling us that inflation is here and only going to get worse.

On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on The Market Just Issued a MAJOR Warning of What’s to Come

Warning: the Current Crypto Market is Napster and iTunes is Coming, Pt 2.

Posted on May 21, 2021 by The Phoenix

Yesterday I outlined why I believe most crypto-currencies will eventually prove worthless.

By way of quick review, crypto is a tech asset. And all technological revolutions follow two phases:

  1. The initial breakthrough phase, which occurs before social/legal frameworks are in place.
  • The “normalization” phase during which social/legal frameworks are implemented giving the technology a societal and financial legitimacy.

If you need a real-world example of this, think of the electronic music file or MP3 revolution. The first phase was Napster, which featured the sharing of music in what was later deemed as illegal activity (the legal framework was not yet ready for the technology).

Then along came iTunes: the normalized version of the technology in which MP3s could be bought and sold in a legally acceptable form.

I believe bitcoin and crypto currencies are currently in the Napster phase of their development. And the Fed will soon introduce “iTunes.”

We know that as far back as 2017, the Fed was already studying this issue:

As the price of the cryptocurrency continues to soar, the Federal Reserve apparently is giving thought to having a product like bitcoin for its own.

William Dudley, president and CEO of the Federal Reserve Bank of New York, said at a conference Wednesday that the Fed is exploring the idea of its own digital currency, according to reports from Dow Jones.

Any product likely would be well off in the future, he said, adding that it would be “very premature” to estimate when the Fed would come up with its own offering, according to Bloomberg.

Source: CNBC

More recently, on February 5th 2020, Lael Brainard who sits on the Federal Reserve’s Board of Governors, which is in charge of establishing Fed policy, stated the following:

In a Bank for International Settlements survey of 66 central banks, more than 80 percent of central banks report being engaged in some type of central bank digital currency (CBDC) work.12 … a few central banks report that they are moving forward with issuing a CBDC. Building on the tremendous reach of its mobile payments platforms, China is reported to be moving ahead rapidly on plans to issue a digital currency.13

Given the dollar’s important role, it is essential that we remain on the frontier of research and policy development regarding CBDC… we are conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC. We are collaborating with other central banks as we advance our understanding of central bank digital currencies.

https://www.federalreserve.gov/newsevents/speech/brainard20200205a.htm

Here is a senior member of the Fed stating point blank that the Fed needs to introduce a central bank digital currency (CBDC) in order to maintain the geopolitical standing of the U.S. dollar. The fact she mentions this RIGHT after discussing the fact China is moving forward with a sovereign digital currency tells us that this is a matter of national security for the U.S.

And then just this week, Fed Chair Jerome Powell commented that crypto currencies are “not convenient for payment” due to swings in value. He added that the Fed will issue a report on U.S. digital currency this summer.

Look, it’s obvious what the Fed is doing here. China has already launched a pilot version of the digital yuan. Ukraine, Saudi Arabia, Sweden and Thailand are also doing the same.

Do you think the Fed, the single most important central bank in the world, which controls the world’s reserve currency (the $USD) is going to sit back and let the world move into the digital currency space without moving itself?

No chance in hell.

Which means at some point in the not-so-distant future, the Fed will introduce “Fed Coin” or whatever its CBDC will be called

When that happens, 99.9% of crypto currencies will go to zero.

After all once the Fed introduces its own crypto currency, EVERY other crypto currency would then exist in direct competition to the Fed’s CBDC, which opens the door to charges of counterfeiting and other Federal felonies.

Currently crypto does NOT compete with the Fed because the Fed doesn’t have a CBDC yet. Once it does, everything changes.

Let me put it this way… what happened to Napster when iTunes showed up?

Bear in mind, Apple the company is nowhere near as powerful or formidable a competitor as the U.S. government. Someone might win a lawsuit against Apple. Very few people win lawsuits against the U.S. government.

Enjoy crypto in its current form, but know that it’s like Napster, and soon iTunes will come along.

Originally posted on www.gainspainscapital.com

Swing by to pick up three FREE investment reports valued at over $300 today.

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Central Bank Insanity, crypto | Comments Off on Warning: the Current Crypto Market is Napster and iTunes is Coming, Pt 2.

Warning: the Current Crypto Market is Napster and iTunes is Coming, Pt 2.

Posted on May 21, 2021 by The Phoenix

Yesterday I outlined why I believe most crypto-currencies will eventually prove worthless.

By way of quick review, crypto is a tech asset. And all technological revolutions follow two phases:

  1. The initial breakthrough phase, which occurs before social/legal frameworks are in place.
  • The “normalization” phase during which social/legal frameworks are implemented giving the technology a societal and financial legitimacy.

If you need a real-world example of this, think of the electronic music file or MP3 revolution. The first phase was Napster, which featured the sharing of music in what was later deemed as illegal activity (the legal framework was not yet ready for the technology).

Then along came iTunes: the normalized version of the technology in which MP3s could be bought and sold in a legally acceptable form.

I believe bitcoin and crypto currencies are currently in the Napster phase of their development. And the Fed will soon introduce “iTunes.”

We know that as far back as 2017, the Fed was already studying this issue:

As the price of the cryptocurrency continues to soar, the Federal Reserve apparently is giving thought to having a product like bitcoin for its own.

William Dudley, president and CEO of the Federal Reserve Bank of New York, said at a conference Wednesday that the Fed is exploring the idea of its own digital currency, according to reports from Dow Jones.

Any product likely would be well off in the future, he said, adding that it would be “very premature” to estimate when the Fed would come up with its own offering, according to Bloomberg.

Source: CNBC

More recently, on February 5th 2020, Lael Brainard who sits on the Federal Reserve’s Board of Governors, which is in charge of establishing Fed policy, stated the following:

In a Bank for International Settlements survey of 66 central banks, more than 80 percent of central banks report being engaged in some type of central bank digital currency (CBDC) work.12 … a few central banks report that they are moving forward with issuing a CBDC. Building on the tremendous reach of its mobile payments platforms, China is reported to be moving ahead rapidly on plans to issue a digital currency.13

Given the dollar’s important role, it is essential that we remain on the frontier of research and policy development regarding CBDC… we are conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC. We are collaborating with other central banks as we advance our understanding of central bank digital currencies.

https://www.federalreserve.gov/newsevents/speech/brainard20200205a.htm

Here is a senior member of the Fed stating point blank that the Fed needs to introduce a central bank digital currency (CBDC) in order to maintain the geopolitical standing of the U.S. dollar. The fact she mentions this RIGHT after discussing the fact China is moving forward with a sovereign digital currency tells us that this is a matter of national security for the U.S.

And then just this week, Fed Chair Jerome Powell commented that crypto currencies are “not convenient for payment” due to swings in value. He added that the Fed will issue a report on U.S. digital currency this summer.

Look, it’s obvious what the Fed is doing here. China has already launched a pilot version of the digital yuan. Ukraine, Saudi Arabia, Sweden and Thailand are also doing the same.

Do you think the Fed, the single most important central bank in the world, which controls the world’s reserve currency (the $USD) is going to sit back and let the world move into the digital currency space without moving itself?

No chance in hell.

Which means at some point in the not-so-distant future, the Fed will introduce “Fed Coin” or whatever its CBDC will be called

When that happens, 99.9% of crypto currencies will go to zero.

After all once the Fed introduces its own crypto currency, EVERY other crypto currency would then exist in direct competition to the Fed’s CBDC, which opens the door to charges of counterfeiting and other Federal felonies.

Currently crypto does NOT compete with the Fed because the Fed doesn’t have a CBDC yet. Once it does, everything changes.

Let me put it this way… what happened to Napster when iTunes showed up?

Bear in mind, Apple the company is nowhere near as powerful or formidable a competitor as the U.S. government. Someone might win a lawsuit against Apple. Very few people win lawsuits against the U.S. government.

Enjoy crypto in its current form, but know that it’s like Napster, and soon iTunes will come along.

Originally posted on www.gainspainscapital.com

Swing by to pick up three FREE investment reports valued at over $300 today.

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Central Bank Insanity, crypto | Comments Off on Warning: the Current Crypto Market is Napster and iTunes is Coming, Pt 2.

Warning: Crypto is Napster and iTunes is Coming, Pt 1

Posted on May 20, 2021 by The Phoenix

I’ve received a number of emails from readers asking for my thoughts on crypto currencies.

First and foremost, I must warn you, I am a no-BS type analyst. So, if you want me to write something fluffy because you personally are a big fan of crypto, don’t read another word. 

It’s not that I’m opposed to crypto currency per se, it’s that I know how policymakers think as well as how central banks work.

And I know BOTH groups have BIG plans for crypto currencies.

First let’s address the technology itself.

Crypto is in fact NOT a currency. Prior to 1913, by law, Congress was the only entity in the United States permitted to issue currency. It then handed this responsibility off to the Fed in 1913. And the Fed is the ONLY entity that can legally issue currency.

So crypto currencies are NOT currencies. They are just another asset class. To argue otherwise is to say you are counterfeiting money, which is ILLEGAL.

Now, crypto is a tech asset. And all technological revolutions follow two phases:

1)    The initial breakthrough phase, which occurs before social/legal frameworks are in place.

2)    The “normalization” phase during which social/legal frameworks are implemented giving the technology a societal and financial legitimacy.

If you need a real-world example of this, think of the electronic music file or MP3 revolution. The first phase was Napster, which featured the sharing of music in what was later deemed as illegal activity (the legal framework was not yet ready for the technology).

Then along came iTunes: the normalized version of the technology in which MP3s could be bought and sold in a legally acceptable form. 

Bitcoin and crypto currencies are currently in the Napster phase of their development.

As such I am inherently wary of them. Moreover, we’re in something of a mania for this with over 5,000 currencies in the world. We are seeing crypto currencies that were literally created in TWO HOURS as a joke (Dogecoin as the tweet below shows), being valued at tens of billions of dollars.

I believe over 99% of cryptos are ultimately worthless. 

Why?

Because at some point the US Government is going to do one of two things:

1)    Start taxing cryptos like regular liquid assets (stocks).

2)    Introduce its own “cash-less” means of exchange/ digital currency.

Regarding #1, since 2014 the IRS currently views crypto  as “property” and suggests it should be taxed as such.

Now there is no federal property tax, so this would mean you would have to tax your crypto holdings based on what property taxes are in your local government. As of 2020, this ranged from the lowest state (Hawaii at 0.3%) up to the highest, (New Jersey at 2.2%.)

By law, come tax season you are supposed to value your crypto holdings at market values and pay taxes on them.

If you think that is bad news, you’re not going to want to read the rest of this article. 

The current Secretary of the Treasury, Janet Yellen, has floated the idea of taxing cryptocurrencies as much as 80%, yes EIGHTY percent.

She is not alone, President Biden’s proposed tax increases would see capital gains taxes as high as 43%.

So, you literally have the Commander in Chief and the person in charge of the U.S. Treasury BOTH pushing for taxing cryptos at a minimum of 40%.

You can ignore this or claim its bunk, but if the government has proved one thing over the last 300 years, it’s that if there is money to be made from taxing an asset, they will start taxing it.

On top of this, at some point in the future, the Fed is going to introduce its own digital currency. We’ll address this topic in tomorrow’s article. 

Originally posted on www.gainspainscapital.com

Swing by to pick up three FREE investment reports valued at over $300 today.

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in crypto | Comments Off on Warning: Crypto is Napster and iTunes is Coming, Pt 1

Every Gold Investor Needs to See This

Posted on May 20, 2021 by The Phoenix

In yesterday’s article I noted that while stocks are clearly forming a top, there are, as of right now, ZERO signs that it is THE top.

Remember, the fact that inflation is running hot doesn’t mean stocks have to crash right now. During the last major bout of hot inflation in the 1970s, stocks roared higher for two years before they finally came crashing down. Throughout that time, the Consumer Price Index (CPI) was clocking in over 3% if not 4%.

So, the fact CPI just hit 3% doesn’t mean stocks have to crash right here and now. And as we’ve assessed over the previous two days, unless the S&P 500 breaks below 4,000 on a monthly basis, things are risk-on.

But what about gold? What can we expect of it as inflation gets hotter and hotter?

The precious metal has been forming a clear bull-flag over the last nine months. As I write this, gold has just completed its third test of the top trendline.

This coincides with the 200-day moving average (DMA and red line) so gold faces a major challenged here. But with the 50-DMA turning up (blue line) momentum is building.

During bull runs, gold miners typically lead bullion and the gold miner ETF (GDX), has already broken above its 200-DMA.

If gold can follow, the upside for this breakout of the bull flag is an incredible 65 on GDX and $2450 on gold.

On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research


Posted in Central Bank Insanity, Inflation | Comments Off on Every Gold Investor Needs to See This

The Fed Just Released Its Blueprint For How to Handle The Coming Inflationary Storm

Posted on May 13, 2021 by The Phoenix

Over the last few articles, we’ve outlined the following:

1)    Inflation first appeared in the financial system in August 2020 and has since accelerated.

2)    This has hurt Tech stocks in a big way, which is why they have collapsed. 

3)    The last two times inflation appeared in the financial system (2010-2011 and the 1970s, respectively), the Fed was forced to either engage in stealth tapering or outright monetary tightening. 

4)    Those Fed actions resulted in the broader stock market as represented by the S&P 500, falling 20% and 50% respectively. 

In light of all of this, what is going to happen to stocks this time around? Will inflation force the Fed to do a stealth taper… or will the Fed get aggressive?

Right now, the answer is truly astonishing… it’s NEITHER.

Indeed, going by recent Fed statements, the Fed is not interested in tightening monetary…at all.

In February, Mary Daly, President of the San Francisco Fed said earlier this week that inflationary pressures are now “downward,” meaning inflation is disappearing. She also added it’s “not time to worry about inflation risks right now.” And that doing so would cost the economy jobs.

That same month, Boston Fed President Eric Rosengren commented that inflation is not likely to hit the Fed’s target until 2022. He was followed by NY Fed President John Williams who told CNBC that rising prices are due to “optimism” about the growing economy.

Bear in mind, inflation was well above 3% in February already.

It’s tempting to simply argue that Fed officials are ignorant of the economic realities facing most Americans because they live in a bubble surrounded by other policymakers and bank officials from the top 0.1% of society.

However, we can put that view to rest since the Fed’s Beige Book, which serves as its primary source for what the real economy is doing, had the following statement in its March report, “businesses in most sectors expect fairly widespread increases in the prices they pay in the months ahead…”

That was followed up in April Beige Book with: “Prices accelerated slightly since the last report, with many Districts reporting moderate price increases and some saying prices rose more robustly. Input costs rose across the board, but especially in the manufacturing, construction, retail, and transportation sectors—specifically, metals, lumber, food, and fuel prices.”

So… for the Fed to claim it doesn’t see inflation, would mean it is either willfully ignorant… or simply doesn’t even bother reading its own economic reports. 

Since those Beige Books were published time, one by one Fed officials have taken up the theme that inflation is indeed appearing, but it is “transitory.”

What the Fed means by this is that they don’t need to do anything because the inflation will disappear naturally as the U.S. economy continues to reopen.

A reopening economy means even greater demand being placed on the same supply chain issues/ rising commodity prices. Moreover, even if the economy remains weak, it’s not as though inflation will disappear by itself either (the stagflation of the 1970s proved that you can have both a recession AND high inflation simultaneously).

I cannot claim to read Fed officials’ minds, so I have no idea if they actually believe this nonsense. All I can say is that the Fed is embracing the narrative that inflation has arrived, but it’s too soon to act because said inflation is “transitory” and will disappear by itself. 

Indeed, most recently I’ve seen several Fed Presidents claim that inflation if rises above the Fed’s target of 2% (say to 2.75% or even 3%), it’s not a big deal.

Bear in mind, inflation is already well over 3% now.

So, what does this mean?

The Fed will continue to keep interest rates at zero, while printing $125 billion per month all while ignoring the countless signals that inflation is already spiraling out of control.

Which means… inflation is going to rage and rage.

On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research


Posted in Inflation | Comments Off on The Fed Just Released Its Blueprint For How to Handle The Coming Inflationary Storm

The Inflationary Storm Has Finally Hit… Are You Ready?

Posted on May 13, 2021 by The Phoenix

I’ve been warning for weeks and weeks now that inflation was going to be a major problem for the financial system.

Yesterday we finally got a taste of it. The official inflation measure for the U.S., the Consumer Price Index (CPI), skyrocketed to 4.2% year over year. Core CPI, which is the most essential component, recorded a year over year jump of 3%.

That doesn’t sound much, but you need to consider the ENTIRE reason that CPI exists is so the government can DOWN-play inflation. There are endless gimmicks used to massage this number as low as possible.

For instance, the CPI…

  • Doesn’t include food or energy inflation, despite the fact those are two of the most necessary goods for consumers to survive.
  • Weighs the cost of goods and services geometrically instead of by their actual price.
  • Uses substitution or replaces items that it measures if they become too expensive.

And more!

Bottomline, the CPI is designed to HIDE inflation. And despite all of the gimmicks and games played by the government, the official inflation number still clocked in at 3%.

This is the highest core CPI since 1982.

To put that into perspective, at that time interest rates were at 19% as the Fed was desperately trying to control inflation.

This time around, the Fed has rates at ZERO while printing $125 billion in new money per month.

To make things even worse, the Fed is in complete denial that inflation even exists. Various Fed officials surfaced yesterday to argue that the spike in inflation is transitory i.e. the Fed doesn’t need to do anything about it.

The White House is also in denial about this problem, claiming that if “base effects” were removed, CPI would only be 2.1%. Bear in mind… as I stated a few paragraphs above, CPI has got dozens of gimmicks built into it to HIDE the real inflation levels.

So, we’ve got both the Fed and the White House in complete denial about this problem. Which means…

Inflation is going to rage and rage.

What does this mean for stocks?

I’ll explain all of that in tomorrow’s article.

In the meantime, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on The Inflationary Storm Has Finally Hit… Are You Ready?

The Last Two Times This Hit, Stocks Dropped 20% and 50%, Respectively

Posted on May 13, 2021 by The Phoenix

Yesterday, I outlined how the rise in inflation has slammed Tech stocks lower.

By way of a quick review, Tech, as represented by the NASDAQ is highly sensitive to inflation on an inverse relationship: when inflation rises, Tech stocks collapse and when inflation falls, Tech stocks erupt higher.

The reason for this is that much of Tech investing is based on growth rates. And if bond yields rise as a result of inflation, bonds become more attractive as an investment, taking away from the appeal of Tech.

As I noted yesterday. as inflation entered the financial system in 2020 and began to accelerate in 2021, Tech stocks have struggled. You can see this in the chart below (red rectangle).

So, we know that Tech is going to struggle going forward as inflation heats up. But what about the broader market like the S&P 500? Will it collapse too?

To figure that out, let’s take a look at the last two inflationary scares in the U.S.

The most recent scare occurred in 2010-2011. At that time, the Fed was pretty quick on the uptake and decided to allow its QE 2 program (the cause of the inflationary spike) to end.

The Fed then waited several months before introducing any new monetary programs. And when it did introduce one, it didn’t involve money printing (instead the Fed used the proceeds from Treasury sales to buy long-date Treasuries through a process called Operation Twist). This was a kind of stealth tightening.

Stocks didn’t like this, collapsing nearly 20%.

 Bear in mind, that was a relatively minor inflationary scare. During the last legitimate inflationary storm in the 1970s-1980s.

During that mess, the Fed was forced to be MUCH more aggressive with its tightening, embarking on two aggressive tightening schedules. It’s worth noting that this triggered two SEVERE recessions (shaded areas).

This IMPLODED the stock market, resulting in a roughly 50% decline over the course of 18 months.

So, what will it be this time? Will the Fed engage in a stealth taper as was the case in 2011… or will it tighten monetary policy aggressively as it did in the 1970s and 1980s?

We’ll address that in our next article.

in the meantime, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on The Last Two Times This Hit, Stocks Dropped 20% and 50%, Respectively