Month: October 2017

The One Thing About Tax Reform That NO ONE is Talking About

The markets have been gunning higher on the notion that the Trump Administration is about to unveil a huge tax reform plan.

However, the devil is in the details. And thus far the plan is focusing on corporate tax reform, with the notion that an employer will somehow “pass on” their savings to employees via raises.

First off, while the phrase “corporate taxes” is a great political prop, the reality is that nearly 50% of large corporations pay ZERO corporate income tax.

That is not a typo.

In 2012, the Government Accountability Office performed a study in which it discovered that 43% of companies with $10+ million in assets pay ZERO corporate income tax.

It’s not as if the other 57% are picking up the slack either.

It is well known that large corporations go above and beyond to avoid paying the full, required tax rate. As Forbes noted earlier this year, Apple pays a 25% tax rate (the official US corporate rate is supposed to be 35%).  Microsoft pays a 16% tax rate. Alphabet (Google) pays 19%. General Electric and Exxon Mobil appear to have paid no corporate income tax in 2016.

My point is this: pursuing corporate tax reform is a pointless exercise.  Few if any corporations pay anywhere near the official corporate tax rate of 35%.

So what tax reform should we be talking about?

Individual tax reform.

And why aren’t we talking about it?

Because any discussion of individual tax reform eventually leads to the elephant in the room: entitlements.

The US currently spends 65% of it budget on entitlement spending. Nearly half of American households receive some kind of Government assistance/outlay. Those households that DO pay taxes cover only some of this (which is why the US is running $500+ BILLION deficits every year).

The bond bubble is financing the rest of this.

As I outlined in my best-selling book, The Everything Bubble: the Endgame for Central Bank Policy, politicians promise, but bond markets deliver.

Put simply, the bond bubble is what has financed the enormous entitlement spending of Governments around the world.

Take away the bubble in bonds, which permits Governments to issue debt at rates WAY below the historic average, and most major countries are bankrupt in a matter of weeks.

Well guess what? The bond markets are already beginning to revolt. As I write this, the bond yields on FOUR of the largest economies in the world are rising, having broken out of their downtrends of the last few years. The bond markets for US, Japan, Germany and the UK are all in revolt.

And guess what is triggering this?

INFLATION.

Inflation forces bond yields higher as the bond markets adjust to compensate for the fact that future interest payments will be worth less in real terms.

Bond yields higher= bond prices lower. Bond prices lower= the bond bubble is in serious trouble.

The above chart is telling us in very simple terms: the bond market is VERY worried about rising inflation. And if Central Banks don’t move to stop hit now by ending their QE programs and hiking rates, we’re in for a VERY dangerous time in the markets.

Put simply, BIG INFLATION is THE BIG MONEY trend today. And smart investors will use it to generate literal fortunes.

Imagine if you’d prepared your portfolio for a collapse in Tech Stocks in 2000… or a collapse in banks in 2008? Imagine just how much money you could have made with the right investments.

THAT is the kind of potential we have today. And if you’re not already taking steps to prepare for this, it’s time to get a move on.

We just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay ou 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:

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

The following is an excerpt from our weekly investment service, Private Wealth Advisory.

ECB President Mario Draghi is now walking back QE.

This is not a surprise to subscribers of our investment newsletter Private Wealth Advisory. I’ve been forecasting this exact development, (as well as the Euro’s spike to 120) since August 2016 (by the way, the Euro was at 109 back then everyone thought it would soon reach parity with the $USD as it collapsed).

Still, why is Draghi doing this?

Because the bond market was in revolt, with yields beginning to rise. Rising yields= falling bonds prices. Falling bond prices over time= bear market in bonds. Bear market in bonds = SYSTEMIC reset.

We explain all of this in our bestselling book The Everything Bubble: The End Game For Central Bank Policy. If you’ve yet to pick up a copy, grab one now. You’ll immediately know more about how the financial system works (as well as what’s come) than anyone else in your social circle.

Draghi, like all Central Bankers, cares about just one thing. Bond yields. And as the below chart shows, bonds particularly German Bunds (don’t forget Germany is who controls the real purse strings in Europe) were in revolt, rising above their long-term trendline.

Put simply, the above chart was a MAJOR warning that the bond bubble was in serious trouble. The ECB, like all Central Banks is now cornered: either it stop printing money and let stocks collapse… or they continue to print money, unleash inflation, and pop the bond bubble.

Either way, we’re heading towards another crisis.

The time to prepare your portfolio for this is NOW before this hits truly gets out of control!

Imagine if you’d prepared your portfolio for a collapse in Tech Stocks in 2000… or a collapse in banks in 2008? Imagine just how much money you could have made with the right investments.

THAT’s the kind of potential we have today.

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://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Central Banks are in VERY serious trouble.

By creating a bubble in sovereign bonds, which I call The Everything Bubble, they were hoping to corner all risk.

The problem with this, is that in order to create this bubble, they had to print trillions of dollars worth of money and use this money to buy bonds. And that money printing (now to the tune of $15 trillion) has unleashed inflation.

Why is this a problem?

Because inflation makes bond prices FALL as bond yields rise to accommodate the higher inflation rate. And when bond prices fall, the bond bubble bursts.

Take a look at high yield/junk bonds. We’re right at the bull market trendline.

Emerging market bonds? Ditto.

Worst of all, the 10-Year Treasury has already broken its bull market trendline running back to previous credit cycle peak in 2007.

Put simply, the above charts are a MAJOR warning that the bond bubble is in serious trouble. Central Banks are now cornered: either they stop printing money and let stocks collapse… or they continue to print money, unleash inflation, and pop the bond bubble.

Either way, we’re heading towards another crisis.

The time to prepare your portfolio for this is NOW before this hits truly gets out of control!

Imagine if you’d prepared your portfolio for a collapse in Tech Stocks in 2000… or a collapse in banks in 2008? Imagine just how much money you could have made with the right investments.

THAT’s the kind of potential we have today.

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://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

While the financial media “high fives” over stocks hitting new high, something far more important is brewing in the bond markets.

Bonds are the “smart money” in the financial system. The bond markets are not only much larger, but much more liquid than stocks. As such, when a major change begins to unfold, bonds usually “get it” much faster than stocks.

With that in mind, take a look at the UGLY Head and Shoulders pattern forming in the long-Treasury.

This is a serious topping pattern. And it suggests that bonds are about to reprice much lower.

What could cause such a drop?

INFLATION.

Inflation forces bond prices lower as yields have to rise to compensate for a loss of purchasing power (bond yields rise when bond prices fall). In light of this, that topping pattern in bonds is a major warning to the Bond Bubble (which we call The Everything Bubble) that the financial system is going to be in very serious trouble soon.

Globally the Bond Bubble is well north of $200 trillion. And when you include derivatives trade based on bond yields, it’s north of $550 TRILLION.

This is many multiples larger than the housing bubble or the tech bubble of the last 20 years. And because bonds are the bedrock of the financial system, when the Bond Bubble bursts, EVERYTHING will have to adjust accordingly.

The time to prepare your portfolio for this is NOW before this hits truly gets out of control!

Imagine if you’d prepared your portfolio for a collapse in Tech Stocks in 2000… or a collapse in banks in 2008? Imagine just how much money you could have made with the right investments.

We offer a FREE investment report outlining when the market will collapse as well as what investments will pay out massive returns to investors when this happens. It’s called Stock Market Crash Survival Guide.

We have reopened this report to the public by one week based on what is happening in stocks today, but after that, we are closing the doors on this offer.

To pick up one of the last remaining copies…

CLICK HERE!

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Dear Subscriber,

I am beyond thrilled to announce that my book The Everything Bubble is now available to purchase at Amazon. You can purchase it by CLICKING HERE.

This book is a distillation of over a decade of work. It is divided into two sections (How We Got Here and What’s to Come).

How We Got Here outlines everything you need to know about how the US financial system was created, developed, and currently operates “behind the scenes.” Anyone who reads it will have a better understanding of these issues than 99% of the public.

What’s to Come outlines what the next round of Federal Reserve policy will look like when The Everything Bubble (the bubble in sovereign bonds) bursts. It presents a road map for how the next crisis will play out as well as how the Fed will react to what’s coming.

Again, you can purchase the book by CLICKING HERE.

Thank you for your business. I hope you enjoy reading this book. I simply couldn’t be prouder of it.

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

This Two Charts Tell You All You Need to Know About What’s Coming In 2018

Inflation is going to annihilate the stock market.

The reason, in fact the BIG reason, that stocks have been soaring since November 2016 is because of the coming inflationary storm. Stocks LOVE inflation at first as it results in asset prices rising.

However, stocks absolutely HATE inflation once it starts eating into profit margins. When this happens, companies begin to lose money as higher operating costs eat into their profits.

On that note, take a look at the following chart of corporate profits pre-tax.

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What you are looking at, is an “end of cycle” situation in which corporate profits begin to roll over in a bit way.

Why are corporate profits rolling over?

Profit margins are shrinking as inflation begins eating away at profits. And this is just the beginning.

What happens when inflation REALLY starts to bite into stocks?

Put simply, BIG INFLATION is the THE BIG MONEY trend today. And smart investors will use it to generate literal fortunes.

We just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay ou 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://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

The Fed is dramatically understating real inflation.

As you know, I’ve been very critical of the Fed’s inflation measures for years. The official inflation measure (Consumer Price Index or CPI) does a horrible job of measuring the actual cost of living for Americans.

I have long stated that this is intentional as the purpose of CPI is to hide the true rate of inflation so the Fed can paper over the decline in living standards that has plagued the US for the last few decades.

The Fed isn’t doing this out of ignorance, either. Back in 2002, Fed researchers actually reviewed  the usefulness of its CPI metric for forecasting inflation.

The results were not pretty. In fact, the Fed discovered that its official measures of inflation (CPI and PCE) do a horrible job of predicting future inflation.

So what does predict future inflation accurately?

FOOD prices.

We see that past inflation in food prices has been a better forecaster of future inflation than has the popular core measure…Comparing the past year’s inflation in food prices to the prices of other components that comprise the PCEPI (as in Table 1), we find that the food component still ranks the best among them all…

Source: The Regional Economist

I want you to focus on these two admissions:

1)   The Fed has admitted that its official inflation measures do not accurately predict future inflation.

2)   The Fed admitted that FOOD prices are a much better predictor of future inflation. In fact food prices were a better predictor of inflation than the Fed’s PCE, non-durables goods, transportation services, housing, clothing, energy and more.

Put simply, if you want to predict inflation well… you NEED to look at food prices.

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With that in mind, food inflation is on the rise. As a whole, Food and Beverage inflation has broken out of a descending wedge pattern (blue lines) in the context of a massive wedge triangle pattern (purples lines). We’re heading for a test of the upper purple line shortly.

Put simply, inflation is rising. And at it is going to be getting worse in the weeks and months ahead. Why do you think the $USD has dumped 10% this year already?

This is THE BIG MONEY trend today. And smart investors will use it to generate literal fortunes.

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:

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Sometimes you need to take a step back and see the big picture.

The big picture today concerns the $USD. Running back to the early ‘80s, the $USD has been in a MASSIVE 40+ year falling wedge pattern.  It broke out of this pattern in 2014 when the Fed ended QE, but that breakout is looking more and more like a FALSE breakout.

A false breakout is one of the most dangerous price moves possible, because the reversal is usually both rapid and VIOLENT. And false breakouts usually erase the ENTIRE previous move.

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What does this mean?

The $USD is going to the low ’80s in the next 12 months. This will unleash a truly horrific inflationary storm that will make fortunes for those who are positioned properly.

This is THE BIG MONEY trend today. Already the financial system is showing signs of it. And smart investors will use it to generate literal fortunes.

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

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We are making just 100 copies available to the public.

To pick up yours, swing by:

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

The world’s Central Banks have finally succeeded in unleashing an inflationary storm.

The first pickup has only just begun to be felt. But this time next year, when inflation is well north of 4% globally and the big price moves have already occurred, everyone will be screaming “INFLATION!”

How did this happen?

Globally, Central Banks are now printing over $120 BILLION per month. And this is happening at a time when most major economies are out of harm’s way.

Put another way, the economies of the EU, Japan, and the US are all growing rather than contracting… but Central Banks are printing MORE money today than they were during the depths of the last systemic crisis (the EU crisis of 2012-2013).

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Moreover, Central Banks have been printing money at this pace (if not higher) for well nearly two years now. So we’re talking about nearly  $1.5 TRILLION in “hot money” hitting the financial system annually for two years.

Put simply, Central Banks have printed the rough equivalent of Germany’s economy and funneled this money into the financial system in the last two years.

The $USD, the reserve currency of the world, has already caught on to this, having dropped 10% in 2017. And the long-term chart is even uglier with the $USD plunged to collapsed in a horrifying spiral over the next 12 months.

This is THE BIG MONEY trend today. Already the financial system is showing signs of it. And smart investors will use it to generate literal fortunes.

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Graham Summers

Chief Market Strategist

Phoenix Capital Research

More and more signs of inflation are showing up.

In the latest ISM reading (a measure of economic activity in the US), this following tidbit showed up:

• Factory index climbed to 60.8 (est. 58.1), the highest since May 2004, from 58.8; readings above 50 indicate expansion
• Measure of new orders increased to 64.6, the strongest since February, from 60.3
• Employment gauge rose to 60.3, the best reading in more than six years, from 59.9
• Index of prices paid advanced to 71.5, the highest since May 2011, from 62

Source: Bloomberg

Put simply, the US economy is moving sharply forward with significant growth… and much HIGHER prices being paid. The reference to year 2011 is particularly relevant as that marked the last major inflationary spike in the US.

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The $USD has already caught on to this, having dropped 10%. And the long-term chart is even uglier.

This is THE trend of the next six months. If you’re not taking steps to actively profit from this, it’s time to get a move on.

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research