Month: July 2018

03

Jul

2018

Why is a $USD at 94 a REAL Problem?

The financial system is in trouble.

Indeed, by the look of things, we are about to experience a wave of deflation… in years.

Let’s first talk about the $USD.

The $USD has broken above initial resistance (bottom red line) and currently sits just below 95. This is a MAJOR problem for risk assets.

Now, some of you are no doubt asking “the $USD was at this exact same level in late 2017 and it wasn’t a problem… what’s changed?”

What’s changed is that at that time the Fed was only withdrawing $USD to the tune of $10 billion per month or $120 billion per year. Today it is withdrawing liquidity at a rate of $30 billion per month of $360 per month… and it intends to raise this to $50 billion per month or $600 billion per year within the coming months.

Put simply, the Fed is NOW pulling US dollars out of the financial system at a rapid clip. And it is doing this at a time when the ECB is PUMPING €30 billion into the system per month. Between this and the fact the Fed is on track to raise rates SEVEN times within 24 months (2016-2018)… while the ECB is STILL keeping rates in negative rate territory, the $USD being at 94 is a MAJOR problem for the financial system.

Remember, globally the financial system has over $9 TRILLION in $USD denominated debt. Some $6 trillion of this is in the Emerging Market space. So with each tick higher in the $USD… and with each liquidity drain by the Fed, the system is “drying up” from a $USD perspective.

You can see this in the Emerging Market space where countries like Brazil, Turkey, and South Africa are in literal FREE FALL.

Brazil’s stock market is DOWN 20% YTD. South Africa is down 17% YTD. And Turkey is down 32% YTD. If we were in December (meaning a full 12 months had passed) and the year ended this month, it would be one of the WORST years for Emerging Markets on record. And we’re at those levels only SIX months in.

This issue is now spreading to Asia. China, Singapore, and South Korea’s stock markets have all recently rolled over and are now at their lows for the year.

Put simply, DEFLATION is now rising and it is rising fast. And the Fed is 100% to blame for this. And unless the $USD rolls over SOON, this mess is going to spread into the US markets.

The time to prepare for this is NOW before the carnage hits.

On that note, we are already preparing our clients with a 21-page investment report that shows them FOUR investment strategies that will protect their capital when and if a stock market crash hits.

It’s called The Stock Market Crash Survival Guide… and it is available exclusively to our clients.

To pick up one of the 100 copies…use the link below.

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

03

Jul

2018

Ignore the Bounce, the Financial System is in Serious Trouble

Ignore the Bounce, the Financial System is in Serious Trouble

The financial system is in trouble.

Indeed, by the look of things, we are about to experience a wave of deflation… in years.

Let’s first talk about the $USD.

The $USD has broken above initial resistance (bottom red line) and currently sits just below 95. This is a MAJOR problem for risk assets.

Now, some of you are no doubt asking “the $USD was at this exact same level in late 2017 and it wasn’t a problem… what’s changed?”

What’s changed is that at that time the Fed was only withdrawing $USD to the tune of $10 billion per month or $120 billion per year. Today it is withdrawing liquidity at a rate of $30 billion per month of $360 per month… and it intends to raise this to $50 billion per month or $600 billion per year within the coming months.

Put simply, the Fed is NOW pulling US dollars out of the financial system at a rapid clip. And it is doing this at a time when the ECB is PUMPING €30 billion into the system per month. Between this and the fact the Fed is on track to raise rates SEVEN times within 24 months (2016-2018)… while the ECB is STILL keeping rates in negative rate territory, the $USD being at 94 is a MAJOR problem for the financial system.

Remember, globally the financial system has over $9 TRILLION in $USD denominated debt. Some $6 trillion of this is in the Emerging Market space. So with each tick higher in the $USD… and with each liquidity drain by the Fed, the system is “drying up” from a $USD perspective.

You can see this in the Emerging Market space where countries like Brazil, Turkey, and South Africa are in literal FREE FALL.

Brazil’s stock market is DOWN 20% YTD. South Africa is down 17% YTD. And Turkey is down 32% YTD. If we were in December (meaning a full 12 months had passed) and the year ended this month, it would be one of the WORST years for Emerging Markets on record. And we’re at those levels only SIX months in.

This issue is now spreading to Asia. China, Singapore, and South Korea’s stock markets have all recently rolled over and are now at their lows for the year.

Put simply, DEFLATION is now rising and it is rising fast. And the Fed is 100% to blame for this. And unless the $USD rolls over SOON, this mess is going to spread into the US markets.

The time to prepare for this is NOW before the carnage hits.

On that note, we are already preparing our clients with a 21-page investment report that shows them FOUR investment strategies that will protect their capital when and if a stock market crash hits.

It’s called The Stock Market Crash Survival Guide… and it is available exclusively to our clients.

To pick up one of the 100 copies…use the link below.

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

02

Jul

2018

Stocks MUST Hold Here or It Gets Serious FAST

Let’s cut through the market BS.

The Fed is the single most important issue for the markets… not tariffs, not trade wars, not even the economy.

Remember, from 2008-20015, the US markets were completely driven by Fed policy and little else. It was Fed QE programs, combined with seven years of Zero Interest Rate Policy (ZIRP) that allowed the US markets to explode higher, despite the weakest recovery in 80 years.

With that in mind, when the Fed began its attempt to normalize policy with its first rate hike in 2015, it represented an attempt to “pass off” this role to the real economy.

When the markets remained elevated, the Fed then decided to accelerate the pace of normalization but hiking rates more aggressively while also introducing Quantitative Tightening (QT) in an attempt to shrink its massive $4.5 trillion balance sheet.

At first, the impact of QT was overshadowed by the fact that the European Central Bank (ECB) and the Bank of Japan (BoJ) were engaging in QE programs of $150+ billion per month. In this context, the fact the Fed was engaging in QT of $10 billion had little impact.

However, fast forward to the end of 1Q18, when the Fed increased the pace of QT to $30 billion per month at the same time that the BoJ and EBC had begun tapering their own QE programs, and the market took note.

In particular, the $USD began to spike higher, and Emerging Market currencies began dropping hard.

This, in turn, began to blow up Emerging Market stock markets with Brazil, Turkey, and even China entering official BEAR markets, with drops of 20%.

Thus far, the US stock market has held up relatively well. But this is where it gets really REALLY bad. The Fed will raise the pace of its QT program to $50 billion this month. And it’s doing it at the same time that the ECB is dropping its own QE program to below $30 billion per month.

Put another way, this is the FIRST time since 2008, that global market monetary policy will be NEGATIVE: more money will be leaving the system via QT, than will be entering it via QE

With that in mind, the S&P 500 is on VERY thin ice. It MUST hold its trendline (blue line) and critical support (red line) or it will be joining the Emerging Market space in a 20% drop.

Put simply, the Fed needs to walk back its QT program NOW or else it is risking a bear market for US stocks.

The time to prepare for this is NOW before the carnage hits.

On that note, we are already preparing our clients with a 21-page investment report that shows them FOUR investment strategies that will protect their capital when and if a stock market crash hits.

It’s called The Stock Market Crash Survival Guide… and it is available exclusively to our clients.

To pick up one of the 100 copies…use the link below.

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

02

Jul

2018

QT of $30 Billion Per Month Blew Up EMs… Will $50 Billion Per Month Blow Up the S&P 500?

Let’s cut through the market BS.

The Fed is the single most important issue for the markets… not tariffs, not trade wars, not even the economy.

Remember, from 2008-20015, the US markets were completely driven by Fed policy and little else. It was Fed QE programs, combined with seven years of Zero Interest Rate Policy (ZIRP) that allowed the US markets to explode higher, despite the weakest recovery in 80 years.

With that in mind, when the Fed began its attempt to normalize policy with its first rate hike in 2015, it represented an attempt to “pass off” this role to the real economy.

When the markets remained elevated, the Fed then decided to accelerate the pace of normalization but hiking rates more aggressively while also introducing Quantitative Tightening (QT) in an attempt to shrink its massive $4.5 trillion balance sheet.

At first, the impact of QT was overshadowed by the fact that the European Central Bank (ECB) and the Bank of Japan (BoJ) were engaging in QE programs of $150+ billion per month. In this context, the fact the Fed was engaging in QT of $10 billion had little impact.

However, fast forward to the end of 1Q18, when the Fed increased the pace of QT to $30 billion per month at the same time that the BoJ and EBC had begun tapering their own QE programs, and the market took note.

In particular, the $USD began to spike higher, and Emerging Market currencies began dropping hard.

This, in turn, began to blow up Emerging Market stock markets with Brazil, Turkey, and even China entering official BEAR markets, with drops of 20%.

Thus far, the US stock market has held up relatively well. But this is where it gets really REALLY bad. The Fed will raise the pace of its QT program to $50 billion this month. And it’s doing it at the same time that the ECB is dropping its own QE program to below $30 billion per month.

Put another way, this is the FIRST time since 2008, that global market monetary policy will be NEGATIVE: more money will be leaving the system via QT, than will be entering it via QE

With that in mind, the S&P 500 is on VERY thin ice. It MUST hold its trendline (blue line) and critical support (red line) or it will be joining the Emerging Market space in a 20% drop.

Put simply, the Fed needs to walk back its QT program NOW or else it is risking a bear market for US stocks.

The time to prepare for this is NOW before the carnage hits.

On that note, we are already preparing our clients with a 21-page investment report that shows them FOUR investment strategies that will protect their capital when and if a stock market crash hits.

It’s called The Stock Market Crash Survival Guide… and it is available exclusively to our clients.

To pick up one of the 100 copies…use the link below.

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

02

Jul

2018

The Fed’s QT Program Increases to $50 Billion Per Month This Month… Stocks Are on THIN Ice

Let’s cut through the market BS.

The Fed is the single most important issue for the markets… not tariffs, not trade wars, not even the economy.

Remember, from 2008-20015, the US markets were completely driven by Fed policy and little else. It was Fed QE programs, combined with seven years of Zero Interest Rate Policy (ZIRP) that allowed the US markets to explode higher, despite the weakest recovery in 80 years.

With that in mind, when the Fed began its attempt to normalize policy with its first rate hike in 2015, it represented an attempt to “pass off” this role to the real economy.

When the markets remained elevated, the Fed then decided to accelerate the pace of normalization but hiking rates more aggressively while also introducing Quantitative Tightening (QT) in an attempt to shrink its massive $4.5 trillion balance sheet.

At first, the impact of QT was overshadowed by the fact that the European Central Bank (ECB) and the Bank of Japan (BoJ) were engaging in QE programs of $150+ billion per month. In this context, the fact the Fed was engaging in QT of $10 billion had little impact.

However, fast forward to the end of 1Q18, when the Fed increased the pace of QT to $30 billion per month at the same time that the BoJ and EBC had begun tapering their own QE programs, and the market took note.

In particular, the $USD began to spike higher, and Emerging Market currencies began dropping hard.

This, in turn, began to blow up Emerging Market stock markets with Brazil, Turkey, and even China entering official BEAR markets, with drops of 20%.

Thus far, the US stock market has held up relatively well. But this is where it gets really REALLY bad. The Fed will raise the pace of its QT program to $50 billion this month. And it’s doing it at the same time that the ECB is dropping its own QE program to below $30 billion per month.

Put another way, this is the FIRST time since 2008, that global market monetary policy will be NEGATIVE: more money will be leaving the system via QT, than will be entering it via QE

With that in mind, the S&P 500 is on VERY thin ice. It MUST hold its trendline (blue line) and critical support (red line) or it will be joining the Emerging Market space in a 20% drop.

Put simply, the Fed needs to walk back its QT program NOW or else it is risking a bear market for US stocks.

The time to prepare for this is NOW before the carnage hits.

On that note, we are already preparing our clients with a 21-page investment report that shows them FOUR investment strategies that will protect their capital when and if a stock market crash hits.

It’s called The Stock Market Crash Survival Guide… and it is available exclusively to our clients.

To pick up one of the 100 copies…use the link below.

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

02

Jul

2018

The Fed Needs to “Walk Back” Its Policy Error Now… or Stocks Drop 20%

Let’s cut through the market BS.

The Fed is the single most important issue for the markets… not tariffs, not trade wars, not even the economy.

Remember, from 2008-20015, the US markets were completely driven by Fed policy and little else. It was Fed QE programs, combined with seven years of Zero Interest Rate Policy (ZIRP) that allowed the US markets to explode higher, despite the weakest recovery in 80 years.

With that in mind, when the Fed began its attempt to normalize policy with its first rate hike in 2015, it represented an attempt to “pass off” this role to the real economy.

When the markets remained elevated, the Fed then decided to accelerate the pace of normalization but hiking rates more aggressively while also introducing Quantitative Tightening (QT) in an attempt to shrink its massive $4.5 trillion balance sheet.

At first, the impact of QT was overshadowed by the fact that the European Central Bank (ECB) and the Bank of Japan (BoJ) were engaging in QE programs of $150+ billion per month. In this context, the fact the Fed was engaging in QT of $10 billion had little impact.

However, fast forward to the end of 1Q18, when the Fed increased the pace of QT to $30 billion per month at the same time that the BoJ and EBC had begun tapering their own QE programs, and the market took note.

In particular, the $USD began to spike higher, and Emerging Market currencies began dropping hard.

This, in turn, began to blow up Emerging Market stock markets with Brazil, Turkey, and even China entering official BEAR markets, with drops of 20%.

Thus far, the US stock market has held up relatively well. But this is where it gets really REALLY bad. The Fed will raise the pace of its QT program to $50 billion this month. And it’s doing it at the same time that the ECB is dropping its own QE program to below $30 billion per month.

Put another way, this is the FIRST time since 2008, that global market monetary policy will be NEGATIVE: more money will be leaving the system via QT, than will be entering it via QE

With that in mind, the S&P 500 is on VERY thin ice. It MUST hold its trendline (blue line) and critical support (red line) or it will be joining the Emerging Market space in a 20% drop.

Put simply, the Fed needs to walk back its QT program NOW or else it is risking a bear market for US stocks.

The time to prepare for this is NOW before the carnage hits.

On that note, we are already preparing our clients with a 21-page investment report that shows them FOUR investment strategies that will protect their capital when and if a stock market crash hits.

It’s called The Stock Market Crash Survival Guide… and it is available exclusively to our clients.

To pick up one of the 100 copies…use the link below.

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research