Month: April 2022

The bond market is blowing up.

As I outlined several weeks agothe financial system is now experiencing its first coordinated central bank tightening in over a decade.

The reason for this tightening is inflation. Inflation is a global phenomenon. Once it appears, it is everywhere. That is the case today.

Our current financial system is based on debt. Sovereign bonds, particularly U.S. Treasuries, are the bedrock of the financial system. These are the senior-most assets owned by large financial institutions. And the yields on these bonds represent the “risk free” rate of return against which all assets (stocks, commodities, real estate, etc.) are valued.

The yields on bonds have been spiking due to inflation. This is what forced central banks to begin tightening monetary policy. But thus far, they are failing to slow, let alone kill inflation.

The U.S. central bank, the Federal Reserve (or Fed) raised rates by 0.25% in March. It was supposed to have ended its Quantitative Easing (QE) program that same month, but for whatever reason, chose to print another $55 billion during that time.

The yield on the 2-Year U.S. Treasury, has since spiked from 2.0% to 2.6%. That is a MASSIVE move for one of the most important bonds in the world (chart on the next page).

A similar move has taken place with the 10-Year U.S. Treasury, which is the single most important bond in the world. The yield on this bond has spiked from 2.1% to 2.9%.

To put these moves into context, bonds, particularly, sovereign bonds, are NOT like stocks. A 2% move is a BIG move for bonds. And we are talking about a 5% move in the most important bonds in the world over the span of four weeks… when the Fed is tightening.

This means that the Fed is now MORE behind the curve on inflation than it was four weeks ago. That is a huge freaking deal. It means the bond market doesn’t believe the Fed is going to kill inflation yet. The Fed will need to be MUCH more aggressive to do so.

It is difficult to express the severity of what is happening right now in bonds. So let me provide some longer-term charts to help you visualize this.

Look at the speed of this rise in yields relative to what bonds have done over the last 20 years. From 2003 to 2006 the yield on the 2-Year U.S. Treasury rose from 1.00% to 5.00%. This represents a quintupling in yield. And it occurred when the Fed was raising rates continuously for three years straight during a major economic expansion.

By way of contrast, the yield on the 2-Year U.S. Treasury has just gone from 0.25% to 2.6% in the span of six months.

That too is a quintupling in yield. And it took place at a time when the economy is faltering, and the Fed has barely begun tightening policy.

You can now see why this is a HUGE deal. The entire financial system will now need to reprice based on this different rate of return. The last time we saw this occur was in 2018. That’s when stocks did this:

Put simply, another collapse is coming. It might not be today or Monday… but it’s coming.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

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).

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

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

The market is once again on thin ice.

The S&P 500 cannot even maintain its 50-day moving average (DMA). And this is despite the Fed pumping $55 billion into the financial system in the last month. Moreover, the 50-DMA is rolling over again. All of this is quite bearish.

The picture is even uglier for the NASDAQ. Tech stocks broke back below their 50-DMA last week. They have since failed to reclaim it. Again, this is quite bearish.

At the end of the day, the only thing holding up stocks is the fact retail investors keep “buying the dip.” Having been conditioned to believe stocks never go down courtesy of two years of Fed interventions, this crowd continues to buy at every opportunity. They’ve collectively poured $40 billion into U.S.-based stock funds in the last six weeks.

I’m guessing no one showed them this chart:

The market is on thin ice. The next bloodbath is just around the corner.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

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).

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

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

Do you know the Lundins?

Unbeknownst to most U.S. investors, a single family has been behind many of the largest natural resource discoveries and natural resource deals of the last 45 years.

Since 1976, they’ve discovered the largest natural gas field in the world, oil fields that have generated more than 300 million barrels of oil, and several of the world’s largest gold deposits. 

They all became billionaires in the process.

Today, this family controls 12 companies located in the U.S., France, Russia, China, and more. Every year they produce more than a billion dollars’ worth of oil, gold, uranium, nickel, and diamonds. Their name is the Lundins. And just like the Rockefeller or Carnegie empires, their fortunes began with a single self-made man: Swedish patriarch, Adolf Lundin.

If you’ve never heard of Adolf Lundin, it’s not surprising. The self-made Swedish billionaire invested primarily in natural resource companies outside of the U.S. Because of this, his name is rarely known outside of natural resource investing circles.

However, to anyone involved in natural resources investing, Adolf Lundin is something of a god. Between 1976 and 1999, Adolf Lundin made four of the largest natural resource discoveries in history. In 1976, he discovered the North Gas field offshore of Qatar: then the largest natural gas field in the world. 

This alone would cement the name Lundin in the pantheon of great resource discoverers. 

However, Adolf’s success was only beginning. In 1998, he discovered both the En Naga oil field (a 100-million-barrel discovery in Libya) and Block PM-3 (a 144-million-barrel discovery offshore of Malaysia). The following year, at age 67, he discovered the Thar Jath oil field: a 150-million barrel discovery in Sudan.

These discoveries made Adolf famous. But it was his ability as a dealmaker that made him rich. The natural resources industry is typically split between two groups: the financiers and the geologist/ explorers. 

Adolf Lundin was both.

He built up Lundin Oil and sold it in 2001 for $480 million. Musto Exploration, a gold company he owned shares in, was sold to Rio Aglom for $500 million. And another gold company, Argentina Gold, went to Homestake for $300 million. By the time he retired from exploring, Adolf was a billionaire. And he’d made many investors fortunes as well.

It sounds almost too simple, but anyone who bought shares in Lundin’s companies and held long-term would have made a fortune. Investing in natural resource companies, more than any other sector, is about putting your money with the right people.

On the one hand, you need expert geologists and wildcatters capable of discovering major finds. But you also need knowledgeable financiers who can put together the capital to start production or arrange a buy-out. Since Adolf Lundin was talented at both, his involvement in a company almost always resulted in large profits.

Adolf passed in September 2006. Today, the Lundin Group is run by two of his sons, Lukas and Ian. Both were brought into the family business at a very early age: by the time they were ten, it was decided that Lukas would manage the company’s minerals business segment while Ian would handle the oil segment.

I recently told subscribers of my Private Wealth Advisory newsletter about an “off the radar” Lundin project that 99% of investors don’t know about. It’s a small company that owns the rights to 5km of land in one of the richest environments for natural resources in the world. 

The company has released the initial results of its drilling program in January of 2022… and they are astounding… as Lukas Lundin puts it… the potential of this project is “unparalleled” to anything he’s seen in his 40+ year career.

That’s quite a statement from a man who has literally made BILLIONS of dollars investing in natural resources.

Private Wealth Advisory subscribers just began building a position in this company yesterday. Already they’re up. And I fully expect them to see triple digit returns from this company when it’s all said and done.

To find out what it is, all you NEED to do is take out a trial subscription to Private Wealth Advisory.

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Best Regards,

By Graham Summers, MBA

Pop quiz… what is the single best performing stock market sector of 2022?

If you guessed tech or Bitcoin, you’re incorrect. It’s actually energy. And it’s not even close.

Energy stocks are destroying EVERYTHING, including cryptocurrencies. Forget bitcoin, have you thought about profiting from oil?

Even more incredible is the fact that this isn’t a NEW development: the energy sector was the top performing stock market sector of 2021 as well! So it’s crushing everything else for well over 15 months!

Despite this incredible performance, the energy sector remains one of the least popular areas of investment on the planet. It’s actually the cheapest sector in the S&P 500 on a Price to Earnings (P/E) basis. And it is also the smallest sector by weight in the entire market: a mere 2.3%.

So you’ve got an incredibly cheap sector that’s unloved by the institutional crowd and that is outperforming every other sector in the market.

Sounds like a recipe for life-changing wealth to me!

For more market insights, including which stocks to buy and sell to maximize your market returns, swing by www.gainspainscapital.com

Best Regards

By Graham Summers, MBA

The Fed released its meeting minutes from March yesterday.

The highlights are:

1)    The Fed will likely begin raising rates by 0.5%, instead of 0.25% sometime this year.

2)   The Fed will begin shrinking its balance sheet by $95 billion per month, sometime in the next three months.

Anyone who tells you this is NOT bearish is out of their mind. The Fed is announcing publicly that it needs to tighten financial conditions as rapidly as possible. This is akin to the Fed screaming, “we want stocks lower and soon.”

If you don’t believe me, perhaps you’ll listen to Bill Dudley.

Bill Dudley is the ex-President of the New York Fed: the branch of the Fed in charge of financial markets. He is also the ex-chief economist for Goldman Sachs. He is the ultimate insider’s insider, a man who not only knows how the Fed controls things, but who actually ran the programs through which the Fed did it.

Mr. Dudley published an article in Bloomberg earlier this week that was truly jaw-dropping. The title? 

If Stocks Don’t Fall, the Fed Needs to Force Them

In his piece, Mr. Dudley makes it clear that the Fed believes it can control the economy via the stock market, not the other way around. In his own words, he writes, “

“Equity prices [stocks] influence how wealthy [Americans] feel, and how willing they are to spend rather than save…”

In simple terms, the American consumer is 75% of GDP. When the stock market is up a lot, Americans feel wealthier and spend more. When the stock market collapses, they feel poorer and spend less.

Mr. Dudley then states that the Fed needs to COLLAPSE the markets to force Americans to spend less… which will end inflation. He writes…

“The Fed will have to shock markets to achieve the desired response.”

This is not the ramblings of some doom and gloom blogger… this is THE man who ran the Fed’s QE programs during from 2009-2018, when the Fed was literally attempting to save the financial system from the Great Financial Crisis.

And he is calling on the Fed to crash the markets. And don’t forget where stock prices are right now relative to the last two crashes.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

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).

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

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

The single most important rule in investing is “don’t fight the Fed.”

The Fed is the single most powerful entity in the financial system. And as we discovered in 2020, there is almost no limit to its power: the Fed was able to stop the most aggressive market crash in history… and push stocks to new all-time highs, at a time when the real economy was shut-down.

Again, the Fed managed to force stocks to new all-time highs during an economic shut-down. You can focus on value investing, momentum investing, day-trading… but whatever you do, DO NOT fight the Fed.

And right now the Fed is SCREAMING that it is going to aggressively tighten monetary policy.

Over the last six weeks, multiple Fed officials, including Fed Chair Jerome Powell (the most powerful Fed insider in the world) have stated that the Fed is WAY behind the curve on inflation and needs to start raising rates by 0.5% multiple times this year.

If you don’t believe me, perhaps you’ll believe Lael Brainard.

Ms. Brainard is the Fed Vice-Chair, the Fed’s second in command. She is arguably the most liberal, pro-money printing Fed official currently in office. Rarely, if ever, has she publicly stated anything that is not in favor Fed monetary easing.

Yesterday Ms. Brainard gave a speech in which she stated the following:

·      High inflation places a “burden on working families.”

·      It is of “paramount importance” that the Fed stop inflation.

·      The Fed will start reducing its “balance sheet at a rapid pace” as early as May.

·      The Fed is prepared to take even “stronger action” if needed.

Again, this is the most pro-money printing Fed official currently in office stating publicly that the single most important focus for the Fed today is ending inflation.

This means aggressive rate hikes and shrinking the Fed’s balance sheet as quickly as possible.

So while foolish investors continue to buy every dip in the stock market… and are willing to gamble on companies that couldn’t make money even when the Fed was easing… smart investors are preparing for what’s coming.

Don’t fight the Fed. Especially when it wants to stop inflation by popping a bubble.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

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).

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

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

The bond market is telling us that the Fed is in very serious trouble.

Bonds are quite complicated, so I’m going to do my best to keep things very simple here.

The Fed ended its Quantitative Easing (QE) program through which it prints new money and used it to buy assets from Wall Street in early March. Since that time, the Fed has also begun raising interest rates, implementing its first rate hike of 0.25% on March 17th.

Historically, when the Fed begins raising interest rates, it looks to the 2-Year U.S. Treasury for guidance: the Fed tracks the yield on this bond as a proxy for where rates need to go.

With that in mind, the yield on the 2-year Treasury, is exploding higher. In six months, it has moved approximately the same amount that it did from 2012-2018!!! This is a truly incredible move, and it tells us the Fed is WAYYYY behind the curve in terms of where interest rates need to go.

If you think that’s disturbing, consider the following…

This yield on the 2-year U.S. Treasury is HIGHER now than it was before the Fed raised rates a few weeks ago. This means the Fed is MORE behind the curve now than it was before it actually raised rates!

We know from the inflationary storm of the late 1970s/ early 1980s that once the Fed gets really behind the curve on inflation, small moves no longer work. The Fed will NEED to be EXTREMELY aggressive going forward to stop inflation.

How aggressive?

Bill King notes that the Taylor Rule suggests rates need to be over 9.5% to stop inflation. Yes, 9.5%. Rates are at currently at 0.5%!

If you think the Fed is going to back off on its monetary tightening, you’re mistaken. The Fed HAS to move and move aggressively if it wants to stop inflation from completely destroying the economy.

This will mean the Fed intentionally triggering a recession within six months. It has no other choice. It has to end inflation and the only way to do so is to crush demand via a recession.

The time to prepare for what’s coming is NOW, before it hits.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

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).

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

https://phoenixcapitalmarketing.com/stockmarketcrash.html

All last week, I warned that the markets are setting up for a spectacular collapse.

I noted that inflation is at levels that have preceded recessions throughout the last 50 years.

I also noted that the yield curve had inverted. This might be the single most accurate predictor of recession. It has accurately predicted every recession since the early ‘70s, including the 2020 recession (something fewer than 1% of professional investors got right). And it’s now forecasting a recession in the near future.

Today, we are adding the economically sensitive Dow Transports index to the list of recession warnings. On Friday, this stock index collapsed almost 5%. The damage was led by highly economically sensitive trucking and rail companies: companies that usually signal a recession months before the rest of the market “catches on.” 

JB Hunt is one of the largest trucking companies in the nation. Trucking might be THE most economically sensitive industry in the market. What does this chart tell you is coming?

Put simply, multiple signals with extremely accurate historical track records are screaming “RECESSION!”

What are the odds they are ALL wrong this time?

The time to prepare for what’s coming is NOW, before it hits.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

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).

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

https://phoenixcapitalmarketing.com/stockmarketcrash.html