Month: May 2022

The stock market is pretty scary these days, isn’t it?

Anyone who is bullish on stocks… or thinks they are cheap and worth buying, keeps getting wrecked. It’s not entirely their fault; the non-stop interventions by “someone” keep making it appear as if there are real buyers in the markets.

Yesterday showed us that there aren’t.

The S&P 500 came charging out of the gate yesterday… but gave up much of the gains around noon. If it weren’t for two OBVIOUS manipulations by “someone” which I’ve highlighted in the chart below, the market would have closed DOWN on the day.

This is the problem with blatant manipulation: it works in the short-term, but does nothing to fix the primary problem with the markets… namely that prices are not at levels at which REAL buyers want to buy.

One way to get around this issue is to focus on long-term charts. 

By focusing on what stocks are doing in weekly or monthly terms, you can tune out much of the “noise” caused by interventions that only last a few hours or even minutes.

Here is a monthly chart of the S&P 500. As you can see, the market has taken out its 10-month moving average (blue line). As the last eight years have shown, any time stocks do this, they end up dropping to at least the 40-month moving average (red line).

What’s REALLY scary about this chart is the fact that the last FOUR times this happened, the Fed stopped the collapse by easing monetary conditions.

This time around the Fed CANNOT ease monetary policy.  

Why? 

Because monetary easing unleashed the very thing what triggered the collapse in the first place: inflation. More easing will only make the situation worse!

Put simply, the Fed is NOT coming to the rescue this time. Stocks could very well break below that red line and wipe out years of gains.

The time to prepare is NOW before it hits.

Private Wealth Advisory subscribers are doing just that.

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But that’s not all…

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The manipulations in the stock market are getting ridiculous.

“Someone” forced stocks higher on Friday. The S&P 500 rose 55 points in just 24 minutes started at 3:10PM. And when that didn’t do the job and sellers returned, the market was then forced 29 points higher in just three minutes!

So all in all, the S&P 500, one of the largest stocks markets in the world, was ramped roughly 2% higher via two interventions in the span of just 28 minutes.

Again, this is ridiculous.

Was it the Fed? A large hedge fund? Several institutions? Who knows. The only thing we do know is that it wasn’t real buyers looking to invest at those prices… this was abject manipulation.

The problem with this is that it doesn’t work… stocks have broken critical support (red line in the chart below) based on the Fed ending its money printing and raising rates to 1%.

Put another way, the Fed hasn’t even begun shrinking its balance sheet and already the S&P 500 is in a bear market.

The NASDAQ is even worse. It’s unwound more HALF of the entire move from the March 2020 bottom. And again, the Fed has barely begun to tighten monetary policy.

What happens when the Fed is forced to raise rates to FIVE percent (they’re 1% now)? What happens when it tries to shrink its nine TRILLION dollar balance sheet by $1+ trillion.

You get the idea.

The Mother of All Collapses is coming!

The time to prepare 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.

We made 100 copies available to the public. As I write this, there are 49 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

The Fed is NOT coming to rescue stocks this time.

For decades, investors have been conditioned to “buy the dip” because the Fed invariably steps in to prop up the stock market whenever a collapse begins in earnest.

The Fed did this throughout 2009-2017, in 2018, and again from 2020-early 2022.

For this reason, investors continue to move into stocks, despite the fact stocks are clearly in a bear market. The below chart is clear: the uptrend (blue line) from the March 2020 lows is broken. Moreover, stocks have taken out critical support (red line). 

If you’re buying stocks because you believe the Fed is going to “save the day” again, you’re in for a world of hurt. Sure, the Fed has done this in the past… but inflation wasn’t present during those times.

It is now.

Basic economics tells us:

Demand + Supply = Price.

Supply for most items is down due to supply chain issues. Meanwhile, demand is UP due to the Fed and Federal Government pumping some $11 TRILLION into the financial system over the last two years.

Higher demand + Lower Supply = RAGING Inflation. 

The Fed cannot fix the supply issues. It can’t print oil, tin, copper, or any of the other commodities the economy needs. The Fed is also powerless to address the dock worker, trucker, transportation labor shortages the country faces.

This means the only way the Fed can kill inflation is to destroy demand by triggering a recession. Put another way… the Fed DOESN’T CARE about stocks.

If you don’t believe me, maybe you’ll be Fed President Esther George.

Kansas City Federal Reserve President Esther George said Thursday that higher interest rates are needed now to bring down inflation and that policymakers are not focused on the impact that is having on the stock market.

Source: CNBC

Bear in mind… inflation is at 8+%… rates are at 1%… the Fed hasn’t even begun shrinking its balance sheet yet… and stocks are already doing this:

What happens when the Fed is forced to raise rates to FIVE percent (they’re 1% now)? What happens when it tries to shrink its nine TRILLION dollar balance sheet by $1+ trillion.

You get the idea.

The Mother of All Collapses is coming!

The time to prepare 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.

We made 100 copies available to the public. As I write this, there are 7 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

As I keep warning, the Mother of All Collapses is coming to the markets.

We’ve already detailed just how insane this Everything Bubble is.

1. Options trading volume (a sign of speculation) was exponentially higher than it was during the Tech Bubble which everyone on the planet now knows was an insane bubble.

• Crypto currencies that were invented as jokes (Dogecoin) were being valued at tens of billions of dollars.

• Tesla (TSLA), which sold ~300,000 cars in 2020, was worth more than the value of every other auto manufacturer on the planet combined.

• People were selling Non-Fungible Tokes (NFTs) of farts, toilet paper, New York Times articles and more.

All of the above items outline insane levels of speculation in individual assets, but they don’t fully illustrate just how MASSIVE this bubble is.

Check out the below chart from Jim Bianco.

Yes, the stock market is now valued at ~200% of GDP. And this level is actually down from 228% of GDP which was the peak last November.

The Tech Bubble, which everyone understands was an egregious stock market bubble, peaked at 182% of GDP in March of 2000.

Put another way, even with stocks down 20% from their all-time highs (more if you’re using the NASDAQ to calculate), today the stock market is still a larger bubble than the TECH BUBBLE AT ITS PEAK!

So again, the Mother of All Collapses is coming.

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

We made 100 copies available to the public. As I write this, there are 25 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

As I mentioned yesterday, the Mother of All Collapses is Coming

And if you think the Fed is coming to the rescue stocks this time, you’re sadly mistaken.

Historically the Fed “saves the day” by intervening in the markets whenever they come unhinged. Well, the markets are already down 20% and we haven’t heard a peep from the Fed. If anything, Fed officials are calling for the Fed to be more aggressive in tightening monetary policy.

There’s a reason for this: inflation.

The U.S. is experiencing its first inflationary storm since the 1970s. Inflation has become the #1 issue for voters. And it’s the mid-terms this year.

And the Fed is feeling the heat from the political classes.

President Biden, who appointed Jerome Powell to a second term as Fed Chair EXPLICITLY called out the Fed earlier this week.

As I said yesterday, inflation is a challenge for families across the country and bringing it down is my top economic priority. This starts with the Federal Reserve, which plays a primary role in fighting inflation in our country…[emphasis added]           

            ~President Biden speaking on inflation 5/10/22.

Yes, the White House is laying the blame for inflation SQUARELY on the Fed’s shoulders. The rest of the Beltway crowd as well as the media will soon be joining in.

Which means… the Fed is being forced to ignore stocks in order to end inflation. And it has a LOOONG ways to go.

Inflation is over 8%. The Fed has rates at 1%. And it has yet to even begin draining liquidity from the system with Quantitative Tightening.

And stocks have already done this:

What happens when the Fed is forced to raise rates to FIVE percent? What happens when it tries to shrink its nine TRILLION dollar balance sheet.

You get the idea.

The Mother of All Collapses is coming!

The time to prepare 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.

We made 100 copies available to the public. As I write this, there are 37 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

The mother of all collapses is coming.

The Fed claims it can tackle inflation without triggering a crisis.

Good luck with that!

The Fed triggered a crisis with the Tech Bubble (a bubble in a single stock market sector) and the Housing Bubble (a bubble in a single asset class). And neither of those are remotely comparable to this last bubble.

This is the Everything Bubble: the bubble in every major asset class (stocks, housing, corporate debt, municipal debt, etc.)

Some of the most egregious signs of froth/ financial excess.

1. Options trading volume (a sign of speculation) was exponentially higher than it was during the Tech Bubble which everyone on the planet now knows was an insane bubble.

• Crypto currencies that were invented as jokes (Dogecoin) were being valued at tens of billions of dollars.

• Tesla (TSLA), which sold ~300,000 cars in 2020, was worth more than the value of every other auto manufacturer on the planet combined.

• People were selling Non-Fungible Tokes (NFTs) of farts, toilet paper, New York Times articles and more.

• “Meme stocks” or stocks that were traded for ironic/ humorous purposes were doing this:

• Former President Trump’s Special Purpose Acquisition Company (SPAC) rose to a value of $5 billion despite having no business or operations.

And the Fed believes it can somehow tackle inflation… AND dissipate this bubble without blowing things up?

Ok, I’ll bite.

Inflation is at 8+%. The Fed has raised rates to 1%. It has yet to even begin shrinking its balance sheet. And stocks have done this:

What happens when the Fed is forced to raise rates to 5%? What happens when it tries to shrink its balance sheet buy $1 trillion+?

You get the idea.

The Mother of All Collapses is coming.

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

We made 100 copies available to the public. As I write this, there are 49 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

The market is now in very serious trouble.

The bond market is NOT calming down. Last week the yield on the all-important 10-Year U.S. Treasury (the most important bond in the world) spiked to new highs for this bull run.

Why does this matter?

Because the yield on this bond represents the “risk free” rate of return against which all risk assets are priced. Every move higher in this yields means risk assets (including stocks) will be priced lower.

Put another way, until the bond market calms down ALL BETS ARE OFF for stocks. This is why the S&P 500 took out critical support last week.

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

All eyes are on the Fed today.

Thus far the bond market doesn’t believe the Fed is serious about tackling inflation. Why would it? The Fed printed another $55 billion after its QE program supposedly ended… and has only raised rates by 0.25%.

Meanwhile inflation is clocking in at 8.5%.

This is why the yield on the 2-year Treasury continues to move higher… the bond market is telling the Fed that it (the Fed) hasn’t done enough. Put another way, the bond market doesn’t think the Fed’s current plan to tackle inflation is credible.

The 30-year Treasury is even more important than the 2-year. This is because bonds of longer duration do a better job of indicating what long-term implications of Fed incompetence.

Put simply, this yield NEEDS to stabilize, otherwise the Fed risks losing control and we enter a bond crisis shortly.

Again, all eyes are on the Fed today. Either the Fed’s strategy is credible and things stabilize… or it’s crisis time. And if it’s crisis time… buckle up, because this current bubble is even larger than the Housing 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

Yesterday I noted that the bond market is crashing. 

By quick way of review:

1)    The Fed is horribly behind the curve on inflation. This has resulted in Treasury yields spiking as Treasury bonds collapse.

2)    The pace of the spike in yields is truly historic: in six months, they’ve moved the same amount as they did in three years from 2003 to 2006 and in six years from 2012-2018. 

3)    The last time bond yields spiked like this was in 2018. At that time the corporate debt markets froze and stocks crashed 20% in a matter of weeks.

Unfortunately, this isn’t the end of the bad news either!

The 10-year U.S. Treasury is the single most important bond in the world. The reason for this is that A) it is issued by the U.S., which is the largest, most dynamic, economy in the world and B) 10 years represents a full economic cycle.

The yield on this bond has just broken out of its 35+ year downtrend for the second time in decades.

As the above chart shows, the first break took place in 2018.

As I mentioned yesterday, at that time the Fed was raising rates four times a year while also shrinking its balance sheet by $500 billion. The end result was the junk bond market froze and stocks crashed (see blue rectangle in the chart below). This forced the Fed to abandon tightening monetary policy.

By way of contrast, during this latest breakout of the yield on the 10-Year U.S. Treasury, the Fed has only just ended QE, has yet to shrink its balance sheet at all, and has only raised rates ONCE.

Again, this is a HUGE freaking deal. Last time this happened the Fed could start easing monetary conditions to stop the carnage. This time around, the Fed CANNOT. It has to continue tightening monetary policy or risk inflation destroying the economy.

Put simply, the Fed needs to decide… does it save stocks or bonds.

Saving stocks means risking a debt crisis that would make 2008 look like a picnic.

Savings bonds means stocks collapsing… but the system remains intact.

Which do you think the Fed will choose?

The stage is set for a historic collapse. It might not be today or tomorrow… 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