Month: June 2022

By Graham Summers, MBA

The Fed’s lying again.

One of the BIGGEST LIES in financial history was the Fed’s claim that there was no inflation or that inflation was transitory in 2021.

How do I know this was a lie?

Because the Fed’s own research contradicted its claim!

If you’re unfamiliar with the Fed’s Beige Book, it’s a report the Fed publishes eight times per year.

In it, the 12 regional banks that comprise the Fed present anecdotal information on the U.S. economy. The Fed retrieves this information via interviews and conversations with business leaders, market experts and other people at the frontlines of the economy.

And throughout 2021, all of these people were SCREAMING that inflation was a major problem. In fact, the complaints about “rising costs” and “needing to raise prices” started as early as March 2021.

Despite this, the Fed argued that inflation was non-existent or would disappear shortly for another six months. We all know how that turned out. The Fed capitulated, inflation is roaring, and we’re all suffering as a result.

And unfortunately for us, the Fed is now pushing another WHOPPER of a lie.

That lie?

That the economy won’t enter recession later this year or the next.

How do I know this is a lie?

You guessed it… because the Fed’s own research contradicts it!

A recession is denoted by a prolonged period of economic contraction. And as everyone knows, the U.S. economy contracted in the first quarter of 2022. So if it contracts again in the second quarter… we’d be in recession.

The Fed runs a service called GDPNow that measures the economy in real time. According to this measure, the economy is flatlining in the second quarter. Sure, the beancounters might be able to massage the data to make it look as if the economy grew by a little bit… but look around you… does the economy feel like it’s booming to you?

It sure doesn’t to me. If anything it feels as if things took a major turn for the worse months ago.

And why wouldn’t they? After all, history has shown us that ANY TIME inflation breaks above 5%, the U.S. economy enters a recession. And inflation cleared 5% in September of last year!

Let’s cut through the BS here. We all know the U.S. is in recession. And we also know that by the time the Fed admits it, the market will have already collapsed to levels most investors don’t even want to imagine.

I’ll detail just how low stocks could go due to the recession 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 made 100 copies to the public… and they are going fast.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

By Graham Summers, MBA

Yesterday I noted that the Fed is completely delusional about engineering a “soft landing.”

The reality is that the Fed has barely raised interest rates. As I write this rates are at 1.5%… while inflation as measured by the CPI is over 8%. And real inflation is likely much higher (CPI doesn’t accurately measure the cost of housing or other items). 

Meanwhile, the Fed has yet to shrink its balance sheet… at all. It claims it can shrink it by over $1 trillion. That’s amusing since the last time the Fed tried to shrink it balance sheet by even $500 billion (2018) the corporate debt market froze and the stock market crashed.

The summate… the Fed has done next to nothing to stop inflation. And already the markets have lost over $25 TRILLION in wealth. The NASDAQ alone has lost 33% of its value in the span of six months.

Moreover… the economy is already in recession. The Fed’s own data shows GDP growth went negative in 1Q22. And it’s barely positive thus far in 2Q22. Even if the Fed massages the data to insure we don’t see two quarters of negative GDP growth, the reality is that the markets are telling us a recession is here now. 

Copper is commonly called “Dr. Copper, the commodity with a PhD in economics” because it has so many industrial uses that its price is closely linked to economic growth. When the economy is booming copper rises and when the economy is contracting copper price falls. 

What is the below chart telling you?

Add it all up… and the best the Fed can hope for is “stagflation” or a period of high inflation combined with economic weakness. And that’s assuming the Fed knows what it’s doing… which given the fact the Fed claimed inflation was “transitory” for most of 2021, is unlikely.

So what does this mean for investors?

That inflation will continue to run hot MUCH longer than anyone expects. The Fed is bluffing when it states it can get inflation under control easily… it’s going to take a LONG time and involve a LOT of pain for anyone who buys into the Fed’s nonsense.

But you don’t have to suffer during this nightmare.

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 made 100 copies to the public… and they are going fast.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

By Graham Summers, MBA

The Fed is now telling us that it can avoid a recession… or engineer a “soft landing.”

It’s a pretty stunning argument… and it raises questions as to whether the Fed actually believes this stuff… of if it’s simply saying this for political purposes so people won’t panic.

Consider what the Fed has done so far in this tightening cycle.

The Fed has raises rates three times bringing them to 1.5%-1.7%. Historically, this is where rates would FALL TO during a market crash or economic downturn. Inflation, as measured by the Consumer Price Index or CPI is over 8%. So rates are extraordinarily low.

Meanwhile, the Fed has yet to shrink its balance sheet… at all.

That’s correct, despite all its claims of “taking action” and “moving to stop inflation” the Fed has yet to shrink its balance sheet. It’s literally done NOTHING in terms of draining liquidity from the financial system.

In simple terms, the Fed has done next to nothing to stop inflation. Rates are at levels that you would usually associate them to hit during easing cycles and the Fed’s balance sheet is ~$9 trillion.

Meanwhile, stocks and bonds have wiped out over $25 TRILLION in wealth… more than was wiped out during the Great Financial Crisis of 2008 and the pandemic Crash of 2020.

What does this all mean?

That inflation will continue to run hot MUCH longer than anyone expects. The Fed is bluffing when it states it can get inflation under control easily… it’s going to take a LONG time and involve a LOT of pain for anyone who buys into the Fed’s nonsense.

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 made 100 copies to the public… and they are going fast.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

By Graham Summers, MBA

Stocks are currently in a bear market. The average bear market is 9 months long and sees stocks lose 30%.

Thus far this bear market is six months old, and stocks are down just 21%. So, the issue is determining just how much further we have to go.

As I’ve mentioned previously, at the very least we can expect this bear market to see the S&P 500 break down to touch its 40-month moving average (this is the same thing as the 200-week moving average). The 40-MMA is illustrated by the red line in the chart below.

The bigger question is what happens there.

During the COVID-19 crash, the Fed moved to support the entire financial system. That is the only thing that stopped stocks from entering a full-scale crisis. 

During a full-scale crisis, the S&P 500 usually breaks its 40-MMA and then wipes out almost the entirety of the previous bull market’s gains. I’ve illustrated this with blue rectangles in the chart below. 

A similar move this time around would mean the S&P 500 falling to at least 1,750.

Will this happen? It’s certainly possible. As I mentioned a moment ago, the only thing that pulled the market back from the brink in 2020 was the Fed moving to ease monetary conditions in an extraordinary way.

This time around, the Fed is trying to tackle inflation… so easing would only worsen the problem! The Fed has only raised rates to 1% and will begin shrinking its balance sheet on June 15th… and stocks have already lost 20% of their value.

What happens when the Fed is forced to raise rates to FIVE percent or more. 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.

Today is the last day this report will be available to the public.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

The financial media is pushing the narrative that the Fed is about to “pivot” in terms of inflation.

Put simply, the argument is that inflation has peaked, so the Fed won’t need to raise rates by 0.5% past the month of September, at which point it will either PAUSE raising rates or continue to raise them albeit at a slower pace of 0.25% per raise.

And it’s total nonsense.

Inflation is now over 8%. The Fed funds rate is at 1%. Even if the Fed hikes rates to 3% by September (it won’t), it’s still NOWHERE near stopping inflation.

The people pushing this narrative in the media are being fed stories by fund managers who were desperate to game performance last month. Most funds had horrific months in May. And since they need to report their results at month end, they needed a reason to justify why stocks suddenly exploded higher for three days right at the end of the month.

Enter the “Fed pivot” narrative.

It’s total nonsense… but if spouting nonsense was a dealbreaker in this industry, most of the financial media would be out of business.

Let’s dive into this a bit more.

Inflation is over 8%.

The Fed has YET to shrink its balance sheet at all. As I write this, the balance sheet is within spitting distance of $9 TRILLION.

Meanwhile, the Fed funds rate is at 1%. 

Again, the notion that the Fed has done enough to take it easy regarding inflation is 100% nonsense.

History has shown us, quite clearly, that once inflation is in the financial system, the Fed CANNOT stop it with half measures.

This means that in order for the Fed to truly bring inflation to task… it will need to get AGGRESSIVE. 

Bear in mind that the meager efforts the Fed has made thus has already caused stocks to do this…

What happens when the Fed is forced to raise rates to FIVE percent or more. 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 for and profit from this mess, our Stock Market Crash Survival Guide can show you how!

Today is the last day this report is available to the public.

We extended our offer by an additional 24 hours due to the holiday weekend, but this is it… no more extensions!

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html