Ok, This is TRULY Horrifying!

 Yesterday, I outlined a terrible secret.

That secret?

That the Fed knows the official inflation measure, the Consumer Price Index (CPI) is practically useless for forecasting future inflation.

In a little-known paper published in 2001, the Fed found that food inflation, NOT CPI or PCE, is the best predictor of future inflation. Fed researchers wrote the following:

We see that past inflation in food prices has been a better forecaster of future inflation than has the popular core measure [CPI and PCE]…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: St Louis Fed (emphasis added).

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.
  • 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.

I mention all of this because today food inflation is erupting higher.

We already noted that agricultural commodities are ripping higher.

But the situation is even worse than I imagined. The below quote is truly horrifying…

Adjusted for inflation and annualized, [food] costs are already higher now than for almost anytime in the past six decades, according FAO data. Indeed, it’s now harder to afford food than it was during the 2011 protests in the Middle East that led to the overthrow of leaders in Tunisia, Libya and Egypt, said Alastair Smith, senior teaching fellow in global sustainable development at Warwick University in the U.K.

Source: Yahoo! Finance

Put simply, food inflation today than at almost any time in the last 60 years. That would include the 1970s, when inflation went into the double digits and the stock market crashed over 50% in a matter of months.

If you think we’re immune to something like this now, take a look at the below chart. This is a massive bubble, looking for a pin. And by the look of things, inflation is it!

On that note, we 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 available to the public.

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

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Posted in Inflation | Comments Off on Ok, This is TRULY Horrifying!

Trust Me, the Fed Doesn’t Want You to Know This

Yesterday I explained how the official inflation statistic used by policymakers, the Consumer Price Index or CPI, is practically useless.

I realize this is quite controversial. After all, everyone on the planet from hedge fund managers to social security administrators uses this data point as THE inflation measure.

Unfortunately for them, CPI is pretty much useless. It doesn’t accurately measure inflation in any way shape or form.

Today, I’m going to let you in on a little secret.

The Fed knows this.

In fact, the Fed has known this for years… since 2001 to be exact.

Back in 2001, the Fed had several researchers dive into the subject of inflation. Their goal was the analyze whether the Fed’s preferred measures of inflation (the CPI and the Personal Consumption Expenditures or PCE) are decent predictors of future inflation.

The Fed also investigated a whole slew of other inflation measures for comparison purposes.

The results?

The Fed found that food inflation, NOT CPI or PCE, is the best predictor of future inflation. Fed researchers wrote the following:

We see that past inflation in food prices has been a better forecaster of future inflation than has the popular core measure [CPI and PCE]…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: St Louis Fed (emphasis added).

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.
  • 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.

With that in mind, take a look at what is happening with agricultural commodities, which are the primary supplies for food.

Chart, histogram

Description automatically generated

You are looking at the end of a 12-year bear market… and the beginning of a new bull market.

If you think this is going to go well for stocks, you are mistaken. During the last major bout of inflation in the 1970s, stocks initially ripped higher for a few years before crashing ~50% erasing all their gains and then some. Even worse, the stock market finished the decade having gained ZERO in 10 years.

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 available to the public.

There are just 9 left.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Posted in Inflation | Comments Off on Trust Me, the Fed Doesn’t Want You to Know This

These Inflation Numbers Are No Joke… a Crisis is Brewing.

The government bean counters are working overtime to hide inflation.

Yesterday’s Consumer Price Index (CPI) number would be hilarious if it wasn’t so damaging to Americans. According to the Bureau of Labor Statistics (BLS), inflation rose only 0.3% month over month for the month of August and 5.3% year over year.

Anyone who lives in America knows this is total bunk

The BLS claims inflation in rents is up a mere 2.9% year over year. The very same day this came out, the Wall Street Journal reported that in the real-world rents are up 10.3%. Also, home prices are up 18% over the same period.

Put simply, unless you live in a cave, your cost of living for shelter (which the BLS uses to calculate total inflation) is up a whole lot more than 2.9%.

Let’s keep going, shall we?

Over the last 12 months, the cost of every commodity is up 51%. Agricultural commodities are up 30%. So is copper. Gasoline prices have nearly doubled at 90%.

Chart, histogram

Description automatically generated

And yet, somehow the BLS claims inflation is just 5.3% year over year. I guess if you don’t drive a car, eat food, build anything, or use any commodities in any way, you’re probably fine.

The whole thing is ridiculous. And it begs the question… why is the BLS doing this?

I can’t claim to be psychic, so I have no idea what’s going on in these peoples’ minds. But I do know that a big reason to understate inflation is to mask the fact that real quality of life is in steep decline in the U.S.

This fact stares all of us in the face on a daily basis.

In the 1950s typically only one parent worked, and most Americans were able to afford their homes and live reasonably comfortable lives. In contrast, today typically both parents work, and most families have massive mortgages, student debt, credit card debt, auto loans, etc.

The whole system requires credit/ debt to function. Without it, most people cannot afford to live anything resembling a “middle class’ existence.

This whole mess will come crashing down one day. In market terms, this is going to happen, it’s just a matter of time.

The question of course is “when”?

To figure that out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

Posted in It's a Bull Market | Comments Off on These Inflation Numbers Are No Joke… a Crisis is Brewing.

These Inflation Numbers Are No Joke… a Crisis is Brewing.

The government bean counters are working overtime to hide inflation.

Yesterday’s Consumer Price Index (CPI) number would be hilarious if it wasn’t so damaging to Americans. According to the Bureau of Labor Statistics (BLS), inflation rose only 0.3% month over month for the month of August and 5.3% year over year.

Anyone who lives in America knows this is total bunk

The BLS claims inflation in rents is up a mere 2.9% year over year. The very same day this came out, the Wall Street Journal reported that in the real-world rents are up 10.3%. Also, home prices are up 18% over the same period.

Put simply, unless you live in a cave, your cost of living for shelter (which the BLS uses to calculate total inflation) is up a whole lot more than 2.9%.

Let’s keep going, shall we?

Over the last 12 months, the cost of every commodity is up 51%. Agricultural commodities are up 30%. So is copper. Gasoline prices have nearly doubled at 90%.

Chart, histogram

Description automatically generated

And yet, somehow the BLS claims inflation is just 5.3% year over year. I guess if you don’t drive a car, eat food, build anything, or use any commodities in any way, you’re probably fine.

The whole thing is ridiculous. And it begs the question… why is the BLS doing this?

I can’t claim to be psychic, so I have no idea what’s going on in these peoples’ minds. But I do know that a big reason to understate inflation is to mask the fact that real quality of life is in steep decline in the U.S.

This fact stares all of us in the face on a daily basis.

In the 1950s typically only one parent worked, and most Americans were able to afford their homes and live reasonably comfortable lives. In contrast, today typically both parents work, and most families have massive mortgages, student debt, credit card debt, auto loans, etc.

The whole system requires credit/ debt to function. Without it, most people cannot afford to live anything resembling a “middle class’ existence.

This whole mess will come crashing down one day. In market terms, this is going to happen, it’s just a matter of time.

The question of course is “when”?

To figure that out, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

Posted in It's a Bull Market | Comments Off on These Inflation Numbers Are No Joke… a Crisis is Brewing.

How to Profit From a Market Crash

Yesterday, I explained why I believe we are due for a period of below average stock market returns.

By quick way of review:

  1. Inflation is roaring higher. Official inflation measures put it at over 5%. Unofficial, more accurate measures have it clocking in at over 8%. And we are seeing corporations raise prices to deal with this.
  1. Inflation is NOT good for stocks. During the last major bout of inflation in the 1970s, stocks initially ripped higher for a few years before crashing ~50% erasing all their gains and then some. Even worse, the stock market finished the decade having gained ZERO in 10 years.
  1. The stock market is now extremely overstretched to the upside. On a monthly chart, the market is 40% above its 50-month moving average (MMA). The only time it has been more stretched above this line was right before the 1987 crash and during the Tech bubble.

So now the big question is… how do we profit from the inevitable collapse?

One method of doing this is the UltraShort S&P 500 ETF (SDS).

SDS was a leveraged play on the U.S. stock market collapsing.

You see, the SDS returns TWO TIMES the inverse of the S&P 500 ETF (SPY).

So, if the SPY falls 5%… the SDS returns 10%. Etc.

During market meltdowns, SDS is a great means of profiting from stocks collapsing. The below chart shows how it performed during the 2020 meltdown. Note SDS (bottom box) skyrocketed over 70% while the S&P 500 dropped some 30% in the month of March 2020.

However, I want to be clear here, DO NOT go out and buy this investment right now. SDS is a TRADE, not a long-term investment. Put another way, SDS ONLY works when the market is melting down. So, if you buy it at any other time, you’ll lose money.

So how do we know when the market is going to melt down?

To do that, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/predictcrash.html

Posted in It's a Bull Market | Comments Off on How to Profit From a Market Crash

Forget About the Economy, This is How You Know a Bubble is Bursting

One of the most difficult things to learn about the stock market is the fact that it has little, if anything, to do with the real economy.

This is a fact borne out by both statistical studies and real-world analysis. And yet I would argue that over 95% of investors don’t understand this.

For whatever reason, most investors believe that the stock market is effectively a derivative of economic growth.

The reality is that the people thinking this haven’t really thought their arguments through to their logical conclusions.

Indeed, if you think I’m being naive with my views of the weak correlation between stocks and the economy, consider that the mutual fund giant Vanguard performed a study analyzing the correlation between stock market returns and various items (dividend yield, stock market valuations, etc.), from 1926 to 2011.

They found that the correlation between stock market returns and the direction or trend of GDP growth was 0.05, or about 5%. Put another way, the trend of the economy only explained roughly 1/20th of the stock market’s returns.

To put this into perspective, it’s lower than the correlation between rain and stock market returns. Yes, rain, as in whether or not it’s raining outside on a given day.

If you still find this hard to believe, let’s take a real-world example.

Between 1972 and 1982, the US economy nearly tripled in size from $1.2 trillion to $3.2 trillion. And yet, throughout that entire period the stock market traded sideways for ZERO GAINS!

In contrast, from 1982 to 2000, the US economy again nearly tripled in size from $3.2 trillion to $10 trillion. But during this particular time, the stock market exploded higher rising nearly 1,500%!

Chart

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So, we have two time periods in which the economy nearly tripled in size. During one of them, the stock market went nowhere. During the other, the stock market rose nearly 1,500%.

Again, stocks have little if any correlation to the economy. This is especially true during asset bubbles like the one we’re in today.

So how do you determine when a bubble has burst and a crisis is about to begin?

To do that, I rely on certain key signals that flash before every market crash.

I detail them, along with what they’re currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by:

https://phoenixcapitalmarketing.com/predictcrash.html

Best Regards

Posted in It's a Bull Market | Comments Off on Forget About the Economy, This is How You Know a Bubble is Bursting

These Charts Are SCREAMING Inflation

On Friday I outlined a very disturbing reality.

That reality?

That the Fed is very likely now a political entity.

By quick way of review:

  • Fed Chair Jerome Powell’s term as Fed Chair ends this year. 
  • The Biden administration has leaked in the media that it is considering giving Powell a second term.
  • Powell failed to present any meaningful information concerning the tightening of monetary policy at the Fed’s annual Jackson Hole meeting.
  • Based on inflation, GDP, and unemployment numbers, there are ZERO economic reasons for the Fed to NOT be already tightening monetary policy aggressively.
  • The above items suggest strongly that Powell has cut a deal with the Biden administration to gain reappointment.

That deal?

Keep the easy money flowing. 

Again, there are no economic reasons for the Fed to continue its current monetary path. The fact that Jerome Powell won’t even commit to presenting a clear timeline for when the Fed will taper is truly negligent.

So where does this leave us?

As I’ve outlined recently, there are clear signs that inflation has entered the financial system.

Commodities, which are inflationary hedges, have just broken out of a 13-year BEAR market. 

Most important in this sector are agricultural commodities. The Fed’s own research has shown that the single best predictor of future inflation is food inflation. Well, take a look at what agricultural commodities are doing.

And then there’s gold, which recently rose to new all-time highs in every major currency.

These charts are SCREAMING inflation. And with the Fed refusing to tighten monetary policy for political reasons, this is likely just the beginning.

Smart investors are taking steps to profit from inflation today. I’ll outline some of my favorite ideas tomorrow.

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 available to the public.

There are just 29 left.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in It's a Bull Market | Comments Off on These Charts Are SCREAMING Inflation

The Four Horseman of the Coming Crash, Pt 3

Over the last two days, I’ve outlined THE single most important development you need to see, in order for the market to crash.

Think of them as BIG warnings, or the FOUR Horsemen that precede a stock market apocalypse.

What are they?

When most heavily weighted companies began to break down badly.

Technically, the S&P 500 is made up of 500 companies. However, each of those 500 stocks don’t receive the same weight from the index. Rather, certain stocks receive a disproportionate weighting giving them a much larger impact on the market’s price action.

Because of this, in order to get a crash, you need the heaviest weighted stocks to break down badly. Put another way, even if most of the 500 companies in the overall market are in a downtrend, if the heaviest weighted stocks DON’T break down, it’s pretty much impossible for the overall market to crash.

Yesterday we reviewed the 1987 crash, noting that the vast majority of the 10 most heavily weighted stocks had broken down in clear warnings that the market was in serious trouble.

Let’s apply this same methodology to today’s market. Today, the top 10 most heavily weighted stocks in the S&P 500 are:

Company Symbol Weight
Apple Inc. AAPL 6.26
Microsoft Corporation MSFT 5.96
Amazon.com Inc. AMZN 3.82
Facebook Inc. Class A FB 2.38
Alphabet Inc. Class A GOOGL 2.27
Alphabet Inc. Class C GOOG 2.16
NVIDIA Corporation NVDA 1.47
Tesla Inc TSLA 1.47
Berkshire Hathaway Inc. Class B BRK.B 1.41
JPMorgan Chase & Co. JPM 1.27
  Total 28.48

Note that out of an index of 500 companies, these 10 alone account for nearly 30% of the market’s weight. So, in order for the market to crash, we need to see them breakdown badly.

So, let’s take a look at the top five today (September 2021).

Apple (AAPL): this stock is clearly in an uptrend.

Chart, histogram

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Microsoft (MSFT): STRONG uptrend.

Chart, histogram

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Amazon (AMZN): this is a weak chart. AMZN has been chopping back and forth for a year now. It’s not as bad as if the company had entered a definite downtrend, but it’s still pretty bad.

Facebook (FB): strong uptrend.

Alphabet (GOOGL): incredible uptrend.

Put simply, out of the top FIVE companies in the S&P 500, which account for nearly a quarter of the market’s weight (22.8% to be exact), FOUR of them are in strong uptrends.

While the market is definitely in a bubble, until these companies break down, the odds of a crash remain small. So, for now, it’s best to let this bubble run. Just keep an eye on these companies. Once they start to break down, you’ll know it’s time to start getting defensive.

In the meantime, if you’re looking for a guide on how to means to accurately predict crashes, what investments perform best during them, and how to take out “portfolio insurance” on your portfolio, we offer an Exclusive Investment Report, The Stock Market Crash Survival Guide outlining all those items and more.

To pick up a FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards,

Posted in It's a Bull Market | Comments Off on The Four Horseman of the Coming Crash, Pt 3

The Four Horsemen of the Coming Crash, Pt 2

Yesterday I outlined THE single most important development you need to see, in order for the market to crash.

Think of them as BIG warnings, or the FOUR Horsemen that precede a stock market apocalypse.

What are they?

When most heavily weighted companies began to break down badly.

Technically, the S&P 500 is made up of 500 companies. However, each of those 500 stocks don’t receive the same weight from the index. Rather, certain stocks receive a disproportionate weighting giving them a much larger impact on the market’s price action.

Because of this, in order to get a crash, you need the heaviest weighted stocks to break down badly. Put another way, even if most of the 500 companies in the overall market are in a downtrend, if the heaviest weighted stocks DON’T break down, it’s pretty much impossible for the overall market to crash.

So today, let’s review the 1987-Crash: arguably the worst single-day collapse in stock market history.

In 1987, the 10 largest companies by market weight were:

Of these, IBM, XOM, GE and T have charts that are easy to find. So, let’s review them.

In 1987, IBM had already taken out both its 50-DMA and its 200-DMA before the crash hit. Put another way, the largest company on the index (the equivalent of the tech sector today) had already broken down VERY badly.

Exxon had yet to look as terrible, but it was clearly struggling, having traded sideways for months before finally breaking down.

General Electric looked awful, breaking its uptrend and falling below its 50-DMA long before the Crash hit.

AT&T (T) was the only one that looked remotely good, as it was still in something of an uptrend when the crash hit.

Chart, histogram

Description automatically generated

For space reasons, we’re only looking at four of the top 10 companies today. But if you were to look at all 10 charts, you’d quickly see that the majority of them had entered downtrends, and were breaking down badly, weeks before the Crash hit.

So does this impact the market today? Put another way, how do we know when THIS will happen?

I’ll outline that in tomorrow’s article. Until then…

In the meantime, if you’re looking for a guide on how to means to accurately predict crashes, what investments perform best during them, and how to take out “portfolio insurance” on your portfolio, we offer an Exclusive Investment Report, The Stock Market Crash Survival Guide outlining all those items and more.

To pick up a FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards,

Posted in It's a Bull Market | Comments Off on The Four Horsemen of the Coming Crash, Pt 2

The Four Horsemen of the Coming Crash, Pt

Over the last few weeks, I’ve been outlining the clear evidence that stocks are in a bubble, arguably the largest stock market bubble of all time. 

In truth, however, it’s not just a bubble in stocks, it’s a bubble in Treasuries, which the Fed has manipulated to absurd levels via over $2 trillion in Quantitative Easing (QE) during the last 18 months.

These bonds are the senior most asset in the current financial system. Their yields represent the “risk free” rate of return against which all risk assets (including stocks) are valued. So, when the Fed created this bubble in Treasuries, it was creating a bubble in Everything, which is why I call this the Everything Bubble.

Of course, this begs the question… when will it burst?

Put another way, when does THIS happen?

Predicting the actual week, let alone the day, of a market crash is all but impossible. However, there are certain key developments that MUST happen for the market to crash. 

Think of them as BIG warnings, or the FOUR Horsemen that precede a stock market apocalypse.

What are they?

The most heavily weighted companies began to break down badly.

Technically, the S&P 500 is made up of 500 companies. However, each of those 500 companies don’t receive the same weight from the index. Rather, certain companies receive a disproportionate weight giving them a much larger impact on the market’s price action.

Because of this, in order to get a crash, you need the heaviest weighted stocks to break down badly. Even if most of the 500 companies in the overall market are in a downtrend, if the heaviest weighted stocks DON’T break down, it’s pretty much impossible for the overall market to crash.

I’ll outline precisely how this played out before the 1987 Crash (arguably the worst single-day collapse in stock market history) in tomorrow’s article. 

In the meantime, if you’re looking for a guide on how to means to accurately predict crashes, what investments perform best during them, and how to take out “portfolio insurance” on your portfolio, we offer an Exclusive Investment Report, The Stock Market Crash Survival Guide outlining all those items and more.

To pick up a FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards,

Posted in It's a Bull Market | Comments Off on The Four Horsemen of the Coming Crash, Pt

The Four Horsemen of the Coming Crash, Pt 1

Over the last few weeks, I’ve been outlining the clear evidence that stocks are in a bubble, arguably the largest stock market bubble of all time. 

In truth, however, it’s not just a bubble in stocks, it’s a bubble in Treasuries, which the Fed has manipulated to absurd levels via over $2 trillion in Quantitative Easing (QE) during the last 18 months.

These bonds are the senior most asset in the current financial system. Their yields represent the “risk free” rate of return against which all risk assets (including stocks) are valued. So, when the Fed created this bubble in Treasuries, it was creating a bubble in Everything, which is why I call this the Everything Bubble.

Of course, this begs the question… when will it burst?

Put another way, when does THIS happen?

Predicting the actual week, let alone the day, of a market crash is all but impossible. However, there are certain key developments that MUST happen for the market to crash. 

Think of them as BIG warnings, or the FOUR Horsemen that precede a stock market apocalypse.

What are they?

The most heavily weighted companies began to break down badly.

Technically, the S&P 500 is made up of 500 companies. However, each of those 500 companies don’t receive the same weight from the index. Rather, certain companies receive a disproportionate weight giving them a much larger impact on the market’s price action.

Because of this, in order to get a crash, you need the heaviest weighted stocks to break down badly. Even if most of the 500 companies in the overall market are in a downtrend, if the heaviest weighted stocks DON’T break down, it’s pretty much impossible for the overall market to crash.

I’ll outline precisely how this played out before the 1987 Crash (arguably the worst single-day collapse in stock market history) in tomorrow’s article. 

In the meantime, if you’re looking for a guide on how to means to accurately predict crashes, what investments perform best during them, and how to take out “portfolio insurance” on your portfolio, we offer an Exclusive Investment Report, The Stock Market Crash Survival Guide outlining all those items and more.

To pick up a FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards,

Posted in It's a Bull Market | Comments Off on The Four Horsemen of the Coming Crash, Pt 1

These Sophisticated Traders Are Betting on a 1987-Type Crash

While the stock market continues to rise to new all-time highs, the options markets are betting on a massive crash.

If you’re unfamiliar with options, they are securities that give you the right, (but not the requirement) to buy shares in an underlying stock or ETF at some point in the future.  The pricing and trading of options is a complicated thing, so for simplicity’s sake you can think of them as bets on where you think a given stock or ETF might trade at some point.

Goldman Sachs, noting that the options markets are pricing in a market crash similar to that of 1987 or 2008.

Displaying

Goldman specifically notes that the options on the Volatility Index (VIX) that are due to expire 12 months from now are priced at 26.

Historically, the only time this contract has been priced at this kind of level has been around the 1987 Crash, the Great Financial Crisis of 2008 and the Coronavirus Crash of 2020.

Put another way, someone is betting and betting BIG that a crash is coming sometime in the next 12 months.

Obviously, this bubble, like all bubbles, will eventually burst. Smart investors are preparing for this in advance.

With that in mind, we’ve reopened our Stock Market Crash Survival Guide to the general public.

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).

We are making just 100 copies available to the general public.

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

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Posted in It's a Bull Market | Comments Off on These Sophisticated Traders Are Betting on a 1987-Type Crash

Yes, It’s a Bubble and Yes It Will Burst Soon

The #1 question I’m asked these days is…

“Are stocks in a bubble?”

Defining a bubble in stocks is extremely difficult because stock prices are based heavily on Treasury yields, and Treasury yields are at ridiculously low levels due to the fact that the Fed is currently spending $960 BILLION per year buying Treasuries.

Think of it this way, if the 10-Year U.S. Treasuries is yielding 1.36%, and that is the “risk free” rate which you would earn lending money to Uncle Sam, what would you be willing to pay for growth from the stock market?

18 times earnings? 20 times earnings? 22 times earnings?

You get my point.

If Treasury yields are kept low, you can argue that stocks are “cheap” even at valuations that no one would be willing to buy a private business for with their own money. Do you think Uncle Bob would buy a carwash for 22 times what it makes per year? Yeah, me neither.

This is one of the key reasons why Central Banks love Quantitative Easing (QE) so much. It doesn’t do much for the economy or job creation, but it allows them to reflate the financial system by pushing the risk-free rate of return (the rate against which all risk assets including stocks are measured) to levels that the bond market wouldn’t tolerate otherwise.

So how are we to measure a bubble?

Warren Buffett’s favorite measure for stocks is to compare the market cap of the stock market to U.S. GDP. By that metric, the stock market is more overvalued today than it was during the Tech Bubble of the late 1990s (153% vs 146%).

Suffice to say, this is a bubble. And technically it’s a bigger bubble than the Tech Bubble, which was widely considered to be the biggest stock market bubble of all time.

Chart, line chart

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Obviously, this bubble, like all bubbles, will eventually burst. Smart investors are preparing for this in advance.

With that in mind, we’ve reopened our Stock Market Crash Survival Guide to the general public.

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).

We are making just 100 copies available to the general public.

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

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Posted in It's a Bull Market | Comments Off on Yes, It’s a Bubble and Yes It Will Burst Soon

This Company Gave Us a Glimpse Into What’s Coming to the Broader Market

The deflationists had another bad day yesterday.

Deflationists argue that inflation doesn’t exist because the Treasury market isn’t acting as if inflation is a problem. They always fail to mention that the Treasury market is ALSO the most manipulated market on the planet. The Fed is currently spending over $1 trillion per year buying these bonds, effectively cornering them.

So why was yesterday a bad day for deflationists?

Because it was revealed that apartment rents are up almost 15% year over year since June. Yes, 15%. This is the highest annual increase since 1993.

By the way, the Bureau of Labor Statistics, which compiles the official inflation data for the U.S. claims “rents or shelter” is in fact only up 2.6% over the same period. As Bill King notes, if CPI accurately reflected the real jump in rent inflation, CPI would be at least 4% higher (north of 9%).

So, while the bond market continues to exist in a manipulated state of fantasy, real people are experiencing real jumps in prices, which is causing real economic damage.

This will eventually lead to catastrophe.

Stocks initially LOVE inflation but that love eventually turns to hate when costs rise so much that they eat into profits.


This was the case during the last real bout of inflation in the 1970s. At that time stocks initially rallied aggressively from mid-1970 to 1974. Then inflation spiraled out of control and the markets crashed some 50%.

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This time around will prove no different. We are already beginning to see signs of this in individual stocks.

Consider Clorox (CLRX). The company lost over 11% of its market cap yesterday when it revealed that the company’s cost of products as a percentage of net sales spiked from 53% in 2Q20 to 63% in 2Q21.

The reason for this spike in costs?

Inflation.

CLRX shares erased months’ worth of gains in a single day and are now back to where they were in early 2020, erasing the ENTIRE COVID-19 ramp.

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This kind of collapse will be spreading more and more throughout the stock market as inflation roars.

With that in mind, we’ve reopened our Stock Market Crash Survival Guide to the general public.

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).

We are making just 100 copies available to the general public.

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

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on This Company Gave Us a Glimpse Into What’s Coming to the Broader Market

These Three Charts Are Issuing a Major Warning to Stock Investors

So, will it be stagflation after all?

It is already clear that inflation has entered the financial system. Those who claim that this cannot be true because Treasury bonds aren’t showing it fail to mention that Treasury bonds are the most manipulated asset class on the planet.

After all, it’s rather difficult to argue that Treasury bonds can discount or measure much of anything when the Fed is spending over $1 trillion buying them every year. Technically, all they are reflecting is what $1 trillion worth of Fed asset purchases can get you in terms of manipulation.

Meanwhile, we are getting signs of inflation everywhere.

  1. Capri, which owns Michael Kors, Versace and other fashion brands just announced it will be raising prices “considerably.”
  2. Chipotle is raising prices 4% to cover increased labor costs.
  3. Proctor & gamble which manufactures consumer goods like Gillette razors and Tide detergent announced it will be raising prices in September.
  4. General Mills, which produces cereals like Cheerios announced inflation costs are up 7% this year.
  5. Whirlpool which manufactures appliances ranging from refrigerators to dryers and washers will raise prices by 12% to offset inflation. It says inflation could cost the company $1 billion this year.

And on and on.

So, we know inflation is here. The question now is whether or not the economy will continue to strengthen or roll over creating a 1970s’-style stagflation.

It now appears it might be the latter as three stock market sectors with close ties to the real economy show us.

First and foremost are Industrials (XLI). These are companies that either produce actual things like tractors, cranes, HVAC systems, etc. or that are involved in real economic activity (mail/shipping). As such, they represent a good gauge of how strong the real economy is doing: during economic expansions these businesses receive more orders.

XLI has gone nowhere since late-April. And this is despite the prospect of a multi-trillion infrastructure bill from the federal government and $120 billion in QE from the Fed.

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Next up are Materials (XLB). These are companies involved in producing things like concrete, copper, steel and the like. During economic expansions these companies receive more orders as they are the primary suppliers of commodities needed for construction, manufacturing and the like.

Here again the chart is odd given the macro backdrop. The Biden administration is hoping to sign a $1.2 trillion infrastructure bill sometime in the next few weeks, and yet, XLB is 5% off its highs. Indeed, you could easily argue that the only reason XLB didn’t collapse last week was the prospect of this infrastructure bill.

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Finally, we have Amazon (AMZN).

The consumer accounts for 75% of the U.S. economy. As the largest online retailer in the U.S., AMZN presents a great window into consumer spending.

After disappointing results for 2Q21, AMZN shares collapsed. They have now gone nowhere since July of 2020. This is NOT what you would expect from a raging economy.

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So, inflation is here… and the economy appears to be rolling over. That would mean a stagflationary environment… which would be the absolutely WORST environment for the massive fake bubble the Fed has created.

With that in mind, we’ve reopened our Stock Market Crash Survival Guide to the general public.

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).

We are making just 100 copies available to the general public.

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

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in It's a Bull Market | Comments Off on These Three Charts Are Issuing a Major Warning to Stock Investors

This is How Professional Traders Are Playing the Next Round of the Covid-19 Crisis

It is impossible to understand what is happening in the U.S. today from a COVID-19 policy response.

One day Dr Fauci says there will NOT be lockdowns, and the very next President Biden suggests there will.

One day CDC Director Rochelle Walensky states that the Biden Administration will likely issue a national mandate for the COVID-19 vaccine… and the next day she walks that back stating that “an experimental vaccine cannot be mandated by anyone.”

One day we are told by Biden administration officials that Delta variants are the biggest concern in terms of spread… and the next day the White House Deputy Press Secretary admits that she doesn’t even know if there’s a test for it.

You can draw your own conclusions from this situation. Some people will say that COVID-19 is a complicated situation that changes on a weekly basis, hence the confusion. Others will say this whole mess is about politics and has nothing to do with science. Others will say it’s a mix of the two.

For investors, given the market impact of another round of shutdowns, the wisest move is to ignore all the news and focus on price levels.

Put another way, don’t try to be psychic… let the market show you what’s going on.

I’ve illustrated the major lines of support for the S&P 500 with green lines in the chart below. They are currently 4380 and 4265. We also have minor support at 4,370 (purple line).

The key with bull markets is to let ride them for as long as possible. Put another way, until the market starts to “do something wrong,” by breaking down and taking out support lines you need to fight the urge to sell.

At some point the stock market will break down again as the Everything Bubble finally bursts and the financial system lurches into another crisis.

With that in mind, we’ve reopened our Stock Market Crash Survival Guide to the general public.

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).

We are making just 100 copies available to the general public.

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

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Posted in stock collapse? | Comments Off on This is How Professional Traders Are Playing the Next Round of the Covid-19 Crisis

Is Another Round of Lockdowns Coming? Two Stocks To Watch

Yesterday President Biden suggested that the U.S. might face another wave of lockdowns. Among the various policies he hinted at were:

1)    Mandating that all Americans get the Covid-19 vaccines.

2)    Shutting down businesses, schools, society like in 2020.

The question now is whether this is a political ploy or if the American people will go along with these proposed policies.

After all, the only reason we had lockdowns in 2020 was because people complied.

I’m not a psychic and cannot claim to have answers to this. But I do know that the stock market is forward­-looking and can provide us with some clues.

After all, back in 2020, stocks began to collapse in late February, several weeks before the country formally went into lockdown.

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Today, stocks are not collapsing (at least not yet).

We had the beginnings of a breakdown in mid-July, but that quickly reversed and gave way to new all-time highs. Moreover, that particularly breakdown wasn’t distinguishable from other corrections over the last six months.

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Still, it’s always good to keep an eye on things. So below are two stocks I’m watching for signs of whether or not another round of lockdowns is coming.

First is Delta Airlines (DAL).

Airlines were one of the hardest hit industries from the 2020 lockdowns. DAL was no exception with shares collapsing over 70% during the first wave of lockdowns (red rectangle).

If we’re heading into another round of lockdowns, I would expect this chart to breakdown BADLY in the coming days. DAL shares have begun to breakdown, but they’ve yet to really nosedive.

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Another company I’m watching is Alpha Pro Tech (APT).

This company makes masks, hazmat suits, shields and other infection control apparel. If we were going towards another round of lockdowns, I would expect to see APT shares start to explode higher as they did in February of 2020 (red rectangle).

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Is another COVID-19 shutdown coming? I don’t know. But if it does, we should experience another financial crisis.

With that in mind, we’ve reopened our Stock Market Crash Survival Guide to the general public.

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).

We are making just 100 copies available to the general public.

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

http://phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in It's a Bull Market | Comments Off on Is Another Round of Lockdowns Coming? Two Stocks To Watch

Buckle Up: Jerome Powell “Cut a Deal” And Inflation is Going Roar!

Over the last two days, we’ve outlined how the bond market is predicting a surge in inflation.

By quick way of review:

  1. Real rates, as measured by the difference between yields on Inflation Treasury Inflation-Protected Securities or TIPS and regular Treasuries have been surging higher (see the chart below).
  • This means that TIPS are dramatically outperforming Treasuries right now. Since TIPs trade based on inflation expectations, this suggests that the bond market is predicting much higher inflation.

What would cause this?

Another round of massive money printing.

We’ve already noted that the Biden administration hopes to sign a $2-$4 trillion infrastructure program into law in the next few weeks. And after that there is talk of a $1.7 trillion climate change program.

Today, I’d like to tackle the Fed’s role in all of this.

The Fed is currently engaged in a $120 billion per month Quantitative Easing (QE) program. This comes to over $1.4 trillion in month printing per year.

Recently the Fed has been hinting that it intends to taper this program, and possibly start raising rates sometime in 2022/ early 2023. But by the look of things, that will no longer be the case.

Why?

Because the Biden administration recently leaked that it intends to give Jerome Powell as second term as Fed Chair starting in 2022.

The story was leaked via Bloomberg, which has a close relationship with the Biden administration. And it suggests that Jerome Powell has “cut a deal” with Joe Biden to stay on as Fed chair. After all, the only way that Joe Biden would give Jerome Powell a second term would be if the latter “got onboard” with Biden’s agenda.

That agenda?

Keep the economy as strong as possible going into the 2022 mid-terms.

This means NO tapering, NO rate hikes, and NO tightening of monetary conditions for the foreseeable future. Sure, the Fed might jawbone things or stage verbal interventions here and there to provide political cover, but there is no way on earth Jerome Powell can tighten monetary conditions in the near future if he wants to stay on as Fed Chair.

Which means…

Inflation is going to ROAR in the coming months.

On that note, if you’re concerned about inflation, we have 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://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on Buckle Up: Jerome Powell “Cut a Deal” And Inflation is Going Roar!

Why Inflation is About to Get a Whole Lot Worse

Yesterday I outlined how real rates suggest gold will be moving MUCH higher in the coming months.

By quick way of review:

  1. Because we are in a fiat-based monetary regime, gold trades like any other asset.
  • Specifically, gold typically tracks “real rates” or the actual cost of money as illustrated by the difference between yields on Inflation Treasury Inflation-Protected Securities or TIPS and regular Treasuries).
  • Real rates typically lead gold at major turns. We saw this at the bottom in March 2020 and more recently in June 2021.

Recently a massive divergence has developed between real rates and gold with real rates rising and gold lagging (see the chart below).

This would suggest gold will be going MUCH higher in the coming months.

What would trigger this?

 Inflation.

Remember, real rates represent the difference between the yields on Treasury Inflation-Protected Securities (TIPS) and regular Treasuries. So, when TIPs outperform regular Treasuries, this line rises, and when regular Treasuries outperform TIPs, this line falls.

So, the fact real rates are rising so aggressively means that TIPS which focus on inflation are dramatically outperforming Treasuries right now. This means the bond market is predicting greater inflation is coming.

What would trigger this?

Two things:

  1. The $2-$4 trillion infrastructure program the Biden Administration is hoping to sign into law in the near future.
  • Jerome Powell’s continued tenure as Fed Chair in 2022.

Regarding #1, policymakers have already made it clear from their response to the 2020 shutdowns that their entire blueprint for dealing with crises, boils down to just two words.

PRINT MONEY.

Shutting down the economy triggers a depression?

Print money.

Stock market experiences fastest 30% crash in history?

Print money.

Municipal bonds collapse because the bond markets don’t believe cities and states will be able to meet their debt obligations?

Print money.

The economy still hasn’t come back because state officials continue to keep their economies on partial or complete lock downs?

Print money.

The economy isn’t coming back fast enough despite vaccines and states reopening?

Print money.

Indeed, policymakers printed so much money to combat the impact of the COVID-189 lockdowns that if you add up all of the money the U.S. has ever printed… over 40% of it was printed in 2020.

And the Biden administration doesn’t intend to stop anytime soon. It has already implemented a $1.9 trillion stimulus. It’s now attempting to get a $2-$4 trillion infrastructure program signed into law. And after that it hopes to implement a $1.7 trillion climate change program.

Inflation is already roaring. What do you think another $2-$4 trillion in money printing will unleash?

And bear in mind, that’s just the Federal Government. We’re not even accounting for the Fed here.

I’ll dive into that tomorrow.

In the meantime, if you’re concerned about inflation, we have 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://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on Why Inflation is About to Get a Whole Lot Worse

Is Gold About To Rip Higher?

On Friday we outlined the strange price action in gold.

As a quick recap:

  1. Because we are in a fiat-based monetary regime, gold trades like any other asset.
  • Specifically, gold typically tracks “real rates” or the actual cost of money as illustrated by the difference between yields on Inflation Treasury Inflation-Protected Securities or TIPS and regular Treasuries).
  • Recently a massive divergence has developed between real rates and gold.

Regarding #3 in the list above, the divergence between the two items is quite large, which means either real rates need to come down, or gold needs to catch up.

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I believe we will see gold begin it next leg up relatively shortly.

Why?

Because real rates usually lead gold on turns.

Let’s go back to the COVID-19 meltdown. Note that real rates (top box) bottomed a few days before gold did (bottom box). Real rates bottomed on March 12th, while gold bottomed on March 20th.

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We saw this same dynamic play out again more recently in June of 2021 when real rates bottomed on the 17th of June (red circle) while gold didn’t bottom until the 29th (blue circle).

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This would suggest that real rates will in fact lead gold higher going forward. Again, real rates have been soaring while gold is struggling to ignite higher. The below chart suggests gold will eventually be running to $2,000 per ounce in the coming months.

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What would trigger a run like this?

Inflation.

I’ll outline how and why in tomorrow’s article until then.

In the meantime, if you’re concerned about inflation, we have 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://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Posted in Inflation | Comments Off on Is Gold About To Rip Higher?