Central Bank Insanity

Apr

2024

What’s Really Going On With Bidenomics?

By Graham Summers, MBA

The economy is showing a strange dichotomy.

On the one hand, the economic data ranges from good to great, with GDP growth clocking in at an annualized rate of 3.9%, and the economy adding ~300,000 jobs per month.

On the other hand, President Biden has the worst job approval rating in 70 years with just 38.7% of Americans approving of his efforts. And always remember, Americans vote with their wallets.

How are these two items possible? How can the economy be doing so well and President Biden be so unpopular?

The answer is quite simple: Bidenomics is actually Bubble-nomics through which the Federal Reserve juices the stock and real estate markets to levels that have no real connection to reality.

Those Americans who make up the top 20%, and especially the top 1% of the economy (the ones who own a lot of stocks and real estate) are doing GREAT. Everyone else? Not so much.

It all started in November of last year. At that time, the Fed announced that it was getting ready to start cutting interest rates despite the fact that inflation was still well above 3% and financial conditions were actually looser than they were before the Fed started tightening monetary policy to end inflation!

Stocks literally EXPLODED higher on the announcement and haven’t looked back.

As for real estate, the Fed effectively cornered the Mortgage-Backed Securities (MBS) market during the pandemic, sending home prices through the roof. Even with this market cooling in the last year or so, prices are WAY higher than they were before the Fed intervened.

By the way, once the Fed starts cutting rates, this market will also explode higher as two-years of pent up demand (mortgage rates were prohibitively high for most of the last two years) comes to market.

The top 20% of the country, particularly the top 1%, who own more assets that the entire Middle Class (the mid-60% in income brackets) have seen their net worth EXPLODE higher during President Biden’s first term.

These individuals comprise an extreme amount of the consumer spending/ economic drivers that are masking how the other 99% of the country are doing.

What does this mean for the markets?

I’ll detail that in tomorrow’s article.

On that note, we recently published a Special Investment Report detailing three investments that will profit from the inflationary effects of Bidenomics. Normally this report would cost $499, but we are giving copies FREE to anyone who joins our daily market commentary.

To pick up your copy, go to:

CLICK HERE NOW!

Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

Apr

2024

Why Stocks Are Falling… and What Comes Next

By Graham Summers, MBA | Chief Market Strategist

The stock market has finally woken up to what I’ve been warning about for weeks… namely that inflation is rebounding.

By quick way of review, the Fed stopped raising interest rates in July 2023. It then started talking about cutting interest rates in November. And it did this despite the clear evidence that Energy prices were the only part of the inflation data that had turned negative. Put another way, every other segment of the inflation data was still rising… albeit at a slower pace.

Fast forward to today, and the official inflation measure, the Consumer Price Index or CPI for short has bottomed and is beginning to rebound.

With inflation doing this, there is NO WAY the Fed can cut rates three times this year. The bond market has realized this and is now discounting maybe one rate cut of 0.25% this year.

Stocks didn’t like that. The S&P 500 has now dropped 4% and is below its 50-day moving average (DMA) for the first time since November 2023.

Bottomline: this move was entirely predictable, and those investors who were prepared for it are seeing EXTRAORDINARY returns in their portfolios.

On that note, we recently published a Special Investment Report detailing three investments that will profit from this rampant government spending. Normally this report would cost $499, but we are giving copies FREE to anyone who joins our daily market commentary.

To pick up your copy, go to:

CLICK HERE NOW!

Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

Apr

2024

The Great Debt Crisis of Our Lifetimes is Coming!

Over the last week, we’ve warned investors that the Fed’s actions are unleashing another round of inflation in the U.S. financial system.

By quick way of review.

The only part of the inflation data that is declining year over year is Energy prices. Every other segment of the Consumer Price Index (CPI) continues to rise.
Financial conditions are as loose today as they were when the Fed first started raising interest rates in March 2022. And yet, the Fed is preparing to cut rates instead of raising them.
The Fed is still providing hundreds of billions of dollars in liquidity to the financial system via credit facilities.
The Fed’s own research indicates that food inflation is the best predictor of future inflation. And agricultural commodities are skyrocketing to new highs.

Unfortunately for Americans, the Fed isn’t the only entity that is engaged in inflationary policies. The Biden administration is currently engaged in truly extraordinary levels of money printing.

The Biden administration has added $6 trillion to the national debt since taking office. Bear in mind, this is happening at a time when the U.S. is collecting a record amount in taxes. So, the Biden administration is not only spending all of the tax dollars collected, it’s spending so much money that the U.S. is having to issue record amounts of debt!

The below chart needs no explanation. This is simply not sustainable.

Indeed, the pace of debt issuance is speeding up not slowing. The Biden admin issued $3 trillion in new debt in between 2021 and 2023. It added another $4 trillion in new debt in 2023 alone. At this pace. the U.S. will hit $40 trillion in debt some time in mid-2025.

The good news is that those investors who are properly positioned for this stand to generate truly EXTRAORDINARY returns in the coming months.

To pick up your copy, go to:

CLICK HERE NOW!

Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

Apr

2024

Are You Ready For the Second Wave of Inflation?

Our latest theme is that the U.S. Central Bank, called the Federal Reserve, or the Fed for short, is NOT politically independent, but is in fact a highly partisan organization that leans left.

The above items are not some conspiracy theory. The Fed’s own actions support this view.

By quick way of review…

1) The Bernanke-led Fed launched QE 3 just three months before the 2012 Presidential election. At the time, the economy was growing, unemployment was falling, and there were no signs of systemic duress in the financial system. So this was a clear intervention to aid the Obama Administration’s 2012 re-election bid.

2) The Fed kept rates at zero for seven of the eight years President Obama was in office. Once it finally got around to raising rates, it engaged in one of the feeblest hiking schedules in history, raising them only once in 2015

and once in 2016.

3) Donald Trump won the 2016 Presidential election in a major upset to the political establishment. At that point the Fed suddenly began raising rates three to four times per year while simultaneously draining $500 billion in liquidity from the financial system.

4) Today, the Fed is actively juicing the stock market via multiple credit facilities designed to provide liquidity to help the Biden administration with its re-election bid. The Fed is also promising to cut rates despite the fact it’s an election year and inflation has not fallen to its 2% target.

I wish this was the end of this disturbing exercise, but it’s not: the Fed is also letting housing bubble up again. The reason? You guessed it, real estate is the single most owned asset class in the U.S. And boosting home prices during an election year is likely to sway voters.

TheS&P CoreLogic Case-Shiller U.S. National Home Price Index rose 6% in January. This is up from 5.6% in December 2023. As HousingWire notes, this represents the seventh consecutive month of annual price growth. It’s also the biggest increase since November 2022.

By the way, inflation was around 6% at that time!

So we’ve got both real estate and stocks bubbling up again, courtesy of the Fed playing political games. In the near-term this is fantastic for Americans, who will see their net worth rise as a result of this.

The bad news is that there’s no such thing as a free lunch. And the Fed’s political shenanigans are unleashing a second wave of inflation.

Gold has figured it out. It recently exploded to new all-time highs.

The good news is that those investors who are properly positioned for this stand to generate truly EXTRAORDINARY returns in the coming months.

On that note, the FREE copies of our Special Investment Report detailing three investments that will profit from the next round of inflation are rapidly being reserved. So if you want reserve one, you better move fast!

To pick up your copy, go to:

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Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

Mar

2024

How the Fed is Juicing Stocks to Help the Biden Administration

Yesterday, I detailed how the Fed is a political entity… and it leans left.

By quick way of review…

and once in 2016.

It is possible that the above items are all coincidence. It’s also possible that Bigfoot could actually be Elvis living in disguise in the woods.

So what is the Fed up to now?

It’s trying to help President Biden win the 2024 Presidential election by juicing the two asset classes that have the largest impact on Americans’ net worth (stocks and housing ).

Today we’ll be assessing the stock market.

The Fed is supposed to be draining liquidity from the financial system via its Quantitive Tightening (QT) program. However, the Fed is ALSO providing $155 BILLION in liquidity via its overnight credit facilities. To put that into perspective, it’s more liquidity than the Fed was providing via this facility in MARCH 2009 right after the worst financial crisis in 80 years!

As if that’s not egregious enough, the Fed is ALSO providing nearly $500 billion in liquidity via a process called Reverse Repurchase Agreements.

Small wonder then that the stock market has been roaring higher. The Fed is providing EMERGENCY levels of liquidity to the financial system at a time when the economy is growing! So much for QT!

In the very simplest of terms, the Fed is juicing stocks higher to boost the Biden Administration’s 2024 re-election bid. And rest assured, I’ll detail how the Fed is doing the same thing with housing in tomorrow’s article.

The good news is that those investors who are properly positioned for this stand to see extraordinary gains.

To pick up your copy, go to:

CLICK HERE NOW!

Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

Mar

2024

Here’s Proof the Fed is a Political Entity… and It Leans LEFT

By Graham Summers, MBA

It’s time to tell the truth when it comes to Fed political interventions.

One of the biggest myths concerning the Fed is that it is politically independent. This is laughably false to anyone who has paid attention during the last 25 years.

Consider that in 2012, the Bernanke-led Fed announced QE 3, its largest QE program in history at the time (an $80 billion per month, open-ended program), a mere THREE MONTHS before the U.S. Presidential election.

Bear in mind, the U.S. economy was growing and the U.S. financial system wasn’t under significant duress at the time. So this was blatant political interference to aid the Obama Administration’s re-election bid by boosting the stock market and economy.

A second major example of Fed political bias concerns its major shift in monetary policy once Donald Trump became President. To fully grasp this, we need to provide a little historical context.

Between 2008 and 2016, the Fed engaged in eight years of extraordinary monetary easing, maintaining interest rates of 0.25% (zero), and engaging in over $3 trillion worth of QE from 2008 to 2015. Bear in mind that throughout this time, the U.S. economy was technically NOT in recession. Economic growth was steady:

And the unemployment rate was in a clear downtrend:

Once the Fed actually ended easing, it embarked on one of the feeblest campaigns of tightening monetary policy in history, raising rates only one time in 2015 and 2016. I would note that all of this took place under the Obama administration.

Then Donald Trump won the 2016 Presidential election, and suddenly the Fed “got religion” about normalizing monetary policy. It raised rates three times in 2017 and another four times in 2018. In 2018 it also began shrinking its balance sheet via a process called Quantitative Tightening or QT. It would ultimately drain $500 billion in liquidity from the financial system via QT in 12 months. That is quite a shift considering the Fed had maintained rates at or close to ZERO for eight years prior to this.

Throughout 2016-2018, the Fed ignored numerous signals that this pace of tightening was placing the financial system under duress, right up until the junk bond market froze and the U.S. stock market crashed 20% during the holidays in December 2018.

For those who would argue that the Fed’s sudden shift from maintaining easy monetary policy for the better part of a decade to aggressively normalizing policy in the span of 20 months had nothing to do with Donald Trump being President, consider that former Fed Vice Chair Stanley Fisher admitted in an interview that the Fed’s raising rates in December 2018 was done specifically to hurt the economy because the Fed was annoyed with President Trump’s constant tweeting about them.

So again… the Fed IS a political entity… and it leans LEFT.

I’ll detail what this means investors as we head into the 2024 President election in tomorrow’s article. But for now, gold is giving us a clue.

The good news is that those investors who are properly positioned for this stand to see extraordinary gains.

To pick up your copy, go to:

https://phoenixcapitalmarketing.com/inflationstorm.html

Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

Feb

2024

Inflation is Back… and The Fed Won’t Be Cutting Rates Any Time Soon

Inflation is going in the wrong direction again… and that is BAD news for stocks.

If you’ll recall, the primary driver of the recent rally in stocks was the Fed suggesting that it would soon begin cutting rates. Indeed, it was a speech by Fed Governor Waller concerning that exact topic in late November 2023 that ignited the move from 4,550 to new all time highs for the S&P 500.

However, with the economy still growing at an annualized rate of 3%, stocks at new all-time highs, and financial conditions looser today than they were before the Fed starting raising rates in March 2022, the ONLY way the Fed could cut rates without looking like a group of political activists is if inflation is at or close to target.

It’s not. In fact, the latest inflation data is going the WRONG way for the Fed.

The Consumer Price Index (CPI) for January was supposed to show a month over month (MoM) increase of just 0.2% and a year over year (YoY) increase of 2.9%. Instead it showed a MoM of 0.3% and a YoY of 2.9%).

That 0.1% difference in MoM and 0.2% difference in YoY don’t sound like a big deal, but this was the reason the market dropped like a brick last week on Tuesday.

Then, on Friday, January’s Core Producer Price Index (PPI) came in at 0.5% MoM vs. expectations of 0.1%. Now that is a legitimately big deal as Core PPI is the Fed’s PREFERRED inflation measure.

This means there will be NO rate cuts in March. And investors will be lucky if they get a rate cut in April/ May.

This sets the stage for a significant stock market correction. I’ve warned repeatedly that stocks are quite stretched above their primary trend. I believe the S&P 500 will be working its way down to 4,800 and then eventually 4,600 in the coming weeks. I’ve illustrated those levels on the chart below.

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Feb

2024

The Fed and the Treasury Are Juicing the System for the 2024 Election

By Graham Summers, MBA

The Fed and the Treasury are juicing the markets to help the Biden administration with its 2024 re-election bid. And their actions are going to result in a massive crisis hitting some time in 2025.

The Fed is supposed to be politically independent, but everyone knows that is a fairytale. The Bernanke-led Fed introduced QE 3 a mere two months before the 2012 election to help the Obama administration. Moreover, former Fed Vice-Chair Stanley Fisher admitted that the Powell-led Fed intentionally raised rates in December 2018 (triggering a stock market crash) to hurt the economy under former President Trump.

Put simply, anyone who tells you that the Fed doesn’t play politics hasn’t been paying attention. And it is clear that today’s Fed led by Jerome Powell and today’s Treasury led by Janet Yellen are actively juicing the markets and economy to help the Biden administration with its claims that the economy is booming and everything is great.

Case in point, the Fed is talking about easing monetary conditions at a time when the stock market is at all-time highs and financial conditions are LOOSER than they were when the Fed first started raising rates! Why do this? To keep stocks higher for the election.

The Fed is not the only one in on this scheme.

The Treasury is pulling out all the stops to help the Biden administration. Typically, the U.S. runs a massive deficit during recessions in order to cushion the economic contraction. Today the U.S. economy is technically still growing… and the Biden administration is running the U.S.’s largest deficit as as percentage of GDP in history (outside of World War II).

Put another way, the U.S. is running emergency levels of social spending at a time when the economy is still growing. And this is adding trillions of dollars in new debt to the U.S.’s liabilities every year.

The U.S. owed $28 trillion in debt when Joe Biden was sworn into office in 2021. It owes $33 trillion today. And the pace of debt issuance is speeding up, not slowing down: the U.S. has added $2 trillion in debt in the last 12 months alone. You can thank Treasury Secretary Janet Yellen for signing off on this insanity.

Worst of all, the above items are happening for political purposes. There are ZERO fundamental reasons for the Fed and the Treasury to be implementing the above policies. But in today’s world of political corruption and systemic abuse of power, it’s simply how things are.

I’ll address how to profit from this in tomorrow’s article. If you’d like it delivered to your inbox, all you have to do is join our FREE daily investment commentary GAINS PAINS & CAPITAL.

To do so click the link below…

https://gainspainscapital.com/subscribe/

Nov

2023

Japan’s Currency Hasn’t Traded Here Since the Late 1980s!

By Graham Summers, MBA

Japan’s currency is now collapsing.

Japan’s central bank, the Bank of Japan (or BoJ for short) is currently engaged in an open-ended Quantitative Easing (QE) program. In its simplest rendering, the BoJ starts buying the 10-Year Japanese Government Bond any time that bond’s yield rises to 1% or higher.

It’s possibly the boldest QE program in history: a definitive “line in the sand” drawn by a major central bank as far as bonds are concerned. Again, this is an open-ended, unlimited QE program through which a MAJOR central bank does whatever it takes to keep is country’s bond yields from rising.

However, even this program is proving inadequate.

The BoJ has had to engage in previously unscheduled bond market interventions SIX TIMES in the last four weeks. And yesterday, it finally gave in and announced that its “line in the sand” of 1% for the yield on the 10-Year Japanese Government bond is now a “loose upper bound” instead of a definitive cap.

The below chart needs little explanation.

In response to this announcement, Japan’s currency, the Yen, broke to new lows. The Yen hasn’t traded at this level since the late 1980s!

This is the end game for every major central bank: the gradual losing control of the bond market… and having to sacrifice your currency in order to stave off a debt crisis. But even that won’t work eventually as the weaker the currency, the less value bonds will have.

As I keep warning, the Great Debt Crisis of our lifetimes is fast approaching.

In 2000, the Tech Bubble burst.

In 2007, the Housing Bubble burst.

The Great Debt Bubble burst in 2022. And the crisis is now approaching.

If you’ve yet to take steps to prepare for what’s coming, we just published a new exclusive special report How to Invest During This Bear Market.

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Jul

2023

The Fed Has Created Another Bubble… Are You Prepared For When It Bursts?

By Graham Summers, MBA

Everything changed for the financial system in March 2023.

What happened then?

The Fed and the Treasury implemented a backdoor bailout of the banking system.

If you’ll recall, in late February/ early March 2023, a number of smaller/ regional banks failed in the U.S. While we say these banks were “small” in comparison to the mega banks like JP Morgan or Wells Fargo, the reality is that when Silicon Valley bank, Signature Bank, and First Republic bank failed, they represented three of the largest bank failures in U.S. history.

Why were these banks failing?

Two reasons:

1) The banks were only paying 0.3% on deposits at a time when depositors could earn 4% or even 5% in a money market fund or short-term Treasuries. So people were pulling their money out of the banks in droves.

2) The banks were sitting on hundreds of billions of dollars’ worth of unrealized losses on their longer-duration assets (mid to long-term treasuries and loans) courtesy of inflation forcing these bonds to collapse.

Now, investor confidence is a strange thing. Both of the above issues were common knowledge as early as November 2022, but for whatever reason, investors chose to ignore them and give regional banks the benefit of the doubt until late February 2023,

Then Silicon Valley bank, Signature Bank, and First Republic failed, and investors began to panic, dumping regional bank shares. Banks’ share prices were falling 10%, 20% even 50% in a single day. And in early March 2023, it appeared as if the U.S. was mere days away from a full-scale banking crisis.

That’s when the Fed and the Treasury jumped in…

The Treasury, acting with the Federal Deposit Insurance Corporation (FDIC) moved to assure depositors that their money was safe, offering to backstop ALL deposits above the usual $250,000 that is insured by the FDIC.

Simultaneously, the Fed pumped nearly $400 billion into the financial system in the span of three weeks.

The Fed also opened a backdoor bailout scheme to funnel nearly $100 billion to the banks.

And that’s when everything changed for the stock market. Stocks bottomed and haven’t looked back.

Below is a weekly chart for the S&P 500 year to date. Each of those candles represent the price action of a given week. White candles represent up weeks and black candles represent down weeks.

As you can see, the last major black candle occurred in late February/ early March 2023 during the regional banks’ issues. Since that time, the market has closed UP for 13 of the last 19 weeks. And of the six down weeks, only two were significant; the other four we all bought aggressively, with stocks reclaiming most of the initial losses by the time the week ended.

I’ve illustrated the two significant down weeks with blue circles in the chart below. Note that the other four down weeks were either down only slightly (purple circles) or saw the market ramp hard off the lows (red circles).

In the simplest of terms, everything changed for stocks in early March 2023. Since that time, the markets are back into “bubble mode” with everything soaring. Companies like Sirius XM Holdings have saw their share price DOUBLE in the span of a week. Meanwhile Carvana is up 700%!

Bearing all of this in mind, smart investors are asking, “what’s next? Will the Fed continue to pump the markets into an even larger bubble, or is this whole mess going to come crashing down?”

I’ll detail my thoughts on this in tomorrow’s article. In the meantime, we recently outlined a unique “of the radar” investment that will could EXPLODE higher as due to the Fed’s money printing. We detail this investment in an investment report called Billionaire’s “Green Gold.”

It details the actions of a family of billionaires who literally made their fortunes investing in inflationary assets. And they just became involved in a mid-cap company that has the potential to TRIPLE in value in the coming months.

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Jul

2023

Why the Fed Has Failed to End Inflation… and What It Means For Your Portfolio

By Graham Summers, MBA

The Fed has raised interest rates from 0.25% to 5.25% in the span of 16 months.

And yet…inflation has yet to disappear in any significant fashion.

As I noted earlier this week, the ONLY data points in the CPI that are DOWN year over year are energy prices. When you strip out energy and food prices you find that core CPI is only slightly down. As I write this, it’s still clocking in at 4.8%… after fluctuating around 5% for most of 2023.

Moreover, asset inflation is out of control.

Stocks are less than 5% off their all time highs, despite one of the most aggressive rate hike cycles in history!

While financial conditions are roughly as loose as they were BEFORE the Fed started raising rates!

What’s going on here?

What’s going on is that the Fed is repeating the same mistake it initially made during the last major inflationary bout in the U.S. in the 1970s: focusing on rate hikes as opposed to draining excess reserves/ liquidity from the financial system.

During the first round of inflation from 1972-1975, the official inflation measure, the Consumer Price Index or CPI, rose from 3.3% to 11.1%. During this period, the Fed, chaired by Arthur Burns, attempted to rein in inflation using rate hikes. This succeeded in triggering a recession, but failed to end inflation: CPI only fell to 5.7% in 1976 before rebounding and eventually peaking at 13% in 1980.

Burns was replaced William Miller as Fed Chair in 1978, but Miller only lasted a year, as his efforts to end inflation proved similarly futile: the Fed raised rates from 6.75% to 10.5% during Miller’s tenure, but inflation continued to rise from 7.6% to 11.3%

It was only when Paul Volcker took the reins as Fed Chair in August 1979 that things changed. Volcker shifted the Fed’s focus from rate hikes to draining excess reserves/ liquidity from the financial system. The goal was to remove the froth from the financial system, while letting rates move in a wider range in order to tighten policy to the point that inflation finally disappeared.

The effect was a severe recession (July 1981-November 1982), but CPI also came down, eventually falling to ~3% in 1983.

The below chart of CPI in the 1970s is clear: rate hikes didn’t end inflation… but draining excess reserves did.

Unfortunately for us today, the Fed is repeating the EXACT same mistake it made from 1972-1979. And those investors who are properly positioned to profit from this mistake will do extremely well as I’ll outline in tomorrow’s article.

In the meantime, if you’re in the market for someone who can help you profit from the Fed’s blunders, I can help you not only thrive but achieve tremendous financial success.

This opens the door to some VERY inflationary surprises in the near future. And those who are positioned to profit from this could see some absolutely stunning returns.

We recently outlined a unique “of the radar” investment that will could EXPLODE higher as inflation turns back up. We detail this investment in an investment report called Billionaire’s “Green Gold.”

Normally this report would be sold for $249. But we are making it FREE to anyone who joins our Daily Market Commentary Gains Pains & Capital.

To pick up your copy, swing by:

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Jul

2023

Warning: Inflation May Have Just Bottomed in 2023

By Graham Summers, MBA

Yesterday, I noted that inflation has very likely bottomed for 2023.

No one in the media is discussing this, but the only parts of the inflation data that is actually falling are energy prices.

See for yourself.

Everything else is still going UP in price, though the pace is slower (this doesn’t stop the media from claiming inflation is falling though).

However, by the look of things, energy prices are bottoming here, particularly in Year over Year comparables.

You see, the inflation data published in the U.S. is based on year over year comparisons. When the Consumer Price Index (CPI) comes out at 5%, what it’s really stating is that a basket of goods and services costs ~5% more currently than it did a year ago.

This is called the base effect: a comparison between two data points in which the current one is expressed as a ratio of the older one. And it can result in some pretty strange circumstances if you’re not careful.

Situations like the one we’re in today.

Let’s wind the clocks back to the first quarter of 2022. Oil prices were rising rapidly due to inflation as the Fed had yet to end its Quantitative Easing (QE) program, let alone raise interest rates. Then Russia invaded Ukraine, and oil spiked even higher to $130 a barrel as the financial world grew terrified of large-scale oil production disruptions.

I’ve illustrated this time period on the below chart of oil prices with a red rectangle.

The rise in oil prices then halted as it became clear that Russia’s war with Ukraine wouldn’t disrupt global oil production by much if at all (Russia would continue selling oil via back-channels to India and other countries). Another factor that stopped oil prices from rising was the fact the Biden administration dumped 292 million barrels of oil on the market by draining the Strategic Petroleum Reserve (SPR).

I’ve been accused of playing politics with this data point, but the chart is clear. President Biden took office in January 2021. At that time the SPR had 638 million barrels of oil. What followed was the largest drop in the SPR’s history, with the SPR declining to 346 million barrels of oil where it sits today. That is a decline of 292 MILLION barrels of oil.

Add it all up, and the end result is that since June 2022, oil prices have declined from $130 a barrel down to the upper $60s/ lower $70s per barrel. The result of this, as far as the CPI is concerned, is that on a year over year basis, for the entirety of 1H23, we have been comparing oil prices in the blue rectangle to oil prices in the red rectangle. As a result of this, energy inflation is down sharply.

This trend is now ending as we work our way into the second half of 2023. Going forward, oil prices on a year over year basis will be compared to the prices in the red rectangle in the chart below.

Put simply, on a year over year basis, the massive drop in energy prices that has lowered overall CPI considerably will be ending. And since energy prices are the ONLY part of the CPI data that has been declining… it is highly likely that the inflation data is bottoming here… or at the very least, won’t be declining much more.

This opens the door to some VERY inflationary surprises in the near future. And those who are positioned to profit from this could see some absolutely stunning returns.

Normally this report would be sold for $249. But we are making it FREE to anyone who joins our Daily Market Commentary Gains Pains & Capital.

To pick up your copy, swing by:

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Mar

2023

Are We About to See a Full-Scale Banking Crisis?

By Graham Summers, MBA

Something doesn’t add up.

The Fed and Treasury keep telling us everything is fine… but the Fed has just expanded its balance sheet by $400+ billion in the span of two weeks.

We haven’t seen money printing like this since the depth of the 2020 meltdown. The Fed has erased 2/3rds of its 9 month long Quantitative Tightening in 14 days!

Despite these emergency loans/ access to credit, the regional banking ETF is right back near its panic lows.

Even stranger, several of the big banks are collapsing in share price as well. Wells Fargo, Bank of America, and Citigroup are all back at their October lows.

Looking at this, it appears something MAJOR is brewing behind the scenes. Banks might less than 14% of the S&P 500 weighting, but they account for something like 70% of all mortgages and 60% of all consumer loans.

Put simply, if this sector is in major trouble, it’s going to have a MAJOR effect on the economy.

Indeed, from a BIG PICTURE perspective my proprietary Crash Trigger is now on the first confirmed “Sell” signal since 2008.

This signal has only registered THREE times in the last 25 years: in 2000, 2008 and today.

If you’ve yet to take steps to prepare for what’s coming, we just published a new exclusive special report How to Invest During This Bear Market.

It details the #1 investment to own during the bear market as well as how to invest to potentially generate life changing wealth when it ends.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/BM2.html

PS. Our new investing podcast Bulls, Bears & BS is officially live and available on every major podcast application (Apple, Spotify, etc.)

To download or listen, swing by:

https://bullsbearsandbs.buzzsprout.com/

Mar

2023

What Happens When $400 Billion Isn’t Enough?

By Graham Summers, MBA

Now is the time to be particularly careful in the markets.

First and foremost, the banking crisis is not over. This is quite concerning, because the Fed has pumped nearly $400 BILLION into the financial system in the last two weeks.

Despite these emergency loans/ access to credit, the regional banking ETF is right back near its panic lows. What does it say about the issues in the financial system that $400 billion in additional liquidity combined with verbal backstops by the Fed/ Treasury isn’t enough to reverse the decline?

The next leg down is coming and coming soon.

Indeed, from a BIG PICTURE perspective my proprietary Crash Trigger is now on the first confirmed “Sell” signal since 2008.

This signal has only registered THREE times in the last 25 years: in 2000, 2008 and today.

If you’ve yet to take steps to prepare for what’s coming, we just published a new exclusive special report How to Invest During This Bear Market.

It details the #1 investment to own during the bear market as well as how to invest to potentially generate life changing wealth when it ends.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/BM2.html

PS. Our new investing podcast Bulls, Bears & BS is officially live and available on every major podcast application (Apple, Spotify, etc.)

To download or listen, swing by:

https://bullsbearsandbs.buzzsprout.com/

Mar

2023

The Market Is Setting Up a Trap

By Graham Summers, MBA

Stocks are rallying today because they believe:

1) The bank crisis is over (it isn’t).

2) The Fed is back to easing (it isn’t).

3) The economy is strong (it isn’t).

4) The Fed can achieve a “soft landing” (it can’t).

The Russell 2000 (IWM) which is more closely aligned with the economy and growth has figured this out. It’s only a matter of time before the S&P 500 “gets it.”

Meanwhile, regional banks are back at the lows.

Financials usually lead the broader market. Maybe this time is different?

Or maybe the next leg down is coming and coming soon.

If you’ve yet to take steps to prepare for what’s coming, we just published a new exclusive special report How to Invest During This Bear Market.

It details the #1 investment to own during the bear market as well as how to invest to potentially generate life changing wealth when it ends.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/BM2.html

Mar

2023

R.I.P. Tech Stocks… Particularly Garbage Tech

By Graham Summers, MBA

Tech is finished.

Ever since the Great Financial Crisis of 2008, the Fed has been primarily in an accommodative framework. For most of 2008-2023, interest rates were at ZERO or 0.25%. The below chart shows where rates were from 2007 until today. You’ll see that with the exception of 2017 to mid-2019, rates were effectively at ZERO for most of this time.

The Fed didn’t just keep rates at zero either. It printed money and used that money to buy assets/ debt securities to prop up the system anytime things started to break down.

We’re not talking about a little money printing either. Between 2007 and 2023, the Fed printed over $8 TRILLION.

This suppression of interest rates… combined with the money printing and easy access to credit had one primary beneficiary…

The Tech sector.

Tech, particularly high beta garbage Tech (apps, texting companies, social media, etc), NEEDs low interest rates to even exist because these companies require a TON of capital/ debt to reach profitability (assuming they even do that, which 95% DON’T).

And remember, we’re not talking about the Fed creating an artificial environment for a few months. They’ve been doing it for most of 15 years. And every time the system began to break down, the Fed would do even MORE extreme versions of these policies… which in turn made the environment even more favorable to the Tech industry.

How bad did this get?

Talk to anyone who wants to become an entrepreneur today and he or she will say they want to found a Tech company. NO ONE says they want to go into energy, or materials, or manufacturing. It’s all about apps, social media, search engines, etc.

Think of it this way, as of 2021…

The largest automaker in the stock market was a tech stock (Tesla).

The largest commerce company in the stock market was a tech stock (Amazon).

The largest consumer discretionary company in the stock market was a tech stock (Apple).

And so on…

The Tech sector was the largest sector by weighting in the S&P 500 by almost a factor of two. In fact, Tech was larger than both the 2nd and the 3rd heaviest weighted sectors COMBINED!

The below chart shows the performance of the Tech Sector relative to the broader market (S&P 500 since 1999). As you can see, Tech outperformed the broader market non-stop from 2008 onward. By the time 2022 rolled around, it was at levels that EXCEEDED those established by the Tech Bubble of 2000!

All of this is due to the Fed.

Most of the people who work in Tech are not geniuses, nor are they the best entrepreneurs on the planet. They were simply the beneficiaries of an artificial environment created by the Fed.

In the simplest of terms, Tech is to the bubble today, what Banks were to the bubble in 2007: the sector that benefited most, generated the largest profits, and consumed the largest percentage of talent/ aspirations.

That period is now OVER. And it’s not coming back.

So what does this mean for the markets?

Well, if the largest sector in the market is in a spectacular bubble the likes of which won’t return for at least another decade… what do you think?

The Silicon Valley Bank bailout is the Bear Stearns moment for this bubble. Lehman is coming… as is AIG… and this entire mess won’t end until the stock market hits levels most cannot even imagine today.

Indeed, from a BIG PICTURE perspective my proprietary Crash Trigger is now on the first confirmed “Sell” signal since 2008.

This signal has only registered THREE times in the last 25 years: in 2000, 2008 and today.

If you’ve yet to take steps to prepare for what’s coming, we just published a new exclusive special report How to Invest During This Bear Market.

It details the #1 investment to own during the bear market as well as how to invest to potentially generate life changing wealth when it ends.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/BM.html

Feb

2023

A Crash is Coming… I Hope You’re Ready

By Graham Summers, MBA

Yesterday I wrote about the egregious levels of froth that have returned to the financial system.

By quick way of review:

1) Investors poured $1.5 billion into stocks per day in January.

2) Meme stocks and insolvent garbage tech plays are exploding higher by 20%, 30% even 100%+ in days.

3) Financial conditions are now LOOSER than they were before the Fed started raising rates in March of 2022.

Today, I’d like to share a chart that illustrates this situation to perfection. It’s alleged to be Warren Buffett’s favorite means of valuing the stock market. In fact, Buffett used this indicator to avoid going anywhere near stocks during the Tech Bubble in the late 1990s.

I’m talking about the total stock market’s capitalization as a percentage of the U.S.’s Gross Domestic Product.

The single most important aspect of this chart is the fact that in spite of stocks collapsing 20% last year… this indicator is STILL HIGHER than it was at the PEAK of the Tech Bubble.

Anyone who claims this bear market is over and that the Fed’s work is done is out of their minds. The stock market is now MORE overvalued relative to the economy than it was at the absolute peak of the Tech Bubble.

I fully believe the stock market is going to crash. My proprietary Crash Trigger is on a confirmed “SELL” for the first time since 2007. The only other time it has signaled in the last 25 years was in 2000, right before the Tech Crash.

If you’ve yet to take steps to prepare for what’s coming, we have published an exclusive special report How to Invest During This Bear Market.

It details the #1 investment to own during the bear market as well as how to invest to potentially generate life changing wealth.

This report is usually $250, but we’re giving away 100 copies for FREE to those who sign up for our free daily market commentary.

To pick up one of the remaining copies, use the link below…

https://phoenixcapitalmarketing.com/BM2.html

Feb

2023

The Bubble is Back… And It’s Bursting Will Only Be That Much Worse

By Graham Summers, MBA

The financial system is back in bubble mode.

Everywhere you look, there are major signs of froth.

1) Investors poured $1.5 billion into stocks per day in January.

2) Meme stocks and insolvent garbage tech plays are exploding higher by 20%, 30% even 100%+ in days.

3) Financial conditions are now LOOSER than they were before the Fed started raising rates in March of 2022.

4) The c-r-y-p-t-o pumpers are back… promoting their scams as the “answers” to everyone’s problems.

Put simply, it’s as if the Fed never even attempted to deflate the bubble of 2021-2022. If it weren’t for the fact Treasuries now yield 5%, you’d be hard pressed to find any signs that the Fed has accomplished anything of note.

Speaking of Treasury yields, the yield on the 2-Year U.S. Treasury has broken out of its downtrend. It is now probing its former highs. If it breaks here… GOOD NIGHT.

The Fed is going to have to get a LOT more aggressive to reduce this level of froth and asset price inflation from the financial system. Put simply, the Fed will need to tighten things until something MAJOR breaks.

This opens the door to a SEVERE recession later this year. And that will mean stocks crashing to lows that no one anticipates.

If you’ve yet to take steps to prepare for what’s coming, we have published an exclusive special report How to Invest During This Bear Market.

It details the #1 investment to own during the bear market as well as how to invest to potentially generate life changing wealth.

This report is usually $250, but we’re giving away 100 copies for FREE to those who sign up for our free daily market commentary.

To pick up one of the remaining copies, use the link below…

https://phoenixcapitalmarketing.com/BM2.html

Jan

2023

The Everything Bubble Has Burst

By Graham Summers, MBA

Over the last 25 years, the financial system has been in what I call the “era of serial bubbles”: a time in which central banks create asset bubbles, said asset bubbles burst, and central banks respond by creating another, larger bubble in a more systemically important asset class.

The first primary bubble was the Tech Bubble of the late 1990s. While that bubble was isolated to a particular sector in a particular asset class (Tech Stocks), it was egregious in scope. A third grader could have looked at a chart of the NASDAQ and told you the situation wouldn’t end well.

When that bubble burst, the Fed opted to create another bubble by employing extraordinary monetary policies. Specifically, the Fed kept interest rates too low for too long, essentially making credit free. And because congress passed legislation that lowered lending standards to potential homeowners, the subsequent bubble took place in real estate: a much larger, systemically important asset class.

However, this time around, the bubble became truly global in scope, courtesy of Wall Street derivatives that the Fed ignored/ refused to regulate. In simple terms, Wall Street packaged up garbage mortgages into “assets” that were sold to everyone from hedge funds to pension funds, banks and more. In this manner, toxic mortgages in Florida, Las Vegas, etc. ended up on the balance sheets of everyone from Japanese banks to Spanish hedge funds.

So, when the housing bubble burst, all of these assets had to be revalued at much lower values… resulting in the global banking system imploding during the Great Financial Crisis of 2008.

What did the Fed do to address this situation?

It attempted to corner/ create a bubble in U.S. sovereign bonds, also called Treasuries.

These are the senior most asset class in the world. These bonds act as the bedrock of our current financial system, with their yields representing the “risk free” rate of return against which all assets (stocks, bonds, real estate, etc.) are valued.

Put simply, when the Fed created a bubble in these bonds it was actually creating a bubble in EVERYTHING, because ALL asset classes would eventually be repriced based on Treasuries were doing.

This is why I coined the term “the Everything Bubble” in 2014.

And that bubble has now burst.

The yield on the all-important 10-year U.S. Treasury has broken its 35 year down trend. The era of Serial Bubbles is over. And there is nothing the Fed can do to fix this situation.

After all, what can it do? There isn’t a larger more systemically important asset class the Fed could use to create another bubble. And introducing more extraordinary monetary policy would make the situation worse.

What does this mean?

The Great Crisis of our lifetimes is finally here.

I’ll detail what’s coming for the markets in tomorrow’s article. In the meantime, if you’ve yet to take steps to prepare for this crisis, we just published a new exclusive special report How to Invest During This Bear Market.

It details the #1 investment to own during the bear market as well as how to invest to potentially generate life changing wealth when it ends.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/BM.html

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May

2021

Warning: the Current Crypto Market is Napster and iTunes is Coming, Pt 2.

Yesterday I outlined why I believe most crypto-currencies will eventually prove worthless.

By way of quick review, crypto is a tech asset. And all technological revolutions follow two phases:

The initial breakthrough phase, which occurs before social/legal frameworks are in place.

The “normalization” phase during which social/legal frameworks are implemented giving the technology a societal and financial legitimacy.

If you need a real-world example of this, think of the electronic music file or MP3 revolution. The first phase was Napster, which featured the sharing of music in what was later deemed as illegal activity (the legal framework was not yet ready for the technology).

Then along came iTunes: the normalized version of the technology in which MP3s could be bought and sold in a legally acceptable form.

I believe bitcoin and crypto currencies are currently in the Napster phase of their development. And the Fed will soon introduce “iTunes.”

We know that as far back as 2017, the Fed was already studying this issue:

As the price of the cryptocurrency continues to soar, the Federal Reserve apparently is giving thought to having a product like bitcoin for its own.

William Dudley, president and CEO of the Federal Reserve Bank of New York, said at a conference Wednesday that the Fed is exploring the idea of its own digital currency, according to reports from Dow Jones.

Any product likely would be well off in the future, he said, adding that it would be “very premature” to estimate when the Fed would come up with its own offering, according to Bloomberg.

Source: CNBC

More recently, on February 5^th 2020, Lael Brainard who sits on the Federal Reserve’s Board of Governors, which is in charge of establishing Fed policy, stated the following:

In a Bank for International Settlements survey of 66 central banks, more than 80 percent of central banks report being engaged in some type of central bank digital currency (CBDC) work.¹² … a few central banks report that they are moving forward with issuing a CBDC. Building on the tremendous reach of its mobile payments platforms, China is reported to be moving ahead rapidly on plans to issue a digital currency.¹³

Given the dollar’s important role, it is essential that we remain on the frontier of research and policy development regarding CBDC… we are conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC. We are collaborating with other central banks as we advance our understanding of central bank digital currencies.

https://www.federalreserve.gov/newsevents/speech/brainard20200205a.htm

Here is a senior member of the Fed stating point blank that the Fed needs to introduce a central bank digital currency (CBDC) in order to maintain the geopolitical standing of the U.S. dollar. The fact she mentions this RIGHT after discussing the fact China is moving forward with a sovereign digital currency tells us that this is a matter of national security for the U.S.

And then just this week, Fed Chair Jerome Powell commented that crypto currencies are “not convenient for payment” due to swings in value. He added that the Fed will issue a report on U.S. digital currency this summer.

Look, it’s obvious what the Fed is doing here. China has already launched a pilot version of the digital yuan. Ukraine, Saudi Arabia, Sweden and Thailand are also doing the same.

Do you think the Fed, the single most important central bank in the world, which controls the world’s reserve currency (the $USD) is going to sit back and let the world move into the digital currency space without moving itself?

No chance in hell.

Which means at some point in the not-so-distant future, the Fed will introduce “Fed Coin” or whatever its CBDC will be called

When that happens, 99.9% of crypto currencies will go to zero.

After all once the Fed introduces its own crypto currency, EVERY other crypto currency would then exist in direct competition to the Fed’s CBDC, which opens the door to charges of counterfeiting and other Federal felonies.

Currently crypto does NOT compete with the Fed because the Fed doesn’t have a CBDC yet. Once it does, everything changes.

Let me put it this way… what happened to Napster when iTunes showed up?

Bear in mind, Apple the company is nowhere near as powerful or formidable a competitor as the U.S. government. Someone might win a lawsuit against Apple. Very few people win lawsuits against the U.S. government.

Enjoy crypto in its current form, but know that it’s like Napster, and soon iTunes will come along.

Originally posted on www.gainspainscapital.com

Swing by to pick up three FREE investment reports valued at over $300 today.

Graham Summers

Chief Market Strategist

Phoenix Capital Research

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Warning: the Current Crypto Market is Napster and iTunes is Coming, Pt 2.

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