Central Bank Insanity

Can DOGE Fix This? We’ll Find Out Soon!

By Graham Summers, MBA | Chief Market Strategist

More Department Of Government Efficiency (DOGE) news.

As the Trump administration prepares to take office on January 20, 2025, more and more data points detailing the egregious fraud, waste, and abuse in government spending are being made public.

Consider…

The Federal Government spends $15 billion per year on office buildings/ energy costs, not to mention hundreds of millions if not billions of dollars on office furnishings. Despite this massive overhead, the government is current sitting on over 7,000 vacant office buildings as most Federal government employees are still allowed to work from home.

Bear in mind, the pandemic ended over 18 months ago.

Having said that, the primary issue as far as government waste is concerned isn’t the number of Federal employees which hasn’t grown by much over the last 20 years… rather it’s the government spending, particularly on ludicrous projects/ programs that offer little if any real benefit to society.

Some of the more disturbing items DOGE has noted…

  • Congress dispensed $516 billion to programs whose authorizations previously expired under federal law. Over half of that ($320 billion) pertained to programs whose authorizations expired over a decade ago.
  • The Pentagon has failed its 7th STRAIGHT AUDIT and is unable to account for where $824 BILLION in spending went. That’s roughly the same size as Poland’s GDP.
  •  In 2023, federal programs made $236 billion in improper payments. That’s billion with a “b.”
  • Some $200 billion in pandemic spending/ stimulus went to fraud/ abuse whether it be companies that didn’t qualify for PPP loans, fake companies that didn’t even exist, etc.

These are just the LARGE line items of note. Once you start delving into the smaller, individual programs the government funds, things go from disturbing to ludicrous.

Some of the worst of the worst that DOGE has highlighted on X (formerly Twitter).

  • $45 million for a diversity and inclusion scholarship in Burma
  • $3 million for “girl-centered climate action” in Brazil
  • $288,563 for diverse bird watcher groups
  • $100,000 to study if tequila or gin makes sunfish more aggressive
  • Almost $1 million to study if cocaine makes Japanese quail more sexually promiscuous
  • $750,000 to study if Neil Armstrong said “One small step for Man” or “One small step for ‘a’ man” during the moon landing.
  • $28 million in licensing fees for a green camouflage pattern for Afghan National Army uniforms. Bear in mind, the “camouflage” didn’t work as Afghanistan is mostly desert.
  • $2.5 million on a Super Bowl Ad for the Census
  • $1.7 million for holograms of dead comedians
  • $500,000 to build an IHOP in Washington, DC

And on and on.

The mere fact DOGE is bringing these items to the public’s consciousness is a worthy endeavor. Hopefully, DOGE can get rid of this stuff and get government spending under control. As we write this, the Federal debt has cleared $35 TRILLION and is adding $1 trillion in new debt every 100 days.

This spending isn’t free. Interest payments on the federal debt have cleared $1 trillion per year and are now the largest line item in our annual federal budget. If DOGE doesn’t get government spending under control, a debt crisis is coming sooner rather than later.

The one thing that IS clear is that DOGE would improve the U.S. fiscal situation. This would remove one of the biggest concerns for the stock market (the U.S. debt mountain/ massive deficits) and open the door to new highs.

On that note, we just published a Special Investment Report detailing that, as well as the #1 investment to own during Trump’s 2nd Term.

We are selling this report as a standalone item for $499… but you can pick up a copy FREE simply by joining our daily market commentary, Gains Pains & Capital.

We are making only 99 copies available to the public.

As I write this, there are only 54 left…

To pick up yours…

CLICK HERE NOW!

Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research

Posted by Phoenix Capital Research in Banana Republic Corruption, Central Bank Insanity, crypto

Can Uncle Sam Stop the World Sliding Into Recession?

By Graham Summers, MBA | Chief Market Strategist

Outside of the U.S., the world economy is in serious trouble. Europe is teetering on the verge of recession with its collective economy barely growing for three quarters in a row.

Germany, the largest most dynamic economy in the EU has only just established a new high in its stock market. This is shocking when you consider the European Central Bank (ECB) has already cut interest rates by nearly 1%! Put another way, European stocks are struggling despite that region’s central bank already aggressively easing monetary policy!

Elsewhere in the world, China just “blinked” by cutting rates on reverse repos and injecting liquidity into its financial system. The problem here is similar to in Europe: economic weakness.

Chinese equities have gone nowhere since late 2022. In a financial system that relies heavily on asset prices for political stability, this has been a disaster. Chinese policymakers are finally acting in the hopes of breaking the downtrend.

Japan has a strong stock market… at the expense of a collapsing currency. The Yen is trading at levels not seen since the early ’90s. The global financial system experienced its first “ripple” from this situation in early August when stocks nose-dived as the Yen erupted higher on an intervention.

This leaves the the U.S. as the sole major economy chugging along with GDP growth of ~3% and a stock market that hit new all-time highs on a regular basis for six months.

A lot is riding on Uncle Sam’s shoulders. Does he have what it takes to keep the world from rolling over into recession?

To answer that question, I’d refer you to our special investment report, How to Predict a Crash which details a quantifiable tool that has accurately predicted Black Swan market crashes. It caught the 1987 Crash, the Tech Crash, and the Great Financial Crisis, to name a few.

With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in How to Predict a Crash.

Normally, I’d charge $499 for this report as a standalone item. But I’m giving it away FREE to anyone who joins our daily market commentary Gains Pains & Capital.

To pick up your copy now (it doesn’t cost a dime)…

CLICK HERE NOW!

Best Regards

Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research

Posted by Phoenix Capital Research in Central Bank Insanity

A “Mystery” Buyer is Propping Up the Markets

By Graham Summers, MBA | Chief Market Strategist

This is BLATANT manipulation!

Stocks suffered a mini crash in early August when the Bank of Japan blew up the carry trade. Peak to trough, the S&P 500 lost 10% in a matter of three days.

Then “someone” stepped in, buying stocks hand over fist, and the market erupted higher, erasing all of those losses in less than two weeks.

This was blatant manipulation. No REAL buyer panic buys stocks. In fact, the traders running books for large financial institutions are graded based on their ability to acquire shares without moving the market.

Again, this was clear manipulation. Someone was trying to force stocks higher no matter what. 

Fast forward to last week, and the same mystery buyer was at it again.

The S&P 500 was rejected by critical resistance at 5,650 (red line in the chart below). Stocks began to roll over, taking out the all-important 50-day moving average (the blue line in the chart below). Note that breaking below the 50-DMA was what precipitated the minicrash in early August.

Then the mystery buyer showed up again, PANIC BUYING stocks. Sending them straight up with every single dip being bought aggressively. Once again, the entire decline was erased in a matter of days.

Again, this is blatant manipulation. No REAL buyer with deep pockets does this stuff. This was someone who was CLEARLY intent on propping up the stock market at all costs.

Who is doing this?

It has to be the Fed… or the Fed courtesy of a proxy.

No other investor has bottomless pockets and PANIC BUYS stocks like this. Again, this is not some investor who’s trying to make money… this is someone who wants stocks higher no matter what.

Again, this has to be the Fed. In fact, I believe that at some point in the next few months, the Fed will openly admit to buying stocks with a new QE program.

I’m putting together a special report detailing precisely why this is… and which stocks I believe the Fed is buying.

This report, titled Chapter X will be sold as a standalone item for $499.

But readers of our free daily market commentary Gains Pains & Capital will have a copy delivered to their inboxes FREE of charge.

To join Gains Pains & Capital and have your copy of Chapter X delivered to your inbox later this week…

https://gainspainscapital.com/subscribe/

Best Regards,

Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research

Posted by Phoenix Capital Research in Banana Republic Corruption, Central Bank Insanity

Is This Major Country About to Default?

Japan is showing us the endgame for central bank insanity.

Ever since the Great Financial Crisis, the Fed has been following Japan’s playbook for propping up a financial system. Indeed, everything the Fed has done, Japan originally nearly a decade earlier.

The Fed first cut interest rates to zero in 2008. Japan did that in 1999. 

Similarly, the Fed first introduced large-scale Quantitative Easing (QE) programs in 2008. Japan first did that in 2001. 

My point is that Japan is the grandfather for central bank insanity. Because of this, the current situation in that country bears watching as it shows us the endgame for what will eventually unfold in the US.

I’m talking about the collapse of a currency.

Japan’s currency, the Yen, started collapsed in 2002. Since that time, Japan’s central bank, the Bank of Japan or BoJ for short, has begun intervening to prop up the currency.

As you can see in the below chart, every single one of these interventions has failed. The Yen is now hanging on to the edge of a cliff by its fingernails. If this last line of support gives way, it could enter a free-fall.

Put simply, the third largest economy in the world is on the verge of an outright currency collapse.  And if you think this couldn’t happen in the U.S., you are mistaken. The Fed has already signaled that it will be inflating away the U.S. debt in the coming years.

This means the $USD slowly entering a death spiral… and inflation trades making fortunes.

There is a LOT of money to be made here… and if you’re looking for a means to to insure you profit from it, we recently published a Special Investment Report detailing three investments that will profit from the Fed’s inflationary mistakes. As I write this, all three of them are exploding higher.

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

Posted by Phoenix Capital Research in Bank Crisis, Central Bank Insanity, Inflation

The Fed Has Made a Crucial Mistake… What Does That Mean For Stocks?

by Graham Summers, MBA

As I outlined yesterday, the Fed is in a panic.

By quick way of review:

  1. The Fed stopped raising rates in June 2023.
  2. Since that time, the Fed has shifted to talking about easing monetary conditions.
  3. This has ignited a second wave of inflation.
    1. On an annualized basis, the 1-month change in inflation is 3.9%
    2. On an annualized basis, the 3-month change in inflation is 4.4%
  4. This resurgence in inflation has benefited former President Trump’s campaign as Americans by and large vote with their wallets.
  5. Former President Trump has set his sights on the Fed.

Regarding #5, Trump is convinced the Fed plays politics to benefit the establishment/ leftists. He believes the Fed intentionally sabotaged the economy during his first term by raising rates aggressively from 2017-2019. He also believes the Fed is actively juicing the markets to help the Biden administration today (he’s not wrong there).

And unlike his prior attacks on the Fed, which largely consisted of tweets and interviews in which he mocked Fed officials, this time around, Trump is planning to take action if elected.

Trump’s advisors recently leaked a proposal to overhaul the Fed completely should Trump win in 2024. Among the various proposals:

  1. Allowing Trump to fire Fed Chair Jerome Powell before the latter’s term is up.
  2. Revising the Fed’s leadership structure to include the White House in decisions concerning monetary policy (including cutting or raising interest rates).
  3. Using the Treasury to keep Fed policy “in check” 

Let me be clear here: I’m not saying that I agree with Trump’s proposals or that a Trump win in 2024 would be a good thing. I’m simply pointing out, as a statement of fact, what Trump plans to do if he wins.

This terrifies the Fed. If there’s one thing policymakers DON’T like, it’s being told what to do, or worse still, being fired.

And thus the Fed is in a pickle. On the one hand, it wants to do everything it can to juice the economy/ stock market to insure Trump doesn’t win.

But on the other hand… juicing the financial system is highly inflationary, which makes it more likely that Trump will win!

So what does this mean for stocks?

Increased volatility.

Stocks are being pulled in two directions shifting from focusing on potential Fed easing, to worrying about higher inflation resulting in the Fed having to tighten again.

We’ve already gotten a taste of this in  2024.

Stocks came into the year roaring higher on hopes of the Fed cutting rates. Then inflation began to tick upwards, resulting in stocks falling on fears that the Fed wouldn’t be able to cut rates any time soon.

We’re not talking about small price swings either as the below chart illustrates.

What does this mean for investors?

Your best bet is to ride the inflationary impulse into the election. After that, everything hinges on who wins.

What investments will profit the most from this situation?

To answer that, we recently published a Special Investment Report detailing three investments that will profit from the Fed’s inflationary mistakes. As I write this, all three of them are exploding higher.

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

Posted by Phoenix Capital Research in Central Bank Insanity, Inflation

Has the Fed Unwittingly Guaranteed a Trump Win?

The Fed is panicking.

Why?

Because, its efforts to loosen monetary policy to juice stocks and real estate higher to aid the Biden administration with its re-election campaign have unleashed another round of inflation.

Don’t believe me? See for yourself.

The Consumer Price Index (CPI) bottomed right around the time the Fed stopped raising rates. It has since flat-lined and is now turning back up.

The same is true for the Fed’s preferred inflation measure, core-Personal Consumption Expenditures or core-PCE.

That little uptick doesn’t look like much, but as economist Jason Furman notes, if you annualize the 1-month and 3-month changes in core-PCE, the situation the second wave of inflation becomes clear.

Annualizing the 1-month MoM rate of change in Core-PCE gives you inflation of 3.9%.

Annualizing the 3-month MoM rate of change in Core-PCE gives you inflation of 4.4%.

Still not convinced? Take a look at what gold is doing.

As a general rule, Americans vote with their pocketbooks. And this spike in inflation is TOXIC for the Biden administration.

Former President Trump is one of the most unlikeable candidates in history… and yet, he’s been gaining on President Biden in the polls ever since inflation started ticking back up again in September 2023 (see for yourself)

So what will the Fed do? Its monetary easing boost stocks and real estate, but it also worsens inflation, which increases the odds of former-President Trump taking the White House. And what investments will profit the most from this situation?

To answer that, we recently published a Special Investment Report detailing three investments that will profit from the Fed’s inflationary mistakes. As I write this, all three of them are exploding higher.

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

Posted by Phoenix Capital Research in Central Bank Insanity, Inflation

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

Posted by Phoenix Capital Research in Central Bank Insanity
Why Stocks Are Falling… and What Comes Next

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

Posted by Phoenix Capital Research in Central Bank Insanity, Inflation

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.

  1. 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.
  2. 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.
  3. The Fed is still providing hundreds of billions of dollars in liquidity to the financial system via credit facilities.
  4. 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.

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.

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

Posted by Phoenix Capital Research in Central Bank Insanity, Inflation

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:

CLICK HERE NOW!

Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

Posted by Phoenix Capital Research in Banana Republic Corruption, Central Bank Insanity, Inflation

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…

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.

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.

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:

CLICK HERE NOW!

Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

Posted by Phoenix Capital Research in Banana Republic Corruption, Central Bank Insanity, Inflation

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.

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:

https://phoenixcapitalmarketing.com/inflationstorm.html

Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

Posted by Phoenix Capital Research in Banana Republic Corruption, Central Bank Insanity, Inflation

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.

If you’re looking to take your trading to the next level, we’ve identified a simple strategy for riding rallies, avoiding corrections, and potentially beating the market by a wide margin. And best of all, it only takes about five minutes a day to use it! And despite this simplicity, it is INCREDIBLY profitable.

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Posted by Phoenix Capital Research in Central Bank Insanity, Inflation

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/

Posted by Phoenix Capital Research in Banana Republic Corruption, Central Bank Insanity

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.

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.

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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Posted by Phoenix Capital Research in Central Bank Insanity, Debt Bomb

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.

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:

https://phoenixcapitalmarketing.com/GreenGold.html

Posted by Phoenix Capital Research in Bank Crisis, Central Bank Insanity

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.”

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.

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:

https://phoenixcapitalmarketing.com/GreenGold.html

Posted by Phoenix Capital Research in Central Bank Insanity, Inflation

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.

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.”

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.

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:

https://phoenixcapitalmarketing.com/GreenGold.html

Posted by Phoenix Capital Research in Central Bank Insanity, Inflation

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:

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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:

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Posted by Phoenix Capital Research in Central Bank Insanity, stock collapse?

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

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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/


Posted by Phoenix Capital Research in Central Bank Insanity, stock collapse?