Debt Bomb

The Dirty Truth About the “Debt Deal” and What It Means for Investors

By Graham Summers, MBA

The U.S. passed a debt ceiling resolution in May of 2023. Both the GOP and the Democrats claimed victory for the deal, but the reality is the government won and Americans were screwed.

How do I know this?

It took the U.S. 232 years to generate its first $10 trillion in debt. It added another $10 trillion in debt in just nine years once the Fed pinned interest rates at zero and cornered the bond market with Quantitative Easing (QE) from 2008 to 2017. 

The U.S. then added another $10 Trillion in debt in just five years when the Fed reintroduced ZIRP and QE in NUCLEAR fashion in response to the pandemic. Obviously, you’re beginning to see the trend here: the U.S. added $10 trillion in debt in 232 years, nine years, and five years. 

But the “debt deal” has really added fuel to the fire.

The U.S. has added another $4 trillion in debt since 2022. But~ $2 trillion of this was added in the seven months since the debt deal was passed! And thanks to the debt deal removing the debt ceiling until 2025, there is little chance that the pace of debt issuance will slow anytime this year.

How will this end? With a debt crisis of some sort. The details, for now, are unclear.

What isn’t unclear is that investors can potentially make a LOT of money from this situation. Those who invested in the right assets at the right times during the last 20 years while the U.S. has engaged in a debt bonanza have seen some truly OBSCENE returns.

And no, I’m not talking about gold. The precious metal has traded sideways for four years, while the U.S. has tacked on another $10 trillion in debt.

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Posted by Phoenix Capital Research in Debt Bomb

Enjoy the Santa Rally… What Comes Afterwards Won’t Be Pretty

By Graham Summers, MBA

Treasury Secretary Yellen wants stocks and bonds higher. 

The reason is simple.

Next year 2024 is an election year. And Yellen is a playing politics for the Biden Administration. After all, it’s hard to convince voters to re-elect someone when their 401(k)s are shrinking by the week.

This is why Secretary Yellen chose to have the Treasury shift its issuance from its traditional breakdown of 15%-20% short-term debt/ 80%-85% long-term debt to favor issuing more short-term debt for the foreseeable future.

Doing this alleviates some of the pressure on long-term Treasuries as well as stocks which are priced based on the former’s yields. This is THE reason why both assets (stocks and bonds) erupted higher last week after declining for most of the last three months.

The BIG problem with this is that Secretary Yellen is choosing to rely heavily on short-term debt at a time when the Biden Administration is running its largest deficit as a percentage of GDP outside of WWII.

The U.S. has added nearly $2 TRILLION to the debt in the last 12 months alone. This is happening at a time when the Treasury is ALSO rolling over trillions of dollars worth of debt. 

By relying on short-term debt (12 months of less in duration), Secretary Yellen is setting the stage for an absolute disaster in late 2024/ early 2025. 

Why?

All of this short-term debt will be coming due between now and then. By late 2024, the U.S. will have nearly $35 trillion in debt. And if inflation hasn’t collapsed by then, all of the new short-term debt will need to be rolled over when rates are HIGH.

Interest payments on the debt are already at $800 billion. What do you think will happen to them when the U.S. has $35 trillion in debt and needs to roll over a large amount of this while rates are still in the 4% range or higher?

The long-term end of the bond market has figured it out. Stocks will too eventually.

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: 

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

Warning: the U.S. is on the Verge of Becoming an Emerging Market

By Graham Summers, MBA

Both stocks and bonds caught a bid mid-week on announcements that the Treasury has decided to issue less long duration bonds that previously expected.

This is GREAT news for risk assets in the short-term. It’s EXTRAORDINARILY BAD NEWS for EVERYTHING in the long-term.

Let’s me explain.

The recent sell-off in both bonds and stocks was driven by one primary concern: that the Treasury would need to issue a gargantuan amount of long-term debt to fund the Biden administration’s profligate spending.

In its simplest rendering:

1) The Biden administration is running the largest fiscal deficit as a percentage of GDP outside of WWII.

2) All of this spending requires the Treasury to issue massive amounts of debt.

Historically, the Treasury’s debt issuance consisted of 15%-20% short-term debt, and 80%-85% long-term debt. The reason for this was to avoid a rate shock should rates change dramatically in a 12-month period (all the short-term debt would come due at a time when rates were much higher).

It was this heavy reliance on long-term debt issuance that resulted in the 10-Year U.S. Treasury collapsing from late July through late October. And since stocks are generally a long-duration asset class, this pulled stocks down as well. 

The below chart shows the 10-Year U.S. Treasury (red line) plotted against the S&P 500 (black line). As you can see, the two were trading in lock-step as soon as the Treasury announced its long duration debt issuance needs for the third quarter of 2023 on July 31st.

The Treasury took note of this collapse, which is why it announced a shift in focus for its 4Q23 debt issuance from long-term debt to short-term debt. 

In its very simplest rendering, the Treasury intentionally removed the #1 concern for the stock market… thereby opening the door to a Santa Rally into year-end. Unfortunately, the cost of this is that the U.S. debt markets will be in VERY serious trouble a year from now.

Why?

Because this is a “one time” trick that cannot be repeated. Sure, it puts a floor under bonds for the time being, but unless the government cuts spending in a BIG WAY, sometime in the next 6-12 months all of this short-term debt will come due and the Treasury will once again need to issue long-term debt.

Mind you, the U.S. is currently adding debt at a pace of nearly $2 TRILLION per year. So you can only imagine the yield investors will require to lend money to Uncle Sam for any time period a year from now when our debt is over $35 trillion and we’re still running a ~$1 TRILLION deficit.

The below chart needs no explanation. Long-term Treasuries have broken their multi-decade trendline. They are now sitting on CRITICAL support. Once that green line goes, the debt crisis begins.

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: 

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb, Inflation

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: 

https://phoenixcapitalmarketing.com/BM.html

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

The Markets Fell For a Lie Yesterday… But This Won’t Last

By Graham Summers, MBA

Yesterday, the Treasury announced that it would “only” need $775 billion to fund the budget for the fourth quarter of 2023.

This was considered to be good news.

Back in July, the Treasury had announced it would need $852 billion for the fourth quarter. So the fact the Treasury surprised the markets by needing less was used as an excuse for traders to gun the markets higher.

There’s just one small problem with this…

The Treasury QRA was an obvious lie. There is no way on earth the Treasury only needs $775 billion in refunding for 4Q23. Heck, it needed $500 billion in the last month alone!

Moreover, it’s not as if the government is suddenly becoming careful about spending. The Biden Administration has added $4.6 trillion in debt since taking office. And the pace is actually INCREASING, not decreasing: they added almost $1 TRILLION in new debt between 1Q23 and 2Q23.

So again, the idea that the Treasury can somehow fund everything with just $775 billion in refunding needs in the 4Q23 is a joke. The real amount will be MUCH larger than that.

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: 

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

By Graham Summers, MBA

The fate of the stock market is in the hands of Treasury Secretary Janet Yellen this week.

Every quarter the Treasury announces its financing needs via its Quarterly Refunding Announcement (QRA). In the QRA, the Treasury announces:

1) How much debt it will need to issue total to fund the government for the coming quarter.

2) The amount of new debt the Treasury will need to issue as opposed to simply rolling over old debt.

3) The breakdown of the debt issuance: short-term T-bills versus longer-term Treasury Bonds.

These three items are the MOST IMPORTANT issues for the markets today.

If you think I’m exaggerating this, consider that the last time the Treasury made its QRA was July 31st 2023. That was THE day that stocks topped and bond yields began to skyrocket.

The Treasury will announce the basics of the #1 and #2 in the list above today. But we won’t get the full breakdown of debt (#3) until Wednesday. 

Historically, the Treasury tries to keep the amount of short-term debt issuance to just 20% of total issuance. The reason for this is that if the Treasury relies too heavily on short-term debt to fund spending, it opens the door to a rate shock.

Consider what would have happened if the Treasury had issued 80% of total debt in short-term T-bills in 2021 when rates were at 0.25%. At the time, the move would have looked quite clever as the Treasury would be taking advantage of the fact that rates were so low. However, fast forward a year to 2022, and the Treasury would need to roll over that same debt at a time when rates were now ABOVE 4%! Interest payments would have been EXPONENTIALLY higher and a debt crisis would arrive.

So again, the Treasury usually keeps T-bill issuance to just 20% of total issuance… unless it’s intentionally trying to calm the markets and juice stocks higher for political purposes.

Which brings us to today.

Janet Yellen is ACUTELY aware of the impact that her decisions will have on the stock market. Indeed, the hallmark of her tenure as Fed Chair from 2014-2018 was to implement monetary policy that benefitted stocks, even if the economic data didn’t warrant it.

So the odds favor her doing something to prop the markets up… especially as we enter an election year in 2024.

However, doing this only sets the stage for a debt crisis down the road. If the Treasury relies extensively on T-bills to finance the budget now, that same debt will come due in a year… which opens the door to a MAJOR rate shock at that time, especially if inflation rebounds.

Again, the fate of the stock market is in Treasury Secretary Janet Yellen’s hands today. If she chooses to game the debt markets for political purposes it only delays the inevitable debt crisis… and not by much.

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: 

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

Are We About to Witness the First Major Central Bank Failure in Decades?

By Graham Summers, MBA

Japan is slowing losing control of its bond market.

The Bank of Japan (BoJ) 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 month. The below chart needs little explanation. You can see that yields broke above critical resistance in mid-2023 and have gone vertical ever since.

At this point, the BoJ is now having to engage in direct interventions in its bond market more than once a week. And this is happening at a time when the Japanese currency (the Yen) is about to break to new lows.

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: 

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

Manipulations Will Work… But Only For So Long

By Graham Summers, MBA

“Someone” saved stocks yesterday.

The day started with the S&P 500 breaking below:

1) The 200-DMA (red line in the chart below).

2) The October lows at 4,223 (purple line in the chart below).

3) CRITICAL support at 4,200 (blue line in the chart below).

This happened as the yield on the 10-Year U.S. Treasury breached 5% for the first time since 2007. As I’ve noted before, a close above this level would induce a collapse in risk assets, including stocks.

That’s when “someone” or “someones” MANIPULATED the stock market, by PANIC buying stocks, forcing the ENTIRE MARKET up by 35 pts in the span of 40 minutes. From that point until 1PM, every single dip was bought with PANIC buying.

How do we know this was manipulation or an intervention?

NO ONE panic buys stocks the moment they break below critical thresholds. There isn’t a single trading shop or trading team in the world in which the head screams “GO ALL IN ON STOCKS” as soon as the market violates a critical level of support.

In the simplest of terms, the manipulators staved off a crisis… for now. But the fact remains that the U.S. Treasury 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: 

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

Is the Great U.S. Debt Crisis About to Begin?

By Graham Summers, MBA

The yield on the 10-Year U.S. Treasury is about to break 5%.

As the below chart illustrates, this is a major level. Once we take it out, there’s little if any overhead resistance until 5.25% and then 6%. 

The 10-Year U.S Treasury is the single most important bond in the world. It is the bond against which all long duration risk assets (real estate, tech stocks, etc) are priced. So if it collapses in a panic (meaning its yields skyrocket) then the ENTIRE financial system will panic.

Stocks are already completely disconnected from the realities of the bond market. They won’t be for much longer if bonds continue breaking down.

Is the Great U.S. Debt Crisis about to begin?

In 2000, the Tech Bubble burst.

In 2007, the Housing Bubble burst.

The U.S. Treasury bubble burst in 2022. And the crisis is now approaching.

Smart investors are already taking steps to prepare for this.

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: 

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

I Guarantee You Most Investors Aren’t Ready For This

By Graham Summers, MBA

The yield on the 2-Year U.S. Treasury hit a new high yesterday.

Why does this matter?

Because…

1) It indicates the Fed’s fight to tame inflation is NOT done.

2) Stocks are in for a world of hurt in the coming months.

Regarding #1, back in May 2023, the 2-Year U.S. Treasury was anticipating that the Fed would have rates at 3.75% in May of 2025. At the time, this meant the Fed would cut rates at least two times before May of 2025 (rates were at 5.25% in May 2023).

Fast forward to today, and the 2-Year U.S. Treasury has just broken out to new highs of 5.20%. This means the market is now anticipating that the Fed will have cut rates possibly ONCE by October of 2025. Moreover, the idea that rates will be ABOVE 5% instead of BELOW 4% in late 2025 is a HECK of a shift.

Put simply, the bond market is figuring out that the Fed will need to keep rates MUCH higher for MUCH longer. And this brings us to #2 in our list above.

Stocks are in for a world of hurt.

Stocks are priced based on Treasury yields. This is one of the primary reasons why stocks remain down almost 10% from their all-time highs despite the fact the economy is growing. After all, if you can earn 5.25% risk free in bonds for two years, why risk putting your money into much riskier stocks where both the earnings yield AND the dividend yield are lower (4.07% and 1.62%, respectively).

The great crisis of our lifetimes is fast approaching.

In 2000, the Tech Bubble burst.

In 2007, the Housing Bubble burst.

The long term U.S. Treasury bubble burst in 2022. And the crisis is now approaching.

Smart investors are already taking steps to prepare for this.

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: 

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb, stock collapse?

Buckle Up, Things Are About to Get MESSY

By Graham Summers, MBA

The yield on the all-important 10-Year U.S. Treasury is spiking again. As I write this, it’s about to take out its former highs.

There are no shortage of reasons.

First and foremost, Inflation remains HOT.

Mainstream economists have been high-fiving one another because CPI is now 3.7%. Apparently the fact prices are still rising but at a slower pace is some kind of BIG WIN for the Fed. For those of us who live in the real world, the fact that prices are still rising by this much despite the Fed embarking on its most aggressive monetary tightening in decades is not a good thing.

And bond yields know it.

Bond trade based on many things including inflation expectations. In this light, the fact inflation is proving this difficult to slay is yet another reason bond yields are spiking higher: they know the Fed will have to do more.

The second reason why yields are spiking is that there is still too much excess liquidity in the financial system. Banks are still parking over $1.2 TRILLION at the Fed every night. This is a clear signal banks have too much extra capital/ liquidity lying around.

And finally, there’s the the ENORMOUS deficit that the Biden administration has been running since President Biden took office. Indeed, Bidenomics should be renamed SPEND-onomics as the federal government is running its largest deficit as a percentage of GDP outside of WWII.

All this spending requires the Treasury to issue massive amounts of debt. Basic economics tells us that the more of something there is, the less it’s worth. This is why U.S. Treasuries are worth less and hopefully won’t become worthless.

The below chart is truly horrifying. It tells us that the fuse is lit on a $33 trillion debt bomb.

The great debt crisis of our lifetimes is fast approaching.

In 2000, the Tech Bubble burst.

In 2007, the Housing Bubble burst.

The U.S. Treasury bubble burst in 2022. And the crisis is now approaching.

Smart investors are already taking steps to prepare for this.

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: 

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

By Graham Summers, MBA

As I noted yesterday, the great debt crisis of out lifetimes is approaching.

The U.S. is now adding debt at an exponential rate. The U.S. racked up its first $10 trillion in debt over the course of 232 years. Following the Great Financial Crisis, it added another $10 trillion in just nine years. The next $10 trillion took only four years.

And by the look of things, the next $10 trillion will take even less than that. The U.S. has added $2 trillion in debt in the last four months. We’re now adding $1.2 billion in debt per hour.

How will this play out?

Well there are three ways to deal with a major debt problem.

1) Pay it back.

2) Inflate it away.

Guess which one policymakers have opted for? 

Why did they spend $8 TRILLION in the span of just 24 months from 2020

Why else is the U.S. running its largest fiscal deficit as a percentage of GDP outside of WWII… despite the fact the economy is still growing!?!

Why else is the Fed providing over $1 TRILLION in reverse repo liquidity schemes to the financial system every single night… despite the fact the financial system isn’t in a crisis?!?

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: https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

If This Were a Stock… You’d Think “GAME OVER.”

By Graham Summers, MBA

Everyone is applauding the short-term deal to keep the government open for another 45 days.

Well, everyone except the bond market, that is.

The bond market, specifically, the market in U.S. sovereign bonds or Treasuries is the single most important market in the world. Everyone focuses on stocks, because stocks are “exciting” and the best investment for obtaining wealth. 

However, the dirty little secret of the investing world is that MOST if not all of the gains from stocks are the result of the bond market. Remember, Treasuries are the bedrock of our current financial system; the yields they pay are the risk free rate of return against which all risk assets (stocks) are priced.

So if bonds blow up, you can kiss the stock market goodbye.

And thanks the the insane amount of spending the Biden administration is engaged in, bonds are about to blow up. Indeed, Bidenomics should really be retitled “debt-o-nomics” because it’s debt, not any kind of economic know-how from the Biden White House that is driving all of this stuff.

Case in point, the U.S. is currently running its largest deficit as a percentage of GDP in history outside of WWII. Bear in mind, this isn’t during a recession. The Biden White House is spending like this while the economy is technically still growing!

Basic economics tells us that the more of something there is, the less value it has. And thanks to the Biden Administration’s spending insanity, the U.S. is issuing a LOT more Treasuries. And that means… you guessed it… Treasuries are being valued as worth less.

Below is a chart you won’t see on CNN or the Mainstream Media. This is a 40+ year chart of the 30-Year U.S. Treasury. If this were a stock, you’d look at this chart and think “GAME OVER.”

As I keep warning, the Great Debt Crisis of our lifetimes is fast approaching. The time to prepare is NOW, before it hits.

I’ve identified a series of market events that unfold before every crash.

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

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/predictcrash.html

Best Regards

Posted by Phoenix Capital Research in Debt Bomb

I Sincerely Hope Chart Number Three Doesn’t Come True

By Graham Summers, MBA

The Fed didn’t raise rates yesterday. What it did do was update its projected dot plot for where Fed officials expect rates to be in 2024 and 2025.

The Fed now only expects to cut rates twice in 2024, as opposed to four times. In very simple terms, the Fed sent a message that rates will need to be higher for longer to end inflation.

The markets took the news hard with bonds, stocks, and even oil all selling off simultaneously. The yield on the all-important 10-Year U.S. Treasury spiked to new highs.

This is a HUGE deal. As I mentioned in yesterday’s article, this is the bond yield against which all risk assets, especially Tech stocks, are priced. If this yield keeps rising, it means stocks will need to be repriced lower.

High yield credit has already figured this out. Stocks are next.

And God help us if the S&P 500 FINALLY realizes what the long end of the treasury market has been saying for the last few months.

As I keep warning. The Great Debt Crisis of our lifetimes is fast 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:

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

The Single Most Important Bond in the World is Breaking Down

By Graham Summers, MBA

The most important bond in the world has just broken to a new low.

Our financial system is backed by debt, specifically, U.S. Government debt or Treasuries. These bonds are the senior-most assets in the world, representing the bedrock of our banking system and financial markets. The yield on these bonds represents the risk-free rate of return against which all risk assets (stocks, real estate, oil, etc.).

Now, when we talk about Treasuries, we are actually talking about a series of bonds of different duration ranging from 4-weeks to 30 years. The total list is below.

Treasury Bill Maturation Periods:

  • 4 Weeks
  • 13 Weeks
  • 26 Weeks
  • 52 Weeks 

Treasury Note Maturation Periods

  • 2 Years
  • 3 Years
  • 5 Years
  • 7 Years
  • 10 Years

Treasury Bond Maturation Periods

  • 20 Years
  • 30 Years

Of these bonds, the 10-Year U.S. Treasury is the single most important one. The reason for this is that 10 years usually encompasses an entire economic cycle. This is the bond used to determine mortgage rates as well as pricing all longer duration assets (tech stocks).

I mention all of this because the yield on the 10-Year U.S. Treasury has just broken to new highs.

This is a HUGE deal. The risk free rate of return is rising… which means ALL risk assets will be repriced to lower levels in the near future. Small cap stocks, which are closely aligned with the real economy have already figured this out. The S&P 500 will soon follow.

That’s not the worst of it either. As I wrote in yesterday’s article, the Great Debt Crisis of our Lifetimes is fast approaching. I’ll explain precisely how the 10-Year U.S. Treasury fits into that in tomorrow’s article. In the meantime, if you’re looking to prepare yourself and your family for what’s coming, the time to take action is NOW before it hits.

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:

https://phoenixcapitalmarketing.com/BM.html

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Posted by Phoenix Capital Research in Debt Bomb

Is the Sovereign Debt Crisis Finally About to Hit?

By Graham Summers, MBA

Trouble is brewing in the U.K. again.

Back in September 2022, which now seems so long ago, the global financial system nearly entered a debt crisis. 

The first country to “get to the brink” was the United Kingdom or U.K. At that time, the U.K.’s new government, led by Prime Minster Liz Truss, introduced a tax cutting program that neither the bond nor the currency markets could stomach. 

The yield on the 10-Year U.K. Government bond went vertical signaling default risk.

While the British Pound imploded, collapsing to a 30+ year low.

In the simplest of terms, the U.K. appeared to be the first country to enter a sovereign debt crisis. Then, suddenly, in the span of a few weeks, this ENTIRE PROBLEM went away.

The official narrative sold to the public concerning the “solution” to this issue was that Prime Minster Truss resigned and a new government was formed. 

However, it’s rather odd that TWO WEEKS before Ms. Truss resigned, the $USD suddenly rolled over and started to collapse while risk assets like stocks caught a bid. Indeed, the entire global financial system entered one of its most aggressive “risk on” chapters in recent history. And it did this on a dime in mid-October 2022.

Perhaps something or someone else was responsible for this incredible turn of events. Perhaps global central banks coordinated a “behind the scenes” intervention that forced bond yields lower so stocks could catch a bid. We’ll never know the true story, but the global financial system sure as heck wasn’t “saved” by Prime Minister Truss resigning.

I mention all of this because once again the U.K.’s debt markets are blowing up with yields on the 10-Year U.K. Government bond getting dangerously close to the levels at which things started to break in 2022.

There are many different ways to profit from this situation. We recently outlined one method that smart investors have used to create life changing wealth during a bear market.

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/1InvestmentBearMarket.html

Posted by Phoenix Capital Research in Debt Bomb

The Clock is Ticking on This $20 Trillion Debt Bomb

By Graham Summers, MBA

Is this the next black swan?

The commercial real estate market in the U.S. is about $20 trillion in size. This is not a small asset class. And thanks to the pandemic changing work habits, the Fed creating a massive credit bubble, and many cities going soft on crime, the collapse of commercial real estate may very well be the next black swan event.

In its simplest rendering, the problems facing commercial real estate are as follows:

1) People do NOT want to return to the office, even if the pandemic is over. 

2) Valuations/ prices in the market have been badly distorted by the Fed, both indirectly via the massive credit bubble the Fed created in 2020-2022, and directly by the Fed offering to buy commercial mortgage backed securities (the last point put a floor beneath this market).

3) Many large cities have decided to go soft on crime, resulting in criminal activity skyrocketing. As a result of this and heavy tax burdens, large businesses are moving out of places like Chicago, New York and the like.

It’s literally a perfect storm for the commercial real estate sector.

Oh… and lest we forget, much of this asset class is financed by trillions of dollars worth of debt. And that debt is now coming due.

The New York Post notes that $1.5 trillion worth of commercial real estate debt comes due by the end of 2025. Bear in mind, rates have done this since much of this debt was issued:

So commercial real estate firms will either need to pay this back (hard to imagine given office vacancies) or roll the debt over at much higher interest rates.

And last but not least… guess who loaned out all this debt to commercial real estate developers and landlords?

REGIONAL BANKS.

Perhaps this is why the regional banking sector can’t rally despite the Fed gifting them hundreds of billions of dollars worth of cheap credit over the last month.

What does this mean?

A $20 trillion asset class is fast approaching its “2008” moment. 

Indeed, our proprietary Crash signal has just triggered its 3rd confirmed signal in the last 25 years. The last two times it signalled?

2000 and 2008.

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 Debt Bomb
Is It 2008 All Over Again?

Is It 2008 All Over Again?

By Graham Summers, MBA

A major bank just went under… contagion is dragging down other similar firms… the Fed is introducing emergency measures to bailout the system.

Is it 2008 all over again?

Yes and no.

“Yes” in the sense that the Fed created a massive bubble in risk assets. Also “yes” in the sense that banks made stupid decisions, violating central tenets of risk management by lending money to clients that could never pay it back (this time tech startups instead of high risk mortgage borrowers). And finally “yes” in the sense that the guilty players get bailed out by the tax-payer and the wealthy are made “whole” with preferential treatment due to their connections to DC.

However, that’s where the similarities end… because the issues the financial system faces today are far greater  and systemic that the ones it faced in 2008.

The 2008 crisis was triggered by a crisis in housing… which became a banking crisis courtesy of Wall Street’s toxic derivatives trades,

This crisis (2023) is a crisis in Treasuries… which are the bedrock of our current financial system, the senior-most asset class in existences. And once again Wall Street has gone bananas with derivatives based on an asset class.

In 2008, the derivatives were “credit default swaps” and the market for them was roughly $50-$60 trillion in size.

Today, the derivatives are based on “interest rates/ bond yields” and the market for them is $500+ trillion. And as we just discovered with Silicon Valley Bank and Signature Bank… the banks weren’t particularly clever in how they managed their risks this time either.

Over the last year as the Fed raised interest rates from 0.25% to 4.75%, the Treasury market has collapsed. Remember, when bond yields RISE, bond prices FALL. 

Other debt securities followed suit including mortgage-backed securities, corporate bonds and the like. Because remember, the yield on Treasuries represents the “risk free” rate of return against which all risk assets are priced. So when Treasuries fell, ALL other debt instruments had to be repriced accordingly.

As a result of this, U.S. banks are currently sitting on $640 BILLION in unrealized losses on their longer duration bond/debt portfolios. This is what precipitated the collapse of Silicon Valley Bank… and if you think that’s the last shoe to fall in this mess, I’ve got a bridge to sell you in Brooklyn.

So enjoy the bounce we are seeing in risk assets now. It won’t last… just as the market rally triggered by Bear Stearns’ shotgun wedding to JP Morgan in March 2008 didn’t last either.

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

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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 Debt Bomb, stock collapse?

Here’s How to Profit From This Mess

By Graham Summers, MBA

I warned and warned and then warned some more… that the market rally was NOT to be trusted.

The next leg down in this bear market has just begun. And Private Wealth Advisory subscribers couldn’t be happier.

As I write this, our three CRASH trades designed to profit from a market meltdown are all EXPLODING HIGHER!

To find out what they are, you’d need to take out a trial subscription to Private Wealth Advisory (PWA).

SIX (6) MONTH subscription to Private Wealth Advisory includes:

You’ll also get a copy of The Stock Market Crash Survival Guide which shows you how to prepare for the coming crash, including my proprietary Crash Trades that can pay out massive returns during crises.

We’ve just opened one of them!

And best of all, you can try Private Wealth Advisory for 30 days for just $4.99.

If you find it’s not what you’re looking for, just drop us a line and we’ll cancel your subscription. You won’t pay another cent!

And the book, reports and ideas you collect during that time are yours to keep.

Frankly, this is a ridiculous amount of material to offer for just $4.99…

Heck, the book alone is worth $9.99, and you’re getting FREE shipping on it!

So technically, you’re getting the Stock Market Crash Survival Guide, Bear Market Trigger report (which has predicted every major bear market in the last 22 years), the weekly market updates, and the trade alerts FREE OF CHARGE.

Don’t miss out on this opportunity. Because it won’t be around much longer. And you’ll regret not taking advantage of it… especially as the market breaks down to new lows.

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Posted by Phoenix Capital Research in Debt Bomb, stock collapse?

Why Japan’s Bond Market Could Make or Break Your 2023 Returns

By Graham Summers, MBA

Japan’s central bank, the Bank of Japan, or BoJ, is beginning to lose control of its financial system.

The BoJ is the grandfather of monetary insanity. The U.S.’s Federal Reserve (the Fed) first introduced Zero Interest Rate Policy (ZIRP) and Quantitative Easing (QE) in 2008.

The BoJ introduced them in 1999 and 2001, respectively.

Since that time, the BoJ has NEVER been able to normalize monetary policy. The longest it managed to tighten financial conditions without having to reverse and start easing again was a measly 14 months.

So we’re talking about 20+ years of loose monetary policy or a slow-motion nationalization of Japan’s financial system. The BoJ has bought so many assets during this time that today it:

1) Owns more than half (50%) of all Japan Government Bonds outstanding.

2) Owns more Japanese stocks than any other entity (country or institution) in the world.

3) Is a top 10 shareholder in 40% of Japan’s publicly listed companies.

4) Has a balance sheet that is equal to 92% of Japan’s GDP.

Having spent 17 odd years printing money and buying assets with little success in creating economic growth, in 2016, the BoJ attempted a new kind of policy: Yield Curve Control (YCC).

In its simplest rendering, the BoJ stated that anytime the yields on Japanese Government Bonds rose above a certain level (0% for the 10-Year Government Bonds), the BoJ would print new money and use it to buy bonds until the yields fell back to the desired range.

This was an open-ended, unlimited form of QE. And the BoJ maintained it for six years straight until inflation finally appeared in the financial system.

And that’s when things started to break: the Yen collapsed to a 35 year low.

At this point, the BoJ had a choice: defend its currency or continue defending its bonds.

The BoJ chose to defend the currency by RAISING the target yield for 10-Year Japanese Government Bonds from 0% to 0.5%. This was an implicit admission that it would print less money defending bonds. And it’s why the Yen began to rally in late 2022 (see the large bounce in the chart above).

Unfortunately, that’s the end of the good news. The bond market has begun testing the BoJ’s resolve, with the yields on Japanese Government Bonds rising above the BoJ’s target repeatedly. Things have begun to spiral out of control to the point that the BoJ is being forced to intervene on a near daily basis to try and stop the bond yields from soaring higher.

The BoJ is now in a corner. If it keeps printing money to defend bonds the Yen collapses making inflation worse. And if it doesn’t print money to defend bonds the bond yields soar and Japan becomes insolvent (unable to make debt payments).

As I keep stating, the Great Crisis… the one to which 2008 was a warm-up, has finally arrived. In 2008 entire banks went bust. In 2022, entire countries will do so.

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

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Posted by Phoenix Capital Research in Debt Bomb, The Everything Bubble