Inflation

Last week, the Fed confirmed that it intends to cut rates three times this year, despite the fact inflation is NOT near its target of 2% and is in fact turning back up.

If you’re scratching your head on this, there’s a very simple answer:

It’s an election year. And the Powell Fed is stacked with political hacks.

It is clear that the Powell Fed is full committed to aiding the Biden administration in its re-election bid. After all, why else would the Fed talk about triggering an easing cycle when:

1) The stock market is at all-time highs.

2) Financial conditions are looser now than they were BEFORE the Fed starting raising rates in 2022.

3)  The economy is growing, NOT slowing down.

4) Inflation is turning back up.

These are the sorts of conditions in which the Fed usually RAISES rates. Instead, the Fed is going to start cutting rates AND reducing the pace of its Quantitative Tightening (QT) program.

Both of those are HIGHLY inflationary. 

In this context, it is clear the Fed has become a political entity. There is no credible economic/ financial reason for the Fed to commit to these policies. At the very least, the Fed should remove one rate cut from its forecast for 2024.

Instead, it is clear that the Fed is committed to pushing stocks and housing  as high as possible going into the 2024 Presidential election. This will be a boon for Americans in the short-term, but the consequences will be devastating in the coming months as inflation eviscerates incomes and investment portfolios.

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

I’ve previously explained in great detail that the official inflation measure, the Consumer Price Index or CPI, is massaged to the point of being a work of fiction.

Among the more egregious gimmicks employed by the BLS:

1. Data collection consists of surveys with low response rates.
2. Those being surveyed are asked to remember what they paid for goods and services (as if anyone keeps an excel spreadsheet of that stuff).
3. The CPI doesn’t consider food or energy prices. 
4. The CPI doesn’t use real world measures for shelter, instead relying on carefully crafted artificial metrics that have no connection to reality.

And so on.

However, if you’re looking for one simple explanation that the CPI is fiction, you need look no further than the Biden administration’s poll numbers.

President Biden is an historically unpopular President.  This is truly astonishing when you consider that his opponent for the 2024 election (former President Trump) is one of the most polarizing and unappealing candidates in history.

Why are Biden’s polls so bad?

Inflation.

Americans vote based on many factors, but ultimately, they tend to vote with their pocket books. And inflation is a MAJOR problem for the bottom four quintiles (lower 80%) of Americans based on net worth/ income.

The media shills and hacks like to argue that Biden is unpopular because Americans are “wrong” or “misguided” due to “disinformation.” But we have to remember that these are the same people who told us inflation was “transitory” for most of 2021 and 2022. Their track record is truly abysmal when it comes to accurately assessing reality.

Bottomline: inflation has NOT come down, no matter what the BLS and media tell you. And those investors who don’t prepare for what’s coming are in for a world of hurt.

I’ll detail what this means for the markets in tomorrow’s article.

If you’ve yet to position your portfolio to profit a resurgence in inflation, we just published a Special Investment Report outlining the clear signals that inflation is back as well as THREE unique investments that could EXPLODE higher as inflation takes hold of the financial system later in 2024.

This report went live just four days ago. And already two of these investments are up.

To pick up your copy, go to:

https://phoenixcapitalmarketing.com/inflationstorm.html

Graham Summers

Chief Market Strategist

Phoenix Capital Research, MBA

The Fed is screwing up… again. And investors who don’t prepare for what’s coming are in for a NASTY surprise in the coming months.

To understand what I mean by this, let me provide some context.

Starting in November of 2023, Fed officials began proclaiming that inflation had been tamed. The argument, at the time, was that inflation data was clearly trending down, while rates were much higher, so the Fed would need to start cutting rates soon to avoid crushing the economy.

I realize this is difficult to picture, so I’ve included the below image for you. The Fed Funds Rate is the red line. The official inflation measure, the Consumer Price Index, or CPI for short, is the blue line. As you can see, starting in mid-2023, the red line was much higher than the blue line.

During the last 25 years, any time the Fed Funds Rate has been much higher than inflation for long, something BAD has happened (a recession or crisis). I’ve illustrated this on the below chart with red rectangles.

This is why the Fed started talking about cutting interest rates in November 2023, despite the fact inflation was still well above 3%, while the Fed’s target for inflation was 2%. In the very simplest of terms, the Fed was “betting” that inflation would continue to trend down, therefore giving the Fed the excuse to cut rates.

However, since that time, the CPI has stopped declining as rapidly. The trend, while still down, isn’t nearly as strong.

Indeed, the situation looks much uglier when we include food and energy prices to inflation. As I noted in yesterday’s article, the ONLY reason inflation appears to have declined as much as it has is because energy prices have collapsed year over year. Once you include energy data in the inflation measure, things look like this:

Put simply, the Fed has screwed up… again. The Fed promised it would cut rates base on an assumption that has proven false. This opens the door to a serious upset for the markets in the coming weeks.

If you’ve yet to take action to profit a resurgence in inflation, we just published a Special Investment Report outlining the clear signals that inflation is back as well as THREE unique investments that could EXPLODE higher as inflation takes hold of the financial system later in 2024.

To pick up your copy, go to:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

Well, it’s finally happening!

Throughout 2023, I warned that inflation was not really disappearing from the financial system. Time and again I noted that the ONLY data in the inflation measure that had declined was energy prices. 

This trend continues to this day, by the way. See for yourself.

Take out energy prices (and used cars) and the inflationary data is still RISING in every category.

And things are going to get worse soon.

Why?

Energy prices will soon no longer be DOWN year over year. For 12 months, the CPI has been calculated by comparing the prices in the blue rectangle to prices in the purple rectangle. However, in 2024, prices will be compared to the blue rectangle for inflation calculations.

We’ve now had two months of the CPI surprising to the upside. And this is while Energy prices are HELPING the inflation data. What happens when Energy is no longer down on a year over year basis?

Hint: gold has already figured it out. Other asset classes will soon.

If you’ve yet to take action to profit a resurgence in inflation, we just published a Special Investment Report concerning THREE investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled How to Profit from Inflation: Three Investments to Make Money”. And it explains in very simply terms how to make inflation PAY YOU.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

Governments around the world are issuing staggering amounts of debt to “paper over” any weakness in the private sector with public spending. As Bloomberg notes, collectively, the U.S., U.K., E.U., and Japan will issue $2 trillion in new debt this year.

This is keeping the world from entering a recession, while simultaneously setting the stage for the next round of inflation. Remember that the first wave of inflation (2021-2023) was triggering by egregious levels of public spending/ stimulus during a time of private sector weakness.

In the U.S., it is clear the Biden administration is implementing policies to prop up the economy and financial markets for the 2024 election regardless of the consequences the policies will bring down the road.

Case in point, the U.S. is running the levels of deficit you usually see during a recession, at a time when the economy is technically still growing. Indeed, the only periods in which the U.S. was running a larger deficit as a percentage of GDP in the last 100 years during World War II, and the Great Financial Crisis.

As you likely know, deficits are financed via the issuance of debt. And because the U.S. is constantly having to roll over old debt into new debt while also issuing new debt to finance its deficit, the country has added some $2 TRILLION in debt in the last seven months alone!

My question to policymakers: what if all this spending brings back higher inflation when the U.S. finally rolls over into recession? What’s the plan, then? 

Gold has figured it out already. Other asset classes will soon, too.

If you’re looking for someone to guide your investing to insure you crush the market, you can sign up for our FREE daily market commentary, GAINS PAINS & CAPITAL.

As an added bonus, I’ll throw in a special report Billionaire’s “Green Gold” concerning a unique “off the radar” investment that could EXPLODE higher in the coming months. 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.

To pick up your copy, swing by:

https://phoenixcapitalmarketing.com/GreenGold.html

By Graham Summers, MBA

Since early 2023, numerous pundits and gurus have been calling for a recession. And despite numerous indicators flashing that one is coming… the recession has yet to arrive.

Why?

This: 

The U.S. is running a GARGANTUAN deficit equal to 5.5% of GDP.

To put this into perspective, it’s larger than the deficit the U.S. ran during EVERY recession in the last 100 years except for the Great Financial Crisis and when the economy was shutdown in 2020.

Put simply, the U.S. is running the kind of spending that we usually see during periods in which the private sector is in a total free-fall… at a time when the private sector is weak, but not yet collapsing.

This has managed to keep the economy positive. But it’s a short-term fix.

Ultimately, the U.S. cannot stay out of recession forever as no amount of government spending can replace the economic impact of the private sector (we learned this during the shutdowns when the Fed and Uncle Sam spent $8 trillion in 12 months but the economy still collapsed).

Moreover… this situation presents us with a MAJOR problem down the road: if the U.S. is already spending at a pace usually associated with recessions while the economy is still growing, what is going to happen when the economy finally does roll over into recession? How much spending will it be doing then? 8% of GDOP? 10% of GDP? More?

And bear in mind, this spending is being funded by debt (it is a deficit after all). What happens to the bond market if the U.S. cranks up its spending to 8% or more of GDP when the actual recession hits?

Gold has started to figure it out. Other assets will figure it out soon.

As I keep stating, you CAN outperform the overall market, but it takes a lot of work and insight!

If you’re looking for someone to guide your investing to insure you crush the market, you can sign up for our FREE daily market commentary, GAINS PAINS & CAPITAL.

As an added bonus, I’ll throw in a special report Billionaire’s “Green Gold” concerning a unique “off the radar” investment that could EXPLODE higher in the coming months. 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.

To pick up your copy, swing by:

https://phoenixcapitalmarketing.com/GreenGold.html

By Graham Summers, MBA

Inflation is back.

While mainstream economists prance around on television claiming that inflation has been defeated, the real data suggests otherwise. 

It’s a well known “secret” on Wall Street that the official inflation measure, the Consumer Price Index, or CPI, is heavily massaged to UNDER-state inflation. However, even the CPI, with all of its gimmicks is showing inflation bottomed in June. 

In June of 2023, the CPI was 3.0%. It’s now 3.7%. And with oil now above $90 a barrel again, it’s likely going much higher in the coming months. Again, this chart is going in the WRONG way.

The CPI is not the only inflation metric that has rebounded. The Atlanta Fed’s “sticky inflation” metric tracks parts of inflation that are deeply embedded in the financial system. These items are “sticky” meaning that it’s much more difficult for the Fed to get rid of them. And it’s clocking in at 4.7% after dropping below 3% just a few months ago.

That’s quite a rebound.

Indeed, CPI for August clocked in at 3.7% year over year. That sounds decent until you realize that CPI was 3.0% in June. That’s quite a rebound in just two months. And bear in mind, core inflation is still well over 4%!

Take a look at what oil is doing. Does this look like inflation is under control to you?

On that note, we recently outlined a unique “off the radar” investment that could EXPLODE higher as inflation rebounds. We detail this opportunity in a special 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

By Graham Summers, MBA

As I noted a few weeks ago, inflation likely bottomed in July.

By quick way of review, the official inflation metric, the Consumer Price Index or CPI, is measured on a year over year basis. So, when the CPI is 5.5%, for instance, what it’s saying is that prices are 5.5% higher than they were during the same month the year before.

As many pundits have noted, CPI has been declining. What they are failing to recognize however is that the only part of the CPI data that has been declining in 2023 is energy prices. And the reasons for this are:

1) Oil prices collapsed for most of the last 12 months after spiking higher during Russia’s invasion of Ukraine in 1Q22.

2) The Biden administration has dumped ~292 million barrels of oil from the Strategic Petroleum Reserve (SPR) forcing oil prices lower.

You can see this for yourself in the table below. Again, the ONLY parts of the CPI that has dropped significantly are energy prices (well that and used cars and medical devices).

However, this period is now ending. On a year over year basis, energy prices will no longer be down much if at all because we are comparing prices in the purple rectangle to prices in the blue rectangle on a year over year basis. This should result in CPI moving higher.

Indeed, CPI for August clocked in at 3.7% year over year. That sounds decent until you realize that CPI was 3.0% in June. That’s quite a rebound in just two months. And bear in mind, core inflation is still well over 4%!

So again, inflation has bottomed. Some investors will profit beautifully from this. Others will get taken to the cleaners.

On that note, we recently outlined a unique “off the radar” investment that could EXPLODE higher as inflation rebounds. We detail this opportunity in a special 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