Inflation

By Graham Summers, MBA

There are two primary reasons why inflation has remained so persistent despite the Fed raising rates from 0.25% to 5.25% in the span of 14 months.

1)     The Fed is using the wrong tools to end inflation.

2)    The Federal Government continues COVID-19 emergency levels of spending. 

Yesterday we discussed #1. Today we’re going to dissect #2. 

Between 2020 and 2022, the Fed printed roughly $5 trillion. The Federal Government spent/ printed another $6 trillion.

Over the last 14 months, Fed has raised rated from 0.25% to 5.25% while draining $500 billion in liquidity from the financial system. In simple terms, the Fed has stopped printing money and is tightening monetary policy.

The Federal Government has not altered its money printing/ spending. In fact, courtesy of the Debt Deal that was just signed into law, the Federal Government has NORMALIZED the emergency levels of stimulus/ spending it introduced during the pandemic.

The government is financed via tax revenues. If spending is greater than tax revenues, then the government issues debt to finance its spending. Despite pulling in record taxes in 2021 (and 2022’s tax haul is looking to be ever greater), the U.S. continues to run $1+ trillion deficits.

Relative to GDP, the deficit is greater than that the government ran during the depths of the 2008 crisis. Indeed, you have to go back to World War II to find a period in which the deficit relative to GDP was greater! And bear in mind, the government is currently running this kind of deficit TWO YEARS after the recession associated with the shutdowns ended!

And thanks to the Debt Deal, this level of stimulus/ spending will become normalized.

Section 265 of the bill notes that the OMB (Office of Management and Budget) director has sole waiver authority to spend whatever money the government wishes if said spending is deemed “necessary for program delivery.” (H/T. Rep Nance Mace for catching this).

The OMB is the part of the Executive Branch in charge of “overseeing the implementation” of the President’s “vision” for the economy. The OMB director is appointed by the President. And according to the current version of the debt dealing congress is voting on, this person has “sole waiver” authority on spending caps.

Put simply, she (the current OMB director is Shalanda Young), is permitted to spend as much money as President Biden wants, provided the spending is deemed “necessary” to deliver on programs that meet his vision for the economy.

That single line negates any and all cuts or spending caps laid out elsewhere in the debt deal. It’s akin to someone writing “everything else in this 99-page bill is non-binding.”

In the very simplest of terms, this deal, if it passes, would normalize the government’s COVID-19 level of spending. This would be highly inflationary. And it would make the Fed’s job of tackling inflation that much more difficult. 

This is why the yield on the 6-month U.S. Treasury bill has soared to new highs…

While the yield on the 1-Year U.S. Treasury is back at its former highs.

The above charts tell us the bond market is figuring out the Fed will need to raise rates higher and hold them there for much, MUCH longer. Three months ago, the Treasury market thought rates would be at 3.75% in two years. It is now suggesting rates will be 4.50% two years from now.

Anyone who believes the Fed will be easing monetary policy soon is mistaken. Between the Fed’s refusal to drain excess liquidity from the financial system and the Debt Deal normalizing the federal government’s pandemic levels of spending, inflation is going to become quite sticky, if not permanently embedded in the financial system.

There are many different ways to profit from this situation. We recently outlined a unique “of the radar” one favored by a family of billionaires in an investment report called Billionaire’s “Green Gold.”

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

To pick up your copy, swing by:

https://phoenixcapitalmarketing.com/GreenGold.html

By Graham Summers, MBA

There are two primary reasons why inflation has remained so persistent despite the Fed raising rates from 0.25% to 5.25% in the span of 14 months.

1)     The Fed is using the wrong tools to end inflation.

2)    The Federal Government continues COVID-19 emergency levels of spending. 

Yesterday we discussed #1. Today we’re going to dissect #2. 

Between 2020 and 2022, the Fed printed roughly $5 trillion. The Federal Government spent/ printed another $6 trillion.

Over the last 14 months, Fed has raised rated from 0.25% to 5.25% while draining $500 billion in liquidity from the financial system. In simple terms, the Fed has stopped printing money and is tightening monetary policy.

The Federal Government has not altered its money printing/ spending. In fact, courtesy of the Debt Deal that was just signed into law, the Federal Government has NORMALIZED the emergency levels of stimulus/ spending it introduced during the pandemic.

The government is financed via tax revenues. If spending is greater than tax revenues, then the government issues debt to finance its spending. Despite pulling in record taxes in 2021 (and 2022’s tax haul is looking to be ever greater), the U.S. continues to run $1+ trillion deficits.

Relative to GDP, the deficit is greater than that the government ran during the depths of the 2008 crisis. Indeed, you have to go back to World War II to find a period in which the deficit relative to GDP was greater! And bear in mind, the government is currently running this kind of deficit TWO YEARS after the recession associated with the shutdowns ended!

And thanks to the Debt Deal, this level of stimulus/ spending will become normalized.

Section 265 of the bill notes that the OMB (Office of Management and Budget) director has sole waiver authority to spend whatever money the government wishes if said spending is deemed “necessary for program delivery.” (H/T. Rep Nance Mace for catching this).

The OMB is the part of the Executive Branch in charge of “overseeing the implementation” of the President’s “vision” for the economy. The OMB director is appointed by the President. And according to the current version of the debt dealing congress is voting on, this person has “sole waiver” authority on spending caps.

Put simply, she (the current OMB director is Shalanda Young), is permitted to spend as much money as President Biden wants, provided the spending is deemed “necessary” to deliver on programs that meet his vision for the economy.

That single line negates any and all cuts or spending caps laid out elsewhere in the debt deal. It’s akin to someone writing “everything else in this 99-page bill is non-binding.”

In the very simplest of terms, this deal, if it passes, would normalize the government’s COVID-19 level of spending. This would be highly inflationary. And it would make the Fed’s job of tackling inflation that much more difficult. 

This is why the yield on the 6-month U.S. Treasury bill has soared to new highs…

While the yield on the 1-Year U.S. Treasury is back at its former highs.

The above charts tell us the bond market is figuring out the Fed will need to raise rates higher and hold them there for much, MUCH longer. Three months ago, the Treasury market thought rates would be at 3.75% in two years. It is now suggesting rates will be 4.50% two years from now.

Anyone who believes the Fed will be easing monetary policy soon is mistaken. Between the Fed’s refusal to drain excess liquidity from the financial system and the Debt Deal normalizing the federal government’s pandemic levels of spending, inflation is going to become quite sticky, if not permanently embedded in the financial system.

There are many different ways to profit from this situation. We recently outlined a unique “of the radar” one favored by a family of billionaires in an investment report called Billionaire’s “Green Gold.”

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

To pick up your copy, swing by:

https://phoenixcapitalmarketing.com/GreenGold.html

By Graham Summers, MBA

There are two primary reasons why inflation has remained so persistent despite the Fed raising rates from 0.25% to 5.25% in the span of 14 months.

1) The Fed is using the wrong tools to end inflation.

2) The Federal Government continues COVID-19 emergency levels of spending.

Today we’re going to dissect #1.

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 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 1972), but CPI also came down, eventually falling to ~3% in 1983.

Fast forward to today, and the Fed repeating the same mistakes it made from 1972-1979. Thus far in its quest to end inflation, the Fed has raised rates from 0.25% to 5.25% in 14 months. It has also attempted to drain ~$500 billion liquidity from the financial system via its Quantitative Tightening (QT) program. CPI has dropped from 8.9% to ~5% where it stands today.

Meanwhile, the evidence is clear that there is still far too much liquidity/ froth in the financial system.

Banks continue to park over $2 TRILLION at the Fed every night via the overnight Reverse Repo Agreements. This is a very technical arrangement that isn’t worth delving into right now, but the primary point is that there is a LOT of excess money in the system.

Other signs of excess froth concern the fact that several of the large tech companies are back at their all-time highs, despite the fact their underlying businesses have either gone ex-growth or growing at much slower rates.

And of course, there is the Artificial Intelligence (AI) bubble.

Nvidia (NVDA), which is seen by the market as the primary beneficiary of A.I., has seen its market cap go from sub-$300 billion to over $1 trillion in six months… on annual revenues of $44 billion (annualized based on the company’s increase 2Q23 outlook). By way of comparison, Cisco (CSCO) which operates in a similar business as NVDA, already has annual revenues of $50+ billion, but trades at a market cap of $200 billion.

Companies are doing everything they can to align themselves with this mania, to the point of mentioning the term “AI” on earnings conference calls even if their businesses has little if any real exposure to the technology.

To summate the above examples, there are clear signs that there is much too much froth/ excess liquidity in the financial system today. And the Fed seems unaware of how to fix this. Case in point, during the regional banking issues of March 2023, the Fed pumped $400 billion into the financial system in the span of three weeks, thereby reversing roughly two thirds of its entire nine-month Quantitative Tightening (QT) efforts!

All of the above items indicate to me that the Fed is unlikely to succeed in its attempt to end inflation unless it dramatically increases QT and implements other measures to drain excess reserves/ liquidity.

To summate, the Fed is making the very same mistake it made in the 1970s: focusing on fighting inflation with rate hikes when there is clear evidence that the REAL issue is that there is too much money/ reserves in the financial system.

For more inflationary insights as well as a Special Investment Report that details how to profit from sticky inflation swing by:

https://gainspainscapital.com/

By Graham Summers, MBA

One of the biggest questions we hear from clients is “why aren’t stocks breaking down?”

The answer is simple: the government.

The Fed is fighting inflation. The government is NOT. The Fed is raising interest rates and engaging in Quantitative Tightening (QT). The government is running a $1+ trillion deficit. And this is in spite of a record tax haul.

In our current socialist version of America, this money is being funneled into the economy. And as a result of this, the economy continues to plod along despite inflation hanging around 5%.

It’s likely going to get worse from here.

Estimated federal outlays for 2023 are slated to be $6.3 TRILLION. That’s 23% of GDP. and the Debt Deal only increases this as it will remove ALL SPENDING CAPS for the Federal Government through 2025.

Uncle Sam isn’t the only one spending like there’s no tomorrow.

State, county and local governments are all spending loads of money. The 50 U.S. states have budgets of $1.2 trillion for FY 2023. That’s a 6.7% increase over that of 2022 which was an 18% increase over 2021. And by the way, that 18% increase in 2021 was the largest in history.

So… if you’re looking for a reason why the economy refuses to roll over… and why stocks continue to hold up… here’s your answer: because the U.S. government from the federal down to the local level is spending trillions and trillions of dollars.

All of this is HIGHLY inflationary. And the bond market knows it.

The yield on the 6-month U.S. Treasury recently hit new highs for this cycle. The impact this is going to have on every asset class will be profound.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.Paragraph

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm2.html

Best Regards,

It’s worse than I imagined.

I had initially thought that the current debt ceiling deal would feature a small amount of spending cuts in 2024.  In reality, it will feature NO CUTS and will in fact open the door to as much spending as the Biden Whitehouse desires.

How is this possible?

A single line in the fine print from Section 265: The OMB director has sole waiver authority to spend if it’s “necessary for program delivery.” (H/T. Rep Nance Mace for catching this).

What does this mean?

OMB stands for Office of Management and Budget. This is the part of the Executive Branch in charge of “overseeing the implementation” of the President’s “vision” for the economy.

The OMB director is appointed by the President. And according to the current version of the debt dealing congress is voting on, this person has “sole waiver” authority on spending caps.

Put simply, she (the current OMB director is Shalanda Young), is permitted to spend as much money as President Biden wants, provided the spending is deemed “necessary” to deliver on programs that meet his vision for the economy.

So much for spending caps! This is the equivalent of handing a credit card to your 10-year-old child and saying, “you can only spend $100… unless it’s for something you think you need.”

We both know how that would turn out.

The reality is that this debt deal opens the door to a LOT more spending by the government, a mere 17-18 months before the next Presidential election. I’m sure the government will become fiscally conservative between now and then. After all, they’ve only grown the debt by $8 trillion since early 2020.

More and more the U.S. is beginning to look like an emerging market economy. Rampant spending, rampant corruption, and rampant inflation. Gold’s figured out what’s coming which is why it’s hanging around $2000 per ounce despite the Fed raising rates aggressively in the last 12 months.

Some investments will make fortunes from all this government spending/ inflation, others will absolutely implode.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.Paragraph

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We made just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm2.html

Best Regards,

By Graham Summers, MBA

As I first noted in my best-selling book The Everything Bubble: The Endgame For Central Bank Policy, “politicians make promises, but bond markets deliver.”

What I meant by this is that our entire political system is now consists of government overspending which is ultimately financed by the bond markets. As long as the bond markets remain stable, politicians will continue to spend and spend and spend. 

And that is precisely what happened with the debt ceiling “resolution.”

We now live in a “one party” system that consists of Democrats, who like to spend trillions and trillions of dollars, and Republicans who like to sign off on 98% of Democrat spending, while arguing that doing so is a “win” for conservatives because the Democrats didn’t get 100% of what they proposed. 

The latest Debt Ceiling “deal” is the latest example of this dynamic.

The Debt Ceiling deal features little if any spending cuts. Total federal spending will be reduced by about 0.2% of GDP in 2024. However, total spending then jumps 1% the next year (2025). And the debt ceiling is now suspended until 2025, which means we’ll likely tack on another $4 TRILLION in debt by then. 

Inflation was already proving extremely sticky in some areas of the economy. We’re 15 months into one of the most aggressive monetary tightening cycles in history and CPI remains at 4.9% while Core PCE (the Fed’s favorite inflation measure) is at 4.7% and has been stuck there for FOUR MONTHS. 

The fact the government will be permitted to continue running $1+ trillion deficits for the next 18 months will only make inflation even more embedded in the economy. The bond market knows this which is why bond yields are rising again.

The yield on the 2-Year U.S Treasury has broken out to the upside after a three-month consolidation period. As I write this, it’s rapidly approaching its former highs.

Some investments will make fortunes from this, others will absolutely implode. This is an extremely volatile market and one that could make or break your portfolio.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.Paragraph

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We made just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm2.html

Best Regards,

By Graham Summers, MBA

You can forget about what the media is telling you…because REAL inflation has come down much at all.

The media likes to trumpet that headline inflation has dropped in the U.S. from a peak of ~9% down to ~6%. However, as I’ve noted time and again, the ONLY reason headline inflation has dropped this much is due to energy prices falling. And the primary reason energy prices have fallen is because the Biden Administration has dumped over 150 MILLION barrels of oil in the last 12 months pushing oil down from $130 a barrel to $70 a barrel.

Core inflation, which removes the effect of energy and food, presents a much clearer picture of underlying inflation without the impact of these political shenanigans. And the situation for core inflation (blue line) doesn’t look NEARLY as promising as headline inflation (red line) as the below chart illustrates.  

As you can see, core inflation has barely dropped much if at all. And it’s now in the process of turning back up!

And bear in mind, this is after the Fed performed its most aggressive 12 month monetary tightening in history, raising rates from 0.25% to 5%!

So what do you think will happen to inflation now that the Fed is beginning to talk about pausing its rate hikes?

Gold has figured it out. The rest of the market will soon as well!

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

As I write this, there are only 29 left.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm2.html

Best Regards,

By Graham Summers, MBA

The next round of the inflation trade has begun.

The first round focused on energy prices. Oil rose from $10 a barrel at the 2020 lows to $130 per barrel at the 2022 highs. You may find this hard to believe, but oil (black line) actually outperformed tech stocks by such a wide margin that the NASDAQ ‘s (blue line) performance looks pathetic in comparison!

During major bull markets in commodities, the sector that leads during the first leg up rarely leads during subsequent moves higher. Which is why this leg up for the inflation trade looks to be lead by precious metals.

As I write this, gold is closing in on its ALL TIME highs. Yes, ALL TIME highs. And practically no one has noticed or cares.

In the simplest of terms, we are getting multiple signals that the inflation trade is about to hit again. Smart investors are already taking steps to profit from it.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

As I write this, there are only 37 left.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm2.html

Best Regards,

By Graham Summers, MBA

OPEC shocked the world by announcing oil production cuts of 1.6 million barrels per day starting in May.

This is a big deal for inflation.

Why?

Because as I have noted previously, the ONLY inflation data that had come down in the last 12 months was in energy prices. And that was due to the Biden administration dumping 250 million barrels of oil in the open market while OPEC was maintaining its regular production rates.

See the data for yourself… literally everything but energy prices and used car prices continues to rise…

But now OPEC is cutting production at the same time that the Biden administration is set to STOP dumping oil on the market.

What does this mean?

Energy prices are about to erupt higher, pushing inflation to new highs.

Oil is already back at $80 a barrel, up from $66 per barrel a few weeks ago.

Gold has figured out what’s coming already. It’s rocketed from $1,600 an ounce to $2,000 an ounce and is about to break out to new all-time highs.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm2.html

Best Regards,

By Graham Summers, MBA

I have a question… and it’s one we need to consider as investors.

What happens to inflation if oil begins to rally aggressively?

Black gold has been in a downtrend for the last 12 months. This, combined with the Biden administration dumping 250 million barrels of oil, has resulted in energy inflation dropping considerably.

Indeed, according to the Consumer Price Index (CPI), which is the official inflation measure in the U.S., energy inflation is the ONLY form of inflation that has come down in any meaningful way in the last year (aside from car prices).

See for yourself in the table below.

I bring all of this up because oil is once again showing signs of life. Despite the threat of recession, the commodity has refused to drop below $65 be barrel. And after yesterday’s 5% rally, it’s within spitting distance of an upside breakout from its year long downtrend.

This could very well be the next MAJOR money maker for investors who take heed.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm2.html

Best Regards,

By Graham Summers, MBA

The Fed is playing a very dangerous game.

The Fed is trying to fight inflation by raising rates… but low rates were NOT what triggered inflation: rampant money printing and supply chain issues were the reason inflation ignited.

Some historical perspective…

Between 2008 and 2014, the Fed printed roughly $3 trillion to combat the Great Financial Crisis and its aftermath. The Fed printed that same amount in six months in 2020. And it would ultimately print a total of ~$5 trillion in just 24 months.

That’s correct, during the pandemic, the Fed printed nearly DOUBLE the amount of money that it printed in response to the Great Financial Crisis. And the Fed did this in 1/3 of the time (two years vs. six years).

The Fed was not the only one.

In fact, compared to what the Federal Government did, the Fed looked like a bunch of money printing/ spending amateurs. The Federal Government spent ~$6 in 2020 ALONE. It then spent another $1.9 trillion in 2021, for a total of roughly $8 TRILLION in two years.

Who would have thought that printed/ spending $13 TRILLION (61% of U.S. GDP) in 24 months would ignite inflation!?!

So what is the Fed’s response to all of this?

Raise rates from 0.25% to 4.75% while draining a measly $500 billion in liquidity from the system.

That’s right, the Fed believes it can rein in the inflation that was created by printing/spending $13 TRILLION by raising rates a little over 4%… and shrinking its balance sheet by 6%.

Give me a break.

So again, the Fed is playing a dangerous game today. Every month that it continues messing around inflation becomes more embedded in the financial system.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

Throughout this week, I’ve pounded the table on the fact that the economic data the U.S. government has put out recently is a huge pile of BS.

We’ve covered everything from the jobs data, to inflation, and the recent retail sales results. By quick way of review, the highlights from my research are:

1) The reason the U.S. economy supposedly “added” 500,000+ jobs in January was due to an accounting gimmick, NOT because those jobs were actually created.

2) The Bureau of Labor Statistics (BLS) openly admits this, citing that without its “population control effect” the economy added… 84,000 jobs.

3) The only part of the inflation data that has dropped has been in Energy prices.

4) The reason Energy prices dropped was because the Biden administration dumped over 250 MILLION barrels of oil in the last two years.

5) Retail sales are booming because of INFLATION (things cost more), not because of consumer spending. The jump on credit card debt and massive decline in consumer savings confirms that Americans are maxing out their credit just to get by.

Perhaps the single most disturbing element of the above items is that they reveal the complete failure of the Federal Reserve to tame inflation. Indeed, according to the Taylor Rule which is widely considered one of the best indicators of where rates should be the Fed should have ALREADY raised rates to over 9% to stop inflation.

Instead the Fed has raised rates to 4.75% and is now talking about possibly one or two more rate hikes of just 0.25%.

Everywhere you look, the Fed is failing miserably at curtailing inflation.

1) Financial conditions are now as loose it not looser then they were before the Fed began tightening monetary policy.

2) Meme stock mania is back with garbage companies rallying 30%, 50% even 100% or more in the last few weeks… again just like before the Fed began tightening monetary policy.

3) The inflationary data is being revised upwards: December’s -0.1% CPI report has been revised upwards to 0.1%, November and October’s CPI numbers were also revised higher.

4) The Producer Price Index results for January 2023 were reported yesterday. They showed inflation rising 0.7% month over month. On an annualized basis this puts inflation over 9%.

And all of this is AFTER the Fed raises rates 4.5% and drains over $500 billion in liquidity from the system!

The Fed now has a choice: get serious about ending inflation and trigger a market meltdown… or face a debt crisis in the near future as bond yields roar to new highs, forcing the government to spend more and more money on debt payments.

Either way, the U.S. is heading for a crisis in the near future. And most investors are being lead like sheep to the slaughter!

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

Yesterday I wrote to you about the complete and utter BS that was the January jobs report.

By quick way of review…

1) The reason the U.S. economy supposedly “added” 500,000+ jobs in January was due to an accounting gimmick, NOT because those jobs were actually created.

2) The Bureau of Labor Statistics (BLS) openly admits this, citing that without its “population control effect” the economy added… 84,000 jobs.

Today I’d like to talk to you about a different type of economic BS… this time concerning inflation.

The prevailing myth in the media is that inflation is coming down. 

This is complete and utter BS. The only data that has fallen has been in energy prices (well, that and used cars). And the reason energy has fallen is because the Biden administration dumped over 250 MILLION barrels of oil in the last two years.

If you don’t believe me, here’s the data straight from the inflation report announced yesterday. Where in this table are there any negative numbers (meaning inflation is turning down) for the months of November and December outside of energy (and used cars)?

“Yeah Graham, but the pace of inflation is slowing, this is a big win!” some media stooges might be saying. 

Let me be blunt here…

The Fed raised rates from 0.25% to 4.75% in less than a year… while also draining $500 BILLION in liquidity from the system… and all it did was SLOW the pace at which prices are still RISING?

And that is a big win?

Oh and by the way, the BLS just changed its methodology for how it calculates inflation this year for some odd reason (hint: political pressure from the White House). If we calculated January’s inflation numbers using the methodology that was applied in December (a mere 30 days before) inflation would be rising at an annualized rated of…

9.6%.

WHOOPS!

Again, the inflation problem is NOT going away. What’s happening is that the government is spewing out complete and utter BS and pretending that the BS is reality.

It’s not. It’s BS. I know it. You know it. And yes, they know it… but it doesn’t look good if you keep spending trillions of dollars while inflation remains at a 40 year high, does it?

And once again, the most disturbing aspect of all of this is that Americans are investing their hard earned dollars based on this BS. 

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

As I have been warning for weeks… inflation is resurging.

The only portion of the inflation data that declined last year was energy (well that and used car prices). The reason energy declined was because A) China was in lockdown and B) the Biden administration dumped 250 million barrels of oil on the market.

If you don’t believe me about this inflationary claim, you can take a look at December’s inflation data for yourself. Everything remains positive except energy and vehicles.

Obviously, for anyone paying attention, this raises a major concern..

What happens to inflation when china re-opens its economy and the Biden administration stops dumping oil?

The answer is simple: inflation comes roaring back.

The Cleveland Fed runs an inflation tracker called Inflation Nowcasting. In December, this data point was at -0.1%. It then jumped to 0.53% in mid-January, before ending the month at 0.63%. Today it’s at 0.68%. This represents a .78% swing in inflation in the span of six weeks. And it confirms that inflation is once again rising in the financial system.

Bear in mind, this is happening AFTER the Fed already raises rates from 0.25% to 4.75% while also draining $500 billion from its balance sheet.

So imagine what happens now that the Fed is SLOWING the pace of its rate hikes… 

Gold has already figured it out: the precious metal has broken out of its downtrend and is right back to the levels at which it traded in March 2022 (when the Fed still had rates at 0.25%)!

This is the #1 threat to investors’ portfolios today… that inflation has come roaring back.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

If you want to find out what is causing inflation… and why it won’t be going away anytime soon no matter what the Fed does, look no further than the below chart.

This is a chart of government spending since 2013. As you can see, government spending was in a clear trend right up until the pandemic, at which time it went absolutely bonkers.

Now, according to the economic data, the recession triggered by the pandemic ended in June 2020. And yet, both the Trump and the Biden administrations continued to spend at a pace FAR exceeding the historic trend.

How much exactly?

Some $20 TRILLION, or roughly 87% of U.S. GDP. 

Bear in mind, we’re not talking about $20 trillion in total spending… we’re talking about $20 trillion in ABOVE-trend spending by the government. 

Even worse, there is no sign that this above-trend spending is slowing down. If anything, it’s starting to accelerate again.

So, the Fed can raise rates and shrink its balance sheet all it wants. It won’t accomplish much while the government is pumping an extra $1+ TRILLION in above-trend spending into the economy every single year. 

And rest assured, this spending isn’t going into productive endeavors. It’s going into paying people not to work, boondoggles, and various inflationary schemes.

Want to end inflation? Stop overspending and printing money. It’s really quite simple. 

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

We’ve spent quite a bit of time analyzing the inflation situation in the U.S. lately.

By quick way of review:

1. The only inflationary data that has dropped is in the energy space (that and used cars).
2. The only reason energy prices have dropped is because A) China was in lockdown for Zero Covid and B) the Biden administration dumped 250 million barrels of oil onto the market.
3. Both A) and B) are over. China has reopened and the Biden admin has already depleted the U.S.’s emergency stash of oil by 40%… as a result of this oil and gasoline prices have bottomed and begun turning upwards again.

All of the above signal that inflation has “not peaked” no matter what the media claims. Indeed, if the latest news is anything to go by, inflation has now become fully entrenched in the financial system.

Welcome to the wage spiral in the U.S.!

The first signs of this appeared during the rail worker deal the Biden administration signed into law. Nestled amongst the various details of the deal was a 24% pay increase from 2020 through 2024 as well as immediate payouts of $11,000.

Bear in mind, this is a 24% pay increase that was signed into law in at the end of 2022. So, the 24% pay increase would actually be over the next two years, or 12% per year.

This is not an isolated incident either.

Wal-Mart, the single largest private sector employer in the U.S. (and the world) just announced it is raising its starting wage by 17%.

These are not small increases. And they indicate a wage spiral is beginning in the U.S.

Why does that matter?

A wage spiral is the Fed’s worst nightmare because there is NO easy solution. The only thing that can stop it is a SEVERE recession that features mass layoffs and a sharp rise in unemployment.

So we can all kiss that “soft landing” narrative good bye.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

Yesterday I illustrated how the “inflation has peaked” narrative is a myth.

By quick way of review:

1. The only inflationary data that has dropped is in the energy space (that and used cars).
2. The only reason energy prices have dropped is because A) China was in lockdown for Zero Covid and B) the Biden administration dumped 250 million barrels of oil onto the market.
3. Both A) and B) are over. China has reopened and the Biden admin has already depleted the U.S.’s emergency stash of oil by 40%.
4. The markets are confirming this, with both oil and gasoline prices bottoming in the last two months. 

Today we’re talking about another type of inflation: asset price inflation, specifically financial conditions.

Fed Chair Jerome Powell has stated multiple times (most recently on December 14th 2022) that the Fed focuses on financial conditions.

See for yourself.

With that in mind, it’s worth noting that financial conditions are now the easiest they’ve been in nearly a year. To put that into perspective, it means financial conditions are back to where they were BEFORE the Fed ended QE and began raising interest rates.

Anyone who thinks the Fed won’t notice this is out of his or her mind. And it only confirms that inflation is not gone in any meaningful way. If anything, we’re in the midst of a resurgence courtesy of energy prices and investors pouring into stocks again.

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We made 100 copies available to the public.

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

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,