By Graham Summers, MBA

Bonds finally bounced yesterday. However, the bounce was relatively weak and didn’t signal the “all clear.”

Simply put, things stabilized. But they didn’t actually improve much. And market leading indicators suggest this correction isn’t over yet.

High yield credit typically leads stocks both the upside and the downside. It bottomed weeks before stocks did in October 2022. And right now, it’s telling us the S&P 500 could easily go to 4,100.

Breadth is another market leading indicator I watch. And it is also telling us stocks are not finished falling just yet. Again, I don’t trust this bounce in stocks at all.

Again, the long-end of the Treasury market has completely collapsed. Banks and financial entities are sitting on hundreds of billions of dollars worth of losses. As I keep warning, the Great Debt Crisis of our lifetimes is fast approaching. The time to prepare is NOW, before it hits.

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.

https://phoenixcapitalmarketing.com/predictcrash.html

Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research

By Graham Summers, MBA

The markets have reached a new level of stupidity.

Stocks are exploding higher based on inflation coming in at 7.1% Year over Year. This is apparently great news because Wall Street expected the number to be somewhere between 7.2% and 7.6%.

So, according to those buying stocks today,  a 0.1% “beat” on an inflation number that is still north of 7% despite the Fed implementing its most aggressive rate hike cycle in 40 years in is a reason to panic bid stocks higher.

Looking through the numbers, almost the entire drop came courtesy of falling energy prices and used cars. I might add that the drop in energy is not surprising given that the Biden administration drained the Strategic Petroleum Reserve (SPR) by ~180 million barrels of oil. Practically everything outside of energy and used car prices is still rising.

Elsewhere in the report, core inflation, which the Fed looks at closely is still at 6%. Sure, it’s not spiking any higher, but this it’s not coming down much either. Again, this is good in a way, but is it a reason to panic buy stocks like inflation is gone? I don’t think so.

Unfortunately for those who are panic buying stocks today, the bear market is NOT over. With a recession just around the corner, stocks will soon collapse to new lows.

If you’ve yet to take steps to prepare for this, 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.

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By Graham Summers, MBA

Stocks lost their 200-day moving average (DMA) yesterday.

This is a major development, because it indicates that the bulls could not get the S&P 500 to break above its 200-DMA and stay there, despite numerous interventions, manipulations, and performance gaming.

Why does this matter?

The 200-DMA is like a “line in the sand” for long term trends in the market. During bull markets, stocks rarely break below it. And during bear markets, stocks rarely break above it. You can see this relationship clearly in the below chart. The 200-DMA is the red line.

With this latest failure, it’s a clear sign that the bear market is nowhere near over. Take a look at the bear market of 2000-2003 to see what I mean.

Here’s the bear market of 2007-2009.

So again, the bear market is not over. The trend remains down. And it likely won’t end anytime soon (think months, possibly years). Many investors will lose another 50% of their portfoios… if not more as it unfolds.

You don’t need to be one of them!

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

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

To pick up your FREE copy, swing by:

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By Graham Summers, MBA

Yesterday I asked, “is the Fed about to hit the PANIC! button like the Bank of England?” 

The markets certainly acted like it: stocks, Treasuries, oil, and gold erupted higher yesterday, fueled by the announcement that the Fed had scheduled an emergency meeting for 11:30AM EST.

It was only a matter of time before Fed Chair Powell would appear and tell the markets that the Fed was reintroducing Quantitative Easing (QE), just as the Bank of England (BoE) had done last week.

Except… Chair Powell didn’t appear. The Fed didn’t make any announcements of any kind except that it was updating its rule regarding debit card transactions.

Debit. Card. Transactions.

Not the reintroduction of QE. Not a slowing or potential end to rate hikes. And certainly not a Fed pivot of any kind.

This is not to say that Fed officials didn’t refrain from making any public appearances yesterday. John Williams, the President of the New York Fed (the branch in charge of market operations) gave a speech in Phoenix Arizona in which he stated:

1)    Inflation is far too high.

2)    Our job [cooling demand and reducing inflationary pressures] is not yet done.

3)    The drop in commodities prices is “not enough” to “bring down” the “broad-based inflation” caused by goods demand as well as labor and services demand.

So… no sign of a pivot there.

If anything, the market’s action yesterday makes a Fed pivot less likely any time soon. With both Treasuries yields AND the $USD falling yesterday, rate and liquidity pressures are much lower than they were last week.

The $USD reversal in particular is a welcome relief as it allowed the British Pound and other currency that were under pressure to rally hard… But this again erases any need for the Fed to pivot.

Bottomline: the Fed will no doubt pivot at some point… but it’s not doing so now. And the market’s action has made the likelihood of a pivot MUCH lower.

So enjoy the relief rally… but don’t plan on it lasting for long. Because 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.

And it is inflation that triggered 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 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,

By Graham Summers, MBA

Yesterday I asked, “is the Fed about to hit the PANIC! button like the Bank of England?” 

The markets certainly acted like it: stocks, Treasuries, oil, and gold erupted higher yesterday, fueled by the announcement that the Fed had scheduled an emergency meeting for 11:30AM EST.

It was only a matter of time before Fed Chair Powell would appear and tell the markets that the Fed was reintroducing Quantitative Easing (QE), just as the Bank of England (BoE) had done last week.

Except… Chair Powell didn’t appear. The Fed didn’t make any announcements of any kind except that it was updating its rule regarding debit card transactions.

Debit. Card. Transactions.

Not the reintroduction of QE. Not a slowing or potential end to rate hikes. And certainly not a Fed pivot of any kind.

This is not to say that Fed officials didn’t refrain from making any public appearances yesterday. John Williams, the President of the New York Fed (the branch in charge of market operations) gave a speech in Phoenix Arizona in which he stated:

1)    Inflation is far too high.

2)    Our job [cooling demand and reducing inflationary pressures] is not yet done.

3)    The drop in commodities prices is “not enough” to “bring down” the “broad-based inflation” caused by goods demand as well as labor and services demand.

So… no sign of a pivot there.

If anything, the market’s action yesterday makes a Fed pivot less likely any time soon. With both Treasuries yields AND the $USD falling yesterday, rate and liquidity pressures are much lower than they were last week.

The $USD reversal in particular is a welcome relief as it allowed the British Pound and other currency that were under pressure to rally hard… But this again erases any need for the Fed to pivot.

Bottomline: the Fed will no doubt pivot at some point… but it’s not doing so now. And the market’s action has made the likelihood of a pivot MUCH lower.

So enjoy the relief rally… but don’t plan on it lasting for long. Because 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.

And it is inflation that triggered 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 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,

Two weeks ago, the new government in the U.K. introduced a series of major tax cuts aimed at stimulating the economy.

Tax cuts mean less tax revenues, which in turn means less money available to pay the interest on the country’s debt. Bond yields in the U.K. were already rising due to inflation and monetary tightening from the BoE. The announcement of tax cuts triggered a panic.

The yield on the 2-Year U.K. government bond exploded higher from 3.5% to 4.4% in a matter of days.

And the British Pound nosedived.

Remember, we’re not talking about volatility in a stock here… we’re talking about the GOVERNMENT BOND and CURRENCY of the FIFTH LARGEST ECONOMY IN THE WORLD!

Pension funds, which invest trillions of pounds’ worth of capital in the U.K. and which were heavily invested in U.K. government bonds, were on the verge of going belly up. So, the Bank of England panicked and announced it would introduce UNLIMITED QE again.

That is not a typo. The Bank of England is the first major central bank to be broken by the markets. And it won’t be the last.

The BoE announced that it will begin “unlimited QE” to support U.K. bonds from September 28th until October 14^th.

U.K. sovereign bond yields dropped on the news.

And the British pound rallied.

What happens here is critical. If yields on U.K, bonds begin to rally ,and the British Pound begins to collapse again… it means the BoE has LOST CREDIBILITY.

Yes, we’re talking about a MAJOR central bank for a developed nation losing credibility with the markets.

As I write this, it is too early to tell. But this is THE most important situation in the world right now. If things go south here, the U.K. will go bust.

The British Pound has managed to “close the gap” from the Monday decline, but it’s not out of the woods by any stretch. You would think that a major central bank saying it will do “whatever it takes” to defend its currency would have a bigger impact. But the pound remains in a downtrend.

Moreover, the yields on British Gilts have come down from their panic highs but remain at EXTREMELY elevated levels. The crisis here is not over by any stretch.

What happens here is critical. If the Pound begins to fall again, and yields on Gilts rise, then the great Crisis of our lifetimes, the crisis in which entire countries go bust, is here.

And it is inflation that triggered 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 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,

By Graham Summers, MBA

As I noted yesterday, Japan has unleashed the next wave of inflation.

By quick way of review:

1) Japan’s central bank, the Bank of Japan or BoJ, is the only major central bank that is still easing monetary conditions: both the Fed and the European Central Bank (ECB) are tightening monetary conditions.

2) As a result of this differential in policy, Japan’s currency, the Yen has hit a 24-year low relative to the $USD.

3) Japan imports almost all its energy and food needs. As a result of this currency collapse, food and energy prices in Japan are skyrocketing.

So last week, the BoJ decided to take matters into its own hands… and intervene directly in the currency markets. This is an actual gamechanger.

Why?

Because Japan is now EXPORTING inflation to the U.S. and Europe. How long do you think the U.S. and Europe will tolerate this?

And so… we have entered the currency wars, a time in which major countries use monetary policy as a weapon to defend their own currencies against others.

All of this is HIGHLY inflation.

Consider the U.S.. If inflation hit a 40 year high at a time when the $USD was doing this:

What do you think happens to inflation when the $USD rolls over due to Japan propping up the Yen?

On that note, we just 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

By Graham Summers, MBA

The Fed’s worst nightmare has arrived.

That nightmare?

Sticky inflation in the form of a wage spiral.

Inflation doesn’t enter the financial system all at once; it arrives in stages. Those stages are:

Stage 1: Price increases in raw materials

Stage 2: Price increases in factory gate prices

Stage 3: Price increases in retail prices/ consumer prices

Stage 4: Employees/workers demand higher wages to meet higher costs of living.

The Fed can deal with stage 1 or stage 2 of inflation relatively easily. However, once we get into stages 3 and 4, inflation becomes a LOT harder for the Fed to kill. 

Indeed, for the Fed, stage 4 is the most dreaded phase of inflation as it usually requires a deep recession to kill it.

And the U.S. economy just entered it.

The ADP national employment report released last Wednesday reveals that private sector employment increased by 132,000 jobs in August.

That’s the good news.

The bad news?

Annual pay increased by 7.6%.

In simple terms, employees/ workers are now demanding higher wages due to inflation. This means the Fed’s worst nightmare has arrived. It will need to raise rates much higher than anyone anyone believes… and trigger a deeper recession than anyone expects in order to bring inflation to heel.

Our downside target for the S&P 500 remains below 3,000 as noted on the chart below.

If you’re looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

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

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

As I warned yesterday, the next crisis is just around the corner.

By quick way of review…

1) The Fed takes its cues on where rates need to be from the yield on the 2-Year U.S. Treasury.

2) Throughout the first half of 2022, the yield on the 2-Year U.S. Treasury has spiked, resulting in the Fed being WAAAAAY behind the curve in terms of inflation.

3) Only once the Fed began raising rates by 0.75% did the yield on the 2-Year U.S. Treasury begin to stabilize.

Why does all of this matter?

Because stocks are priced based on Treasury yields. So, when the yield on the 2-Year U.S. Treasury spiked earlier this year, the stock market took it on the chin.

Indeed, it was the fact that the yield on the 2-Year U.S. Treasury had stabilized that allowed the stock market to rally this summer.

Then came the Fed’s monster screw up.

In July, Fed Chair Jerome Powell claimed the Fed is “in the range of neutral” as far as monetary policy is concerned. This is akin to him stating, “we’re done tightening monetary policy.”

It was arguably the stupidest thing a Fed Chair has said since Ben Bernanke stated that “subprime is contained” in 2007. And the bond market just called the Fed’s bluff.

The yield on the 2-Year U.S. Treasury has just broken to new highs. This represents the bond market telling us that it no longer believes that the Fed is serious about tackling inflation. The Fed either needs to get WAY more aggressive with monetary policy (bad for stocks) or inflation is going to collapse the economy (even worse for stocks).

Put simply… stocks are on borrowed time. And the markets know it!

If you’re looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

We made 100 copies available to the general public.

As I write this there are 18 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

Are you ready for the next crisis?

You better be… because the Fed is losing control of inflation and the bond market… again.

Historically, the Fed has taken its cues on where rates should be based on where the yield on the 2-Year U.S. Treasury is trading. In this context, it is easy to see how badly the Fed screwed up earlier this year. The gap between the yield on the 2-Year U.S. Treasury (blue line in the chart below) and the Effective Federal Funds Rate (red line in the chart below) is massive.

This is why the stock market collapsed earlier this year. Stocks are priced based on Treasury yields, so when the yield on the 2-Year U.S. Treasury spiked earlier this year, the stock market took it on the chin.

The Fed attempted to get this under control this summer, by hiking rates by 0.75%. The history of Fed rate hikes during its most recent monetary tightening up until that point is below

· March 17, 2022: Fed raises rates 0.25%.

· May 5, 2022: Fed raises rates 0.5%.

· June 16, 2022: Fed raises rates 0.75%.

When the bond market saw this, it began to calm down and the yield on the 2-Year U.S. Treasury stabilized.

This stability in bond yields is what allowed the stock market to rally this summer.

But the Fed just screwed this up BIG TIME.

I’ll explain how as well as when the next crisis will hit in tomorrow’s article. In the meantime, if you’re looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

We made 100 copies available to the general public.

As I write this there are 27 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

Judging from last week, the bear market rally ended right at the 200-day moving average (DMA) for the S&P 500.

This was right where market leaders such as Tesla (TSLA) had suggested we’d see a top. Indeed, one of the first signs that the market would be topping out was the fact TSLA struggled to remain above its 200-DMA once it initially broke above that line in mid-July.

So where do we go from here?

High yield credit, which leads stocks, suggests the S&P 500 is going to 4,100 in the near-term.

It’s a similar story for breadth, which also leads stocks.

However, if the S&P 500 cannot maintain support (green line in the chart below) around 4,100, things could get UGLY fast.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

We are making just 100 copies available to the general public.

As I write this there are 39 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

Yesterday we put this recent stock market rally in the context of historical bear market rallies.

By quick way of review.

1. It is extremely common for stocks to rally, and sometimes by quite a lot and for as long as two months, during a secular bear market.

• During the Tech Crash, the S&P 500 experienced four rallies, ranging from 10% to 25%, and lasting two weeks up to 2.5 months.

• During the Housing Crash, the S&P 500 experienced four rallies, ranging from 10% to 15% and lasting one to two months each.

In this context, the current rally in stocks is 9 weeks old (a little over two months) and has seen the S&P 500 rally some 17%.

This begs the question… if this is indeed a bear market rally… when will it end? Put another way, when does the next leg down begin?

Historically, the 40-week moving average (the same as the 200-day moving average) has been a line of GREAT significance during bear markets. During the Tech Crash, the S&P 500 was never able to break above this and stay there.

A similar dynamic played out during the Housing Crash. Here again, the S&P 500 was unable to reclaim the 200-DMA/40-WMA.

So where are stocks trading today in relation to this line?

The S&P 500 is just about to test its 200-DMA/40-WMA. If history is any guide, it won’t be able to reclaim this line and stocks will begin their next leg down in the next few weeks.

For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

On Friday I outlined the technical setup for the stock market’s current bear market rally.

By quick way of review…

1. The price action in 2022 had been extremely bearish with 12 out of the previous 15 weeks closing down as of mid-June.

• The S&P 500 was extremely extended below its 50-day moving average (DMA)… hitting a low of 11% below that line in early June.

Put simply, the markets were primed for a bear market rally. After all, EVERY major bear market experiences these.

It is not uncommon for stocks to rally quite a lot… and for several weeks if not months, during bear markets. During the first 12 months of the Tech Crash, the stock market experienced two rallies of ~10 each lasting over a month in length, as well as two rallies of ~20+%, both of which lasted two months.

However, despite these significant rallies, stocks continued down another year, finally starting the bottoming process in late 2002.

Similarly, during the Housing Bust, there were four stock market rallies of 10%-15%, each lasting three weeks or more. Again, each of these ended in misery with stocks plunging an additional 50% before the market bottomed in 2009.

My point with all of this is that bear markets are extremely dangerous because stocks don’t go straight down. Instead, the stock market frequently experiences significant ~10+% rallies that can last as much as two months.

Just like this current rally.

I’ll outline when the next leg down in this secular bear market will begin in tomorrow’s article… in the meantime, if you’re looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html