stock collapse?

They Can Lie All They Like… But We Have a Confirmed Sell Signal

By Graham Summers, MBA

I’m getting sick of the lies.

I keep hearing from supposed gurus and commentators (not to mention the White House) that inflation is on the decline… but whenever I go to the grocery store or try to hire someone to fix something at my house or do just about anything other than pay for gas… the price is UP.

Who am I to believe? The establishment or my own eyes and wallet?

This is a MAJOR issue today in America… we are told all the time that something is a certain way… only to find out that it’s not like that at all. And the idea that inflation is going away is one MAJOR lie that hits close to home since it affects our incomes and our lives on a daily basis.

I’ve been one of the few people stating that inflation is not declining for months now. In fact, the only reason the data even rolled over at all was because energy prices fell because the Biden administration dumped 250 MILLION barrels of oil on the markets.

All that accomplished was about three months of declining energy prices. Because the bond market just called “BS” on the idea that inflation is under control.

To whit… the yield on the 2-Year U.S. Treasury… which the Fed tracks to determine where rates need to go… is SPIKING again and about to take out its former highs! This tells us pint blank that inflation is back and if anything the Fed will need to be MUCH MORE aggressive to stop it.

And despite this… and the economy rolling over… and inflation NOT being on the decline… investors poured $1.5 BILLION per day into stocks last month. In fact, from what I can tell, investors are MORE bullish today than they were a year ago! These folks BELIEVE the lies they are being told!

This is the kind of environment in which crashes can happen.

Indeed, 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. I’ve illustrated them in the chart below.

The clock is ticking on the markets today… just like it was in 2000 and 2008. Many investors will lose everything… but you don’t have to be one of them.

If you’ve yet to take steps to prepare for what’s coming, we have published an 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.

This report is usually $250, but we’re giving away 100 copies for FREE to those who sign up for our free daily market commentary.

To pick up one of the remaining copies, use the link below…

https://phoenixcapitalmarketing.com/BM2.html

This image has an empty alt attribute; its file name is signature.jpg
Posted by Phoenix Capital Research in stock collapse?

A Truly Incredible Bull Market is Underway!

By Graham Summers, MBA

A truly incredible bull market is underway.

It’s catching everyone by surprise. And smart investors should read this article carefully to make sure they don’t miss out…

It’s a bull market in economic BS.

Before proceeding I want to stress that this is not a left vs right issue, nor is it Democrat vs Republican.

It’s reality vs. total fantasy.

The total fantasy is the notion that the economy is doing well right now. And one of the prime examples is the latest jobs numbers which claim the U.S. economy added 500,000+ jobs last month (January 2023).

The jobs report argues that the U.S. economy added 517,000 jobs in January. It arrived at this number courtesy of the household survey which argued that 894,000 jobs were added last month.

The Bureau of Labor Statistics (BLS) then admits in the very next column that 810,000 of these jobs were added via its “Population Control Effect” AKA an accounting gimmick, NOT reality.

Remove that gimmick and the U.S. added 84,000 jobs last month.

If you don’t believe me, here’s the table from the BLS stating this reality.

How is this possible? How can the BLS add so many fake jobs to its official numbers? Simple:

1) Only 44% of those given surveys actually answer them.

2) The Bureau of Labor Statistics applies numerous gimmicks to the data in an attempt to normalize things. Perhaps this is due to political pressure, or perhaps they are incompetent. Whatever the reason, the data is a work of fiction and has a tenuous connection to reality at best.

Some of the gimmicks the BLS applied to the January jobs data.

Its seasonal adjustments added over two million people to the non-farm payrolls number for the economy in both January 2022 and January 2023. Without these adjustments, only 152 million are working, as opposed to the 155 million the official number claimed.

Similarly, the household survey was adjusted to add over 1 million people to the “employed” category. So, in December of 2022, these one million people were NOT counted as employed. In January 2023 they were, NOT because they obtained jobs, but because the BLS’ model tweaked the number higher.

Things get even wackier from there.

Part-time employment supposedly jumped by 627,000 in January 2023… despite the clear historical trend that part employment should DROP after the holidays.

The BLS also claims that only 5,000 tech workers lost their jobs in January. The real number of tech workers who lost jobs is 85,000.

Bottomline: remove all of the gimmicks and tricks, and the real economy only added 84,000 jobs last month, which is the weakest job growth in TWO YEARS.

So how was the “official” number presented to the public so positive?

The BLS updated its methodology based on new estimates from the census. Doing this meant applying its model to a MUCH LARGER number, which generated MUCH LARGER job creation.

Don’t believe me? The BLS lays it all out in clear language here. Note the words “updated, estimates, and assumption” are featured heavily here.

So again, the economy is NOT booming. What’s booming is the amount of BS the government bean-counters apply to the economic data. I fully expect much of this to be revised down in the coming months.

But what’s truly frightening?

Investors are actually BUYING STOCKS based on this stuff!

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

Posted by Phoenix Capital Research in stock collapse?

Here’s Your Roadmap For the Market’s Next Money Making Move

By Graham Summers, MBA

Stocks look to have formed a short-term peak last week. 

Ever since this bear market began, the S&P 500 has followed certain dynamics. One of them is that it usually peaks around the same levels above its 50- and 200-day moving averages (DMAs).

Specifically, anytime the S&P 500 gets 5% above its 50-DMA and 3% above its 200-DMA, it usually tops out and rolls over. I’ve illustrated this dynamic with red horizontal lines in the chart below. And as you can see, this dynamic was at work during the recent stock market action as well: the S&P 500 rallied right to those levels and then rolled over.

So where do stocks go from here?

Well, the chart suggests they won’t stop the coming leg down until they are 8% below their 50-DMA and 10%-12% below their 200-DMA. That is where stocks have “bottomed” during the down legs of this bear market thus far.

I’ve illustrated those levels with red horizontal lines in the chart below. 

Bear in mind, these kinds of moves can take weeks if not months to play out, so don’t expect a crash here and now. I’m simply sharing these charts with you to give you some idea of the underlying dynamics of this bear market, and where things are likely headed in the weeks to come.

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

Posted by Phoenix Capital Research in stock collapse?

If You Were Hoping the Fed Would Boost Your Portfolio, Friday Was a Wake up Call

By Graham Summers, MBA

Friday’s data just obliterated any hope of the Fed stopping its rate hikes.

In case you missed it, on Friday the Institute for Supply Management (ISM) reported that its non-manufacturing PMI hit 55 in January 2023. This is a HUGE deal as the same data point was 49 in December 2022.

Anything below 50 is considered to indicate an economic contraction. So the fact we saw this sharp rebound indicates the economy is still going strong. And this, combined with the fact that the economy added over 500,000 jobs last month, tells us that the Fed has a LOT more room to raise rates going forward.

So if you were betting on a soft landing… or the Fed stopping its rate hikes and cutting rates later this year, you’re in for a rude surprise. 

The $USD figured out what’s coming last week. But as usual, stocks are last to “get it.”

In simple terms, the markets are setting up to deal out a load of pain to stock market bulls in the coming weeks.

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.Paragraph

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.Paragraph

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/BM.html

This image has an empty alt attribute; its file name is GSsignature-real.jpg

Posted by Phoenix Capital Research in stock collapse?

Few Things Destroy an Investor’s Portfolio Like This

By Graham Summers, MBA

Stocks are now in a strange time in which they do not perceive any major threats.

As a result of this, the bulls are buying stocks based on the usual “the Fed is about to pivot” nonsense. And they’re in for a world of pain.

Last year (2022) the big threat was inflation. Inflation, combined with the Fed tightening monetary policy, forced Treasury yields higher. With yields hitting 4% or higher in some cases, stocks were no longer as attractive as an investment class. So the stock market was repriced downwards from 20-22 times forward earnings to 16-18 times forward earnings.

However, as the above chart shows, since October 2022, Treasury yields have stabilized. With yields no longer rising, the threat of inflation has “disappeared” as far as stocks are concerned. And so investors have begun pouring back into the stock market based on the hope that the Fed will soon end its monetary tightening.

This is horribly misguided. Few things destroy an investor’s portfolio like buying stocks during a recession based on hope that the Fed will start easing monetary policy. And rest assured, the same bond market that told us inflation was out of control, is now telling us that a recession has arrived.

So what happens to stock bulls who buy stocks going into a recession? Well, the last two times, stocks did this:

In simple terms, the markets are setting up to deal out a load of pain to stock market bulls in the coming weeks. 

But you don’t need to be one of them!

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.Paragraph

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/BM.html

This image has an empty alt attribute; its file name is GSsignature-real.jpg
Posted by Phoenix Capital Research in stock collapse?

I Sincerely Hope You’re Not Falling For This

By Graham Summers, MBA

The longer I’m in this business, the clearer it becomes that no one actually reads anymore. Everyone simply trumpets headlines, or retweets articles, without looking at the data.

The latest and most glaring example of this is the claim that “inflation has peaked.” Everywhere you look in the media (and on social media) people repeat this statement as if it is a fact.

It is not. Inflation has not peaked. And the data confirms this.

Almost ALL of the drop in inflation data has come from energy prices falling. And energy prices have fallen because the Biden administration dumped over 250 MILLION barrels of oil from the Strategic Petroleum Reserve (SPR).

To put this into perspective, it’s nearly 40% of the SPR. And the Biden admin dumped it in the span of less than two years. THAT is why energy prices dropped, which accounts for almost ALL of the drop in inflation data.

See for yourself. Outside of the drop in energy prices, the only significant drop in prices occurred in used car vehicles. Everything else is still RISING in price year over year.

I bring all of this up because now that the Biden admin is no longer dumping tens of millions of barrels of oil on the open market, energy prices are bottoming.

Oil has bottomed and is starting to turn up.

The situation is even uglier for gasoline.

So, unless President Biden wants to empty the SPR to zero, this “inflation has peaked” narrative is over. Inflation is coming back in a big way. And NO ONE is positioned for 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,

Posted by Phoenix Capital Research in Inflation, stock collapse?

The Next Major Threat to Your Portfolio Just Arrived

By Graham Summers, MBA

The data is finally beginning to register that a recession is at hand.

I’ve been forecasting that the U.S. economy was in recession back in November. Leading indicators and the bond market made this clear. 

The yield curve has accurately predicted every recession since 1982. And it was SCREAMING that a recession was about to hit in the U.S. since mid-2022. As you can see in the chart below, the yield curve was more inverted than at any point in the last 40 years.

However, a big problem with economic forecasting is that most data sets are backwards looking. So often times you don’t get actual data telling you that a recession has arrived until the economy is already several months into the recession.

And the stock market pays attention to economic data, NOT leading indicators.

I mention all of this because the recession that I’ve seen unfolding since November is finally showing up in the economic data. Yesterday, the Commerce Department released a number of data series that were HIGHLY recessionary. 

Retail Sales clocked in at -1.1% Month over Month. Similarly, Industrial Production came in at -0.7% Month Over Month while Manufacturing Production registered -1.3% Month Over Month. 

Bear in mind, these are the data points for December. So, this is what was happening in the economy a month ago. And bear in mind, the Month Over Month numbers are a comparison between December and November. So, the downturn actually started more than seven weeks ago. 

This is why stocks took it on the chin and bonds caught a bid yesterday. And judging by yesterday’s data, this process is just getting started.

And remember what happened to stocks during the last two major recessions in 2000 and 2007.

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.Paragraph

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/BM.html

This image has an empty alt attribute; its file name is GSsignature-real.jpg
Posted by Phoenix Capital Research in stock collapse?

Buckle Up, the Bond Market is About to Break a Major Central Bank

By Graham Summers, MBA

The situation in Japan is worsening.

As I’ve outlined before, Japan is the grandfather of monetary policy insanity. The Fed first introduced Zero Interest Rate Policy (ZIRP) and Quantitative Easing (QE) in 2008.

The central bank of Japan, the Bank of Japan or BoJ introduced them in 1999 and 2001, respectively. And since that time, it’s NEVER been able to normalize monetary policy. Indeed, the longest the BoJ has even managed to tighten monetary conditions in 20+ years is a mere 14 months. 

Put simply, Japan has been dealing with extraordinary monetary policy for an entire generation: 25 years. Along the way, the BoJ has launched: 

1)    Negative interest rate policy (NIRP), through which it charges lenders to lend it money.

2)    A single QE program equal to 25% of Japan’s GDP (in 2013).

3)    Unlimited QE in the form of yield control, through which it prints money and buys Japanese Government Bonds any time said bonds’ yields begin to rise above a certain level.

We are in the process of watching #3 blow up today.

Initially, the BoJ, wanted 10-Year Japanese Government Bond yields to remain at 0%. However, once inflation arrived, the BoJ found itself printing so much money to defend that level, that it was forced to raise its yield target to 0.5%.

And that’s when all hell broke loose. The bond market is repeatedly testing the BoJ’s resolve, with yields rising above 0.5% time and again. To counter this, the BoJ is being forced to launch previously unscheduled QE programs on a near daily basis.

Friday and Monday alone, the BoJ spent $78 BILLION. And bond yields STILL rose above its desired level of 0.5%.

Something is about to break here. The BoJ just announced that it won’t be changing its policy despite the obvious signs that it is losing control of its bond market.

Put another way: we’re about to find out what happens when a bond market breaks a major central bank. Think of the 2023 crisis for Italy and Spain… only with the world’s THIRD largest economy and third most used currency. 

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 2023, 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.Paragraph

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/BM.html

This image has an empty alt attribute; its file name is GSsignature-real.jpg

Posted by Phoenix Capital Research in stock collapse?, The Everything Bubble

Is the Worst Over For This Bear Market?

By Graham Summers, MBA

In 2022, the Everything Bubble burst courtesy of the inflation created by over $8 trillion in Fed and Federal government money printing. 

As I outlined in my best-selling book, The Everything Bubble: the Endgame for Central Bank Policy, the Fed created the Everything Bubble when it attempted to corner the U.S. Treasury market in the aftermath of the Great Financial Crisis.

Treasuries are the bedrock of our current financial system, and their yields represent the “risk free” rate of return against which all risk assets (stocks, bonds, real estate, etc.) are priced. So, when the Fed created a bubble in Treasuries via Zero Interest rate Policy (ZIRP) Quantitative Easing (QE), it ended up creating a bubble in EVERYTHING.

So, it’s no small irony that the Fed and its absurd money printing from 2020-2021 was what unleashed inflation, which burst this bubble. You see, Treasury yields don’t just trade based on Fed intervention. They also trade based on economic growth as well as inflation. 

So once inflation ignited in 2021, U.S. treasury yields broke out of their 35+ year downtrend.

Remember, when I wrote that the yields on these bonds represent the “risk free” rate of return against which all risk assets, including stocks, are valued? Once Treasury yields started rising, stocks were soon repriced much lower to account for this. The S&P 500 ended 2022 DOWN 19%, making it the seventh worst year for stocks since 1920.

Which brings us to today.

The single most common question my clients are asking is if “the worst is over” for this bear market.

To answer that, we need to determine the answers to two other questions:

1)    Has the Fed managed to kill inflation?

2)    Will the U.S. economy experience a soft landing as opposed to a severe recession?

I’ll delve into those tomorrow. In the meantime 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

This image has an empty alt attribute; its file name is GSsignature-real.jpg
Posted by Phoenix Capital Research in stock collapse?, The Everything Bubble

Why Investors Should Be Praying For a Stock Market Crash

By Graham Summers, MBA

Investors should be praying for a stock market crash.

From a systemic perspective, the markets have entered a period of “risk off”. This has been the case since March of 2022. And the single best thing for investors would be for the markets to get this situation over with quickly via a crash.

Yes, I am fully aware that crashes are extremely painful and involve investors losing a lot of money. However, when the markets crash, they also bottom quickly, which means the pain is over FAST.

Consider the 2020 Crash: the entire collapse was over in about five weeks. And stocks had already begun to recover much of their losses within a few months. In fact, within six months they were at new all-time highs!

Now compare that to the Bear Market of 2000-2002. 

That collapse took over TWO YEARS to complete. Not months… YEARS.  Peak to trough the S&P 500 lost 50%. And on a yearly basis the losses were actually worse with each successive year. The market lost 10% in 2000, 13% in 2001, and 23% in 2002.

Worst of all, it took the S&P 500 FIVE years to recoup its losses. Investors lost money for years and then had to wait half a decade to make those losses back.

So again, the best thing for investors would be for the markets to crash soon. A crash would mean the pain would be over quickly and stocks could bottom.

Unfortunately, I don’t think that is going to be the case. 

I’ll explain why in tomorrow’s article… however, in the meantime 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

This image has an empty alt attribute; its file name is GSsignature-real.jpg
Posted by Phoenix Capital Research in stock collapse?, The Everything Bubble

The Great Crisis of Our Lifetimes Has Finally Arrived

By Graham Summers, MBA

In 2014, I coined the term “the Everything Bubble” to describe the Fed’s insane monetary policies. By quick way of review, after the Great Financial Crisis of 2008, the Fed created a bubble in U.S. sovereign bonds, also called Treasuries.

The Fed did this by cutting interest rates to zero and introducing large-scale Quantitative Easing (QE) programs to the tune of $3.5 trillion. The end result was that the entire Treasury curve was repriced at extraordinarily low levels of risk.

Because these bonds are the bedrock of our current financial system, and their yields represent the “risk free” rate of return against which all risk assets (stocks, bonds, real estate, etc.) are priced, when the Fed created a bubble in Treasuries, it ended up creating a bubble in EVERYTHING.

This is why I coined the term “the Everything Bubble.” And in 2017 I published a best-selling book by the same name (The Everything Bubble: The Endgame For Central Bank Policy), explaining what the Fed was doing and what the final outcome would be.

That outcome?

That the Everything Bubble would burst, just like the Tech bubble of the 1990s and the Housing Bubble of the ‘00s. And when this happened, it would bring about the worst financial crisis of our lifetimes.

That process has now begun. Last year, 2022, was one of the worst years for the financial system in history.

It was literally the worst year for bonds on record, with bonds losing anywhere from 4% to 22% depending on the duration of bonds you owned.

The situation wasn’t much better for stocks. The S&P 500 finished the year down 18%, making it the seventh worst year running back to 1920. The only years during which stocks performed worse than this were during the during major financial crises or during a severe recession/ depression.

And unfortunately, this is just the beginning.

Unlike the Great Financial Crisis or the collapse of 2020, this process will NOT be quick. The reason is quite simple: during those situations the Fed was able to introduce extraordinary monetary policy to cushion the collapse. 

This time it cannot. 

The entire reason the Everything Bubble burst was because the Fed maintained its emergency level monetary policies for far too long. The recession of 2020 supposedly ended in May of that year, but the Fed printed $2.6 TRILLION after this, while also keeping interest rates at zero.

The Fed wasn’t the only one. Between multiple Stimulus programs and as well as socialist schemes disguised as infrastructure/ fiscal stimulus, the U.S. government has spent over $8 TRILLION in the last 34 months.

The end result is that inflation has arrived in the financial system. And the Fed CANNOT try to “cushion” this situation because more money printing/ easing is only going to make things worse.

Put another way, this crisis is going to take longer, and get much worse than anyone expects. It’s quite possible stocks don’t bottom until 2024… at levels most investors can’t even imagine.

The time to prepare for this is NOW. During the bear market of 2000-2003, things actually got worse each successive year with stocks losing 10% in 2000, 13% in 2001, and 23% in 2002.

I believe something similar will happen this time around

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

This image has an empty alt attribute; its file name is GSsignature-real.jpg
Posted by Phoenix Capital Research in stock collapse?, The Everything Bubble

If Stocks Don’t Hold This Line… They Could Lose Another 44%-55% Easily

By Graham Summers, MBA

Something MAJOR happened last week for Tech Stocks.

That something?

The NASDAQ failed to reclaim its 200-week moving average (WMA).

See for yourself.

Why does this matter?

The NASDAQ has only lost its 200-WMA two other times in the last 30 years. Both of these instances (2001 and 2008) were during major bear markets that saw stocks lose an additional 44%-55% of their total value.

I’ve illustrated them in the chart below with red circles. Note that even during the 2020 crash, stocks managed to hold this line.

Not this time.

There is a small chance the bulls might be able to rally here and stop a full-scale collapse. But the clock is ticking. 

If they don’t, consider that after the NASDAQ lost its 200-WMA in 2001, stocks lost another  55% in value.

In 2008, when they lost this line, stocks lost another 44%.

Suffice to say, a lot is at stake here. And as I said before… the clock is ticking.

If you’ve yet to take steps to prepare for the next leg down in the markets, 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

This image has an empty alt attribute; its file name is GSsignature-real.jpg


Posted by Phoenix Capital Research in stock collapse?

You Don’t Want to Miss These Three Charts

By Graham Summers, MBA

The big news this week is that stocks lost their 200-Day Moving Average (DMA) again.

Historically, November and December are two of the most bullish months for stocks. Only April is better from a single month perspective. So, the fact the market was unable to reclaim its 200-DMA and remain there is EXTREMELY bearish.

The price action was feeble to say the least. 

The bulls have everything going for them: the Fed has reduced the pace of its interest rate hikes, the economy is not yet in recession, and we are in one of the best months for stock market returns: the famed Santa Rally of December.

So the fact that the bulls were unable to get stocks above their 200-DMA indicates that this recent market rally was nothing more than a Bear Market Rally, NOT the start of a new Bull Market.

Below is a chart of what happened to stocks when they failed to maintain their 200-DMA during the Bear Market of 2000-2003. I’ve highlighted this in red circles. Stocks dropped another 30%.

Here’s the same item during the bear market of 2007-2009. This time around stocks lost 50%.

Unfortunately for anyone who is buying into this narrative that stocks are in a new bull market, 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.Paragraph

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

This image has an empty alt attribute; its file name is GSsignature-real.jpg
Posted by Phoenix Capital Research in stock collapse?

The Fed Believes Inflation Will Be 2% in 2023… GOOD LUCK WITH THAT!

By Graham Summers, MBA

The Fed will end its two-day Federal Open Market Committee (FOMC) meeting today at 2PM East Standard Time. 

The known universe expects the Fed to raise rates by 0.5%. And the current consensus is that by this time next year, inflation will be down near 2%.

It’d be hilarious if it didn’t involve so much suffering.

To understand what I mean by this, let’s wind the clocks back a year to the Fed’s December 15th 2021, FOMC meeting. At that time, the Fed had only just decided that inflation was NOT “transitory.”   

Bear in mind, inflation has measured by the Consumer Price Index (CPI) had cleared 5% in June of 2021. It had since increased to over 7% as of December 2021.

Despite this, the Fed had yet to raise rates or end its Quantitative Easing (QE) program: the Fed Funds Rate was at 0.25% and QE was around $105 billion per month. 

Again, inflation was over 7%, the Fed Funds rate was 0.25% and QE was still over $100 billion per month. So, what did the Fed, with its army of economics PhDs and analysts predict would happen once the Fed started tightening monetary conditions in 2022?

The Fed’s official forecast for 2022 was that rates would be somewhere between 0.5% and 1%.

That is correct. With inflation over 7% and rates at 0.25% in December 2021, Fed officials predicted that one year later rates would be somewhere around 0.5%-1%. In fact, even the most HAWKISH Fed officials only saw rates around 1.25% in December 2022.

Don’t believe me? Here’s the dot plot from the December 2021 meeting.

Fast forward to today… and rates are at 4.5%. The Fed was not even in the ballpark.

But wait… it gets better.

Back in December 2021, the Fed also predicted where inflation, as measured by the Personal Consumption Expenditures (PCE) index would be a year later.

That prediction?

That PCE would be somewhere between 1.9% and 3% in 2022. In fact, the absolute worst case scenario Fed officials forecast for inflation in 2022 was 3.1%-3.2%.

See for yourself.

Fast forward to today and Personal Consumption Expenditures (PCE) inflation is 6%… or roughly DOUBLE the Fed’s WORST prediction.

I bring all of this up because the current consensus is that inflation has peaked, the Fed won’t need to be much more aggressive going forward, and that this time next year, inflation will have fallen back to the Fed’s target of 2%.

Good luck with that!

Unfortunately for anyone who is buying into this narrative today, the bear market is NOT over. With a recession just around the corner, stocks will soon collapse to new lows. And that’s even assuming that inflation DOES drop to 2% next year (it won’t).

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.Paragraph

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

This image has an empty alt attribute; its file name is GSsignature-real.jpg

Posted by Phoenix Capital Research in Inflation, stock collapse?

Why Stocks Could Lose 30%-50% in the next 12 Months

By Graham Summers, MBA

As I warned earlier this week, stocks have lost their 200-day moving average (DMA).

This is a MAJOR development. In terms of seasonality, things are usually quite bullish this time of year (the famed “Santa rally”). The fact the bulls failed to keep the S&P 500 above its 200-DMA despite this is VERY bearish.

Remember, 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.

Put simply, the failure to maintain the 200-DMA indicates that this recent market rally was nothing more than a Bear Market Rally, NOT the start of a new Bull Market.

Below is a chart of what happened to stocks when they failed to maintain their 200-DMA during the Bear Market of 2000-2003. I’ve highlighted this in red circles. Stocks dropped another 30%.

Here’s the same development during the bear market of 2007-2009. This time around stocks lost 50%.

So again, the bear market is not over. The trend remains down. And stocks could lose another 30%-50% in the next 12 months.

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:

https://phoenixcapitalmarketing.com/BM.html

Posted by Phoenix Capital Research in stock collapse?

The Good and Bad News For Stocks Going Into 2023

The following is an excerpt from my weekly investment advisory Private Wealth Advisory. To learn more about Private Wealth Advisory and how it can help you and your investments, Click Here!

This week I have good news and bad news.

The good news is that bonds are finally starting to stabilize.

The bad news is that they are doing this right as the economy collapses into a severe recession.

As I’ve outlined throughout this year, the ENTIRE stock market collapse thus far has been due to bond yields rising.

When Treasuries were yielding 0.25%-0.4% throughout most of 2020 and 2021, investors were willing to pay 20-22 times forward earnings for stocks. However, once Treasury yields rose over 4% stocks were repriced down to 16-18 times forward earnings. This makes sense. When the “risk free” rate of return is close to zero, you’ll pay a premium for growth. But once you can earn 4+% “risk free” suddenly stocks look a lot riskier!

Indeed, stocks were priced at 20-22 times forward earnings for most of 2020 and 2021. However, once Treasury yields began to rise in late 2021, stocks peaked in terms of multiples. They were eventually repriced down to 16-18 times earnings.

As I noted since this repricing began, the ONLY thing that would stop stocks from being repriced lower would be if bond yields stabilized. With that in mind, I want to point out that the yield on the 2-Year U.S. Treasury appears to have peaked. In fact, it now looks to be forming a kind of “Head and Shoulders” topping pattern. We only need the right shoulder to complete that pattern.

Chart

Description automatically generated

Regardless of whether that Head and Shoulders pattern is actually confirmed, the key item here is that Treasury yields finally appear to be stabilizing. Obviously, stocks would LOVE for Treasury yields to fall, as that would open the door to a higher forward multiple (assuming the economy is strong). But for now, the price action in the Treasury market suggests that stocks will remain priced at a forward multiple of 16-18 at least for now.

That is the good news.

The bad news is that earnings are now collapsing, as the economy collapses into a severe recession. This means the denominator in the P/E ratio (Price/ Earnings) is now shrinking. Earnings for the third quarter of 2022 are DOWN 8% Year over Year. As Charlie Bilello notes, this is the second consecutive quarter of negative earnings growth on a Year over Year basis.

Unfortunately, earnings will be dropping even more going forward. To understand why, we need to first understand the Treasury market. The Treasury is comprised of numerous bonds with different maturation periods ranging from 4 weeks to 30 years.

When you plot the yield on all of these bonds, you get the “yield curve.” And the difference in yield between various bonds on this curve is one of the most accurate predictors of recession.

Specifically, the difference between the yield on the 10-Year U.S. Treasury and the yield on the 3-month U.S. Treasury. Anytime this difference becomes negative (meaning the 3-month yield is actually higher than the 10-year yield) this indicates a recession is about to hit.

I’ve illustrated this in the chart below.  Anytime the black line falls below the red line, the 10-year 3-month yield curve is “inverted.” This was the case in 1989, 2001, 2007, and 2019: all of those preceded recessions.

It is happening again now. And as you can see, this metric is MORE negative today than it was before the COVID-19 crash as well as the Great Financial Crisis.

Put simply, the yield curve of the Treasury market is predicting a severe recession in the near future, likely the start of 2023.

This is going to force stocks to new lows.

During the typical recession, Earnings Per Share (EPS) usually fall 25%. As I write this, Wall Street’s current consensus for 2023 EPS is $230. And Wall Street expects this to GROW by 5%!!!

This means the anticipated fair value for the S&P 500 is somewhere between 3,680 and 4,140. Incidentally, that is the EXACT trading range the S&P 500 has been moving in for the last six months.

A picture containing chart

Description automatically generated

Put simply, the market is trading based on what Wall Street expects is coming down the pike. But as I just noted, Wall Street expects earnings growth of 5% next year. However, the reality is that bonds are telling us a recession is coming… and a recession would mean a DECLINE in earnings of at least 25% (remember, the yield curve is predicting a SEVERE recession).

This would mean the actual 2023 EPS would be closer to $172.

Assuming Treasury yields no longer rise, this means the fair value for the S&P 500 at 16 to 18 times this much lower EPS would be 2,752-3,096. I’ve illustrated that range in the chart below. Suffice to say, the stock market has a LONG ways to go to the downside.

Chart

Description automatically generated

“But wait a minute, Graham” some of you are probably thinking… “the Fed is about to pivot sometime next year, and that would STOP the bear market!”

I wish that was the case…

Historically, anytime the Fed stops tightening and begins easing, the markets don’t actually bottom for another 14 months.

During the Tech Crash, the Fed started cutting rates in January of 2001. However, by that point, a recession had hit and stocks lost another 44% eventually bottoming in October 2003.

Diagram

Description automatically generated

Similarly, during the Housing Crash, the Fed started easing in August of 2007. There again, a recession hit and stocks lost another 56% before eventually bottoming in March 2009.

Chart

Description automatically generated

Simply put, even if the Fed were to surprise everyone and start easing as soon as  next month (December) the coming recession would STILL result in EPS collapsing and stocks cratering another 30% or so.

With stocks at 4,000 or so on the S&P 500, a 30% decline would bring them right to… 2,800, or around the lower end of the implied fair value for the market at a 16- times my expected EPS for 2023: $172.

Low Multiple                     Recessionary EPS           Fair Value in 2023

16                    X                     $172                    =      2,752 or ~2.800

So again, this week we have both good news and bad news. The good news is that bonds are stabilizing. The bad news is that a recession is coming, and earnings are about to crater.

That will trigger a stock market collapse to new lows… possibly down to the mid-2000s on the S&P 500.

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:

https://phoenixcapitalmarketing.com/BM.html

Text, letter

Description automatically generated
Posted by Phoenix Capital Research in stock collapse?

This is Why Stocks Are Holding Up… But Will Soon Crash

By Graham Summers, MBA

Over the last few days, I’ve illustrated how several major indicators are flashing “RECESSION!”

By quick way of review:

  1. The 10y-3m yield curve has predicted every recession in the last 50 years. It’s telling us that a new severe recession is just around the corner.
  2. Oil has collapsed from $130 per barrel to ~$75 per barrel, indicating demand destruction is underway.

All of this is BAD news for stocks.

Why?

During the typical recession Earnings Per Share (EPS) decline by 25%. 

Based on what bonds are doing, stocks are priced between 16 and 18 times forward EPS. Wall Street is currently forecasting EPS growth of 5% next year to $230.

$230 X 16 (or 18)= 3,680 to 4,410.

Incidentally, that is the trading range that stocks have been in for most of the last six months.

By Graham Summers, MBA

Over the last few days, I’ve illustrated how several major indicators are flashing “RECESSION!”

By quick way of review:

  1. The 10y-3m yield curve has predicted every recession in the last 50 years. It’s telling us that a new, severe recession is just around the corner.
  2. Oil has collapsed from $130 per barrel to ~$75 per barrel, indicating demand destruction is underway. This only happens during a recession.

All of these data points are BAD news for stocks.

Why?

During the typical recession Earnings Per Share (EPS) decline by 25%. 

Based on what bonds are doing, stocks are priced between 16 and 18 times forward EPS. And Wall Street is currently forecasting EPS growth of 5% next year to $230.

$230 X 16 (or 18)= 3,680 to 4,410.

Incidentally, that is the trading range that stocks have been in for most of the last six months.

However, a recession would mean that EPS for 2023 is closer to $172.

$172 X 16 (or 18)= 2,752 to 3,096

That’s the red box in the chart below.

Put simply, a recession will erase trillions of dollars in wealth…and Wall Street is once again asleep at the wheel, driving its clients off a cliff.

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:

https://phoenixcapitalmarketing.com/BM.html

Posted by Phoenix Capital Research in stock collapse?

Warning: The Fed Didn’t Pivot… And It Won’t For Months, Part 1

By Graham Summers, MBA

So much for the Fed pivot!

Ever since the Fed began tightening monetary policy in March of 2022, numerous pundits, social media personalities, and financial media types have been pushing the notion that the Fed will “pivot” or stop tightening monetary policy soon which will ignite a new bull market in stocks.

This narrative is both ignorant and deceptive.

It is ignorant in that history has shown us that stocks usually don’t bottom for another 14 months once the Fed starts easing monetary conditions following a cycle of tightening. This was the case during the Tech Crash and the Housing Crash.

I’ve received questions from several of you as to why this was not the case during the COVID-19 crash. In that particular instance the market was imploding due to an exogenous issue (the pandemic) triggering an economic shutdown, as opposed an organic bear market triggered by Fed tightening.

Moreover, during COVID-19, the Fed effectively backstopped the entire financial system, spending over $3 trillion buying municipal bonds, corporate bonds, corporate bond ETFs, student loans, auto loans, and more in the span of three months. Were the Fed to abandon its current monetary tightening and begin easing financial conditions, it would NOT implement similar schemes; rather it would likely simply cut rates.

So again, history is very clear here: barring an exogenous issue (another pandemic, nuclear war, etc.) if the Fed were to abandon its tightening and begin easing conditions, stocks would continue to fall and likely not bottom for another year.

However, the “Fed is about to pivot” narrative is not only ignorant… it is also deceptive in that there is practically ZERO evidence that the Fed has even begun considering it.

Looking over the statements made by Fed officials since March 2022, I’m struck by the fact that even the most formerly dovish Fed officials have become inflationary hawks.

Neel Kashkari is the President of the Federal Reserve Bank of Minneapolis. Prior to the Fed’s current monetary tightening it is quite difficult to find any instances in which he wasn’t a fan of money printing/ QE/ maintaining easy monetary conditions.

However, since the Fed embarked on its crusade to end inflation, Mr. Kashkari has been extremely hawkish. Some notable headlines from the last six months…

Fed’s Kashkari: We may have to push long-term real rates into restrictive territory.

~May 2022

Fed’s Kashkari says officials are ‘a long way’ from backing off inflation fight.

~July 2022

Kashkari stakes out the most aggressive stance on lifting interest rates

~August 2022.

Kashkari Says Bar for Fed Policy Pivot on Rates Is ‘Very High’

~October 2022.

Again, this is Neel Kashkari, the man who was arguing that the Fed shouldn’t “overreact” to “temporary inflation” throughout 2021. And now he is adamant that the Fed needs to be aggressive in raising rates to end inflation. Nowhere do you see him even hinting at the Fed pausing rate hikes let alone easing.

Another example of a formerly dovish Fed official turning inflation hawk is John Williams.

Mr. Williams is the current President of the Federal Reserve Bank of New York: the branch of the Fed responsible for market operations. In September of 2021, when inflation cleared 5% for the first time in 13 years, Mr. Williams commented that it might be “appropriate” for the Fed to ends its emergency level Quantitative Easing Program sometime in “mid-2022.”

Yes, he wanted the Fed to run QE for another eight months despite inflation clearing 5%. This was insanely dovish and negligent.

Fast forward to the middle 0f 2022, and Mr. Williams is making the following statements:

NY Fed president urges big interest-rate hike but believes ‘economy is strong’

~June 2022.

Fed’s Williams pushes back on market expectations of a rate cut next year.

~August 2022.

Fed’s Williams says more rate hikes needed to bring down inflation

~ September 2022.

My point with the above examples is anyone who pushes the narrative that the Fed will soon pivot isn’t actually paying attention to what the Fed (and Fed officials) are saying. In this sense, the people who keep finding excuses to push this narrative are being highly deceptive.

But that hasn’t stopped them from trying…leading investors to the slaughter time and again!

I’ll detail what’s really driving stocks higher in tomorrow’s article.

A crash is coming. And it’s going to make 2008 look like a joke. I coined the term the “Everything Bubble” in 2014. I warned about it for the better part of 10 years.

And it has officially burst.

On that note, we are putting together an Executive Summary outlining how to invest now that the Everything Bubble has burst.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here.

https://phoenixcapitalmarketing.com/TEB.html

Posted by Phoenix Capital Research in stock collapse?

Warning: None of the “Jobs” Created Last Month Were Real

By Graham Summers, MBA

Once again, the bean counters at the Bureau of Labor Statistics (BLS) made the economy look better than reality.

According to the BLS, the economy added 261,000 jobs in October. This was significantly higher than the 200,000 that was expected. The investing world was ecstatic to see this and bought stocks hand over fist on Friday.

The only problem with this is that none of those “jobs” were real.

As Bill King notes in the King Report, the BLS tweaked its seasonal adjustments in 2022 to boost the NFP numbers.

In 2021, for the month of October, the BLS reduced the total number of jobs in America from 149.31 million jobs down to 148.005 million jobs, an adjustment of -1.305 million.

For some reason, this year (2022) the BLS only adjusted the total number of jobs by -1.061 million.

That’s a difference of +244,000 from the 2021 adjustment.

So, right off the bat, 244,000 of the 261,000 jobs the economy “created” in October of 2022 were imaginary, created via a seasonal adjustment in a spreadsheet by the BLS.

For those of you keeping track this means that over 93% of the jobs created in October 2022 were fake or made up.

Actually, in reality, things were even worse than this.

Another gimmick the BLS used was to create “jobs” was its Birth-Death Model.

You see, in the real world, jobs are not created consistently throughout the year. Some months see a lot of jobs created and others don’t, depending on how many businesses are created or go bust in a given month.

The BLS tries to “smooth” over this by using a Birth-Death Model. It too, is a gimmick, nothing more. And for some reason, this gimmick boosted the number of jobs crated in October 2022. 

In 2021, the Birth-Death model added 363,000 jobs in October. In 2022, this same model added 455,000 jobs. That’s a difference of 92,000 jobs. 

So, there’s another 92,000 FAKE jobs created in a spreadsheet instead of in the economy.

And people were BUYING stocks based on this?!?!

The reality is that stripped of gimmicks, the economy LOST more jobs than it created in October. This only adds to the evidence that the U.S. economy is in fact in recession.

And what happens to stocks during recessions?

A crash is coming. And it’s going to make 2008 look like a joke. I coined the term the “Everything Bubble” in 2014. I warned about it for the better part of 10 years.

And it has officially burst.

On that note, we are putting together an Executive Summary outlining how to invest now that the Everything Bubble has burst.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here.

https://phoenixcapitalmarketing.com/TEB.html

Posted by Phoenix Capital Research in stock collapse?

Who Would You Rather Bet On?

By Graham Summers, MBA

The financial system is currently experiencing a “relief rally.”

For the eight weeks ending October 28th, the primary problems facing the financial system were:

1)    The collapse of the British Pound/ UK Government Bonds

2)    The collapse of the Japanese Yen.

3)    The collapse of U.S. Treasuries.

All of those have been resolved temporarily, courtesy of the Truss Government resigning in the U.K., the Bank of Japan making its largest intervention ever in the currency markets, and U.S. Treasuries catching a bid, courtesy of Treasury Secretary Janet Yellen verbally intervening to help the Biden Administration with the mid-term elections.

All of these solutions are temporary however. 

The fact is that the U.S. is in an inflationary recession. I know it. You know it. Policymakers know it, though they have to lie to prop up the bogus narrative that everything is under control.

It’s not.

The financial system has already erased more wealth in 2022, than it did in 2020 or 2008. During those prior crises, bonds rallied providing a hedge against the collapse in stocks.

Not this time.

Bonds AND stocks are both collapsing, erasing over $18 trillion in wealth. And bear in mind, that’s NOT counting the loss of capital in housing or other asset classes.

And unfortunately for the bulls, we are nowhere near the bottom for either stocks or bonds. 

Stanley Druckenmiller is arguably the greatest investor alive today. He averaged 30% a year for 30 years straight. And he notes that historically, whenever inflation gets over 5%, inflation never comes down until the Fed raises rates ABOVE CPI.

Currently, rates are 3.0-3.25%.

CPI is over 8%.

We have a looooong ways to go here. And there is plenty of historical data to back that up.

During the last stagflationary crisis in the 1970s, stocks lost 50% of their value before bottoming.

Thus far, in 2022, stocks have only lost 22%. If we are LUCKY, we are half way through this bear market.

Who would you rather bet on being correct… an investment legend like Druckenmiller, who has one of the greatest track records in history… or the Fed or some other establishment shill whose job it is to claim everything is great?

A crash is coming. And it’s going to make 2008 look like a joke. I coined the term the “Everything Bubble” in 2014. I warned about it for the better part of 10 years.

And it has officially burst.

On that note, we are putting together an Executive Summary outlining how to invest now that the Everything Bubble has burst.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here.

https://phoenixcapitalmarketing.com/TEB.html


Posted by Phoenix Capital Research in stock collapse?