The Economy

17
Apr
2025

Is the Fed Trying to Crash Stocks?

By Graham Summers, MBA | Chief Market Strategist

The #1 mandate for the Fed is to maintain financial stability. That is literally the Fed’s job. It’s supposedly why the Fed was created in 1913.

The stock market just experienced one of its worst collapses in history. It was literally the 5th fastest 10% decline in the last 75 years. All told some $11 TRILLION in wealth has been erased. And it’s not as if the markets have stopped breaking down. The chart of the S&P 500 is UGLY.

At the same time, the U.S. dollar is breaking multi-year support.

And the long end of the Treasury bond market is in danger of breaking down to the point that yields are on the verge of erupting higher. This is what debt spirals are made of!

Put simply, the ENTIRE financial system is on edge.

So, what do our current Fed Chair Jerome Powell do? He trashes the economy and the stock market in a speech.

Yesterday, Chair Powell spoke at the Economic Club of Chicago. Rather than soothing the markets by stating the Fed stands to act, he went DARK with his speech, stating that tariffs will have a negative impact on the economy, trigger an uptick in inflation, and potentially have a “larger than expected” impact. When asked if the Fed would intervene in stocks if they continued to collapse, he said, “No, with an exclamation.”

This is simply jaw dropping.

Again, the Fed’s job is to maintain financial stability. The entire financial system is on edge, and the Fed Chair is warning about an economic downturn, higher inflation, and saying that he doesn’t care if the stock market collapses.

I cannot remember ANY Fed official EVER being this bearish/ negative on things when the financial markets are on edge. And it begs the question, “is the Fed TRYING to crash the markets?”

We know the Fed hates Trump. You can literally feel the disdain in their public statements. But at this point it appears that senior Fed officials have taken things to the point of negligence.

A CENTRAL BANKER’S JOB IS TO PROMOTE STABILITY, NOT KICK THE MARKETS WHEN THEY’RE DOWN.

This is an extremely dangerous situation. The Fed basically just told investors, “you’re on your own with this mess.”

The odds of a stock market crash are now higher than at any point since the pandemic.

If you’ve not prepared for this, the time to do so is NOW before this unfolds.

Indeed, our proprietary Crash Trigger is now on red alert. This trigger went off before the 1987 Crash, the Tech Crash, and the 2008 Great Financial Crisis.

We detail this trigger, how it works, and what it’s saying about the market today in a Special Investment Report titled How to Predict a Crash.

Normally this report is only available to our paying clients, but in light of what’s happening in the markets today, we are making just 99 copies available to the general public.

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Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research

Posted by Phoenix Capital Research in It IS different this time., stock collapse?, The Dollar, The Economy, The Everything Bubble, The Markets
04
Feb
2025

How Trump’s Negotiating Strategies Can Make You Money

By Graham Summers, MBA | Chief Market Strategist

Thus far, the Trump tariff wars are following a negotiation framework that Trump has used throughout his career in commercial real estate.

That pattern:

  1. Open with an outrageous demand, thereby anchoring negotiations to a number that is highly in your favor.
  2. Ask for something in return for whenever you walk back from your original ask.
  3. Present your opponent with a long-term opportunity in exchange for deal that isn’t what they want right now.

Regarding #1, anchoring is a psychological phenomenon through which the negotiating parties become psychologically “anchored” to the first number or “ask” introduced in the negotiation regardless of how outrageous it is.

Consider the recent tariff war with Mexico.

President Trump introduced the negotiation with tariffs of 25% on all exports from Mexico to the United States. This was a huge and outrageous move to make (he could have opened with tariffs of just 5%), and it served the purpose of anchoring the negotiation on a number that is highly in his favor. This sets the #2 in our list: asking for something in return whenever you walk back from your original ask.

Now that negotiations are underway between President Trump and Mexico’s President Claudia Sheinbaum, Trump can walk back from the threat of 25% tariffs (say to tariffs of 20%, 15%, etc.) while simultaneously asking for something in return. In this manner, it appears as if he’s “giving ground” and should get something in return for doing so (the rule of reciprocity).

It’s working.

Mexico has already agreed to put 10,000 troops at the border in exchange for the 25% tariffs not being introduced for a month. This is extraordinary. On Thursday, there were NO tariffs between the two nations. Four days later, by anchoring the negotiation on an extreme outcome (25% tariffs) Trump has already gotten Mexico to “buy into” the need for better border security between the two nations without giving up anything (all he’s done is postponed his intended tariffs by a month).

Which brings us to #3 in the above negotiations.

Trump is famous for suggesting a long-term relationship that is mutually beneficial in exchange for an immediate deal that is highly in his favor. In commercial real estate, this might consist of asking a contractor to perform a job for less money in exchange for the promise of a long-term relationship through which Trump would give the contractor lot more business in the future.

In terms of the current trade war between the U.S. and Mexico, President Trump could very well end up finalizing negotiations with tariffs of 10% on imports from Mexico, while offering any number of benefits to the country as part of a long-term trade agreement. In this fashion he scores a huge win politically, while introducing a new more balanced trade deal between the two nations.

For investors we are in a new environment in which those who have studied Trump and his strategies have a definite edge.  Because of our understanding of what Trump was doing over the weekend, we viewed the recent correction as an opportunity, NOT the start of a market crash or bear market.

To start receiving these kinds of actionable insights, join 56,000 readers in over 56 countries in receiving our daily market alert every weekday before the markets open (9:30AM EST).

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Best Regards

Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research

Posted by Phoenix Capital Research in The Economy, The Markets, Trump 2nd Term
26
Jun
2024

If You’ve Got Money in the Markets… You NEED to Read This!

By Graham Summers, MBA | Chief Market Strategist

I keep warning that “this time really is different” when it comes to the economy.

Everyone knows this on some level… but most analysts are refusing to acknowledge it. 

Remember, never before has the U.S. shut down its economy voluntarily. Not during WWII, not during the Spanish flu, NEVER. So that alone was a game-changer as far as how our economy functions (and is measured).

Moreover, never before has the Fed and the Federal Government pumped $11 TRILLION into the financial system in the span of 20 months.  Consider that the U.S. economy was ~$20 trillion at the time… so we’re talking about policymakers putting an amount greater that 50% of GDP into the financial system.

Again, this has never happened before. In fact, if you add up all the money ever printed in the history of the U.S.,  over 40% of it was printed in 2020 alone.

So again, it is “different” this time.  Both the downturn, and the policy response were unprecedented. And that has rendered many traditional economic metrics useless at predicting the next move in the cycle.

We’ve already assessed the yield curve inversion, as well as the coming Sahm Rule trigger which we expect later this summer. Today’s lets assess the Money Supply or M2.

In its simplest rendering, M2 measures the amount of money in the financial system (savings accounts, money market funds, etc.)  Historically, analysts have looked at M2 to assess whether a recession was coming or not. If M2 goes negative, it usually precedes a recession.

I bring all of this up because in 2023, M2 went negative, resulting in countless analysts and commentators shouting that a recession was about to hit.

The big problem with this is that they forgot to note that M2 had GROWN by 40% during the pandemic… so of course it’s going to decline a bit! Heck even a significant decline is likely to occur after a 40% jump!

Today, M2 is turning back up again. And all the folks who were screaming about its decline indicating a recession was about to hit are silent. And all the investors who sold the farm based on the gurus/ analysts screaming about M2 have missed out on one of the greatest bull runs in stock market history.

Again… it really is different this time. Most historical economic measures are so warped by the pandemic and subsequent policy-response that obsessing over them is only going to lead to missing out on market gains.

After all, as investors, our job is to make money, not look for any excuse to dump stocks and panic about something bad happening. And as I’ve outlined in recent articles, this means riding bull markets for as long as possible, and then side-stepping bear markets when they eventually hit.

In the very simplest of terms, you need to be invested in stocks, until an objective, verifiable tool (not your feelings or limiting beliefs) tells you it’s time to “get out.”

I’ve developed a tool that takes ALL of the guessing work out of this problem. With just one look at this tool, you can tell whether it’s a good time to buy stocks or not. I detail it, along with what it’s currently saying about the market today in a Special Investment Report How to Predict a Crash.

To pick up a free copy, swing by

CLICK HERE NOW!

Best Regards

Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research

Posted by Phoenix Capital Research in It IS different this time., It's a Bull Market, The Economy