GAINS, PAINS & CAPITAL

I’ve warned many times that QE 3 will not be coming any time soon and that stocks are on very VERY thin ice.

With that in mind, I wanted to alert you to the following news story:

Those looking for a clear and unambiguous green light for QE3 from Fed Chairman Ben Bernake’s much anticipated speech in Jackson Hole on Friday could be disappointed.

There are three reasons that add up to Bernanke likely falling short of market expectations for an all-out endorsement of additional Fed [cnbc explains] action at the annual meeting of central bankers in Wyoming the way he telegraphed QE2 [cnbc explains] last year.

It’s also rare for a Fed chairman, especially one this consensus-oriented, to get too far out front of his committee. The August policy statement clearly showed a willingness of the committee to conduct additional asset purchases.

This article was written by Steve Liesman of CNBC. Liesman is known to have extremely close ties to the Fed. So for him to write this sort of story before the Fed’s Jackson Hole meeting (Friday) is EXTREMELY significant.

Consider that the only reason the market is holding up is due to the bulls desperately hoping the Fed will unleash QE 3 this Friday. Now consider that Bank of America is close to collapsing at the very same time that the European debt contagion is threatening to take down the entire European banking system (Germany is increasingly unlikely to give the “greenlight” to more bailouts).

In this environment, for the Fed to NOT unleash QE3 on Friday could cause a full-scale market collapse. So it would make plenty of sense for the Fed to try and do some damage control ahead of time with stories similar to Liesman’s.

Now, have a look at Gold’s action this morning: the precious metal is down over 3% in just a few hours. Do you think perhaps some “well-connected” investors might know that Bernanke isn’t going to unveil QE 3 tomorrow (the Fed has a precedent for leaking information to the “chosen” few).

If QE 3 were coming, Gold shouldn’t correct. The same is true if BAC were going to be bailed out suddenly: Gold should keep rallying. But instead Gold is falling sharply.

The same goes for Brazil: THE commodity player and one of the emerging market darlings for the Bulls. Does this chart look like we’re about to see QE 3 (which would send commodities through the roof)?

Again, this is a major signal that QE 3 is not coming. Those who are hoping it will need to look at what the markets are telling us. Ignore stocks and pay attention to the credit markets: they’re on DEFCON 1 RED ALERT.

I fully believe we’re about to see another catastrophic Crash similar to 2008. Many people are going to see their portfolios get completely destroyed.

You don’t have to be one of them.

I can show you how to turn this period into a time of profits, NOT pain. To whit, my clients actually made money in 2008, having been warned a full three weeks in advance of the Crash to get out the market and go short.

I believe we could see another 2008 situation unfold in the near future, which is why I just unveiled six specific trades to subscribers… all of which will pay off HUGE returns as the current stock market collapse accelerates.

We’ve also taken steps to prepare ourselves sand our loved ones for what’s coming to the US economy (bank holidays, food shortages, stock Crashes, debt defaults, civil unrest and more) with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports: 40+ pages of material devoted to showing individual investors how to prepare these areas of their lives in great detail.

So we’re ready for whatever may come. And the worse things get… the more profitable our strategy will be.

If you’ve yet to take these steps yourself, it’s not too late… in fact, you’ve still got time to get your financial “house” in order to not only survive what’s coming… but potentially even make serious money from it.

All you need to do is take out a “trial” subscription to my Private Wealth Advisory newsletter. You’ll immediately be given access to the Private Wealth Advisory archives. You’ll also receive copies of the reports I detail above… and you’ll also be on my private client list to receive my bi-weekly investment reports as well as real-time trade updates on when to buy and sell various investments.

And if you should decide that Private Wealth Advisory is not for you, you can ask for a full refund during the first 30 days and I’ll return every cent of your subscription cost.

The reports you’ve downloaded during your “trial” period are yours to keep, even if you choose to cancel.

To get started with you Private Wealth Advisory subscription today, download the Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports and start taking action to prepare for what’s coming…

Click Here Now!

Good Investing!

Graham Summers
Editor In Chief
Gains Pains & Capital

Now that the market has rolled over and erased most of the gains from last week, I can’t help but wonder just why the market rallied at all. True, it was oversold… but the FOMC announcement wasn’t exactly bullish (Seriously… ZIRP for another year was reason for an 8% rally in four days?).

I found it interesting that the New York Post published a story containing the following quote just 3 hours before the post-FOMC market ramp job started.

Back in October 1989, a guy named Robert Heller, who had just quit his post as a Fed governor, suggested that the government should purchase stock index futures contracts to calm the markets in times of distress.

“The Fed could support the stock market directly by buying market averages in the futures market, thus stabilizing the market as a whole,” Heller wrote in an op-ed piece in The Wall Street Journal after saying the same thing in a little-noticed speech. “The stock market is certainly not too big for the Fed to handle.”…

This is a rather odd turn of events… a former Fed official urges the Fed to step in and buy the stock market… just three hours before the markets mysteriously reverses and rallies hard on no real news of note.

This begs the question… did the Fed buy the market to put a floor under the collapse? There’s no telling for sure. But it’s rather odd that this article came out just three hours before the market magically reversed and exploded higher

If the Fed did actively buy the stock market to try and put a floor under it, we can assume three things:

1. The Fed is becoming truly desperate
2. The Fed realizes QE isn’t helping
3. QE 3, if it arrives, will be coming later down the line

If the Fed did in fact buy the market two weeks ago, then the Fed is getting extremely desperate. We know the Fed has been supplying juice to key Wall Steet firms who then bought the market, but never before has it been so obvious that the Fed itself may have been buying the market.

Remember since March 2009, QE has been the primary tool the Fed used to deal with the Financial Crisis. QE 1 was something of a success in that in restored investor confidence in the system. However, as I’ve noted in previous articles, by the time we got to QE 2, the negative consequences of QE (inflation) far outweighed the positive consequences (stocks rising).

So the fact the Fed did not announce QE 3 two weeks ago but chose to buy the market (at least it looks that way), indicates then we’re are DEFCON 1 RED ALERT for the entire financial system as it indicates that the Fed is abandoning its more traditional monetary tools and simply trying to buy the market it means the Fed is losing control of the system in a big way.

It also indicates that the Fed realizes that the benefits of QE come at too high of a cost for it to engage in more of this for now. Instead, the Fed will save QE 3 for a little further down the road as a final Hail Mary pass.

Which brings me to the most important point from yesterday’s Fed FOMC: there were three dissenting votes (an 18 year high). This tells us that Bernanke’s “inflate or bust” mentality is coming up against serious friction at the Fed. And it also tells us that there will be fierce resistance to QE 3 if the Fed chooses to unveil it down the road.

The take home point here is that the Fed is not as market friendly as before. There is growing dissent amongst Fed officials. And we’re beginning to see signs of desperation.

In plain terms, the situation in the markets right now is very VERY dangerous. It is easily the most dangerous market I’ve ever seen. We are going to see greater losses and sharp rallies. But the overall trend is now down.

I warned to get defensive several weeks ago. That warning is even more important now. I would avoid stocks and Treasuries as neither are particularly safe. I’d have increased exposure to cash and PHYSICAL bullion (Gold and Silver). If you have to remain long stocks shift into large-caps and companies that will exist a year from now (brands and industries people will need regardless of how bad the economy gets).

However, if you’re looking for actionable investment ideas and in-depth market analysis that will not only get you through this mess, but actually help you make some money, you NEED to get in on my Private Wealth Advisory newsletter.

Over the last two weeks, while 99% of investors got crushed, Private Wealth Advisory subscribers locked in seven winners including gains of 6%, 7%, and 9% in as little as one day (no we were not using options, just stocks and ETFs).

My readers made money in 2008 and the Euro Crisis of 2010. They’re making money now. Almost all of our portfolio rose double digits last week.

My readers are also taking steps to prepare their families and loved ones for what’s coming with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports, which are also included with every Private Wealth Advisory subscription.

To join them…take action to get your financial house in order… and start making this Crisis grow your portfolio instead of crushing it…

Click Here Now!!!

Good Investing!

Graham Summers

Looking out on the markets before the week begins the mood is very, very tense.

The European debt crisis continues to intensify with Greece moving to save one of its smaller banks (Proton) from failure. The Greek bank system does not have FDIC-style insurance, so a bank failure there means that the possibility of losing all of one’s money is in fact very real.

Elsewhere in the Eurozone, Spain and Italy are increasingly coming under fire with the ECB revealing it has purchased 34 billion Euros worth of their debt in the last two weeks. As I’ve noted in previous pieces, these two countries are the REAL problem for the Eurozone: they’re too big to be bailed out.

How this particular mess will play out all depends on Germany. No German support for the ECB’s moves and you’ve got no EU. And German politicians are becoming increasingly negative about further aid.

Indeed, over the weekend Angela Merkel announced that Euro-bonds (the new idea of floating bonds backed by… the EU?!?) wouldn’t solve the EU’s problems. Germany’s Finance Minister said the same thing, pointing out that Germany would be required to make $3.6 billion in interest payments for Euro-bonds in the first year alone, with the amount likely to increase to over $36 billion per year after the first decade.

Merkel’s party got slammed in the March 2011 German elections. With the next round of elections coming up in roughly one month’s time (and 56% of Germans saying the Euro has brought them disadvantages), the fate of the Euro will likely be decided within the next four months.

The market seems to be sensing this with the Euro coiling tighter and tighter in a triangle pattern. When this pattern breaks (likely to the downside) the Euro will take out critical support at 140 and begin its break to new lows (below the May 2010 lows of 118):

Aside from the European situation, the world is experiencing a global liquidity crisis that is now bordering on a “2008” situation. I’ve been warning about this to my Private Wealth Advisory subscribers since early July. However, we’re now beginning to see even Goldman Sachs and other large institutions publicly calling for a Crash. In other words, BUCKLE UP.

The S&P 500 has now wiped out a year’s worth of gains, bringing stocks back to roughly where they were when the Fed announced QE lite. The snapback rally of early last week proved to be exactly what I thought it was: a bounce from oversold conditions.

The tell-tale sign is that we’ve since had a sharp reversal erasing all of those gains. One more down day and we’re on to new lows and officially into a bear market in the US (20% off the peak). Which would put us up there with Spain, Switzerland, Russia, Germany, Brazil, Italy, India, and nearly every other major market in the world.

I’ve said before that stocks are the last to “get it.” What I mean by this is that the bond and credit markets typically adjust to changes in the world much faster than stocks. This is definitely true today as the US stock market has held up relatively well. However, Treasuries have rallied beyond even their May 2010 highs and are now approaching their 2008 highs:

In plain terms, the market’s are in full-scale Crisis mode. While stocks have bounce hard temporarily the rest of the financial system is in a complete and utter panic.

I warned to get defensive several weeks ago. That warning is even more important now. I would avoid stocks and Treasuries as neither are particularly safe. I’d have increased exposure to cash and PHYSICAL bullion (Gold and Silver). If you have to remain long stocks shift into large-caps and companies that will exist a year from now (brands and industries people will need regardless of how bad the economy gets).

However, if you’re looking for actionable investment ideas and in-depth market analysis that will not only get you through this mess, but actually help you make some money, you NEED to get in on my Private Wealth Advisory newsletter.

Over the last two weeks, while 99% of investors got crushed, Private Wealth Advisory subscribers locked in seven winners including gains of 6%, 7%, and 9% in as little as one day (no we were not using options, just stocks and ETFs).

My readers made money in 2008 and the Euro Crisis of 2010. They’re making money now. Almost all of our portfolio rose double digits last week.

My readers are also taking steps to prepare their families and loved ones for what’s coming with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports, which are also included with every Private Wealth Advisory subscription.

To join them…take action to get your financial house in order… and start making this Crisis grow your portfolio instead of crushing it…

Click Here Now!!!

Good Investing!

Graham Summers

We’re introducing a new component to Gains Pains & Capital: an editorial focus on successful business practices and entrepreneurialism. Too much economic commentary focuses strictly on the markets… which, as we all know, is not the same thing as the economy.

So once a week, we’re going to be focusing on entrepreneurs, businesspeople, and artists from all walks of life who are using their talents to create high quality products and services that sell, potentially create jobs, and ultimately put the economy back on track.

This week we’re talking to Mark Courseille, head pastry chef at Michel, the newest restaurant to be opened by food legend and all around culinary genius Michel Richard (you’ll hear more about him in a week or two) in Tyson’s Corner Virginia.

I first met Courseille after my wife and I enjoyed one of the best meals of our lives at Michel. The highlight of the night was the “chicken” we had for dessert, one of Courseille’s signature dishes.

See for yourself.

This is a meringue, shaped like a hen, filled with luscious ice cream and sitting atop a nest of brittle sugar “straw,” whipped cream, and a pool of caramel syrup.

The combination of textures and flavors was absolutely incredible. In each bite you had the sweet but brittle meringue combined with the soft, cold ice cream, as well as the caramel and sugar “nest.” Add to these unbelievable flavors the sheer fun of having “chicken” for dessert and this was hands down the most memorable dessert my wife and I have ever shared.

However, this was more than just a dessert, it was almost a marketing tool for the restaurant as a whole: as soon as our order came out, every table around us ordered one too. By the time we’d left I counted six others being served… all based solely on the appearance of our initial order.

Needless to say, Courseille had created something that was not only delicious, but an additional revenue stream for his employer (the “chicken” sells for $12, and to be honest, I would have paid $20 for it, it’s that good). Whether the guy knows it or not, he’s a marketing genius (on top of a master pastry chef). I had to meet him.

We recently sat down for coffee and talked desserts, the restaurant industry and more. The first thing I asked him was what inspired the “chicken” dessert.

“When people eat desert, they do it for pleasure, not out of hunger. So I try to create something that will make them happy, not just something that tastes great. I want my desserts to be fun, desserts that remind them of their childhood, something they will remember after they’ve left the restaurant and will tell their friends about.”

How do you do this?

“For me pastry is about presentation as much as it is about taste. If you are just going to go for taste, people will enjoy it, but it will not stand out in their minds. So for my desserts, I really try to be very precise and meticulous in the presentation. I try to make something people enjoy seeing as well as eating.”

But your desserts aren’t simply interesting to look at; they’re almost funny or playful. You make everything from Christmas Trees to Clowns.

“That is something I learned from Michel (Richard, 2007 James Beard winner for outstanding chef and owner of Michel where Courseille works). He was also a pastry chef before he became a chef. And he’s one of the masters of creativity in the kitchen. For instance, he designed a crème-caramel cheesecake. Normally when you eat American cheesecake, it’s heavy and leaves you very full.

So Michel combined a crème-caramel, a light French dessert, with cheesecake, a heavy American dessert, to make something that was both familiar and yet completely new. So when people ordered it, they get something that surprised them and made them laugh. It was not only delicious, but it created a very strong reaction for people so they remembered it. That’s the same impact I want my desserts to have.”

It’s also a unique hybrid of French and American cuisine. You’re combining two traditions into making something new.

“Exactly. This is the future of pastry and the restaurant industry in general. People don’t want just traditional French or American pastry. They can get this anywhere. Instead, you have to merge those two cuisines or find some other unique approach to creating food that people cannot find anywhere else. You need to make yourself stand out in some way, not just in terms of quality, but in terms of perspective.

This is a big focus for us at Michel: giving people something delicious that they cannot get anywhere else so they will remember it and hopefully come back for more of.”

It sounds like you aren’t making desserts, you’re making experiences.

“Yes. I am trying to make something that will make people feel good. As I said earlier, it’s not just taste. That is a big part of French culture that I’ve kept with me. In France you don’t rush cooking or eating. You don’t mind spending a lot of time cooking something that is really good. Eating good food especially with family and friends is a big part of my culture.”

And now you’re sharing that with the US.

“Yes. The restaurant industry has changed a lot in the last ten years. Before then, restaurants served either traditional food at a moderate price or very fancy food that was very expensive. But today you find that food and cooking are more celebrated in the US. People no longer go out just to eat all the time. More and more they go out to have something good. So the spectrum has become much wider allowing for many new perspectives.”

Has the recession changed this at all?

“A little bit. In the last few years, people went out more to celebrate things like a birthday or an anniversary than just to eat dinner. But if you focus on quality and offer something unique and memorable, people will come to eat at your restaurant even if they eat out less.”

So the economy makes them more selective.

“Exactly. That’s why I try to be creative with my desserts at Michel. People are now more careful about how they spend their money. So I have to really create something great that they will remember and want more of.”

This is the future of restaurants as you put it.

“Yes. People will pay for quality. But you cannot just charge any price. If you charge like $40 for a dessert, even if it’s an amazing dessert, people think to themselves, “That was good, but was it $40 good?” Price is not that flexible. So you need to create something of quality, that is memorable, and doesn’t cost too much. You don’t want the person to feel anything other than good at the end of the meal.”

That’s exactly what I thought when I ate the “chicken.” I only remember that it was amazing and how fun it looked. To be honest I didn’t even remember what it cost.

“Then I’ve done my job well.”

You know it’s interesting… without saying it explicitly, you’ve touched on three of the most important attributes of any businessman or entrepreneur. They are 1) to master a talent or skill. 2) Use that talent to create or offer something people value 3) Figure out the “sweet” spot for pricing.

“That is exactly how restaurants work, at least the ones that will succeed going forward. Chefs will have to be creative and original. They will have to create an experience that is memorable. That is what I try to do every day in the kitchen.”

Thanks for the thoughts Mark. We wish you and the rest of the folks at Michel great success.

“Thank you.”

My advice to readers and investors: do yourself a favor… consider what Mark is saying from the perspective of your own business or work. How can you do things in a way that will make people remember you and your work? What kind of experience are you making or selling with your product or service? And if you’re not selling an experience… why not? How could you create one for your clients?

Finally, to anyone who enjoys fine dining, I highly suggest swinging by Michel in Tyson’s Corner if you’re ever near the DC area. Anything you eat there will be amazing. Just make sure you save room for dessert. Who knows, you may find yourself whipping up a business idea of your own.

At the very least, you’ll have eaten one of the best meals of your life.

You can read more about Michel at:

http://www.michelrichardva.com/

Graham Summers

As much as the mainstream financial media likes to pretend that the financial crisis is over, unfortunately it isn’t. In fact, what’s going to happen next will very likely make 2008 look like a joke.

There is one simple reason for this: the “Fed” safety net that pulled the markets back from the brink is gone.

As noted in an earlier piece, the Fed is not going to be able to unleash QE 3 at any point in the near future. Indeed, the Fed is going to find it harder and harder to unveil any new program as we go into the election by virtue of the fact that it’s already become a political target for candidates (Perry, Paul, and Bachmann).

Given that the financial system is now more leveraged than during the Tech Bubble, that mutual funds are more heavily invested in stocks than at any point in the last 40 years (hello redemptions), that the derivatives market has not been reined in, that the global economy is once again turning sharply downward, that the EU and European banking system are collapsing, that the US economy is now clearly in a double dip (within the confines of an ongoing DE-pression), and that China is heading into a hard landing… the fact that the Fed will not be able to do much to stop the Crisis should have everyone freaking out.

Remember, for EVERY Crisis in the last 80 years, the answer was always “the Fed will fix it.”

However, with the Second Round of the Great Crisis at our doorstep, this time around it will be CLEAR the Fed DIDN’T “fix it.”  You don’t get a second collapse within three years of an allegedly one in 100-year event and come up with “yeah, the problem was fixed.”

We entered this Round in earnest in late July 2011. It isn’t over. The fact that the proposed solutions now involve floating bonds for entities that don’t even really exist (Eurobonds) should tell you how desperate it’s getting.

I hold by my former statements: this is the time to be defensive, moving into cash and non-cyclical sectors. Gold and Silver are a little too hot right now, so I wouldn’t be adding to positions there. The same goes for US Treasuries.

However, if you’re looking for actionable investment ideas and in-depth market analysis that will not only get you through this mess, but actually help you make some money, you NEED to get in on my Private Wealth Advisory newsletter.

Over the last two weeks, while 99% of investors got crushed, Private Wealth Advisory subscribers locked in seven winners including gains of 6%, 7%, and 9% in as little as one day (no we were not using options, just stocks and ETFs).

My readers made money in 2008 and the Euro Crisis of 2010. They’re making money now.

They’re also taking steps to prepare their families and loved ones for what’s coming with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports, which are also included with every Private Wealth Advisory subscription.

To join them…take action to get your financial house in order… and start making this Crisis grow your portfolio instead of crushing it…

Click Here Now!!!

Good Investing!

Graham Summers

According to French President Nicolas Sarkozy, he and Angela Merkel share an “absolute determination” to defend the Euro. I find that hard to believe as:

• 86% of Germans think the Euro is at risk.
• 71% of Germans are doubtful about the common currency.
• 56% of Germans say the Euro has brought them economic disadvantages.

The European bailouts were always ultimately about Germany. Without German support, you have no bail out and no EU either.

So with that in mind, we need to consider that Angela Merkel’s party was absolutely destroyed in the German March 2011 elections, largely because she had been pro-bailouts and pro-the Euro. She’s not out of the woods yet either.

The next round of German elections comes in September (the 4^th, 11^th, and 18^th). Is Merkel (and her party) really going to commit political suicide to support the Euro? After all, she would literally have to change the German constitution to participate in the creation of Eurobonds (the latest deranged ECB idea). You think the German people will go for that?

Me neither. Especially considering that the German economy is starting to roll over: GDP growth was only 0.1% (0.5% was expected). Both exports and imports fell upwards of 4%. It’s hard to believe the German people will want to continue bailing out Greece and other weaker EU countries when Germany itself is contracting.

However, in the very short-term, the Euro has been rallying for three primary reasons:

1. Shorts covering (Dealers were heavily short the Euro)
2. The Fed (QE 2 and most Fed action is aimed at bailing out European banks)
3. Political influence (hype and hope on Euro-bonds, Swiss pegs, etc)

Short term, the Euro might be the most heavily manipulated investment on the planet today. The dynamic between the US Federal Reserve, European Central Bank, and Swiss National Bank makes this situation nearly untradeable in the short-term.

However, the political/ economic/ monetary backdrop behind this mess remains the same: Germany cannot and will not be able to bail out all of Europe. The short-term moves are nothing more than drama. The EU in its current form has entered the End Game.

Whether we see weaker players kicked out (Greece and Portugal), some kind of larger EU split (North and South), or a complete dissolution (possible but highly unlikely), the EU will be breaking apart within the next year to 18 months.

Howe precisely this plays out remains to be seen. Right now the Euro looks to have broken out of a wedge pattern within a larger upward trading channel. Once we break the lower trendline (black) we’re going DOWN.

Which returns to a theme I’ve been expounding on for months now, that the Great Crisis has now entered its second round: the Sovereign Debt round, in which entire countries and regions will be going bust (rather than just private banks).

We entered this Round in earnest in late July 2011. It isn’t over. The fact that the proposed solutions now involve floating bonds for entities that don’t even really exist (Eurobonds) should tell you how desperate it’s getting.

I hold by my former statements: this is the time to be defensive, moving into cash and non-cyclical sectors. Gold and Silver are a little too hot right now, so I wouldn’t be adding to positions there. The same goes for US Treasuries.

However, if you’re looking for actionable investment ideas and in-depth market analysis that will not only get you through this mess, but actually help you make some money, you NEED to get in on my Private Wealth Advisory newsletter.

Over the last two weeks, while 99% of investors got crushed, Private Wealth Advisory subscribers locked in seven winners including gains of 6%, 7%, and 9% in as little as one day (no we were not using options, just stocks and ETFs).

My readers made money in 2008 and the Euro Crisis of 2010. They’re making money now.

They’re also taking steps to prepare their families and loved ones for what’s coming with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports, which are also included with every Private Wealth Advisory subscription.

To join them…take action to get your financial house in order… and start making this Crisis grow your portfolio instead of crushing it…

Click Here Now!!!

Good Investing!

Graham Summers

The action of the last few days has created rising bearish wedges in Brazilian ETF, S&P 500, and the Russell 2000.

Let’s start with Brazil as it’s become THE international “risk” market, leading all the other BRIC countries in the market (Brazil is blue, Russia green, China red, and India purple).

With that in mind, have a look at Brazil’s ETF which is forming something of a rising bearish wedge pattern. This is a termination pattern which means when it breaks it will likely be down and wipe out most of the gains of the last week.

Now, this pattern does have a bit of upside left in it. But we could just as easily take out the bottom trendline in which case, we’re on our way to new lows.

In the case of the S&P 500, this pattern is far more pronounced and rapidly nearing its apex.

As for the Russell, we’re right at the apex.

When you combine these patterns with the light volume that has occurred throughout this latest move upwards as well as the fact it’s moving on rumors (seriously, Eurobonds? You think Germans are going to support this?), we’re very likely going to see a reversal in the near future culminating in new lows for the year.

Remember, while all the focus is on the Fed and its response to the markets, the US economy continues to worsen. This morning’s Empire Manufacturing numbers were terrible. Add to this the recent market rout (which will impact sentiment surveys going forward) as well the all but guaranteed terrible 3Q earnings we’ll be seeing soon, and we’ve got a real economic downturn on our hands.

And people are viewing stocks as a great buy today?

We went for this same scheme back in 2008. At that time the US economy was clearly breaking down, the banking system was collapsing, and yet people were buying every dip and viewing every negative announcement with rose colored glasses.

We all know how that turned out.

On that note, if you’re looking for actionable investment ideas and in-depth market analysis that will not only get you through this mess, but actually help you make some money, you NEED to get in on my Private Wealth Advisory newsletter.

Over the last two weeks, while 99% of investors got crushed, Private Wealth Advisory subscribers locked in seven winners including gains of 6%, 7%, and 9% in as little as one day (no we were not using options, just stocks and ETFs).

My readers made money in 2008 and the Euro Crisis of 2010. They’re making money now.

They’re also taking steps to prepare their families and loved ones for what’s coming with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports, which are also included with every Private Wealth Advisory subscription.

To join them…take action to get your financial house in order… and start making this Crisis grow your portfolio instead of crushing it…

Click Here Now!!!

Good Investing!

Graham Summers

The Euro situation is coming to a point… literally: we’ve entered a triangle pattern. In fact, we have a second triangle forming within this larger pattern.

We’ve got just a little more room to run before we reach the apex of this pattern. However, given how things are going over there, we could see the breakout come at any minute now. These patterns can break either up or down, but given the situation over there, it’s likely going to be down and it will be taking most of the financial world with it.

Remember, the European debt drama was always about Spain and Italy: Greece, Ireland, and Portugal were the minor players (Portugal did pose something of a threat in that Spanish banks were massively exposed to its debts). However, when Spain or Italy go down, they’re taking France and Germany (the two most solvent EU members) with them.

And that’s when the Eurozone will crumble.

With that in mind, the two key items to note are Italy’s emergency austerity program (how this tactic work for Greece and Ireland?) and France’s AAA credit rating coming under review.

This latter situation has  almost come out of left field. But the fact that France is now coming under fire  tells us that the European mess has now spread to the key “prime” players or France and Germany.

If you’ll recall, a similar process happened to the US banks in 2008 when the alleged “well capitalized” banks of Merrill Lynch and Morgan Stanley started collapsing. Greece and Portugal are like Bear Stearns. Italy and Spain will be Lehman Brothers. And France and Germany are Bank of America or Citigroup: Too Big To Fail. If the financial solvency of one of these countries (France or Germany) becomes suspect, then it’s game. set. match. for the Eurozone in its current form and the ensuing Crisis will make 2008 look like a picnic.

Keep your eyes on the French market. While the S&P 500 has exceeded its May 10 high (courtesy of the PPT), France is only just coming up to test this level. A breakdown here means that the next wave of collapse has begun:

Speaking of the S&P 500, that index is forming something of a bearish rising wedge pattern. Given how weak things got towards the end of last week, we could see a breakdown as early as today). However, the pattern does allow for a final thrust to 1,200 or so.

Big picture: I warned to get defensive several weeks ago. Stay defensive now. This snapback rally is not the start of a new bull market rally. If anything, the volatility of the last week has made it evident that we’re back in a 2008 environment: you simply don’t see 3-4% price swings on a daily basis in a healthy market.

On that note, if you’re looking for actionable investment ideas and in-depth market analysis that will not only get you through this mess, but actually help you make some money, you NEED to get in on my Private Wealth Advisory newsletter.

Over the last two weeks, while 99% of investors got crushed, Private Wealth Advisory subscribers locked in seven winners including gains of 6%, 7%, and 9% in as little as one day (no we were not using options, just stocks and ETFs).

My readers made money in 2008 and the Euro Crisis of 2010. They’re making money now.

They’re also taking steps to prepare their families and loved ones for what’s coming with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports, which are also included with every Private Wealth Advisory subscription.

To join them…take action to get your financial house in order… and start making this Crisis grow your portfolio instead of crushing it…

Click Here Now!!!

Good Investing!

Graham Summers

For months now I’ve been warning about the stock markets facing a devastating collapse. I cited mutual fund cash levels, systemic leverage, derivatives exposure, and on and on.

And yet, despite the clear data points and research I presented, I was told I was crazy. I even had readers from bearish websites write me to tell me that my “sky is falling” warnings were “crap.”

And then this happened (I’ve added the recent drop in overnight futures).

Stocks are now back to November 2009 levels. In plain terms, the last year and a half may as well have not happened. The second half of QE 1, QE lite, and QE 2… literally everything the Fed has done since the end of 2009 has been wasted money.

Yes, we will get a sharp short-covering at some point. But the damage is done. Even QE 3 won’t bring the market back. We’re going to new lows… as in sub-600 on the S&P 500. Many folks are going to lose everything.

While most investors are getting taken to the cleaners, subscribers of my Private Wealth Advisory have already locked in SIX winners last week, including gains of 7%, 8%, and 9% in just one day.

They’ve also SAVED their portfolios from this bloodbath, courtesy of my well-timed warning (the following is an email I received from a client last week).

As of 9:45 this morning your well-timed note yesterday has saved 10% of my trading account.  Thanks!!

Roger D.

So if you’re looking for someone to help you navigate the market AND make sure that you actually MAKE money during the Crises, you NEED to check out my Private Wealth Advisory. Because if the market drop occurring as I write this is any indication, this Crash isn’t over by a long shot.

To take out a subscription to Private Wealth Advisory…

Click Here Now!!!

Best Regards

Graham Summers

Given their technical set-up and oversold conditions last week, stocks should have staged a bounce of some sorts. Instead, they went into full-scale Crisis mode falling over 7% as the US was downgraded and global debt collapse went into hyperdrive.

This brought the S&P 500 up against the critical support level of 1,200. However, we’ve already taken this line out in the overnight futures sessions. As I write this, the S&P 500 is around 1,172 or so.

The bulls have only one hope to cling to and that is for the Fed to mention QE 3 in its FOMC meeting tomorrow. The Fed will absolutely HAVE to actually mention QE 3 given that its previous hints of additional stimulus resulted in meager, short-lived rallies.

However, the fact remains that the market is on Red Alert mode. The financial system is more leveraged than it was during the Tech Bubble. Mutual funds are more heavily invested in stocks than at any other time in the last 50 years.

And the cause of the 2008 Crisis (derivatives) still hasn’t been reined in.

As I warned a few weeks ago, now is the time to be getting defensive and shifting to cash. We will see some sharp bear market rallies in the near future, but the End Game is now in motion. Even if the Fed does announce QE 3, the effects will be muted.

Consider that in just two weeks the market has wiped out ALL of the gains of the last 9 months and you’ll see what I mean: the Ponzi  scheme that is our current financial system requires money constantly for it not to collapse (not correct, but COLLAPSE).

The whole world now knows that QE 1 and QE 2 were failures. Which is why QE 3 won’t do much. Which means the REAL Crisis is now here.

While most investors are getting taken to the cleaners, subscribers of my Private Wealth Advisory have already locked in SIX winners last week, including gains of 7%, 8%, and 9% in just one day.

They’ve also SAVED their portfolios from this bloodbath, courtesy of my well-timed warning (the following is an email I received from a client last week).

As of 9:45 this morning your well-timed note yesterday has saved 10% of my trading account.  Thanks!!

Roger D.

So if you’re looking for someone to help you navigate the market AND make sure that you actually MAKE money during the Crises, you NEED to check out my Private Wealth Advisory. Because if the market drop occurring as I write this is any indication, this Crash isn’t over by a long shot.

To take out a subscription to Private Wealth Advisory…

Click Here Now!!!

Best Regards

Graham Summers

Stocks got crushed this week with the S&P 500 dropping 90 points between the intraday high and low. As a result of this, we’re now at major support at 1,200:

The market is oversold and traders are looking for an opportunity to ramp this thing higher. So we could see a move to 1,250. Remember, no investment goes straight up or straight down and most collapses follow a pattern of:

1)   the initial drop

2)   the bounce

3)   The REAL drop

Indeed, the only thing that could really kick off a rally for stocks would be the announcement of QE 3 (or hint of it) from the US Federal Reserve. However, even this would be short-lived. The market has finally begun to realize that the Fed can’t solve the issues that created the 2008 Crisis.  Which is why we’ve been in a free-fall for over a week now.

With that in mind, now is the time to be getting more and more defensive. This means moving to cash, Gold, and other safe havens. If you need to remain long in stocks you need to be shifting to high-quality, large-cap companies with strong balance sheets (little debt and lots of cash). They’ll fare better than small-caps or move speculative plays during a collapse.

Elsewhere in the markets, the US Dollar has rallied hard as investors flee stocks and the Euro. We’re now at resistance at 75. However, we need to break above 76 with conviction if this thing is going to last. If we do that, then the falling wedge pattern I noted a few weeks ago predicts a move to as high as 84.

This would coincide with stocks absolutely cratering. It could very well happen, so you need to be preparing for this in advance.

I can show you how.

Indeed, this last week has been a great one for subscribers of my Private Wealth Advisory newsletter. We’ve already seen three winners from this drop. And we’ve just opened another four Crisis Trades that are already skyrocketing.

If you’d like to join us… and take steps to prepare your portfolio for the market blood-bath that is unfolding.

Click Here Now!!!

Best Regards

Graham Summers

We are currently witnessing a pattern in the stock markets that has occurred multiple times in the last century. And everytime we did, things got UGLY.

That pattern is:

1)   a Spring Crisis

2)   a Summer rally (on light volume)

3)   The BIG Crisis

This pattern has occurred in 1907, 1929, 1931, 1987, 2000 and 2008. In each of these years, stocks came undone via some kind of Crisis during the March –May period. There was then a brief summer “relief” rally, and then things got VERY ugly in the fall.

Here’s the pattern for 2000:

Here it is in 2008:

So far, the market has been trading sideways for most of 2011, but the pattern is emerging:

Given that the Financial System is now even more leveraged than it was during the Tech Bubble… and that we’ve added TRILLIONS in debt to the US’s balance sheet, the odds of another systemic collapse are getting higher by the day.

And when it comes to profiting from this kind of disaster, few people on the planet have my ability to make Crises pay off.

To whit, my clients actually made money in 2008 (courtesy of my proprietary Crash trigger), having been warned a full three weeks in advance of the Crash to get out the market and go short.

And when the Euro Crisis of 2010 rolled around, my Private Wealth Advisory portfolio outperformed the market by 15%.

I’ve recently alerted subscribers of Private Wealth Advisory to six trades that will all explode when the markets crumble. In fact, while the markets have been a sea of red lately these positions have EXPLODED higher.

And we’re just getting started.

So if you’ve yet to take steps to prepare your portfolio for a market collapse… and would like clear “buy” and “sell” alerts on which trades to make and when… you NEED to take out a “trial” subscription to my Private Wealth Advisory newsletter.

Once you do, you’ll immediately join my elite group of subscribers including strategists at Wells Fargo, Merrill Lynch, Royal Bank of Scotland and more.

This means you’ll receive my bi-weekly research reports detailing the most important trends in the markets as well as which investments will profit most from them.

You’ll also get my real-time trade alerts whenever it’s time to “pull the trigger” on a trade. While most newsletters stick with a fixed publishing schedule, Private Wealth Advisory issues trade alerts in real-time, letting you know the minute it’s time to buy or sell a given investment.

And finally, every Private Wealth Advisory subscription comes with full access to all of my Special Reports including the Prepare Your Family, Prepare Your Savings, and Prepare Your Portfolio reports which outline precisely how to prepare these three areas of your life for the coming Second Round of the Financial Crisis.

You get all of this for just $199 per year. But this price will only be good for the remainder of August, because we’re raising the price to $299 in September.

To take out a “trial” subscription to Private Wealth Advisory today, start receiving my hard hitting financial analysis, real time trade alerts, and ALL of my Special Reports…

Click Here Now!

Good Investing!

Graham Summers

The situation in the US Congress marks a new low for politics in this country. I’m not going to bother going into details related to the various plans that have been proposed because all of them fail to be relevant.

What I mean by this is that all of the various cuts ($1 trillion or so over however many years) are in fact irrelevant given the fact that the US is running deficits north of $1.5 trillion PER year already.

As for the debt ceiling, whether we raise it or not is also irrelevant in the grand scheme of things. The US is broke and has been for a long time now. There is absolutely no way we will ever pay back our debts which now stand at $44K per man woman and child in the US.

This of course fails to include social security, Medicare and other unfunded liabilities which put the US debt levels closer to $60 trillion.

What I’m trying to say with all of this is that the US welfare state, or the notion of politicians dishing out handouts in exchange for votes, is soon coming to an end. Social security, Medicare and many other government spending programs will be cut in the coming years. Regardless of your feelings regarding these programs, they are not funded and with tax receipts falling (and will fall further as the Depression deepens) the US will simply not have the money to pay for these programs.

We will also see the US defaulting on its debts with some kind of debt restructuring included. This is absolutely guaranteed to happen. And THAT is the item of most import for the US financial system.

The reason for this is that the entire financial system is based on the ratings of specific securities with US Treasuries as the highest rated AAA. So if US debt takes a downgrade this will result in systemic volatility on a mass scale.

For one thing pension funds, investment funds, and other entities that are required to only invest in AAA-rated securities will have to move out of Treasuries when this happens.

On top of this, US banks will undergo another Crisis based on the fact that Treasuries are the senior most assets on their balance sheets. What happens when the bedrock of their balance sheets drops dramatically in value forcing system wide margin calls?

KA-BOOM!

When it comes to profiting from this kind of disaster, few people on the planet have my ability to make Crises pay off.

To whit, my clients actually made money in 2008, having been warned a full three weeks in advance of the Crash to get out the market and go short.

And when the Euro Crisis of 2010 rolled around, my Private Wealth Advisory portfolio outperformed the market by 15%.

I’ve recently alerted subscribers of Private Wealth Advisory to six trades that will all explode when the markets crumble. In fact, while the markets have been a sea of red lately these positions have EXPLODED higher.

And we’re just getting started.

So if you’ve yet to take steps to prepare your portfolio for a market collapse… and would like clear “buy” and “sell” alerts on which trades to make and when… you NEED to take out a “trial” subscription to my Private Wealth Advisory newsletter.

Once you do, you’ll immediately join my elite group of subscribers including strategists at Wells Fargo, Merrill Lynch, Royal Bank of Scotland and more.

This means you’ll receive my bi-weekly research reports detailing the most important trends in the markets as well as which investments will profit most from them.

You’ll also get my real-time trade alerts whenever it’s time to “pull the trigger” on a trade. While most newsletters stick with a fixed publishing schedule, Private Wealth Advisory issues trade alerts in real-time, letting you know the minute it’s time to buy or sell a given investment.

And finally, every Private Wealth Advisory subscription comes with full access to all of my Special Reports including the Prepare Your Family, Prepare Your Savings, and Prepare Your Portfolio reports which outline precisely how to prepare these three areas of your life for the coming Second Round of the Financial Crisis.

You get all of this for just $199 per year. But this price will only be good for the remainder of August, because we’re raising the price to $299 in September.

To take out a “trial” subscription to Private Wealth Advisory today, start receiving my hard hitting financial analysis, real time trade alerts, and ALL of my Special Reports…

Click Here Now!

Good Investing!

Graham Summers

Let’s start with the economic situation.

The Euro Crisis is by no means over. In fact, we’ve yet to get the details of the mega-Euro bailout that is supposedly going to solve all of Europe’s problems (it won’t but that’s the market’s view for now). Meanwhile Spain and Italy are both coming unraveled in a big way. With GDPs of $1.46 trillion and $2.11 trillion respectively, there is no way the ECB can bail these two out.

On the other side of the pond, the White House supposedly reached a debt deal late Sunday night. The deal involves a debt ceiling hike (no surprise) no tax increases, and $2 trillion in spending cuts over the next ten years (though Obama stressed they would not occur so as to damage the US economy).

In other words, the US Government kicked the can down the road a little further. Judging from the worsening economic data in the US (this morning’s ISM was a disaster), the can won’t be going far this time around.

Against this ugly backdrop, stocks are coming up against support at 1,275. If we take this line out, we’ve got support at 1,250 and then we’re going to 1,225 or even 1,200 in a heart beat.

Now is the time to be getting defensive. This means rotating our of more speculative growth plays and shifting into non-cyclicals. For some investors it means getting out of stocks all together.

One thing that NEEDS to be mentioned is that this time around, bad economic news is resulting in sell-offs. For the last two years, whenever bad data came out, stocks actually rallied on the belief that the Fed would have to provide more stimulus. So the fact that stocks are now tanking on bad economic data should be a major red flag that things have changed.

On that note, I full believe that we could be heading into another 2008 episode. We’re DARN close to triggering my proprietary Crash trigger. And there is no shortage of major black swans lurking in the financial system.

Indeed, global manufacturing is now at its worst levels since 2009. China is clearly heading into a hard landing while the European debt contagion is spreading to Spain and Italy in a big way.

Add to this the fact that the financial system is even more leveraged than it was in 2000 and you’ve got a recipe for financial disaster. And given that this coming crisis will entail entire countries (not just private banks) collapsing, this time around is going to be even worse than 2008.

However, this doesn’t mean that you have to lose money. In fact, Crises can be one of the best times to actually produce outsized profits as the financial herds panic and head for the exits.

And when it comes to profiting from this kind of disaster, few people on the planet have my ability to make Crises pay off.

To whit, my clients actually made money in 2008, having been warned a full three weeks in advance of the Crash to get out the market and go short.

And when the Euro Crisis of 2010 rolled around, my Private Wealth Advisory portfolio outperformed the market by 15%.

I’ve recently alerted subscribers of Private Wealth Advisory to six trades that will all explode when the markets crumble. In fact, while the markets have been a sea of red lately these positions have EXPLODED higher.

And we’re just getting started.

So if you’ve yet to take steps to prepare your portfolio for a market collapse… and would like clear “buy” and “sell” alerts on which trades to make and when… you NEED to take out a “trial” subscription to my Private Wealth Advisory newsletter.

Once you do, you’ll immediately join my elite group of subscribers including strategists at Wells Fargo, Merrill Lynch, Royal Bank of Scotland and more.

This means you’ll receive my bi-weekly research reports detailing the most important trends in the markets as well as which investments will profit most from them.

You’ll also get my real-time trade alerts whenever it’s time to “pull the trigger” on a trade. While most newsletters stick with a fixed publishing schedule, Private Wealth Advisory issues trade alerts in real-time, letting you know the minute it’s time to buy or sell a given investment.

And finally, every Private Wealth Advisory subscription comes with full access to all of my Special Reports including the Prepare Your Family, Prepare Your Savings, and Prepare Your Portfolio reports which outline precisely how to prepare these three areas of your life for the coming Second Round of the Financial Crisis.

You get all of this for just $199 per year. But this price will only be good for the remainder of August, because we’re raising the price to $299 in September.

To take out a “trial” subscription to Private Wealth Advisory today, start receiving my hard hitting financial analysis, real time trade alerts, and ALL of my Special Reports…

Click Here Now!

Good Investing!

Graham Summers

Given the ridiculous number of rumors (and ridiculousness of some of the rumors) related to the US and EU debt talks that are circling the financial community, I thought it best that we confront the realities these two economies face. Today we’re focusing on Europe.

Regarding Europe, we still don’t have any details regarding the Greek bailout, nor do we have any real sense of how the mega-bailout fund will really work in terms of solving any of the EU’s problems.

However, the fact remains that everything related to EU bailouts hinges on Germany. Germany is the most solvent member of the EU. And without its backing, NO EU bailout scheme will work in any way.

With that in mind, we need to consider that the majority of Germans now want out of the Euro. As I have noted in previous articles, politics is the name of the game in the EU, so the next round of German elections in September could dampen Germany’s interest in backstopping more bailouts (current Chancellor Angela Merkel’s party took a serious beating in the March elections already).

A second element that needs to be focused on is Germany’s economy. Any threat to the German economy could quickly hinder the debt talks/ bailouts in the EU for the following reason:

1)   Germany is the largest, strongest, most solvent, member of the EU, so if it’s in trouble, the less solvent members will be in major trouble.

2)   A weak German economy will fuel the political fires for those Germans who see little benefit in remaining in the EU (subsequently the heat will turn up on those politicians pushing for continued bailouts).

In simple terms, if the German economy breaks down, then the EU and the Euro are in big trouble. With that in mind, Germany has recently seen three economic releases that show the “recovery” is slowing (the IFO Business Climate, Manufacturing and Services, and the ZEW Economic Sentiment).

If any of the negative issues mentioned above become worse, the EU experiment would fast approach its end. This would result in the Euro taking a hit, which would push the US Dollar higher.

On that note, the Euro broke out of the triangle pattern I mentioned a few weeks ago to the downside. It’s now rallying to retest the lower trendline for this pattern (fitting the classic, break-down, test, then REAL move pattern I’ve been telling readers about for years).

The ultimate downside target for the triangle patterns breakdown is 136 or so. So unless the Euro stays above 44, we’re going there relatively quickly. Given that Italy has just joined Austria in cancelling a bond auction, I’d say this downside target is on its way.

However, the bigger picture here is the 125-level which has been a line of massive importance for the Euro since its creation:

As the above monthly chart of the Euro reveals, 125 has served both as important resistance and important support over the last 20 years. The Euro just broke below this level during the 2010 Crisis. The next time it breaks below this line we’ll be in the midst of the final End Game for the Euro experiment.

On that note, if you’re looking for the means to produce quick profits based on market moves, you NEED to check out my Rapid Fire Options Alert newsletter.

Rapid Fire Options Alert uses a proprietary system of trading options that I’ve developed over my years as a financial analyst. The degree of accuracy is stunning (our success rate on trades is over 77%). And the gains are simply spectacular (we’re up over 230% for the year so far).

That’s not a typo. We’ve seen a 230% return on invested capital so far in 2011. And we’re only in July.

Most importantly, this system of trading couldn’t be simpler. We trade on Tuesday mornings. When it’s time to pull the trigger on a trade, we send out an email and text alert detailing which option contract to buy, what price to pay, and what stop loss to use.

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It’s that simple.  Provided you can trade regular puts and calls, ANYONE can use this system to increase their portfolio dramatically: again we’re up 230% for the year so far.

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Best Regards,

Graham Summers

Editor’s Note: The following is an excerpt from my latest issue of Private Wealth Advisory. In it, I present the most comprehensive overview of the European debt crisis out there, but I also identified one Spanish Bank that is poised on the brink of collapse. To find out which bank it is, how to profit from its collapse and learn about my six other Crisis trades that will pay out double digit returns when the system breaks down again… Click Here Now

The first wave of the next crisis is going to come from Europe where it is clear that the ECB has reached the End Game of monetary intervention. To whit: Greece was bailed out only 13 months ago, it has since requested an extension on those loans and is now receiving a SECOND bailout.

Greece, as a country, really has very little to do with Europe’s economy (it’s about $330 billion out of the EU’s $16 trillion GDP). However, Greece was the first nation to be bailed out. And so it has set the trend for what’s to come in Europe. And what’s to come is the following: default, political shakedowns, and civil unrest.

Ultimately, the BIG players in the EU Crisis are Spain and Italy with GDPs of $1.46 trillion and $2.1 trillion respectively. There literally is NO WAY the ECB can bail these countries out. Which is why in Europe the End Game looms and Greece’s bailouts will ultimately be irrelevant.

What I mean by this is that the ECB has played its hand with the small players (Greece) and is now facing problems it cannot possibly solve. There is only one outcome to this scenario and it is default and restructuring which will involve European banks taking a “haircut” AKA losing billions of Euros worth of money on toxic debt.

However, there is a MUCH bigger problem here and that problem is the same one that created the 2008 disaster: DERIVATIVES.

US commercial banks have over $200 trillion in derivatives outstanding on their balance sheets. However, worldwide, the derivatives market is over $600 TRILLION in size. And the financial system in Europe is as saturated, if not MORE saturated with toxic debt than the US financial system.

According to the Bureau of International Settlements, the total exposure worldwide to PIGS (Portugal, Ireland, Greece, and Spain) debt is over $2.5 TRILLION. Most of this is in the form of derivatives. And 70% of it is from foreign entities (banks and firms located outside of the country).

Let’s take Greece for instance. Courtesy of derivatives, France has $92 billion in exposure to Greece debt. Germany is on the hook for $69 billion. Great Britain has $20 billion. And the US has $43 billion.

These levels, while dangerous, are not catastrophic. As I’ve stated before, Greece is NOT the big problem for the EU. However, worldwide exposure to Greek debt is in the ballpark of $277 billion. So a default there would result in significant market dislocations.

Now consider the exposure to a BIG Problem such as Spanish debt. In this situation, Great Britain is on the hook for $51 billion. The US is on the hook for $187 billion. France is on the hook for $224 billion. And Germany is on the hook for a whopping $244 billion.

As I said before, Greece is ultimately a small player in this mess. Worldwide exposure to Greek debt is $277 billion. Worldwide exposure to Spain, on the other hand, is north of $1 TRILLION.

Now this is where things get REALLY tricky. Because of the intertwined nature of the derivatives market, a Greek default could result in systemic risk for the simple fact that if one of the banks that goes down with Greece has extensive exposure to Spain as well, then things could get ugly very, VERY fast.

Indeed, given that the European banking system is just as, if not MORE saturated than the US’s when it comes to toxic debt, even a small player like Greece could end up triggering another round of systemic risk.

This all ties in with what I’ve been saying for months now… that 2008 was in fact the warm up and that the REAL Crisis is fast approaching. And when it hits, the Fed will be POWERLESS to stop it. Because this time it will be entire countries, NOT just Wall Street banks that collapse. So what’s coming will be the equivalent of 2008 all over again, along with food shortages, civil unrest, outbreaks in crime, bank holidays, and the like. It will, in short, be like what’s going on in the Middle East today (though NATO won’t be bombing us).

Which is why if you haven’t already taken steps to prepare yourself and your portfolio for the coming disaster, you need to do so NOW.

I can show you how…

I’ve recently published three key reports titled Protect Your Family, Protect Your Savings, and Protect Your Portfolio all in all 40+ pages of material devoted to showing individual investors how to prepare these areas of their lives in great detail.

I’m talking about how to prepare for bank holidays, food shortages, stock Crashes, debt defaults, civil unrest and more.

When it comes to profiting from this kind of disaster, few people on the  planet have my ability to make Crises pay off.

To whit, my clients actually made money in 2008, having been warned a full three weeks in advance of the Crash to get out the market and go short.

I believe we could see another 2008  situation unfold in the near future, which is why I just unveiled six specific trades  to subscribers… all of which will pay off  HUGE returns as the current stock market collapse accelerates.

So we’re ready for whatever may come. And the worse things get… the more profitable our strategy will be.

If you’ve yet to take these steps yourself, it’s not too late… in fact, you’ve still got time to get your financial “house” in order to not only survive what’s coming… but potentially even make serious money from it.

All you need to do is take out a “trial” subscription to my Private Wealth Advisory newsletter. You’ll immediately be given access to all of the reports I detail above… and you’ll also be on my private client list to receive my bi-weekly investment reports as well as real-time trade updates on when to buy and sell various investments.

And if you should decide that Private Wealth Advisory is not for you, you can ask for a full refund during the first 30 days and I’ll return every cent of your subscription cost.

The reports you’ve downloaded during your “trial” period are yours to keep, even if you choose to cancel.

To get started with you Private Wealth Advisory subscription today, download the Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports and start taking action to prepare for what’s coming…

Click Here Now!

Good Investing!

Graham Summers
Editor In Chief
Gains Pains & Capital

The 2008 Crisis occurred when private US banks became so distrustful of one another’s balance sheet risk that interbank liquidity dried up triggering a systemic implosion in the unregulated derivatives market, particularly in Credit Default Swaps (which was a $50-60 trillion market at the time).

The Federal Reserve dealt with this situation by suspending accounting policies (permitting banks to lie about their true balance sheet risk), offering to backstop those banks with the greatest derivative exposure (JP Morgan, Bank of America, Goldman Sachs, and Citigroup), shifting trillions of dollars’ worth of toxic debt to the US balance sheet and then funneling trillions of new dollars into the banks most at risk of a derivative collapse (the banks I listed before).

From a philosophical perspective, the Fed removed the notion of “risk of failure” from Wall Street’s collective mind. As anyone who’s studied human behavior can tell you, without consequence for one’s actions most people will take their bad behaviors to the limit.

As a result of this, Wall Street went back to doing what caused the Financial Crisis in the first place: increasing leverage, fleecing clients, and paying its employees’ excessive salaries. Today the financial system is once again overleveraged. In fact, leverage levels today exceed those that occurred during the 2008 Tech Bubble, the large banks continue to be insolvent due to their gargantuan derivative exposure.

Put another way, the financial system is primed for another 2008 episode. The very same issues that caused 2008 remain in place. Leverage is far too high. And the unregulated derivatives market remains a multi-hundred trillion dollar problem.

However, the next Crisis will not simply be another 2008. The reason for this is that by transferring trillions in toxic debt to the public balance sheet, the Federal Reserve has put the US’s credit rating and debt situation in jeopardy.

To be clear, the US was already bankrupt due to unfunded liabilities (including Social Security and Medicare, the US has over $50 trillion in debt). But the Fed’s actions truly brought things to a tipping point.

Consider that before the Financial Crisis the Fed’s balance sheet consisted of $800 billion worth of Treasuries. Today, thanks to QE 1, QE lite, and QE 2, it’s $2.8 trillion. To put that number into perspective, it’s larger than the economies of France, the UK, and Brazil.

Remember, most if not ALL of this increase was the result of the Fed taking on DEBT (and toxic debt at that). With only $51 billion in capital, the Fed now has a leverage ratio of 54 to 1. To put this into perspective, Lehman Brothers was only leveraged at 30 to 1 when it went bust.

To say that the US Federal Reserve is now insolvent would be a gross understatement. The only reason anyone trusts the Fed today is:

1)   Tradition (it’s backstopped the system since 1913)

2)   The Fed has a printing press which means it can create money out of thin air

3)   Lack of alternatives (what other entity in the US has a printing press?)

And the only reason the US financial system and currency haven’t already collapsed is because other countries are in even worse shape and on the verge of collapse themselves (see Europe, China and Japan… China is rapidly heading towards a subprime crisis of its own).

However, this relative appeal (the US, while bankrupt, is in better shape than other countries) does not mean the US will avoid taking its medicine. That medicine will consist of some kind of debt default/ restructuring and a collapse in the Federal Reserve banking system. Put another way, it will mean an end to our current monetary system.

This process will involve bank holidays, severe market dislocations and crashes, temporary food shortages and consequent civil unrest.

I can show you how…

I’ve recently published three key reports titled Protect Your Family, Protect Your Savings, and Protect Your Portfolio all in all 40+ pages of material devoted to showing individual investors how to prepare these areas of their lives in great detail.

I’m talking about how to prepare for bank holidays, food shortages, stock Crashes, debt defaults, civil unrest and more.

When it comes to profiting from this kind of disaster, few people on the  planet have my ability to make Crises pay off.

To whit, my clients actually made money in 2008, having been warned a full three weeks in advance of the Crash to get out the market and go short.

I believe we could see another 2008  situation unfold in the near future, which is why I just unveiled six specific trades  to subscribers… all of which will pay off  HUGE returns as the current stock market collapse accelerates (one is already up 8%).

So we’re ready for whatever may come. And the worse things get… the more profitable our strategy will be.

If you’ve yet to take these steps yourself, it’s not too late… in fact, you’ve still got time to get your financial “house” in order to not only survive what’s coming… but potentially even make serious money from it.

All you need to do is take out a “trial” subscription to my Private Wealth Advisory newsletter. You’ll immediately be given access to all of the reports I detail above… and you’ll also be on my private client list to receive my bi-weekly investment reports as well as real-time trade updates on when to buy and sell various investments.

And if you should decide that Private Wealth Advisory is not for you, you can ask for a full refund during the first 30 days and I’ll return every cent of your subscription cost.

The reports you’ve downloaded during your “trial” period are yours to keep, even if you choose to cancel.

To get started with you Private Wealth Advisory subscription today, download the Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports and start taking action to prepare for what’s coming…

Click Here Now!

Good Investing!

Graham Summers
Editor In Chief
Gains Pains & Capital

Stocks have started to break down in a big way again. It looks as though we’ve entered a wide trading range on the S&P 500:

If we don’t bounce hard at 1,300, we’re going to 1,250 in short order. The $1 million question on everyone’s mind is whether this is just a correction or the start of another Crisis.

The US Dollar is indicating it could very well be the latter:

As you can see, the US Dollar looks to have just broken out of a falling wedge pattern. The ultimate target for this breakout, if confirmed, is over 84. The only thing that could instigate that kind of move would be a full-scale Crisis (the last two significant US Dollar rallies were due to the 2008 Crash and 2010 Euro Crisis, respectively).

If this happens it will be the Eurozone that starts it. The debt problems over there have no spread to Italy, a country far too large for the EBC to bail out. And with the European banking system being just as, if not even more saturated with toxic debt as the US’s, we could see a systemic collapse over there from just about anywhere: Portugal could take down Spain which could in turn take down Germany, etc.

Indeed, the Euro is hanging on for dear life at 140. A break below this level would indicate we are at the beginning of a serious breakdown in the Eurozone. That would be the trigger to watch for the beginning of REAL trouble.

However, one thing is clear: we are fast approaching the REAL Crisis.  And there’s no shortage of Black Swans to hit either. The Euro problem isn’t going away. In fact, it’s now spread from Greece to Italy and Portugal… the latter county now being officially rated as “junk.”

Meanwhile, China is experiencing a liquidity Crisis on par with the Lehman-collapse. In fact, a recent bond auction there failed to sell EVEN HALF of the bonds offered (there’s not enough capital available).

And then of course there’s the US where we have only two weeks to deal with the debt ceiling before we begin a default.

The next Crisis is literally at our doorstep. And it’s going to kick off another 2008 episode as all the over-leveraged players (read: EVERYONE) will have to sell positions to meet margin/ redemption calls. However, this time around we’ll also see civil unrest as people lose their social safety nets (unemployment, social security, etc).

What will follow will be the equivalent of 2008 all over again, along with food shortages, civil unrest, outbreaks in crime, bank holidays, and the like. It will, in short, be like what’s going on in the Middle East today (though NATO won’t be bombing us).

Which is why if you haven’t already taken steps to prepare yourself and your portfolio for the coming disaster, you need to do so NOW.

I can show you how…

I’ve recently published three key reports titled Protect Your Family, Protect Your Savings, and Protect Your Portfolio all in all 40+ pages of material devoted to showing individual investors how to prepare these areas of their lives in great detail.

I’m talking about how to prepare for bank holidays, food shortages, stock Crashes, debt defaults, civil unrest and more.

When it comes to profiting from this kind of disaster, few people on the  planet have my ability to make Crises pay off.

To whit, my clients actually made money in 2008, having been warned a full three weeks in advance of the Crash to get out the market and go short.

I believe we could see another 2008  situation unfold in the near future, which is why I just unveiled six specific trades  to subscribers… all of which will pay off  HUGE returns as the current stock market collapse accelerates (one is already up 8%).

So we’re ready for whatever may come. And the worse things get… the more profitable our strategy will be.

If you’ve yet to take these steps yourself, it’s not too late… in fact, you’ve still got time to get your financial “house” in order to not only survive what’s coming… but potentially even make serious money from it.

All you need to do is take out a “trial” subscription to my Private Wealth Advisory newsletter. You’ll immediately be given access to all of the reports I detail above… and you’ll also be on my private client list to receive my bi-weekly investment reports as well as real-time trade updates on when to buy and sell various investments.

And if you should decide that Private Wealth Advisory is not for you, you can ask for a full refund during the first 30 days and I’ll return every cent of your subscription cost.

The reports you’ve downloaded during your “trial” period are yours to keep, even if you choose to cancel.

To get started with you Private Wealth Advisory subscription today, download the Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports and start taking action to prepare for what’s coming…

Click Here Now!

Good Investing!

Graham Summers
Editor In Chief
Gains Pains & Capital

Indeed, it just posted the single biggest money pump since Lehman Brothers…  on the week of June 27 2011. If you’re looking for a reason that stocks have been ramped so much higher in the last two weeks. This is it.

Indeed, for the week ended June 27, the Fed flooded the financial system with $76 BILLION in liquidity. Bill King of the King Report puts that number into perspective noting that it’s BIGGEST increase since September 22, 2008 right after Lehman Brothers collapsed.

That’s right, the Fed just juiced the system as much as it did when Lehman Brothers went under. While a shockingly large single money pump, the Fed’s generally been flooding the system with liquidity at a pace equal to that of 2008 since the beginning of the year.

In 2008, the Fed put roughly $1 trillion in liquidity into the system to try and hold things up. So far in 2011, it’s put in nearly $700 billion. You think that the recession ended and systemic risk has gone away? Explain this one.

In simple terms, it’s clear that beneath his attempted calm, Ben Bernanke is in fact scared stiff. Why else would he be printing money night and day? If the financial system was indeed stable and secure, why is he pumping money at the same pace as 2008?

This all ties in with what I’ve been saying for months now… that 2008 was in fact the warm up and that the REAL Crisis is fast approaching. And when it hits, the Fed will be POWERLESS to stop it. Because this time it will be entire countries, NOT just Wall Street banks that collapse. So what’s coming will be the equivalent of 2008 all over again, along with food shortages, civil unrest, outbreaks in crime, bank holidays, and the like. It will, in short, be like what’s going on in the Middle East today (though NATO won’t be bombing us).

Which is why if you haven’t already taken steps to prepare yourself and your portfolio for the coming disaster, you need to do so NOW.

I can show you how…

I’ve recently published three key reports titled Protect Your Family, Protect Your Savings, and Protect Your Portfolio all in all 40+ pages of material devoted to showing individual investors how to prepare these areas of their lives in great detail.

I’m talking about how to prepare for bank holidays, food shortages, stock Crashes, debt defaults, civil unrest and more.

When it comes to profiting from this kind of disaster, few people on the  planet have my ability to make Crises pay off.

To whit, my clients actually made money in 2008, having been warned a full three weeks in advance of the Crash to get out the market and go short.

I believe we could see another 2008  situation unfold in the near future, which is why I just unveiled six specific trades  to subscribers… all of which will pay off  HUGE returns as the current stock market collapse accelerates.

So we’re ready for whatever may come. And the worse things get… the more profitable our strategy will be.

If you’ve yet to take these steps yourself, it’s not too late… in fact, you’ve still got time to get your financial “house” in order to not only survive what’s coming… but potentially even make serious money from it.

All you need to do is take out a “trial” subscription to my Private Wealth Advisory newsletter. You’ll immediately be given access to all of the reports I detail above… and you’ll also be on my private client list to receive my bi-weekly investment reports as well as real-time trade updates on when to buy and sell various investments.

And if you should decide that Private Wealth Advisory is not for you, you can ask for a full refund during the first 30 days and I’ll return every cent of your subscription cost.

The reports you’ve downloaded during your “trial” period are yours to keep, even if you choose to cancel.

To get started with you Private Wealth Advisory subscription today, download the Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports and start taking action to prepare for what’s coming…

Click Here Now!

Good Investing!

Graham Summers
Editor In Chief
Gains Pains & Capital

The Fed must literally be about to pee itself.

The $600 billion in QE 2 bought at best roughly three months’ worth of improved economic data. Granted, it was heavily massaged economic data (US economic data is now largely a work of fiction), but for simplicity’s sake, we’ll say that the Fed got roughly one month’s worth of improved economic data for every $200 billion it spent.

However, QE 2 ALSO blew up food and energy prices up: between 2010 and 2011 gas rose 33% while ground beef, cheese, and vegetables were all up in the double digits as well.

So the Fed needed things to cool down a bit. So they allowed QE 2 to end. Of course, Bernanke juiced the market one final time to the tune of $76 billion, probably hoping that the market would buy his bluff and believe that things might hold up without Fed juice.

But the market didn’t. Instead, the markets have begun to implode proving beyond any doubt that the Fed was the primary support behind the stock market rally.

So here we are today. The US economy has very clearly fallen off a cliff. The Fed already has a $2.8 trillion balance sheet (larger than the GDP of France, the UK or Brazil). Announcing QE 3 would mean creating an inflationary disaster. And NOT announcing QE 3 means a market collapse and very likely another 2008 scenario.

So it’s literally “pick your monetary poison.”

However, in the end, regardless of how we get there, QE 3 will come. The reason for this is that EVERY Fed move since the Financial Crisis began has been aimed at propping up the large Wall Street banks who continue to remain insolvent due to their TRILLIONS in derivative exposure.

When it comes between screwing the taxpayer vs. triggering a systemic implosion that will destroy the banking oligarchs, the Fed has taken option #1 EVERY TIME. They’ve already done it to the tune of $4 trillion (at the bare minimum). They’ll do it again.

Why?

Because letting the banks collapse means hitting “reset” on the entire financial system (at least temporarily). Wall Street as at minimum over $200 TRILLION in derivatives sitting on its balance sheets. And the Fed will do anything it can to try and contain this disaster. That includes kicking the US Dollar off a cliff and screwing US consumers.

Ultimately, all of these efforts will fail (see the Euro situation today). But this will only happen after the Fed has done any and every action it can to prop things up. This will include QE 3 and as many QE’s as the US Dollar will allow.

So, QE 3 is coming. We might even see QE 4 before the system collapses. But the system WILL collapse. And when it does, it will be a 2008 type Crisis on steroids.

The reason for this is that the Financial System is now even more leveraged than it was during the Tech Bubble. When the Crisis hits all the over-leveraged players (read: EVERYONE) will have to sell positions to meet margin/ redemption calls.

This will kick off a death spiral in the markets as every drop results in more and more selling from financial institutions. Add to this the collapse of the Euro, a China hard landing, and US debt default and you’ve got the makings of a global catastrophe: think what’s happening in Greece with now on top of a stock and bond market crash.

What will follow will be the equivalent of 2008 all over again, along with food shortages, civil unrest, outbreaks in crime, bank holidays, and the like. It will, in short, be like what’s going on in the Middle East today (though NATO won’t be bombing us).

Which is why if you haven’t already taken steps to prepare yourself and your portfolio for the coming disaster, you need to do so NOW.

I can show you how…

I’ve recently published three key reports titled Protect Your Family, Protect Your Savings, and Protect Your Portfolio all in all 40+ pages of material devoted to showing individual investors how to prepare these areas of their lives in great detail.

I’m talking about how to prepare for bank holidays, food shortages, stock Crashes, debt defaults, civil unrest and more.

When it comes to profiting from this kind of disaster, few people on the  planet have my ability to make Crises pay off.

To whit, my clients actually made money in 2008, having been warned a full three weeks in advance of the Crash to get out the market and go short.

I believe we could see another 2008  situation unfold in the near future, which is why I just unveiled six specific trades  to subscribers… all of which will pay off  HUGE returns as the current stock market collapse accelerates.

So we’re ready for whatever may come. And the worse things get… the more profitable our strategy will be.

If you’ve yet to take these steps yourself, it’s not too late… in fact, you’ve still got time to get your financial “house” in order to not only survive what’s coming… but potentially even make serious money from it.

All you need to do is take out a “trial” subscription to my Private Wealth Advisory newsletter. You’ll immediately be given access to all of the reports I detail above… and you’ll also be on my private client list to receive my bi-weekly investment reports as well as real-time trade updates on when to buy and sell various investments.

And if you should decide that Private Wealth Advisory is not for you, you can ask for a full refund during the first 30 days and I’ll return every cent of your subscription cost.

The reports you’ve downloaded during your “trial” period are yours to keep, even if you choose to cancel.

To get started with you Private Wealth Advisory subscription today, download the Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports and start taking action to prepare for what’s coming…

Click Here Now!

Good Investing!

Graham Summers
Editor In Chief
Gains Pains & Capital