China is losing the trade war.

China is not going to be the next superpower. It never was. That was a lie fed to the public in order for voters to sign off on the US political class selling out the US for decades while the corporate class moved manufacturing/ industry offshore to boost profit margins.

The China “growth” story was in fact a “US selling itself out story.”

Remove the US from the equation and China would be in the same place as it was in the early ‘70s albeit with the same degree of economic expansion/development as most developing countries experienced over the same time period.

The key point in the above is that China is a derivative economy that has obtained its growth by stealing US IP and ripping off US products. Name a single major invention to come out of China? How about a single major technology that is a game changer?

You can’t. It’s not an organic economy.

What China IS good at is manufacturing a strong face to the world. But China’s economy/ financial system is rotten to its core, built on unregulated garbage loans/ financial products, and graft/ corruption. Whatever problems you might find in the US economy/ financial system, China is exponentially worse.

Bad debt? China hides its debt via structured products and unregulated loans. In reality China has a Debt to GDP ratio well over 300%. And that’s assuming those numbers are correct.

No one has a clue just what is going on in the black hole of the Chinese financial system. Remember when 80,000 tonnes of aluminum and 20,000 tonnes of copper of that was posted as collateral in China went missing in 2014? If an economy manages to lose tens of thousands of tonnes of metal, you better believe its even more careless with paper debts/ loans/ financial products.

What about corruption/ fraud? Time after time we’re told that the US political class is a bunch of crooks. Well, Chinese politicians make them look like amateurs. Between 1991–2011 it’s estimated that between 16,000–18,000 Chinese officials fled China taking 800 BILLION RMB (roughly $125 BILLION) with them.

Yes, Government officials stole $125 BILLION.

The list goes on and on.

So while China will play the strong face in dealing with the Trump administration on trade, the fact is that China has a LOT more to lose than the US does.

China is the largest buyer of US oil in the world.

China also needs food/ commodities from the US.

What does the US need from China?

Debt financing? The Fed owns more US debt than China does. The market could absorb China liquidating its Treasuries in a matter of weeks.

Low quality/ low cost goods? Americans already own too much stuff. Why do we need to go more into debt to buy more junk?

At the end of the day it’s a simple equation… what is more NECESSARY to an economy… food/ energy or cheap TVs/ discretionary junk?

So what does this is all mean?

China is going to buckle soon. If the Trump administration gives the Chinese leadership an “out” through which it can sign a deal without looking weak, China will sign the dotted line.

The markets know this, which is why, despite all the “world is ending/ trade wars/ deflation is coming” rhetoric, the $USD is well within the confines of long-term consolidation patterns.

Those big bad $USD breakouts were just bounces, occurring from massively oversold levels. The $USD hasn’t broken out of anything in the Big Picture.

By the way, given that both China and the US want a weak $USD… what are the odds the $USD spikes higher into a raging bull market?

The $USD is about to roll over in a massive way. When it does inflationary trades will EXPLODE higher.

We just published a Special Investment Report concerning a FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead

The report is titled Survive the Inflationary Storm

We are making just 99 copies available to the public.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

China is losing the trade war.

China is not going to be the next superpower. It never was. That was a lie fed to the public in order for voters to sign off on the US political class selling out the US for decades while the corporate class moved manufacturing/ industry offshore to boost profit margins.

The China “growth” story was in fact a “US selling itself out story.”

Remove the US from the equation and China would be in the same place as it was in the early ‘70s albeit with the same degree of economic expansion/development as most developing countries experienced over the same time period.

The key point in the above is that China is a derivative economy that has obtained its growth by stealing US IP and ripping off US products. Name a single major invention to come out of China? How about a single major technology that is a game changer?

You can’t. It’s not an organic economy.

What China IS good at is manufacturing a strong face to the world. But China’s economy/ financial system is rotten to its core, built on unregulated garbage loans/ financial products, and graft/ corruption. Whatever problems you might find in the US economy/ financial system, China is exponentially worse.

Bad debt? China hides its debt via structured products and unregulated loans. In reality China has a Debt to GDP ratio well over 300%. And that’s assuming those numbers are correct.

No one has a clue just what is going on in the black hole of the Chinese financial system. Remember when 80,000 tonnes of aluminum and 20,000 tonnes of copper of that was posted as collateral in China went missing in 2014? If an economy manages to lose tens of thousands of tonnes of metal, you better believe its even more careless with paper debts/ loans/ financial products.

What about corruption/ fraud? Time after time we’re told that the US political class is a bunch of crooks. Well, Chinese politicians make them look like amateurs. Between 1991–2011 it’s estimated that between 16,000–18,000 Chinese officials fled China taking 800 BILLION RMB (roughly $125 BILLION) with them.

Yes, Government officials stole $125 BILLION.

The list goes on and on.

So while China will play the strong face in dealing with the Trump administration on trade, the fact is that China has a LOT more to lose than the US does.

China is the largest buyer of US oil in the world.

China also needs food/ commodities from the US.

What does the US need from China?

Debt financing? The Fed owns more US debt than China does. The market could absorb China liquidating its Treasuries in a matter of weeks.

Low quality/ low cost goods? Americans already own too much stuff. Why do we need to go more into debt to buy more junk?

At the end of the day it’s a simple equation… what is more NECESSARY to an economy… food/ energy or cheap TVs/ discretionary junk?

So what does this is all mean?

China is going to buckle soon. If the Trump administration gives the Chinese leadership an “out” through which it can sign a deal without looking weak, China will sign the dotted line.

The markets know this, which is why, despite all the “world is ending/ trade wars/ deflation is coming” rhetoric, the $USD is well within the confines of long-term consolidation patterns.

Those big bad $USD breakouts were just bounces, occurring from massively oversold levels. The $USD hasn’t broken out of anything in the Big Picture.

By the way, given that both China and the US want a weak $USD… what are the odds the $USD spikes higher into a raging bull market?

The $USD is about to roll over in a massive way. When it does inflationary trades will EXPLODE higher.

We just published a Special Investment Report concerning a FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead

The report is titled Survive the Inflationary Storm

We are making just 99 copies available to the public.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Why the $USD is about to collapse.

The Fed left rates unchanged last week, upgrading its view on the economy from “stable” to “strong.” It also reiterated its plans to raise rates two more times in 2018.

Put simply, this was a notably hawkish Fed meeting. Which is why it’s striking that the $USD didn’t do much of anything in response. The greenback was effectively flat that day.

Truth be told, the $USD hasn’t done much of anything since the Fed June meeting. Again, this is striking because the Fed is currently engaged in the single most hawkish monetary policy in history with 3-4 intended rate hikes per year and a QT program of $30 billion per month.

And yet, the $USD has traded sideways since mid-June.

Let’s be honest here, if the $USD cannot mount a major bull rally when the Fed is this hawkish (and other Central Banks are maintaining NIRP and QE programs), then the $USD is in SERIOUS trouble.

The picture worsens for the $USD when you start including currency pairs.

The Australian Dollar: $USD pair, the Canada Dollar: $USD pair, and the New Zealand Dollar: $USD pair are all bottoming right now. This is a MAJOR signal that the $USD is turn sharply down.

So, we’ve got the $USD failing to breakout to the upside despite the Fed running the most aggressively hawkish monetary policy in history… as well as the three most significant inflationary currency pairs signaling pronounced $USD weakness is about to hit.

That’s a heck of a “tell” from the markets. And it’s “telling” us that we’re about to see a major inflationary move.

We just published a Special Investment Report concerning a FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead

The report is titled Survive the Inflationary Storm

We are making just 99 copies available to the public.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Traders will shoot for new all-time highs for the S&P 500 today or tomorrow.

But first, a quick review of our calls for this year.

Back in mid-march, when everyone was getting bullish about stocks, we warned that the S&P 500 would revisit the lows.

Then, in late March/ early April that we believed the stock market would make a run to new all-time highs this summer. Thus far the Russell 2000 and the NASDAQ have already accomplished this. The S&P 500 is now less than 30 points from doing the same.

However, since June the risk/reward profile flipped for us, and we started warning of a potentially sharp move lower in stocks.

The issue for us pertains to Fed policy. The Fed is far too aggressive right now, particularly when you compare what it’s doing to what the ECB and BoJ are doing. Companies are already warning of the damage the $USD’s strength is having on future results. And as we know, stocks are a discounting mechanism.

Which is why we remain concerned of a potentially aggressive sell-off in US stocks. We are NOT calling for a crash, but the odds heavily favor a sharp move lower, rather than an explosive rally at this point.

So while new ATHs are coming, the real opportunity lies on the other side.

Those who are allocating capital based on this… could stand to make a FORTUNE as it unfolds.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what’s coming down the pike when the Everything Bubble bursts.

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

Do NOT delay… there are fewer than 200 slots remaining.

https://phoenixcapitalmarketing.com/TEB.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

Traders will shoot for new all-time highs for the S&P 500 today or tomorrow.

But first, a quick review of our calls for this year.

Back in mid-march, when everyone was getting bullish about stocks, we warned that the S&P 500 would revisit the lows.

Then, in late March/ early April that we believed the stock market would make a run to new all-time highs this summer. Thus far the Russell 2000 and the NASDAQ have already accomplished this. The S&P 500 is now less than 30 points from doing the same.

However, since June the risk/reward profile flipped for us, and we started warning of a potentially sharp move lower in stocks.

The issue for us pertains to Fed policy. The Fed is far too aggressive right now, particularly when you compare what it’s doing to what the ECB and BoJ are doing. Companies are already warning of the damage the $USD’s strength is having on future results. And as we know, stocks are a discounting mechanism.

Which is why we remain concerned of a potentially aggressive sell-off in US stocks. We are NOT calling for a crash, but the odds heavily favor a sharp move lower, rather than an explosive rally at this point.

So while new ATHs are coming, the real opportunity lies on the other side.

Those who are allocating capital based on this… could stand to make a FORTUNE as it unfolds.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what’s coming down the pike when the Everything Bubble bursts.

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

Do NOT delay… there are fewer than 200 slots remaining.

https://phoenixcapitalmarketing.com/TEB.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

Warning… the following involves politics. We are neither pro- nor anti-the Trump administration, unfortunately we have to include political issues in our framework for understanding the markets.

For the last few months, it’s been an ongoing question… why is the Fed THIS hawkish at a time when the BoJ and ECB are engaged in NIRP as well as QE programs.

Don’t get me wrong, I believe the Fed should be hawkish… but eight planned rate hikes while engaging in a QT program that will reduce the Fed balance sheet by an amount equal to Sweden’s GDP every year is beyond excessive.

Moreover, the Fed’s policies are pushing the $USD sharply higher… which is causing a meltdown in the Emerging Markets. As the below chart shows, every push higher in the $USD has pushed Emerging Markets and China down.

Then, over the weekend, President Trump tweeted the following:

Tariffs are working far better than anyone ever anticipated. China market has dropped 27% in last 4months, and they are talking to us. Our market is stronger than ever, and will go up dramatically when these horrible Trade Deals are successfully renegotiated. America First…

Turn off any personal political bias for a moment… the President of the United States just outlined a specific drop (27%)in China’s stock market over a specific time frame (four months). And he did so within the context of his administration’s trade negotiations.

We know that the Trump administration views the stock market as a “report card.” And now we know that they apply that same metric to foreign markets.

Let’s review this here again…

1)   The Fed, which is run by Jerome Powell, who President Trump appointed in January, is currently engaged in the most hawkish monetary policy in Fed history.

2)   This hawkishness is pushing the $USD higher and hurting Emerging markets, particularly China’s stock market, badly.

3)   This is taking place at a time when the Trump administration is putting pressure on China to renegotiate trade issues.

4)   The President himself just publicly noted that China’s stock market is dropping hard while the US’s continues to fare well. He linked this to his administration’s trade negotiations with China.

This raises the question… has the Trump administration weaponized the Fed?

Put another way, did President Trump tell the Powell Fed to be as hawkish as possible as leverage against China during the trade disputes?

Take a look at the below chart with this question in your mind.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what’s coming down the pike when the Everything Bubble bursts.

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

https://phoenixcapitalmarketing.com/TEB.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

Warning… the following involves politics. We are neither pro- nor anti-the Trump administration, unfortunately we have to include political issues in our framework for understanding the markets.

For the last few months, it’s been an ongoing question… why is the Fed THIS hawkish at a time when the BoJ and ECB are engaged in NIRP as well as QE programs.

Don’t get me wrong, I believe the Fed should be hawkish… but eight planned rate hikes while engaging in a QT program that will reduce the Fed balance sheet by an amount equal to Sweden’s GDP every year is beyond excessive.

Moreover, the Fed’s policies are pushing the $USD sharply higher… which is causing a meltdown in the Emerging Markets. As the below chart shows, every push higher in the $USD has pushed Emerging Markets and China down.

Then, over the weekend, President Trump tweeted the following:

Tariffs are working far better than anyone ever anticipated. China market has dropped 27% in last 4months, and they are talking to us. Our market is stronger than ever, and will go up dramatically when these horrible Trade Deals are successfully renegotiated. America First…

Turn off any personal political bias for a moment… the President of the United States just outlined a specific drop (27%)in China’s stock market over a specific time frame (four months). And he did so within the context of his administration’s trade negotiations.

We know that the Trump administration views the stock market as a “report card.” And now we know that they apply that same metric to foreign markets.

Let’s review this here again…

1)   The Fed, which is run by Jerome Powell, who President Trump appointed in January, is currently engaged in the most hawkish monetary policy in Fed history.

2)   This hawkishness is pushing the $USD higher and hurting Emerging markets, particularly China’s stock market, badly.

3)   This is taking place at a time when the Trump administration is putting pressure on China to renegotiate trade issues.

4)   The President himself just publicly noted that China’s stock market is dropping hard while the US’s continues to fare well. He linked this to his administration’s trade negotiations with China.

This raises the question… has the Trump administration weaponized the Fed?

Put another way, did President Trump tell the Powell Fed to be as hawkish as possible as leverage against China during the trade disputes?

Take a look at the below chart with this question in your mind.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what’s coming down the pike when the Everything Bubble bursts.

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

https://phoenixcapitalmarketing.com/TEB.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research