By Graham Summers, MBA

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

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

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

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

Debit. Card. Transactions.

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

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

1)    Inflation is far too high.

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

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

So… no sign of a pivot there.

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

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

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

So enjoy the relief rally… but don’t plan on it lasting for long. Because the Great Crisis… the one to which 2008 was a warm-up, has finally arrived. 

In 2008 entire banks went bust. In 2022, entire countries will do so.

And it is inflation that triggered it!

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We made 100 copies available to the public.

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

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

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

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

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

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

Debit. Card. Transactions.

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

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

1)    Inflation is far too high.

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

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

So… no sign of a pivot there.

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

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

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

So enjoy the relief rally… but don’t plan on it lasting for long. Because the Great Crisis… the one to which 2008 was a warm-up, has finally arrived. 

In 2008 entire banks went bust. In 2022, entire countries will do so.

And it is inflation that triggered it!

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We made 100 copies available to the public.

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

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

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

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

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

And the British Pound nosedived.

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

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

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

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

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

And the British pound rallied.

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

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

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

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

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

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

And it is inflation that triggered it!

On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We made 100 copies available to the public.

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

To pick up yours, swing by:

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards,

By Graham Summers, MBA

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

By quick way of review:

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

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

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

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

Why?

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

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

All of this is HIGHLY inflation.

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

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

On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.

We are making just 100 copies available to the public.

To pick up yours, swing by:https://phoenixcapitalmarketing.com/inflationstorm.html

By Graham Summers, MBA

The Fed’s worst nightmare has arrived.

That nightmare?

Sticky inflation in the form of a wage spiral.

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

Stage 1: Price increases in raw materials

Stage 2: Price increases in factory gate prices

Stage 3: Price increases in retail prices/ consumer prices

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

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

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

And the U.S. economy just entered it.

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

That’s the good news.

The bad news?

Annual pay increased by 7.6%.

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

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

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

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

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

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

By quick way of review…

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

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

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

Why does all of this matter?

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

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

Then came the Fed’s monster screw up.

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

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

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

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

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

We made 100 copies available to the general public.

As I write this there are 18 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html

By Graham Summers, MBA

Are you ready for the next crisis?

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

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

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

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

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

· May 5, 2022: Fed raises rates 0.5%.

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

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

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

But the Fed just screwed this up BIG TIME.

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

We made 100 copies available to the general public.

As I write this there are 27 left.

To pick up your FREE copy, swing by:

https://phoenixcapitalmarketing.com/stockmarketcrash.html