Let the farce begin. The Fed meets today to discuss whether or not to begin shrinking its balance sheet. The financial media informs us that this is the single most important Fed meeting in years and that its coming announcement is a game-changer. Give me a break. The Fed will NEVER let its balance sheet …Read More »
Articles by Phoenix Capital Research
Back in January 2017, we predicted that this year would be a year of a $USD collapse. At that time it was obvious to us, plain as day, that the Trump administration would want a weak $USD in order to implement its economic policies. Since then, the $USD has collapsed against every major world currency: …Read More »
The $USD continues to drop like a brick, having taken out critical support in the near-term. This is just the beginning. It's only going to get worse from here. Here’s the $USD’s chart running back 40 years. I call this the “single most important chart in the world,” because how the $USD moves has a …Read More »
The market bubble has become so massive that even Wall Street is nervous. To be clear, investment banks do best when stocks are in a bull market. And they love bubbles because it means more M&A, IPOs, dead offerings, stock issuance and other deals from which they derive their revenues. So for Wall Street CEOs …Read More »
The next leg up for Gold is officially here. Gold has broken out of the mother of all triangle patterns established by the long-term bull market trendline established in 2006 and its seven-year descending line from the 2010 peak. Of course, things won’t be moving in a straight line from here. But the upside target …Read More »
Yesterday we talked about the US Dollar ($USD) dropping below critical support. By quick way of review, here’s the key chart. As you can see, the $USD staged a large bull market run in 2014 as the Fed wound down its QE program. The greenback was then range bound for three years until this month …Read More »
While everyone continues to focus on stocks, a much larger, far more important situation is brewing in the single most important asset class in the world. That situation involves the US Dollar ($USD). While CNBC and the financial media love to talk about stocks, the reality is that stocks are actually one of the smallest …Read More »
The Fed July FOMC minutes, that were released last week, were nothing short of extraordinary. However, to fully appreciate just what the Fed admitted, we first need a little background. From November 2016 until June 2017, the Fed was pushing a hawkish agenda. The running mantra at this time was that the Fed would raise …Read More »
The Fed confirmed yesterday that stocks are in a bubble. Lost amidst the usual Fed-speak about inflation and other items were the following nuggets. 1) “Equities” (read: stocks) were the primary reason the Fed discussed financial stability risks. 2) The Fed raised its assessment of financial stability from “notable” to “elevated.” 3) The Fed discussed …Read More »
The market should bounce this morning, but after that we’re heading down. The technical damage from last week was severe with the bull market trendline that has supported stocks since early November being violated on the S&P 500. Moreover, stocks finished down during August options expiration week in six of the last seven years. So …Read More »
Whoever is rigging the market is getting increasingly desperate. The daily VIX slams are getting more and more ridiculous. It’s getting to the point that the VIX is getting slammed 5%-6% every single day at 9:50AM just to pin the S&P 500 (they’re not even trying to get a gain anymore). Here’s the VIX. Here’s …Read More »
Over 99% of investors continue to live in delusion. That delusion is that stocks are NOT in a bubble. They are. In fact, it’s arguably about to become the biggest stock bubble in history. According to John Hussman, stocks have been more expensive based on median valuations only ONCE before in history. That was the …Read More »
Do you know Seth Klarman? Klarman is founder of Baupost Group and is widely considered to be one of the greatest value investors in history. In 30+ years from 1982 to 2015, he only had three losing years, and is believed to have averaged returns of 16%. Bear in mind, he did this while keeping …Read More »
Janet Yellen has confirmed that the ($USD) is going to collapse. I don’t mean a systemic, going to zero, collapse (though one day the $USD, like all fiat currencies will fail). I mean that the $USD is going to drop hard in the coming 18+ months. How hard? I believe we’ll see the $USD in …Read More »
Very few investors caught on to it, but a few weeks ago the Fed made its single largest announcement in eight years. First let me provide some context. For eight years now, the Fed has propped up the stock market. In terms of formal monetary policy the Fed has: · Kept interest rates at ZERO …Read More »
The credit cycle is turning for the worse. Delinquency rates are creeping up in the consumer loan and commercial/industrial loan space. This is a clear signal that both the consumer and the corporate sectors of the economy are beginning to run out of steam. In response to this, banks are pulling back on lending. If …Read More »
As we noted yesterday, the world’s Central Banks have begun sending signals that the price of money in the financial system (bond yields) is going to be rising. Why is this a big deal? Because globally the world has packed on $68 TRILLION in debt since 2007. And ALL of this was issued based on …Read More »
Global equity flows might have just peaked. Bull markets are driven by new capital: you need more money from more buyers to increase buying pressure so that stock prices rise. However, it looks as though globally investors are tapped out. After months of new capital pouring into the market, global equity fund inflows slowed dramatically …Read More »
The market has gone absolutely nowhere for 15 weeks now. That is not a typo, nor am I bearing overly negative. Since the end of February, when President Trump last tweeted that he had big plans for the economy, the S&P 500 is up a total of just 1.6% or roughly 39 points. And THIS …Read More »
We continue to see articles and comments in the financial media proclaiming that stocks are not in a bubble. The people claiming this are either delusional or intentionally lying. Most people would argue that Warren Buffett knows a thing or two about investing. He’s possibly the single most famous investor of all time and is …Read More »
Since 2008 the financial media has been proclaiming that the US was in a “recovery.” This argument was used to justify the insane monetary policy of the Federal Reserve, which maintained ZIRP for seven years and spent over $3 trillion in QE. Well, it turns out there was no recovery to speak of when it …Read More »
As we expected, the market is now turning in a big way. When markets peak and begin to break down, they never simply collapse. Instead they first break through support and then stage a bounce. The reason for this is due to investor psychology: the bulls don’t initially throw in the towel, but instead “buy …Read More »
Stocks need to go parabolic today or it’s game over for the bulls. While CNBC and other media outlets continue to buy into the narrative that we’re in some kind of economic utopia, the reality is that the market senses a truly MASSIVE move is about to come. The below formation is called a Rising …Read More »
The “smart money” is flashing a signal that the US economy and ultimately the financial system, are in serious trouble. CNBC and other media outlets like to focus on stocks because they tend to be more volatile and therefore more exciting. But BONDS are the “smart money” for the financial system. The Bond market is …Read More »
Our article regarding Sub-Prime 2.0 garnered a lot of attention.
After all, we’re talking about a $1.2 trillion credit bubble in auto-loans, with roughly 1 in 3 new loans going to sub-prime borrowers.
Today we’re building on that theme with some chart analysis.
One of the best means of wrapping your ahead around an industry is to examine the charts of its 3 biggest players.
Those charts represent the collective understanding of millions of investors looking at the same industry. As such it can paint a very clear picture, quickly, of what the investment world thinks of an industry and its prospects.
With that in mind, today we’re looking at the charts of the Big Three US Automakers.
General Motors (GM).
GM emerged from bankruptcy and went public again in 2010. And while things are not as bad as they were in 2011-2012, the company has basically been treading water since 2013. Even the Trump hype has faded here and we’re back in the doldrums.
Put simply, this chart says “no growth, and internal struggles continue.”
Fiat Chrysler (FCAU):
Here again the company disappeared for a while (this time when Fiat bought Chrysler, NOT through bankruptcy like General Motors). However, once again, we see a company that is gyrating in a large range, NOT growing or breaking to new highs. Again momentum is rolling over and we’re facing a LARGE drop.
Again, “zero growth, and big issues afoot.
Do you remember when GOP Senators and Representatives were portrayed as literal monsters for forcing the Government to shut down?
We were told back in 2013 that if GOP-lead Congress didn’t keep the Government open… we would face literal Armageddon.
A few headlines from that time period:
Republicans Shutdown the Government for Nothing (the Atlantic)
Like Dr. Frankenstein, the GOP is trapped in a burning windmill with a monster of their own making (Charleston City Paper)
Ted Cruz: the GOP’s Self-Made Monster (The Guardian)
And of course…
They actually did it. A group of Republicans in the House just forced a government shutdown over Obamacare instead of passing a real budget.
~tweeted by then-President Barack Obama
We mention all of the above because in one of the greatest ironies of politics… Democrat leadership (Nancy Pelosi and Charles Schumer) is now advocating a Government shutdown in order to stop funding for a wall on the Mexico-US border.
Yep, the same crowd that claimed a Government shutdown mean the end of the world and those who are would shut down the Government over budgetary differences are monsters… now wants to employ pursue that exact outcome in order to stop the US having a border wall.
We don't particularly care for either side in this argument. But the irony is absurd.
France holds the first round of its Presidential election this weekend.
The big worry for the markets is the fact that anti-Euro candidate Marin Le Pen could potentially win.
Now, the polls show Le Pen as having NO chance of becoming Prime Minister.
Of course, the polls also showed that BREXIT would not happen and Hillary Clinton had a 98% of becoming President.
We all know how those turned out.
“So what?” one might ask, “why would a Le Pen victory matter? Both BREXIT and Trump’s Presidential election ignited massive stock market rallies… why wouldn’t France leaving the Euro do the same?”
The big problem for EU members from is debt.
Yes, we all know that EU countries are saturated in debt… but the key issue here WHO owns this debt and WHAT it represents to them.
To citizens of a nation, sovereign debt represents payment of social entitlements in exchange for long-term debt servitude as a nation.
To politicians of a nation, sovereign debt represents a means of paying for welfare schemes promised on the campaign trail.
For banks… sovereign debt represents the senior-most collateral backstopping their massive derivatives portfolios.
The derivatives markets, the same markets that triggered the 2008 meltdown, were never properly dealt with.
Today, at the time of this writing, there are over $700 TRILLION worth of derivatives in the financial system.
A major shift is taking place in global stock markets.
Let me explain…
Below is a chart of the S&P 500 priced in Emerging Market Stocks.
When the black line falls Emerging Markets are outperforming US stocks. When the black line rises, US stocks are outperforming Emerging markets.
As you can see, from 1999 until roughly 2010, Emerging markets demolished stocks by a wide margin.
This trend then reversed in 2011, with the S&P 500 dramatically outperforming Emerging markets.
However, that trend now appears to be reversing. The chart has failed to break out to new highs and is now in danger of breaking its bull market trendline.
When this happens, we will once again be entering a period in which Emerging markets outperform US stocks.
Take note, that’s when the opportunity for larger opportunities outside the US will take flight.
We outline this and two other major investment themes in our Special Report detailing the impact President Trump’s policies will have on the markets (hint, Trump is a WEAK Dollar guy… and it’s going to create opportunities in unique asset classes).
It’s titled How to Profit From the Trump Trade and we are giving away just 1,000 copies for free.
Today there are a mere 19 left.
To pick up one of the remaining copies, swing by
While everyone continues to focus on Trump and his policies, a much larger issue looms.
That issue is the US debt ceiling.
The US Government hit its debt ceiling on March 16, 2017. The Government employed “extraordinary measures” to keep the Government open. At that time, Congress had a little over three weeks to deal with this issue.
Given how divided Congress has become, it’s no surprise this has gone nowhere. Congress left for its spring recess without fixing this.
Congress returns on April 21st and will have just a handful of sessions to resolve this issue before its deadline. (April 28 2017).
In order to resolve this issue, Congress will have to resolve the budget… which includes issues that are EXTREMELY contentious (the US/Mexico border wall for one).
Put simply… in order to avoid a Government shutdown and potential repeat of the 2013 Debt Ceiling Crisis, the same Congress that cannot even get an Obamacare Repeal off the ground (one of the most sought after pieces of legislation in over a decade)… is supposed to somehow work out a budget including VERY contentious issues… in a HANDFUL of sessions.
Good. Luck. With. That…… particularly at a time when it is clear certain groups in Congress are all too happy to blow up deals in order to sabotage the Trump administration’s agenda.
This is an absolute mess.
The S&P 500’s weekly MACD indicator has triggered a “sell signal.”
For those of you who like technical analysis, this indicator is formed by two interweaving lines.
The first line (usually black on the chart) is formed by subtracting the 26-week exponential moving average (EMA) from the 12-week EMA.
So if the 26-week EMA is 12 and 12- week EMA is 10, the black line would be at 2 for that particular day.
The second line (usually red on the chart) is formed by the 9- week exponential moving average.
The “signals” come when the two lines connect:
1.Anytime the black line breaks above the red line, it triggers a “buy” signal.
2.Anytime the black line breaks below the red line, it triggers a “sell” signal.
The market has triggered four such readings in the last two years. Two of them preceded sharp corrections of 9+% in the span of a week or so. A third resulted in a gradual 5% grind lower. The fourth just hit.
Where does this lead us?
A 4.7% decline would bring stocks to stub-2250 on the S&P 500. A more vicious and severe decline such as the ones that occurred in January ’15 and August ’16 would bring us to 2,125 on the S&P 500.