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by Phoenix Capital Research
Just what is the Fed so scared of? Today, the Fed’s favorite reporter, Jon Hilsenrath at the Wall Street Journal published an article completely refuting his own work from just two weeks ago. If you’ll recall, two weeks ago, Hilsenrath wrote that the Fed was planning to taper its QE purchases before the end of the year. Today, Hilsenrath wrote that when the Fed does taper its buying it won’t be “predictable.” [...] by Phoenix Capital Research Two big events have occurred/ are occurring.
Charles Evans who is one of the biggest pushers for QE, stated that the Fed has “the appropriate monetary policy in place” and that the economy is “improving quite a lot.”
Regarding #1, Evans has been one of the biggest pushers for more QE. Throughout 2011 and 2012, every time he appeared on [...] by Phoenix Capital Research
Japan has fueled much of this latest rally in stocks, driving the marketing first with promises of money printing by the Prime Minister in November 2012, and then a massive $1.2 trillion QE program announced by the Bank of Japan last month. The result of this has been a collapse in the Yen and a 70%+ rally in the Nikkei in the last six months. This has been the fundamental [...] by Phoenix Capital Research
If you want to get a sense of what’s happening in the world, your best bet is to ignore Government data and focus on corporate revenues. Why revenues? Because earnings can be massaged any number of ways (depreciation methods, laying off staff to cut costs, depletion of loan loss reserves for banks, etc.). But you cannot fake actual money coming in the door. With that in mind, I want [...] by Phoenix Capital Research
The stock market is completely and totally out of control.
Eight of the last ten closes have been new record highs. It’s now been six months since we had a 5% correction. Traders got us to 1,650 on the S&P 500.
At this point, no long term investor in their right mind should be buying. This is especially true given that the S&P 500 is now not only totally disconnected [...] by Phoenix Capital Research
The markets are rallying because today is Tuesday. Stocks have rallied every Tuesday for the last 17 weeks and traders are now conditioned to play for this move. It’s also a POMO day (meaning the Fed is pumping the markets), which adds fuel to the fire for a stock rally.
The market is beyond overstretched. We have not had a 5% correction in six months. Stocks have gone almost [...] by Phoenix Capital Research
After the market’s close on Friday, Jon Hilsenrath at theWall Street Journal released an article implying that the Fed might remove or reduce its QE programs before the year end. The reason this matters is because Hilsenrath is thought to be an unofficial mouthpiece for the Fed. Time and again he’s released articles hinting at the Fed’s future policies in advance. And many believe senior Fed officials such as Bernanke [...] by Phoenix Capital Research
Having pumped the system with liquidity non-stop since the Crash of 2008, the Fed now realizes it’s in big trouble and needs to manage down expectations of further stimulus.
As we noted earlier this year, the Fed, while attempting to appear committed to endless money printing via its QE 3 and QE 4 programs, was in fact decidedly split on whether to commit to more as well as the [...] by Phoenix Capital Research
Japan should serve as a lesson to central planners around the world. Japan’s stock market/ real estate bubble burst in the early ‘90s. Since that time Japan has launched NINE QE efforts equal to roughly 25% of its GDP. And GDP growth has worsened despite these efforts from 2% to 1%. Ditto for employment. Japan elected a new Prime Minister Shinzo Abe in September 2012. Since that time, his [...] by Phoenix Capital Research
Stocks are officially in a blow-off top. This is the culmination of Bernanke’s life’s work. In his mind he has succeeded in saving capitalism by spending trillions of Dollars pushing stocks higher.
It doesn’t matter that the US hasn’t experienced 3% GDP growth a SINGLE year since he took the Fed. It doesn’t matter that the employment ratio is at levels last seen back in the early ‘80s. It [...] by Phoenix Capital Research
The market is beyond overstretched at this point on a short-term, intermediate term, and long-term basis. The sheer number of warning signals is staggering. The blow off top out of the rising wedge pattern we noted before is rolling over indicating this is likely a false breakout: The Russell 2000 is lagging well behind the S&P 500. Small caps, in general, should lead a rally if it’s going to [...] by Phoenix Capital Research
The media is jumping for joy over last week’s US jobs numbers. But beneath the veneer of headline numbers lies a truly horrible economic reality. Let’s have a look at the two key economies for the world: China and the US. For starters, China’s recent economic data, as massaged as it is to the upside, is downright awful. China’s PMI numbers were the worst in two years. Staffing levels [...] by Phoenix Capital Research
The Fed meets today and tomorrow. The ECB meets on Thursday. Those will be the defining market forces for the next three trading sessions. There is little if any point in trying to trade this week (at least until Thursday). The Fed is notorious for leaking info to the well-connected. The most recent “accidental” sending of a report a day early is just the latest example. In simple terms, the market [...] by Phoenix Capital Research
The markets are holding up based on hope for more stimulus from the Fed and ECB this week (Fed FOMC is Tuesday and Wednesday, the ECB meeting is on Thursday). This is a very dangerous environment. We are entering the seasonal period in which stocks typically do poorly (May-November). Earnings guidance is falling. And even the massaged GDP number for 1Q13 was lower than expected. In simple terms, we [...] by Phoenix Capital Research
For the last four years, the financial world has traded largely based on hope of more intervention from Central Banks. That was and is the single driving factor of the markets. Good news was good news (it’s a recovery!) but bad news was even better (the Fed will have to print more money!) as far as stocks were concerned. However, against this backdrop several issues began to develop. The [...] by Phoenix Capital Research
Since 2011, the Fed and other global Central Banks have injected over $2 trillion into the financial system. They’ve also announced plans to continue pumping money ad infinitum. And yet for the period from 2011 until two weeks ago Gold, the inflation hedge of choice for investors, hasn’t done much of anything. Why is this? Part of it has to do with simple sentiment. Gold was overextended in 2011, stretched [...] by Phoenix Capital Research
The markets rallied hard yesterday, thanks to promises of more from Europe. However, the global economy is once again contracting with the bad data coming out of both China and Germany: two of the biggest exporters in the world. With that in mind, the S&P 500 looks as though its initial jump to the upside from its rising wedge pattern could have been a false breakout: a move [...] by Phoenix Capital Research
Europe is leading the world higher today on two items: 1) EU President Barroso stating that there are limits to austerity. 2) Spain’s Prime Minister Rajoy agreeing with Angela Merkel that nations must cede sovereignty if Europe is to last. The first of these issues is just political grandstanding. Europe’s problems are not related to whether or not EU politicians pursue austerity or growth policies; they are related to EU [...] by Phoenix Capital Research
Having pumped the system with liquidity non-stop since the Crash of 2008, the Fed now realizes it’s in big trouble and needs to manage down expectations of further stimulus. As we noted earlier this year, the Fed, while attempting to appear committed to endless money printing via its QE 3 and QE 4 programs, was in fact decidedly split on whether to commit to more as well as [...] by Phoenix Capital Research If you happened to simply glance over the headlines in the financial media over the last few months, you’d think the European Crisis was over. In November, no less than France’s Prime Minister, Spain’s Prime Minister, and even Germany’s Finance Minister suggested that the worst is over for the Euro Crisis or that the Crisis as a whole was over completely. Unfortunately for them, the markets don’t seem to [...] by Phoenix Capital Research
More signs of trouble. We’ve been told countless times that Europe was “fixed.” The problem with this is that the market is beginning to realize this is not true. Much of the European recovery counts on Germany. The ECB owns the printing presses… but without Germany’s support, the Euro is done for. However Germans are only going to be supportive of the Euro up to a point. That point is [...] by Phoenix Capital Research
The markets moved higher yesterday because frankly Tuesday is the day for upside moves: thus far in 2013, we’ve had 13 straight Tuesday gains. This, combined with the very short-term oversold basis of several markets, mainly Gold and commodities, gave the “risk on” trade a bump.
From a technical perspective, the S&P 500 is in danger of breaking several critical trendlines:
The rising wedge pattern is a consolidation pattern [...] by Phoenix Capital Research
First off I want to say that all of us here at Phoenix Capital Research are sending our prayers to the victims of the Boston Terror Attacks. We sincerely hope none of you, our readers, or your loved ones were injured or harmed by these events. The markets today are snapping back from yesterday’s sharp drop. However, in the bigger picture we believe that Ben Bernanke must be [...] by Phoenix Capital Research Good Morning Investors
Gold is crashing this morning, falling over $90 to $1413 per ounce.
This move is looking to be largely based on institutional liquidation in Asia where Japanese bonds are being sold.
The Bank of Japan announced a massive $1.2 trillion QE effort on April 6. The move was lunacy given that Japan has already announced QE equal to over 20% of its GDP in the preceding years and [...] by Phoenix Capital Research
More and more analysts are catching on to the fact that Government measures of inflation are phony. The US Government tells us that inflation, as measured by the CPI, is 0.8%. This is largely a work of fiction however as the actual cost of goods purchased by consumers has increased. The US Government hides this fact by changing the CPI regularly to underplay the threat of inflation. One [...] by Phoenix Capital Research
Anyone who wants to get to the truth behind the inflationary threats to their wealth should ignore everything the Central Banks say about inflation and look instead at their actions. Worldwide gold demand in 2012 was another record high of $236.4 billion in the World Gold Council’s latest report. This was up 6% in value terms in the fourth quarter to $66.2 billion, the highest fourth quarter on [...] by Phoenix Capital Research
What happened in Cyprus isn’t a “one off” event.
The financial media and elite have been trying to convince the world that Cyprus was a unique situation… a “one time” deal… and that our money is safe in the banks.
This is untrue.
Spain, Canada, and New Zealand have already proposed similar measures through which individuals’ SAVINGS accounts would be used to prop up the banks during times of Crisis.
It’s [...] by Phoenix Capital Research
Since the Financial Crisis erupted in 2007, the US Federal Reserve has engaged in dozens of interventions/ bailouts to try and prop up the financial system. Now, I realize that everyone knows the Fed is “printing money.” However, when you look at the list of bailouts/ money pumps it’s absolutely staggering how much money the Fed has thrown around.
Here’s a recap of some of the larger Fed [...] |
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Stocks Are the Most Overbought in Four Years
by Phoenix Capital Research
Stocks are now beyond overbought. The market ramped on Tuesday (the 17th straight Tuesday rally by the way) because traders are now playing for Tuesday rallies.
The financial media is looking for any and all reasons to justify the move, but the fact is that the market had rallied for 16 straight Tuesdays before… so why not a 17th time?
Behind this backdrop things only worsen. The divergence between stocks and the [...]