Phoenix Capital Research's blog

The global Central Banks are relying increasing on verbal intervention. The reasoning here is very simple: actual monetary policy is proving to have marginal effects. In the US, every new wave of QE has had less and less impact on the stocks.

The reason for the economic gimmicking pertains the political perspective of China’s economic data. As a communist regime, China’s government has one focus and one focus only. It’s not economic growth for growth’s sake, nor is it improving the quality of life for China’s population...

Considering that Europe’s problems took years to unfold, despite the clear evidence that its banking system was virtually insolvent, the fact that things appear calm in Europe today doesn’t really say much about the true state of affairs over there.

Warren Buffett once noted, Gold doesn’t do anything “but look at you.”  However, the fact of the matter is that Gold has dramatically outperformed the stock market for the better part of 40 years.

As we noted earlier this week, the Fed is growing increasingly concerned of a bubble forming in the financial markets. Previously we noted that Janet Yellen was issued warnings regarding this.

The entire capital market structure has become mispriced.

As the cost of living increases around the globe, wage protests and strikes have become commonplace, particularly in the emerging market space:

Yellen’s decision to continue tapering QE indicates that she is aware of the fact the markets are getting out of control again or are approaching a bubble. This is further confirmed this by her decision to drop the 6.5% unemployment threshold as well as her suggestion that interest rate hikes could come as soon as six months after QE ends this coming December.

This is the multi trillion-dollar question. 

Why hide inflation? Well for one thing, understating inflation allows you to overstate GDP growth.

Since 2007, the world’s Central Banks have collectively put more than $10 trillion into the financial system since 2008. To put that number into perspective, it’s equal to roughly 15% of global GDP.

Nearly 40% of China lives off of $2 a day. Your average college graduate in China makes just $2,500 per year. In an economy such as this, a rise in prices in costs of living can be devastating for the population.

We have an economy that is weaker than the headline numbers claim with inflation that is higher than the headline numbers claim.

A critical element for investors to consider is that the Fed is not forward thinking when it comes to monetary policy. Indeed, if we reflect on the last 15 years, we see that the Fed has been well behind the curve on everything.

Inflation has weakened the yen by 6.8% in the past 12 months… and the cost of living in Japan is now at a five year high.