Phoenix Capital Research's blog
So the debt ceiling “we’re going to run out of money and the world ends” talk is not accurate. What is accurate is that playing games with your debt limits impacts other investors’ psychologies. And THAT is the real issue here.
Remember, every single Treasury and T-bill out there is utilized as collateral for millions of Dollars worth of trades. So if the big financial institutions begin to refuse to accept some US debt as collateral based on the perceived risk of a deb ceiling debacle there could quickly be capital call in the market similar to what happened when Lehman failed.
All told, there have been a total of 147 crises since 1970 in the world. September accounted for 27 of them, the single largest month.
It’s often argued that they don’t a bell at the top. I would argue that we numerous bells ringing in the financial markets today.
Finally the mainstream media is beginning to get the problems with the Federal Reserve.
In the past, the Fed has been the fuel for bubbles. This time around, the Fed IS the bubble itself, with its balance sheet expansion driving ALL assets higher.
In plain terms, the Fed has proven beyond even a hint of a doubt that it is simply flying by the seat of its pants, with no clear game plan or eventual outcome in mind. The Fed is simply going to keep doing what it’s done for five years until something breaks.
Thus, we see the “smart money” exiting the markets. We also see fewer and fewer companies participating in the market rally. Those who run these companies are more pessimistic than at any point in the last five years dating back to the nadir of the 2009 collapse. And finally we have investors as a whole displaying the most complacency about the market in history.
The markets seem to sense that all of this. In the US we’re putting in what looks like a lower high. The market appears to be forming a Head and Shoulders pattern.
This shows us point blank that the economy has not recovered and that all talk of recovery is based on either phony data or outright fraud.
The facts are now becoming abundantly clear, that the forecast we’ve maintained for well over two years has been validated: the US is in a DE-pression and both Washington and the Federal Reserve have wasted trillions of Dollars.
The stock market is on the line for the whole QE forever rally.
If you were a totally bankrupt European Government relying on the promise of additional funds from Germany to stay in power and your options were A) start cranking out better data now with the promise of future bailouts from Germany or B) having to deal with a German Chancellor who wants out of the Euro… which would you choose?
The market is rallying today on August performance gaming. The talking heads will claim this move has something to do with fundamentals, but the reality is that the move up yesterday and today consists of fund managers doing whatever they can to end this month with their holdings as high as possible. Nothing else.
If you remove this sector, then earnings for the S&P 500 in the second quarter so far are DOWN 2.9%