Phoenix Capital Research's blog

I have a business I would like to sell you. Let’s run over the numbers first. First and foremost, I have to be honest, this business has not implemented a budget in five years. I know that seems like an insane way to run a business, but I can assure you that management is comprised of highly intelligent, ethical people.

Bernanke couldn’t stomach this kind of deleveraging. The reason is simple: those who have accumulated great wealth as a result of this system are highly incentivized to keep it going. Bernanke doesn’t talk to you or me about these things. He calls Goldman Sachs or JP Morgan. 

By keeping interest rates near zero, the Fed has been hoping to push investors into the stock market. The hope here was that as stock prices rose, investors would feel wealthier (the “wealth effect”) and would be more inclined to start spending more, thereby jump-starting the economy. This has not been the case. Instead the entire capital market structure has become mispriced.

Earnings can be massaged in countless ways to beat estimates. You can release loan loss reserves, massage depreciation numbers, implement one time charges or writedowns, reprice bonds, etc.

The fact is that the markets are significantly overpriced. And based on over 100 years worth of data, this kind of overvaluation usually precedes a market peak.

These men are masters of the capital markets. They are voting with their feet and pulling their capital out of them. 

The macro picture for the world is dangerous. And high quality companies will not be spared the carnage if a market onslaught begins (which is looking increasingly likely).

The only problem is that this entire “crisis” was a lie. The US actually hit its debt ceiling back in May 2013, a full five months ago.At that time neither the Treasury Department, nor the White House, nor Congress talked about this.

According to King, since losing its peg, Gold has risen 37.43 fold since 1967. That is more than twice the performance of the Dow over the same time period (18.45 fold). So much for the claim that stocks are a better investment than Gold long-term.

Yellen is yet another academic with no banking or business experience what-so-ever. This makes three in a row (Greenspan, Bernanke, and now Yellen). The results speak for themselves.

I continue to read pieces in the media claiming the QE should not be stopped because it will hurt the recovery. I don’t understand this claim because there is literally no historical evidence that QE creates jobs in the first place.

No one and I mean NO ONE would place an order like this. It simply doesn’t happen. Anyone who is trying to unload a position of this size would do it in chunks over a period of time in order to not push the price sharply lower.

Remember how we were told time and again that Europe was saved? Remember how repeatedly we were told that the European Central Bank (ECB) would do “whatever it takes” to fix things? Turns out all of that was a total load of BS.

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.