Phoenix Capital Research's blog

This isn’t just any trendline. This is THE trendline. Take it out and the 10 year will likely be yielding 5-6% in no time… which by the way is where it was for most of the ‘90s and very early ‘00s.

Asia has become the most important issue for the markets today. The Central Bankers’ dream of endless QE has become a nightmare for Japan while China’s “growth miracle” is rapidly falling to pieces.

Traders and investors do not respond to sea changes instantly. The smart ones take note and begin adjusting their portfolios and hedging their bets. This doesn’t result in massive market moves as these investors are sophisticated enough to move out of old positions and into new ones without drawing too much attention

The “QE generates economic growth” story is officially dead. This will have severe repercussions throughout the financial system.

 Could it be coincidence that the worst Crisis in years suddenly went away right as the women with her finger on the “bailout” button needed to convince German voters that she’s doing a great job?

There is literally no evidence that printing money creates jobs. Look at Japan, they have and continue to maintain QE efforts equal to 40+% of their GDP and unemployment hasn’t budged in 20 years. The UK has engaged in QE equal to over 20% of GDP with no success.

However, the Fed is terrified of losing control of the system, so it wants to continue doing anything no matter how futile in order to maintain the appearance of confidence. God forbid anyone figures out the emperor has no clothes…

The “smart” money is fleeing the market en masse (institutions, wealthy private investors, etc.).

So, somehow the US economy is roaring back in a big way? Hard to see. Over 70% of the economy is consumer spending. And spending is driven by incomes. And incomes are… falling.

Traders shot for and managed to hit 1,700 on the S&P 500. At this point, there is no real reason for this other than trader games (start of the month buying).

The bigger story is Japan, where the Central Bank dream of doing “enough” is crashing into the wall. Japan has announced a $1.4 trillion QE effort, an amount equal to 21% of its GDP. To put this into perspective, this is the single largest QE in history, the kind of QE Bernanke and his pals could only dream of announcing.

So the second and third largest economies in the world are in collapse with stock market crashes. What are the odds the world will pull through this?

At this point the Central Bank has one of two options: 1)   Monetize everything OR 2)   Let the bond market fall to where it deems rates are appropriate given the new default risk.

Anyone who believes that housing is back in a big way needs to take a look at homebuilder stocks.