Phoenix Capital Research's blog
Graham Summers’ Weekly Market Forecast (line in the sand edition)
Submitted by Phoenix Capital Research on 09/06/2010 21:04 -0500Last week I forecast that stocks would either re-test 1,040 and breakdown or rally to 1,100. Stocks once again opted to accomplish both of my forecasts falling to test 1,040 on Tuesday before starting the mother of all ramp jobs Tuesday afternoon into Friday.
All in all, stocks rallied over 5% in the span of 72 hours. The move started off as the most obvious manipulation in history, with stocks exploding higher in the final 15 minutes of trading in August to insure that the Dow closed the month above 10,000, which appears to be the proverbial “line in the sand” that the PPT has drawn (more on this in a moment):
Does It Really Matter If We Get Another QE?
Submitted by Phoenix Capital Research on 09/02/2010 15:21 -0500Honestly, I cannot predict when Bernanke will unveil QE 2. All I can say is that it largely does not matter in the grand scheme of things. Yes, it will cause some short-term volatility. But ultimately QE 2 will simply be a catalyst that speeds up the processes that are already underway. Those processes are:
1) Systemic collapse
2) Destruction of fiat money
3) Massive loss of wealth
Give Me Capitalism Without the Cronies
Submitted by Phoenix Capital Research on 08/31/2010 14:17 -0500In today’s Crony capitalist economy, the political system is bought outright by the large multinational corporations via various lobbying efforts/ corporate donations. These multinationals then receive kickbacks in the form of deregulatory policies and other tax loopholes, which permit them to further expand their power and influence.
If Lehman Had “No Idea,” Who Else is Clueless?
Submitted by Phoenix Capital Research on 08/30/2010 21:21 -0500In today’s world of trillion dollar bailouts, $2-4 billion doesn’t sound like much, so let’s give some perspective here… in its golden days, Lehman Brother’s market cap was roughly $47 billion. So you’re talking about bets equal to an amount between five and 10% of its market cap. Not exactly chump change.
And Lehman had no idea where it was or how much it really owed.
Mind you, we’re only addressing Lehman’s options and futures derivatives, we’re completely ignoring its mortgage backed securities, collateralized debt obligations (CDOs), and other Level 3 assets. Options and futures are literally the “tip of the iceberg,” the most visible portion of the behemoth that was Lehman’s off balance sheet derivative issues. After all, these are regulated securities unlike most derivatives.
Graham Summers’ Weekly Market Forecast
Submitted by Phoenix Capital Research on 08/30/2010 07:33 -0500Last week I mentioned that barring any additional intervention (monetary or otherwise) stocks would roll over. That is precisely what happened with the S&P 500 falling to test MAJOR support around 1,040 twice.
We looked about read to fall off a cliff until Friday when Fed Chairman Ben Bernanke stated in his speech that the Fed stands ready to do whatever is needed to fight the financial crisis. It wasn’t a direct monetary intervention, but in these desperate times verbal intervention is good enough, and traders gunned the S&P 500 higher back into the gap created by the Monday/Tuesday sell-off.
Welcome to Earth, Mr. Recovery
Submitted by Phoenix Capital Research on 08/26/2010 13:40 -0500Now, about that “double dip.”
By now, even the most bullish commentator has begun to acknowledge that the Stimulus high is ending and we are likely entering a “double dip” recession later this year.
It is not difficult to see why, every indicator worth anything is pointing to a massive drop in GDP coming shortly. The ECRI, which has a 100% accuracy rate for predicting recessions has just posted its fastest collapse in history and is already at levels indicating another recession is a “sure thing.”
The “Flight to Safety” Trade Your Broker Won’t Tell You About
Submitted by Phoenix Capital Research on 08/26/2010 13:19 -0500Quietly and with little fanfare, Gold has made a MAJOR change in its status. The precious metal is largely viewed as THE anti-paper money play by investors. This all changed in November 2009. What happened then? The Sovereign Debt Crisis began in earnest with Dubai asking for a six-month extension on $60 billion worth of debt.
At this point, Gold broke away from its traditional relationship to the US Dollar. Indeed, since then Gold has actually moved in tandem with the US Dollar. The correlation between the two is not perfect, but generally Gold and the Dollar have moved together both to the upside as well as the downside.
Is it Just Me or is 2010 Feeling A LOT Like 2008?
Submitted by Phoenix Capital Research on 08/26/2010 13:07 -0500So what can we glean from this Crisis and the psychology surrounding it? Well, we can see that Systemic Crises follow a clear pattern when it comes to social psychology and how people react. That pattern is:
1) A minor player goes under and people shrug it off for a few months
2) A larger issue arises requiring a vast sum of money and people begin catching on that something LARGER is at stake
3) Suddenly everything comes unhinged and the entire world panics
Today, no more than two years after this debacle, we are witnessing the EXACT same pattern play out on a sovereign basis.
The Only Things That Matter… And No One Talks About
Submitted by Phoenix Capital Research on 08/12/2010 22:53 -0500Today, most pundits are growing increasingly concerned that we are headed for a “double dip” recession. I think this view is idiotic as the US “recovery” was in fact nothing more than a small bounce in economy activity within the context of a DEPRESSION.
Let’s be honest here. The money printing and Stimulus DIDN’T work last time. All it did was buy time. Indeed, from an economic perspective, the only thing the Feds can claim with any certainty is that the Stimulus produced a bunch of economic data points that were questionable in authenticity (GDP, inflation, employment, etc) many of which have since been revised lower (GDP again).
Is Gold Crash Proof This Time Around?
Submitted by Phoenix Capital Research on 08/10/2010 17:52 -0500The first thing that needs to be said is that IF we have another systemic meltdown like that of Autumn 2008, Gold will likely go down along with everything else. There are simply too many big players (hedge funds, investment banks, etc) with heavy exposure to Gold who would be forced to liquidate their positions during a systemic collapse. I know this is not what the Gold bugs want to hear, but during systemic Crises, just about every investment on the planet plunges while the US Dollar and Treasuries rally.
Thanks for the Invitation Mr Geithner, But You Forgot to Mention Which Planet You’re On
Submitted by Phoenix Capital Research on 08/06/2010 07:47 -0500Mr. Geithner is either outright insane or a total liar. Neither of those are welcome realizations, though I doubt they are news to anyone with a working brain. However, for the sake of manners, I'll simply assume Mr Geithner is outright insane, in which case I am indeed, quite honored to be invited to his recovery... I only wish he'd mentioned the planet where it was taking place.
The Most Wrong Thing I’ve Ever Heard
Submitted by Phoenix Capital Research on 08/02/2010 20:49 -0500In 1970, the financial industry only accounted for 10% of S&P 500 earnings. By 2003, this percentage had swelled to 31%. Put another way, by the turn of the century the financial industry accounted for nearly $1 out of every $3 in corporate profits. Folks, this is the REAL “New Economy” Greenspan touted in the ‘90s: financial speculation. Greenspan and pals never really believed that technology would increase worker productivity. How could they? None of their policies actually benefitted technology firms or induced entrepreneurialism.
An Open Letter to President Obama
Submitted by Phoenix Capital Research on 07/30/2010 09:55 -0500Dear Mr. President, You don’t know me, but I was one of the millions of Americans who voted for you in the last election. I have since been fairly critical of your Presidency largely because I, like many others, feel betrayed by the policies you have enacted upon winning said election.
The Stinging Critique of a Worker Bee
Submitted by Phoenix Capital Research on 07/28/2010 15:53 -0500A little while back, a Fed Economist by the name of Kartik Athreya, wrote a piece urging the public to only listen to economists who have PhDs from top level universities when searching for economic insights. Obviously this paper was a lot of fun for me to read. So I thought I’d present some thoughts on Mr. Athreya and the group of “experts” he represents
I Thought Quantitative Easing Ended?
Submitted by Phoenix Capital Research on 07/28/2010 15:50 -0500Back in April investor bullishness was at extremes. Consequently, Wall Street ramped stocks first upwards (the usual predilection) to shank the puts… only to swiftly reverse the action in the middle of the week to shake out the calls. This whole system occurs courtesy of the Federal Reserve which openly and blatantly pumps the market on options expiration week. I’ve shown the below chart before. It’s staggering that no one in Congress or any of the regulators actually bother following up on this. How much more obvious does Bernanke need to get?


