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Graham Summers’ Week Market Forecast (Words Are No Longer Enough Edition)

Phoenix Capital Research's picture




 

 

The markets have entered a very dangerous environment in which even the usual market props (Fed Presidents calling for more easing) are being overridden by market concerns for Europe.

 

To whit, last week, not one, but two Fed Presidents (Yellen and Dudley), called for more easing/ QE. On the very same day (April 11), the ECB issued a similar statement regarding the potential for more easing.

 

At any point in the last 18 months, these sorts of statements would have kicked off a sharp rally in stocks. Instead, last week stocks posted a one day gain (the verbal interventions were on April 11) only to only to roll over again and close the week with their worst performance thus far in 2012.

 

This should be cause for major concern. As I’ve noted numerous times on these pages, the Fed has largely been engaging in verbal rather than monetary intervention since May 2011. Indeed, at one point I even facetiously noted that the Fed got more “bang for its buck” by having its biggest dove (Charles Evans) talk up stocks rather than money printing (QE 2 pushed the S&P 500 up 11% while various Evans verbal statements produced a 12% gain).

 

So, for the market to tank despite two Fed Presidents hinting at more QE (as well as the ECB engaging in similar comments) should be a major warning sign that selling pressure is creeping back into the markets in a big way.

 

With that in mind, this week is a bit of a toss-up. It is options expiration week, so we should see the usual upwards manipulation by Wall Street.

 

However, at the same time, the markets are waking up to the reality that Europe is about to enter its real Crisis (Spain) at the very time that European elections, particularly that of France, are favoring leftist socialist politicians who are completely opposed to fiscal austerity.

 

Indeed, the situation in Europe is fast approaching a confluence of factors (political, technical, fundamental, and economic) that has the potential for an absolute disaster to unfold in the next six to eight weeks.

 

For one thing, we have an Irish referendum, as well as Greek and French elections all in the next month. Any and all of these could go very, very wrong for the EU bailout gravy train.

 

Aside from this, most European markets are breaking down in a major way. These charts, particularly those of some of the PIIGS, are the ugliest I’ve ever seen… and that includes 2008.  Whatever they’re predicting… it’s going to be horrendous.

 

And of course, we have the continued economic deterioration in the Eurozone. Greece has already seen an economic contraction of 17% making its collapse comparable to that of Argentina in 2001 (an situation that involved full-scale defaults, systemic collapse, and outright riots). Indeed, the “Greek issue” is far from resolved as I fully expect greater defaults in the future.

 

Far more disconcerting is Spain, which is already sporting unemployment numbers on par with those of Greece… and it only just began to implement austerity measures. Meanwhile the Spanish Government is trying to prop up the collapsing banking sector by forcing weaker banks to merge (how’d that work out for US financials in 2008?).

 

And then of course there is France, where hard-core socialist François Hollande is about to unseat Sakozy.

 

A few facts about Hollande:

 

  1. He just proposed raising tax rates on high-income earners from 41% to 75%.
  2. He wants to lower the retirement age to 60.
  3. He completely goes against the recent new EU fiscal requirements Merkel just convinced 17 EU members to agree to and has promised to try and renegotiate them to be looser.

 

All of these factors, combined with the end of the strongest seasonal period for stocks (November-April) as well as the end of Operation Twist 2 (June) have the making of a truly horrific period for the markets. Indeed, the mere fact that verbal interventions from the Fed are no longer working should tell investors point blank that things are about to get VERY ugly in the markets.

 

On that note, if you’re not preparing for the coming EU Banking Crisis, you need to get moving NOW. At most we have 6-8 weeks before it hits. And when it does, it’s going to make 2008 look like a joke.

 

 

So if you’re not already taking steps to prepare for the coming collapse, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.

 

This report is 100% FREE. You can pick up a copy today at: http://www.gainspainscapital.com

 

Good Investing!

 

Graham Summers

 

PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.

 

And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com

 

 

 

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Mon, 04/16/2012 - 15:53 | 2349522 Mad Mad Woman
Mad Mad Woman's picture

Actually Hollande has the right idea.

1. Raising the tax rate on the high earners (i.e. the wealthy) will put money back in the country's coffers and take some of the pressure off the country as a whole.

2. Lowering the retirement age to age 60 needs to be done so the younger people can get employment. The unemployment rate for the younger generations in France is too high. Putting them to work will save France from what Greece is experiencing with riots and such.

3. The new EU fiscal requirements are not attainable. Period.

4. France will be better off in the long run with Hollande's plans. Austerity just ain't going to do the trick. And France and the 17 other EU countries should be giving Merkel the finger. Let it all crash so everybody can start over with a clean slate. It's all funny money anyway, just numbers in a computer. There's nothing to back the currencies anyway, it's just like playing Monopoly. Let the banks fail. That's what Rothschild is waiting for, and they'll come out on top.

They all had their chance in 2008 to correct the financial problems and the developed countries opted to not do that. Karma's a bitch baby.

Mon, 04/16/2012 - 14:36 | 2349241 ThisIsBob
ThisIsBob's picture

Mr. Summers, do you trade?

Mon, 04/16/2012 - 14:31 | 2349222 Eric L. Prentis
Eric L. Prentis's picture

Spanish King Juan Carlos, hunting elephants in Botswana, in the early morning, while walking to the loo, broke his hip, and took a private jet home—for an operation.

 

King Juan Carlos, who says he cannot sleep because of Span’s high youth unemployment, said, when leaving his expensive African safari, “Let them eat pachyderm.”    

Mon, 04/16/2012 - 14:26 | 2349203 FinalCollapse
FinalCollapse's picture

Verbal Easing (VE), bitchez!

Mon, 04/16/2012 - 12:38 | 2348851 Zero Govt
Zero Govt's picture

Graham's off on one again

it doesn't get any easier being reminded the worlds going to end 6 times a day from Graham, the suffocating hysterics over at King World News etc etc and then by coincidence being offered get-rich schemes

so for the 2nd time in a week Grahams reminding us Europe is going to end in May-June, thanks.. another 14 reminders before the fateful day will not help any

Mon, 04/16/2012 - 11:25 | 2348628 Neo1
Neo1's picture

A Banksters defeatism nightmare, Being forced to Return to Real Money=United States Note=Lawful Money. The real reason you pay an income tax, is for the privilege of using a private currency. Also known As A:  Federal Reserve Note, Demand from your bank or brokerage, lawful money and the tax goes away, with a tax exemption on lawful money, all of your money is yours. Use the Remedy within the Federal Reserve Act. http://savingtosuitorsclub.net/  Stop being a Slave!!!!!!  

http://www.21silver.com/?show=merrill&read=federal_reserve_act_remedy 

Tax Exemption: http://stormthunder.com/federal-reserve-act/  Web search these four different phrases: Redeemed in Lawful Money  or  United States Note  or Redeemed in Lawful Money Pursuant to Title 12 USC §411  or deposited for credit on account or exchanged for non-negotiable federal reserve notes of face value  

Mon, 04/16/2012 - 11:14 | 2348575 Nostradamus
Nostradamus's picture

Indeed, the mere fact that verbal interventions from the Fed are no longer working should tell investors point blank that things are about to get VERY ugly in the markets.

Yes, but, if things do start to get very ugly in the markets, then the monetary easing will begin in earnest.  All it takes is a drop in the market of  about 20%.

 

Mon, 04/16/2012 - 14:38 | 2349244 Lucius Corneliu...
Lucius Cornelius Sulla's picture

I wouldn't count on too much monetary easing.  The rest of the world is getting pretty pissed off with dollar debasement and the consequent inflation it is unleashing in their economies.  You can be sure that contingency plans are being worked to counter the FED's dollar devaluation policy.  More monetizing will only excellerate the process of removing the dollar as the world's reserve currency.

Mon, 04/16/2012 - 18:32 | 2349977 Zero Govt
Zero Govt's picture

why don't they wake up then and trade in their own currencies

China is, Russia is, India will, Brazil will  . . .

Mon, 04/16/2012 - 10:59 | 2348524 Element
Element's picture

No Risk Of That!

Mon, 04/16/2012 - 10:51 | 2348487 BeerGoggles
BeerGoggles's picture

I see Graham is touting his recent gains again not to mention the loss on his recent shorts of over 30%.

Mon, 04/16/2012 - 10:50 | 2348485 GOSPLAN HERO
GOSPLAN HERO's picture

It's just Graham, passing gas.

Mon, 04/16/2012 - 13:25 | 2349005 tardball
tardball's picture

You know, we could solve the world's energy issues with Graham's gas.  Fuck going green; it's time to go Graham--with the occasional hershey squirt.

Mon, 04/16/2012 - 12:18 | 2348803 vast-dom
vast-dom's picture

who needs words when u got graham's gas? words truly aren't enough....

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