This page has been archived and commenting is disabled.

Buckle Up: Profits Are Falling, the Fed is Cornered, and the Uptrend Has Been Broken.

Phoenix Capital Research's picture




 

The stock market is rapidly running out of props.

 

First off, corporate sales and profits are rolling over. As Charlie Bilello recently noted, we’ve had two straight quarters of Year over Years drops in corporate revenues.

 

 

Moreover, corporate profits are also falling at a pace usually associated with recessions:

 

Profit growth for the S&P 500 companies is at its weakest point since 2009. That’s because, in fact, there isn’t any profit growth.

 

S&P 500 earnings for the first half of the year are expected to show a 0.7% contraction compared to a year ago, according to numbers from FactSet research. Growth in the first quarter was a meager 1.1%, but the second quarter is more than offsetting that, expected to contract at a 2.2% rate, FactSet estimates. The last time the S&P 500 saw a year-over-year decline for the first half of a year was 2009, when earnings positively cratered at the depths of the global recession, down 30.9%.

 

Source: Wall Street Journal

 

With the fundamentals no longer supporting a stock rally, this leaves the Fed and momentum as the sole providers of support for stocks.

 

Regarding the Fed, it failed to raise rates for the umpteenth time last week. Despite this, stocks actually FELL on the news.

 

 

One by one the various Fed doves are throwing in the towel. Sure, they might refuse to hike rates right now, but we’re a long ways from when Bernanke said that QE was a success because stocks were rallying. The Fed realizes that it is in the political crosshairs because QE has exacerbated wealth inequality.

 

Fed President Fred Bullard even chastised Jim Cramer for being a perma-bull this morning. This is the same individual who desperately claimed the Fed should hold off ending QE back in October 2014 to prop the stock market up (mind you, he wasn’t even a voting member of the Fed at that time, so this was nothing more than verbal intervention).

 

In simple terms, the current political climate will not permit the Fed to ease any more unless we enter a full-scale market meltdown. At best there will be verbal interventions, but the Fed is out of the stock juicing business for now.

 

This leaves the market’s momentum/trend as the sole remaining prop for stocks. Unfortunately both have been broken.

 

 

Sure, the markets may bounce here and there (stocks posted eight moves of 16% or greater when the Tech Bubble burst) but we are officially in a very negative environment for stocks. Smart investors should prepare for a bear market and possibly even a Crisis.

 

If you've yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis "Round Two" Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.

 

We made 1,000 copies available for FREE the general public.

 

As we write this, there are less than 10 left.

 

To pick up yours…

 

Click Here Now!

 

Best Regards

 

Graham Summers

 

Chief Market Strategist

Phoenix Capital Research

 

Our FREE daily e-letter: http://gainspainscapital.com/

 

 

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 09/22/2015 - 16:28 | 6581046 Crocodile
Crocodile's picture

Phoenix Capital - please leave; you are a CURSE on ZH.  Please go somewhere else; maybe join the Clinton Foundation or something.

 

"but the Fed is out of the stock juicing business for now." - Phoenix Capital

Guess they can't read a chart or stop viewing with 20 minutes of trading left; these people are shills!

Tue, 09/22/2015 - 15:08 | 6580596 Lucky Leprachaun
Lucky Leprachaun's picture

Why does anyone believe anything Bullard says?  Guys like him are there in order to lie to and mislead the drones out there.

Tue, 09/22/2015 - 14:20 | 6580331 pazmaker
pazmaker's picture

I'm investing in word working tools and farming equipment, along with lead and some PM's  screw stocks

Tue, 09/22/2015 - 13:00 | 6579800 undercover brother
undercover brother's picture

8 years worth of artificially low interest rates spurred not only the stock market ripping higher, but more importantly, resulted in the misallocation of massive amounts of capital due to inability to quantifiy risk.  Eventually the piper will need to be paid and it will be painful as the US and rest of the world head into another recession/depression amidst the spector of massive defaults and central bank with a credibility problem.  Had the Fed done nothing in 2008 and allowed the junk to be wiped out of the system, the markets would be much healthier today, likely 1200 to 1300 with no junk hanging overhead and clear skies.

Tue, 09/22/2015 - 08:51 | 6578384 buzzsaw99
buzzsaw99's picture

the only real question is at what level does the fed step in and start buying. everything else is irrelevant.

Tue, 09/22/2015 - 16:26 | 6581059 Crocodile
Crocodile's picture

On the S&P the new norm is 1940; if it get s below that, then by the end of the day on Friday it will magically reappear.

Tue, 09/22/2015 - 08:31 | 6578250 Frankie Carbone
Frankie Carbone's picture

...

Tue, 09/22/2015 - 08:08 | 6578151 Oldwood
Oldwood's picture

If you want to see the greatest driver of income disparity, look at ignorance.This why education and media are working so hard to keep people ignorant. And investors are the worst as ignorance is the butter on their bread. Weak minded sheep always looking for the easy money are lined up for the shearing and the financial industry and its enabling "investors"would have it no other way.

Tue, 09/22/2015 - 00:04 | 6577650 hungrydweller
hungrydweller's picture

WooHoo, Graham!  Your broken clock is about to be right again!  It only took 6 years!

Tue, 09/22/2015 - 17:01 | 6581249 Crocodile
Crocodile's picture

Had to use the WSJ to get the info; even they tell the truth once in a while.

Mon, 09/21/2015 - 21:07 | 6577129 Herdee
Herdee's picture

More of big mouth Bullard and his Bullshit.I'm sick and tired of hearing endless dribble from all of these Fed basturds.It's gotten to the point of being endless crap from a gang of nitwits that everybody is -well- FEDUP with.As far as Bullard goes,they should dump that F'n C.S. off in no man's land in the endless miles of run down slum land in East St. Louis or dump him off in the middle of the 40 square miles of polluted industrial wastleland surrounding Detroit and let the F'n mother walk out of the shit in the middle of winter.

Mon, 09/21/2015 - 16:14 | 6576016 Phillyguy
Phillyguy's picture

There are a number of relatively cheap ETFs that allow you to short all the major stock indices. Link: www.tradermike.net/inverse-short-etfs-bearish-etf-funds

Tue, 09/22/2015 - 08:33 | 6578269 Advoc8tr
Advoc8tr's picture

Handy list ... thanks.

Tue, 09/22/2015 - 08:03 | 6578139 Oldwood
Oldwood's picture

What would happen if they threw a party and nobody came?

Is there nothing that would prevent people showing up for "free" money? We really do behave as sheep and it is the very sheep crowding about the "free" money, complaining the loudest about sheep.

Mon, 09/21/2015 - 12:30 | 6574889 Bemused Observer
Bemused Observer's picture

Die global corporations, die!

And they WILL, soon enough. Once they have chewed through their war chests, and that money disappears into the deflationary vortex, never to return because of tanking sales, they will start going under, one by one. Unless they are smart (snort!) and pro-actively downsize in a serious way. Meaning the layoffs start hitting the upper management and unrealistic 'growth' strategies are abandoned.

When the sclerotic mega-corps die off, small local entrepreneurs will pick up the pieces and generate an era of REAL growth. With the big ones gone, and a good healthy deflating of this overblown "economy", it won't take billions of venture capital to start a business. We'll go back to real supply/demand, with the focus on local rather then global concerns.

Mon, 09/21/2015 - 18:59 | 6576552 ThrowAwayYourTV
ThrowAwayYourTV's picture

I hear Congress is getting ready to kill the Import Export Bank which guarantees overseas companies loans backed by the american taxpayer.

I didn't know, and I'll bet a lot of others didnt know either that we the tax payers were on the hook if a foreign company defaulted on a loan from an amerikan co.

 

 

Tue, 09/22/2015 - 17:02 | 6581255 Crocodile
Crocodile's picture

The American Taxpayer is the new replacement.

Mon, 09/21/2015 - 12:27 | 6574875 pedro314
pedro314's picture

Profit...who needs them anyway (TSLA,AMZN,NFLX...)

Mon, 09/21/2015 - 12:27 | 6574872 Dead Canary
Dead Canary's picture

Oh, Phoenix Capital. You always cheer me up.

Mon, 09/21/2015 - 12:12 | 6574784 Grandad Grumps
Grandad Grumps's picture

IMO

The banks need the stock market to fall so that they can restart their theft and fraud machines.

The current ones are running out of gas and they need to be refueled.

Of course, now the banks need to be properly positioned for the fall and that means finding suckers (err consumers) to bear the weight of the fall. How long will it take the banks to be properly positioned?

I do not know. You might want to ask God's banker, Mr. Cufflinks or the Hobbit.

Mon, 09/21/2015 - 11:26 | 6574558 numapepi
numapepi's picture

The fed's refusing to raise interest rates even a pitiful .25% is an admission the economy is near death. If there was a "recovery," the patient wouldn't need to be on life support, now would he?

http://incapp.org/blog/?p=2661

Mon, 09/21/2015 - 11:24 | 6574547 Tortuga
Tortuga's picture

How coluld profits be falling?

Bougtht and paid for tax laws allow all kinds of shennigans to obfusecate, lie, re-hypothecate, hide, and deduct losses, in order to show a profit.

The lamestream media is constantly heading the latest WH it's all good for the World!.

I believe there are perpetual growth profits, irregardless of reality because they went to Harvard or Yale, or ...

Mon, 09/21/2015 - 13:37 | 6575208 KnuckleDragger-X
KnuckleDragger-X's picture

As soon as all that Keynesian "pent up demand" starts happening, it'll be rainbows and unicorn pee everywhere.......

Mon, 09/21/2015 - 11:15 | 6574501 Arnold
Arnold's picture

Buy Apple , there fanboyz.

 

http://www.theguardian.com/technology/2015/sep/21/apple-removes-maliciou...

 

With your support we will make it through difficult times.

Mon, 09/21/2015 - 18:38 | 6576560 ThrowAwayYourTV
ThrowAwayYourTV's picture

The new i-car is really going to suck. Who would be caught dead in an apple car?

Just shows you how desperate they are to get out of the toy business though.

But just what the world needs, another car. right?

Tue, 09/22/2015 - 00:49 | 6577702 sprintjump
sprintjump's picture

An electric car with an apple logo... the icar will be the single biggest douche tag for the lefties.

Tue, 09/22/2015 - 08:56 | 6578423 ayyy lmao
ayyy lmao's picture

I can smell the "smug" just by thinking about it. 

https://youtu.be/PpWbObKK_tg?list=PLS5XPxnz4QPk1_Ucdp7KcasbYx7cnuhUL

Mon, 09/21/2015 - 21:55 | 6576686 TheRideNeverEnds
TheRideNeverEnds's picture

Why waste your time with little gadgets when you can rake in that fat cash from the mass market auto industry?

Hell look at Tesla. It is now a multi billion dollar company and they have sold what, fifteen cars? All at a substantial loss.

Its free money, what could possibly go wrong?

Do NOT follow this link or you will be banned from the site!