The Real Reason Stocks Dropped in February and Why Another Leg Down is Coming

Rates are rising once again.

Over 90% of investors focus almost exclusively on stocks. This is a mistake. The reality is that everything happening in stocks since 2008 has been the direct result of Central Banks creating a bubble in bonds.

Because our current financial system is debt-based in nature (meaning sovereign debt, not gold or some other asset is the bedrock of the financial system) when Central Banks did this, they effectively created a bubble in everything (including in stocks).

Put simply, it is BONDS, not stocks, that concern Central Banks the most. If stocks collapse, it’s a big deal for investors. If bonds collapse, it’s a big deal for entire countries/ the financial system.

With that in mind, consider that bonds have begun to collapse, with US Treasury bond yields rising sharply above their downtrends.

THIS is what triggered the February meltdown.

And by the look of things, we're not done yet. Instead of falling hard, rates have found support and are preparing to breakout to the upside again.

This is a MAJOR warning for stocks. Despite spending over $14 TRILLION trying to corner the bond markets, Central Banks are STILL beginning to lose control. The Everything Bubble is beginning to burst.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what's coming down the pike when the Everything Bubble bursts.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here:

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research


LawsofPhysics Tue, 03/20/2018 - 09:43 Permalink


Bullshit.  The central banks will continue to print to buy bonds AND they will raise interest rates (for themselves not savers).

Easy peasy, what the fuck are you going to do about it debt slaves?

everything1 Tue, 03/20/2018 - 10:03 Permalink

So why raise rates?  To pay the servicers of the debt yah never going to pay back?  Ah, but yes, meanwhile we always squeeze the blood out of turnip at the end.

east of eden Tue, 03/20/2018 - 10:04 Permalink

Within a year (if we survive that long), 30yr @ 6.5 (min), 10yr at 4.5(min), 5yr at 2.75 or higher.

If I were still 'invested' in the casino, I would remove everything, convert to gold and crypto, keep lots of different denominations of various fiat (although NOT Swiss francs or GBP or US$), and wait it out.

It appears they think they can deflate the bubble in some kind of 'managed' way. I don't think they will turn out to be correct. At some unknown point, the cattle will smell the slaughterhouse, and bolt.

Agent44 Tue, 03/20/2018 - 13:43 Permalink

Might be another restest of the S&P 200ma, and probably a quick cascade below it (IF it happens at all) so as to shake out the chickenshits. I will be buying on that shakeout (IF it happens at all). This is a secular bull market rallying on the current and coming AI revolution, further earnings and productivity. It doesn't give a fuck about rates (except temporarily), it doesn't give a fuck about right wing, left wing, Trump, Putin, fake news, real news, no news, transsexuals, faggots, straights, islam, christian, tv persons, youtube, or your aunt matilda.

There can be an extended correction, not necessarily in price, but in time...6 months is quite possible. Then, it will go higher. The S&P is headed well beyond 3,000, over the next 2 years. You will either be on board and make money, or you will be a blithering, whining chickenshit, constantly screaming the sky is falling for one reason or another.

gm_general Tue, 03/20/2018 - 17:58 Permalink

All these dimwits claiming they know the reason. The MACD on SP500 perfectly expresses a trend where support and resistance lines form a megaphone pattern years long. The MACD hit the resistance line in an especially stretched condition and EXACTLY then things turned like a dog encountering an invisible fence. The SP500 here represents a good market proxy, vs the Dow which is not a statistically significant number of stocks, and the NASDAQ is so distorted by big cap stocks like FANGs that it cannot serve this purpose either.