2018: White Swan For Stocks Now... Black Swan Later This Year

As I predicted three weeks ago, stocks have begun their move to new all-time highs.

The reason?

Inflation. Stocks LOVE inflation at first. But that relationship quickly goes sour once inflation results in rising operational costs that eat into profits.

THAT stage is six-nine months from now. Right now, stocks are LOVING the weak $USD and inflationary backdrop.

This is the single biggest trend for 2018: INFLATION. And it could very well burst the Everything Bubble later in 2018.

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:

https://phoenixcapitalmarketing.com/TEB.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Comments

JLarryL Thu, 04/26/2018 - 21:30 Permalink

So far not a single index has broken out of the trend established since January. Probably too soon to call. But the pivotal moment is right ahead.

That is what happened. I didn't wait to determine whether or not the time was right for plunging on the bear side. On the one occasion when I should have invoked the aid of my tape-reading I didn't do it. That is how I came to learn that even when one is properly bearish at the very beginning of a bear market it is well not to begin selling in bulk until there is no danger of the engine back-firing.

bshirley1968 Thu, 04/26/2018 - 22:12 Permalink

No way am I willing to take that bet. Charts are pretty and all, but if they could tell the future we would all be rich.

This one thing I know, stocks will either go up or continue down from here.

Graham needs to consider that inflation doesn't guarantee "sales" at higher prices. The Fed is contracting the money supply with higher rates. I think Graham's explanation might be a little bit of an over simplification.

DavidC bshirley1968 Fri, 04/27/2018 - 07:43 Permalink

The Fed is between a rock and a hard place (of its own doing). It can't raise rates without a crash (witness the move a few days ago when the ten year broke above 3%) and yet it can't lower them so that it has some leeway (not much!) when the next recession hits. Combined with that pension funds need higher yields yet will suffer if stocks crash.

 

DavidC

In reply to by bshirley1968

mosfet Fri, 04/27/2018 - 03:03 Permalink

Rising rates always trump inflation due to increased debt servicing - until inflation outpaces rates exponentially.  Venezuela has a 21% rate but >9000% inflation so their markets stop caring about rates long ago.  If the Fed can't print it you should hold & especially diversify in it...commodities, PMs, crypto & eventually stocks & RE.  Some are gonna rise far faster than others and you may only get one shot to get it right.