Stocks Are at Risk of A SERIOUS Drop Unless the US Dollar Rolls Over Soon

The financial media are euphoric that stocks are up today. However, they’re all ignoring the fact that the issue that triggered the recent sell-off (the Fed’s colossal policy error regarding the $USD) has not been resolved.

Put another way, until the $USD rolls over, stocks are in serious danger. We need to get out of that red rectangle area ASAP and back down to the green rectangle.

By the look of things, the Fed still hasn’t figured this out. 

At a time when the ECB is still engaged in QE and the BoJ is printing yen by the tens of billions, the Powell Fed has decided it’d be a great idea to hike rates over 7 times over 24 months while withdrawing $600 billion in liquidity per year.

Understand, I’m not saying that rate hikes and QT are BAD. I’m saying that the PACE at which the Powell Fed is engaging in these policies is ridiculous. The market knows this which is why the yield curve is inverted and Emerging Market Stocks and Emerging market Currencies are imploding.

If the Fed doesn't figure this out soon, we could very well see the carnage of the Emerging Markets space spread into the S&P 500. I remain VERY bullish in the intermediate term, but the Fed could make things NASTY in the short-term if it doesn't fix this.

Ignore the bounce today. The markets are being propped up by pumping the five big Tech plays (AAPL, NFLX, MSFT, AMZN, FB). Underneath this facade, the US stocks are in SERIOUS trouble.

On that note, we are already preparing our clients for this with a 21-page investment report titled the Stock Market Crash Survival Guide.

In it, we outline the coming collapse will unfold…which investments will perform best… and how to take out “crash” insurance trades that will pay out huge returns during a market collapse.

We’ve extended our offer to download this report FREE by one week. But this week is the last time this report will be available to the general public.

To pick up one of the last remaining copies…

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research


wonger Thu, 06/21/2018 - 04:58 Permalink

The Fed will stop rate hikes and QT, they will not take the risk of being blamed, war will be the excuse to bring the market down

JIMSJOE2 Thu, 06/21/2018 - 07:17 Permalink

Simply not based on any financial reality. Since 2009 international capital flows have been moving into dollars and then the Dow especially from Europe as it is collapsing. For 6 years the alt media has been claiming that both the dollar and the Dow will collapse "any day" and it has not all due to capital flows. For months now the Dow has been in consolidation mode but this will change as we move farther into 2018 and the shit hits the fan in Europe in 2021 according to the computer models at Armstrong Economics. Just recently as Draghi at the ECB announced QE will continue thru 2019 and LONGER if needed, every one and his brother knew this would hit the euro and the pound and cause more dollar strength. Capital moved out of emerging markets as they see their native currencies get hit with dollar strength collapsing markets and moving into dollars. Again as we move forward these international capital flows especially from Europe and flow again into US equities as capital is simply parked. Where else are you going park? Italian and Spanish sovereign debt? Negative German bunds? How about any bank in the EU? Folks there are few places left!

    Of course this dollar strength is why there is across the board commodity weakness including gold and silver. Traders taking advantage of the ECB's decision added put options knowing dollar strength equates to gold weakness which we saw and are still seeing. Again this will accelerate as we move forward. Currency traders have hammered the EUR/USD and the GBP/USD causing more strength.

     The ECB has destroyed the bond market there, the traditional banking system with negative rates, the access to capital by banks and corporations and countries and of course the destruction of the economies in most EU countries. When QE does start to finally taper rates will skyrocket to record levels in line with the risks and this will be the final nail in the EU. The models are forecast the political turmoil there as when huge flows of capital move out of countries and trading blocks this causes severe economic problems followed by the toppling of governments. This is what we are seeing now and will only accelerate and spread. Again the EU, euro, most banks, many corporations and countries will not survive in their present form there. Europe is broke and adding everything above with the added cost of the migrants, to say they are in serious trouble is a huge understatement.

   Now knowing all of this is it really hard to understand why the dollar and the Dow have moved up since 2009?

     Now Yellen was furious with Draghi when he went to negative rates as she knew capital would flow into dollars and cause strength. She needed a much weaker dollar for a cushion as she realized Bernanke had kept rates too low for too long and crushed yield which destroyed pensions and the large institutional firms like insurance companies who hold the bulk of US wealth which includes retirement investments. Powell is in the same boat. If these go does does the US economy. The pundits who claim the FED is trying to collapse the economy are simply clueless.

    Folks it is all about capital flows and the global macroeconomic events which cause these flows to move. There is an old saying, "Follow the money."