Warning: The Everything Bubble is in SERIOUS Trouble

As we noted on Friday, the official inflation metric in the US, called the Consumer Price Index (or CPI) is designed to HIDE inflation, not measure it.

Case in point, over the last two months, the CPI has relied on the collapse in prices of various non-essential items (airline tickets, hotel rooms, etc.) to “cover up” the increase in energy, housing, and the other items we all need.

And yet, even despite this “massaging” of the data, the CPI has hit 2.9%.

Put another way, inflation is running so hot right now that even with various gimmicks in place, the CPI is STILL closing in on 3%.

Why is this a big deal?

Because TREASURY bond yields trade based on inflation. If inflation is soaring higher, bond yields will also rise to accommodate this.

If bond yields RISE, bond prices DROP.

And if bond prices DROP enough, the Debt Bubble bursts.

With that in mind, consider that yields on Treasuries have broken their long-term 20-year trendline.

This is a MAJOR problem. The entire debt bubble requires interest rates to remain LOW in order for it to be maintained.

Inflation is screwing this up for the Fed... which now faces a NASTY choice… continue to support stocks or defend bonds… and unfortunately for stock investors, it’s going to have to choose bonds.

Put another way, I believe there is a significant chance the Fed will let the stock market collapse in order to drive capital BACK into the bond market to force bond yields down.

Yes, the Fed has screwed up with monetary policy. And it is doing so intentionally to try to sustain the Debt Bubble. Currently the downside target for the collapse is in the 2,300-2,450 range.

The time to prepare for this is NOW before the carnage hits.

On that note, we are already preparing our clients with a 21-page investment report that shows them FOUR investment strategies that will protect their capital when and if a stock market crash hits.

It's called The Stock Market Crash Survival Guide...and it is available exclusivelyto our clients.

To pick up one of the 100 copies...use the link below.

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Comments

clade7 Mon, 07/16/2018 - 10:21 Permalink

I dont know what this fucking guy is talking about either LOP...?..I used to pay attention to all this Bla-bla-bla and thought it might be important...in truth, it is not...These past 10yrs of broken mathematical laws have me so much spun in circles....I went retro into what I know as certainties for survival...tribal and thrival.......

 

I have some snares, some skills, and am out of debt, ...so I dont give one royal fuck about these linguistic shenanigans anymore!!  Occams Razor!  This kind of financial blather aint intended for us...we dont need or heed it anymore...

PT clade7 Mon, 07/16/2018 - 11:59 Permalink

Only weak people are subject to the laws of mathematics.  Everyone else survives via a careful combination of charm and violence.  Then they hire accountants to make it all look legit so the weak mathematicians think it all adds up and so stay stuck in their bubble.  Took me decades to figure out that much and I still haven't figured out how to escape the trap.  I think it has something to do with having the right "friends". 

The numbers have blatantly not added up for nearly two decades now.  I'm still happy to see the charts but this story is forever incomplete.  Everything will keep on keeping on even as the numbers continue to not add up.  Show us why this is so.  Show us what needs to happen in order for the numbers to re-assert their authority.  I suspect the real story is not explained by numbers but it is the interactions of charm and violence that determine our destiny.  What will cause Charm and Violence to fail to such an extent that the numbers will regain control?

Yes, yes, hard work, I know.  It was so much easier to follow the numbers, if only they meant something in the real world.

"The defendant put the bullet in the gun, aimed the gun at the other guy's head, pulled the trigger, the gun went off and the other guy died due to a bullet-sized hole and a small piece of lead in his head.  But the defendant is not a murderer therefore the defendant is not guilty.  Case closed."  - I was saving that metaphor for a different story but it works just as well for this story.

Why did no-one ever believe the prophets?  I now know it was due to for every correct prophet there was ten thousand incorrect prophets.  Even when everything adds up, they can still be wrong.  I hate to create this kind of work but this story is incomplete unless you can tell us what will happen in order to make you wrong and ( if you're lucky ) why that effort will fail anyway and you will be right after all.  I suspect the real knowledge we seek will not be found in mathematics but in the realm of the flow of Charm and Violence.

In reply to by clade7

Yellow_Snow GoFuqYourself Tue, 07/17/2018 - 08:43 Permalink

THEY will never let the debt bubble burst...  just have to go back to 2008 for proof.  If the SHTF they will steal trillions more from future unborn generations.  The inevitable outcome is stagflation with eventual hyperinflation.  Look back at historical stawk market crashes.  They are dwarfed by money creation...  that is why stawk indexes (DOW, S&P) are shown as logarithmic charts...  The entire bond market is substantially over valued for various reasons...  Eventually rates will have to normalize one way or another...  then you will have hyperinflation.  It's that close to blowing up...

Get out of THEIR system...  with PM's or crypto's

Rome is burning

In reply to by GoFuqYourself

Ghost who Walks PT Tue, 07/17/2018 - 02:29 Permalink

I wouldn't be blaming the laws of mathematics, but rather the selection of linear financial models to try to impress the weak-minded.

In the real-world as boundary conditions are approached, the real effects are often non-linear and hard to model.

I agree with you insofar as "Charm" and "Violence" relate to the actions of market participants. Once "Trust" in the game or the rules of the game is lost, then the outcomes are very unpredictable as the players are watching each other and seeing who heads for the exits.

In reply to by PT

UndroppedClanger PT Tue, 07/17/2018 - 04:26 Permalink

The Charm is already losing its power; for a very long time the working population has been kept content with the usual bread and circuses but now the quality of life is beginning to fall, there's no longer enough to keep everyone placated and the governments can't afford to prop it all up.

The cattle start to look up from their empty trough and get rowdy at being fenced off in a dusty field when they can see all that grass on the other side of the fence, and the herdsman remembers that, hey, cattle can deal quite a blow when they're riled up and there's a lot more of them.

In reply to by PT

PiratePiggy Mon, 07/16/2018 - 10:52 Permalink

Vote up if you lost money being bearish following "Phoenix Capital Research"

Vote down of you made money being bearish following "Phoenix Capital Research"

buzzsaw99 Mon, 07/16/2018 - 13:00 Permalink

I believe there is a significant chance the Fed will let the...

the author is just guessing at what the fed will do whereas the rest of us KNOW what the fed will do.  this piece is good for amusement only.

If bond yields RISE, bond prices DROP...

wait.  what?  why didn't anyone tell us this valuable information before?  lololololol

tangent Tue, 07/17/2018 - 09:16 Permalink

Inflation will ramp up into 2027 but that makes the bubble grow instead of shrink. The everything bubble pops in 2027 because that is when they have to print money for literally everything, especially social security. Everyone will have the fresh print dollars instead of just the wealthy elites of the moment that so nicely pad the wealth gains of the top 1%. Inflation has been selective because few fresh print dollars trickle down.

But it hardly matters as the middle class has been in decline since 1971. Quality of life continues to decline so long as the elite bankers have all the cards and exploit them.

Money velocity shoots up around 2027 as the US Federal Reserve basically prints out money for just about everything.

I suggest getting your gardening done next spring so you can get practice. You don't want to figure out how to grow food when you're already starving to death in the likely 2028 food riots. Farmers won't be seen as backwards Yokels any more after that point.