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Graham Summers is Chief Market Strategist for Phoenix Capital Investment Research, an independent financial research firm based in Charlottesville VA with clients in 56 countries around the world. He and his staff write Daily Market Alert (http://phoenixcapitalmarketing.com/dma.html), an... More
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  • THREE Charts That Prove We're In A Depression And That The Federal Reserve And Washington Are Wasting Money

    Wall Street and mainstream economists are abuzz that we're seeing a recovery in the US due to the latest jobs data. These folks are not only missing the big picture, but they're not even reading the fine print (more on this in a moment).

    The reality is that what's happening in the US today is not a cyclical recession, but a one in 100 year, secular economic shift.

    See for yourself. Here's duration of unemployment. Official recessions are marked with gray columns. The Fed has spent over $4 trillion…. and this has barely dropped by a month or two .

    (click to enlarge)

    Here's the labor participation rate with recessions again market by gray columns:

    (click to enlarge)

    Another way to look at this chart is to say that since the Tech Crash, a smaller and smaller percentage of the US population has been working. Today, the same percentage of the US population are working as in the late 1970s.

    Here's average hours worked per week for the private sector.

    (click to enlarge)

    This number is of extreme importance. The reason is because companies don't just start laying people off en masse when the economy is weak. Instead they start cutting work hours bit by bit. The mass layoffs don't come until the official numbers announce that we're in a full-blown recession.

    Indeed, when you account for population growth and the drop in average hours worked per week, the US has created net ZERO jobs in the last five years. Put another way, there has been literally ZERO job growth since the recession "ended."

    Again, what's happening in the US is NOT a garden-variety cyclical recession. It is a STRUCTURAL SECULAR DEPRESSION.

    Folks, this is a DE-pression. And those who claim we've turned a corner are going by "adjusted" AKA "massaged" data. The actual data (which is provided by the Federal Reserve and Federal Government by the way) does not support these claims at all. In fact, if anything they prove we've wasted money by not permitted the proper debt restructuring/ cleaning of house needed in the financial system.

    It all boils down to the same simple sentence repeated by myself and others: you cannot solve a debt problem by issuing more debt (even if it's at better rates).

    This concludes this article. If you're looking for the means of protecting yourself from what's coming, you can pick up a FREE investment report titled Protect Your Portfolio at http://phoenixcapitalmarketing.com/special-reports.html.

    This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.

    Best Regards

    Phoenix Capital Research

    Jun 16 3:19 PM | Link | Comment!
  • The Fed's Epic Failure To Read The Economy In Four Charts

    The great liquidity tsunami of the post Crash era is coming to an end. But the inflationary aftereffects are only just beginning.

    The Fed is now actively tapering its QE programs. The $85 billion per month QE 3 and QE 4 programs have been reduced to $45 in asset purchases billion per month.

    While this still comes to an annualized rate of $540 billion in purchases per year, it marks a significant shift in Fed policy.

    Let's be blunt here. The Fed has engaged in the single largest monetary experiment in history, betting the US economy and banking system on misguided theories that have little to no evidence of success.

    The 1970s proved that the Phillips curve (the idea that high inflation cannot coincide with high unemployment) was a bogus idea. And both Japan and the UK have proven that QE does not generate sustainable growth: both countries have engaged in QE efforts equal to over 25% of their GDPs… neither have seen sustained economic growth.

    Finally, and this is the single most important item to note… the Fed is fighting the wrong fight. And it has been for well over a decade.

    In the early 2000s, Alan Greenspan was worried about deflation. So he hired Ben Bernanke, the self-proclaimed expert on the Great Depression from Princeton. The idea was that with Bernanke as his right hand man, Greenspan could put off deflation from hitting the US. Indeed, one of Bernanke's first speeches as a Fed President was titled "Deflation: Making Sure It Doesn't Happen Here"

    The entire reason Bernanke was hired was to ward off deflation. Now take a look at the following charts.

    Here's what happened to home prices during the Greenspan/Bernanke tenure.

    (click to enlarge)

    This looks an awful like inflation, not deflation.

    Here's what happened to food prices.

    (click to enlarge)

    Here's what happened to oil prices.

    (click to enlarge)

    And here's what happened to stocks.

    (click to enlarge)

    All of the above items indicate intense IN-flation, not DE-flation. The Fed literally hired a deflation expert who helped manufacture one of the greatest periods of inflation in history!

    My point with this is that the Fed is typically way behind the curve when it comes to economic forecasts and subsequent monetary policy. By worrying about deflation, the Fed blew bubbles in most asset classes resulting in the 2008 Crisis.

    This concludes this article. If you're looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://phoenixcapitalmarketing.com/special-reports.html.

    This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.

    Best Regards

    Phoenix Capital Research

    Jun 16 3:17 PM | Link | Comment!
  • The Regulations That Boosted The Liquidity Of The Last 5 Years Have Changed

    Most analysts miss major changes in the financial system.

    The reason for this is that they only look at the economic data for signs of what's happening. If you're looking for a competitive edge in your forecasts, however, you need to learn to "read between the lines" on news releases.

    Which is why I believe 99% of analysts are overlooking the following story (hat tip Bill King's King Report).

    Three longtime banks for private equity firm KKR & Co LP (KKR.N) have snubbed a request for a $725 million buyout loan over concerns it is too risky to pass muster with U.S. regulators, sources familiar with the situation said on Thursday.

    The banks had funded a similar deal six months earlier…

    Now, the three banks have refused to bankroll a bid by KKR-owned Brickman to buy rival landscaping company ValleyCrest Companies LLC, as they seek to cut back on making new loans that do not comply with the leveraged lending guidelines, the sources said. Dell Inc DELL.O founder Michael Dell's investment firm owns ValleyCrest.

    It is unusual for banks that lead the financing of a leveraged buyout of a company not to be tapped for smaller follow-on financings.

    Source: Reuters.

    KKR is one of the premiere name brand private equity firms in the world. Here we find that "longtime" banks, or banks that have done business with KKR for decades, have decided NOT to fund a KKR deal due to new leverage guidelines.

    Even the article itself notes this is unusual.

    This story is of MAJOR importance as it indicates the following:

    1) The deal-making spree of the last 3 years is peaking out.

    2) New regulations are beginning to affect the wave of liquidity that has buoyed stocks in the last 5 years.

    Does this mean stocks will collapse right now? Not necessarily. But it is a clear sign that things are changing behind the scenes in the financial system. The smart money is taking note… will the rest of the market?

    In time…

    This concludes this article. If you're looking for the means of protecting yourself from what's coming, you can pick up a FREE investment report titled Protect Your Portfolio at http://phoenixcapitalmarketing.com/special-reports.html.

    This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.

    Best Regards

    Phoenix Capital Research

    Jun 16 3:15 PM | Link | Comment!
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