weekly market update 9-21-16phoenixcapitalmarketing.com/pwa9-21-16.pdf · 2016. 9. 22. · trade...
TRANSCRIPT
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Weekly Market Update 9-21-16
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Disclaimer: The informationcontainedon thisnewsletter is formarketingpurposesonly. Nothing contained in thisnewsletter isintendedtobe,norshallitbeconstruedas,investmentadvicebyPhoenixCapitalResearchoranyofitsaffiliates,norisittoberelieduponinmakinganyinvestmentorotherdecision.Neithertheinformationnoranyopinionexpressedonthisnewsletterconstitutesandoffertobuyorsellanysecurityorinstrumentorparticipateinanyparticulartradingstrategy.Theinformationinthenewsletterisnotacompletedescriptionofthesecurities,marketsordevelopmentsdiscussed.Informationandopinionsregardingindividualsecuritiesdonotmeanthatasecurityisrecommendedorsuitableforaparticularinvestor.Priortomakinganyinvestmentdecision,youareadvisedtoconsultwithyourbroker,investmentadvisororotherappropriatetaxorfinancialprofessionaltodeterminethesuitabilityofanyinvestment.OpinionsandestimatesexpressedonthisnewsletterconstitutePhoenixCapitalResearch'sjudgmentasofthedateappearingontheopinionorestimateandaresubjecttochangewithoutnotice.Thisinformationmaynotreflecteventsoccurringafterthedateortimeofpublication.PhoenixCapitalResearchisnotobligatedtocontinuetoofferinformationoropinionsregardinganysecurity,instrumentorservice.Informationhasbeenobtainedfromsourcesconsideredreliable,butitsaccuracyandcompletenessarenotguaranteed.PhoenixCapitalResearchanditsofficers,directors,employees,agentsand/oraffiliatesmayhaveexecuted, or may in the future execute, transactions in any of the securities or derivatives of any securities discussed on thisnewsletter. Past performance is not necessarily a guide to future performance and is no guarantee of future results. SecuritiesproductsarenotFDICinsured,arenotguaranteedbyanybankandinvolveinvestmentrisk,includingpossiblelossofentirevalue.Phoenix Capital Research, OmniSans Publishing LLC and Graham Summers shall not be responsible or have any liability forinvestment decisions based upon, or the results obtained from, the information provided. Phoenix Capital Research is notresponsibleforthecontentofothernewsletterstowhichthisonemaybelinkedandreservestherighttoremovesuchlinks.OmniSansPublishingLLCandthePhoenixCapitalResearchLogoareregisteredtrademarksofPhoenixCapitalResearch.OmniSansPublishingLLC-POBOX2912,Alexandria,VA22301
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TheFedfailedtoraiseratesagaintoday.AtthispointtheFedhasbecomeapoliticalentityandnothingmore.WhatImeanby“political”isthattheFeddoesnothingmorethanpontificatetomaintainthenarrativethat“alliswell.”Intruth,theFedhasn’tactuallyMADEmorethanoneREALmonetarydecisionsinceQEendedin2014.Again,theFedisnowpolitical.FedPresidentsappearalmostdailytellingushowgreattheeconomyisdoing,onlytothenputoffhikingratesbecausetheeconomyistoo“fragile.”Thisis“haveyourcakeandeatittoo”nonsense.Iftheeconomyisinfactgreat,ratesshouldbenorthof1%,insteadofat0.25%.Youcannotmaintainratesat0.25%orlowerforsevenyearsandclaimtheeconomyisgrowing.Likeyou,I’mtiredofthisnonsense.AndintruthIthinktheFed’sdecisiontodayisaminorissue.TheBIGissuepertainstootherCentralBanksandtheircurrencies.Indeed,theworldhasmissedthebiggeststoryof2016.ThatstoryisthefactthattheCURRENCYmarketshavestoppedpayingattentiontoCentralBankpolicyandarenowdecidingthingsforthemselves.Forthosewhoareunfamiliarwiththesignificanceofthecurrencymarkets,abriefrecapisinorder.Thecurrencymarketsarethelargest,mostliquid,andmost“alert”marketsontheplanet.Globally,thestockmarketisroughly$69trillioninsizeandtradesabout$191billioninvolumeperday.Thebondmarket(includingcorporates)isalittleover$199trillionandtradesabout$700billioninvolumeperday,Thecurrencymarketsareunmeasuredinsizeaseverycurrencytradeisultimatelyapairstrade(meaningtobuyonecurrencyyouhavetosellanother).However,wedoknowthatthecurrencymarketstrade$5.3trillioninvolumeperday.Putanotherway,thecurrencymarketstradeover26timesmorevolumethantheglobalstockmarketeverysingleday.Assuchtheyarethemostliquid,sensitivemarketsintheworld.
WEEKLY MARKET UPDATE 9-21-16
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Iwanttoalsostressthatatthissize,thecurrencymarketismuchlargerthanCentralBanks.IfthecurrencymarketbeginstorevoltagainstaparticularCentralBank,thereisn’tathingsaidCentralBankcandoaboutit.Withthisinmind,thecurrencymarketsarethefirstmarketstopickuponmajorchangesinthefinancialsystem.ThefirstindicationthatCentralBankmonetarypolicywasnolongerdictatingcurrencymarketmovesoccurredwiththeEuroin2015.TheEuropeanCentralBank,orECB,wasthefirstmajorCentralBanktoimplementNegativeInterestRatePolicyorNIRP.TheECBcutratestoNIRPinJune2014andagaininSeptember2014.ThosefirsttwoNIRPcutswerethelasttimetheEuroreallyreacted.TheECBhassincecutratesfurtherintoNIRPonDecember2015andagainonMarch2016.BothofthosecutsfailedtoproduceasignificantreactionfromtheEuro.
Thiswasthefirstindicationthatthecurrencymarketswerebeginningtorevolt.However,itwastheBankofJapan’smovetoNIRPinJanuary2016,whichconfirmedthis.
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TheBankofJapanimplementedNIRPforthefirsttimeonJanuary28,2016.UnliketheECB,whichgotasignificantdevaluationfromtheEurowithitsfirstNIRPcut,theBankofJapangotNOTHINGfromtheYenasaresultofitsfirstforayintoNIRP.Indeed,theYenactuallybegantorallyassoonastheBoJwenttoNIRP.Andithasn’tstoppedsince!
TheYenhasappreciatednearly20%sincetheBoJwenttoNIRP.ThisisaHECKofamovebyamajorworldcurrency.AnditsendsaclearsignalthatthecurrencymarketsarenolongerreactingtoCentralBankpolicy.ThisiswhyIamnotinterestedinwhetherornottheFedraisedratestoday.Thecurrencymarketsarealreadyactingoftheirownvolition.Indeed,theUSDollarhasbeeninanuptrendsinceMay.Itjustbrokeoutofatrianglepattern,whichshouldresultinabreakouttothenewhighs.
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Theinitialupsidetargetforthismoveis97-98.However,ifthe$USDreallybeginstomovewecouldseeabreakoutto99-100whichrepresentstheupperlineofthe$USD’stradingrangeofthelasttwoyears.
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Fewanalystsnotedit,butthe$USDactuallystageditssecondstrongestdayoftheyeartheFridaybeforelast.Theonlyotherdayinwhichthe$USDralliedmorewasonthedayofBREXIT,ablackswaneventthatfeaturedEXTREMEcurrencyvolatility.
ThismovetellsussomethingBIGisafoot“behindthescenes”inthefinancialsystemIbelievethatsomethingisabankingcrisisintheEU.TheclearsignaliscomingfromDeutscheBank(DB).DBistheproverbial“canaryinthecoalmine”forEurope.PerchedatopthelargestderivativesbookinEurope,DBhastiestomostmajorfinancialinstitutionsintheregion.WhichiswhyassoonasDBstartsnose-diving,youknowsomethingbigisup.DBsharesaredown16%sinceSeptember15thandnearly20%fromSeptember9th.Putanotherway,thisbankhaslostaFIFTHofitsmarketcapinlessthantwoweeks.
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DBisnottheonlymajorEUbankintrouble.CreditSuisse(CS)neverreclaimeditpre-Brexitlevels.Itisnowonthevergeoftakingoutitspost-Brexittrendline.
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ThesituationisevenworseforBarclays(BCS),whichhasalreadybrokenitspost-Brexittrendline.
DittoforUBS(UBS)
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Indeed,EUfinancials(EUFN)ingeneralappeartobestartingadowntrend.
ThisisaBIGproblem.TheEUbankingsystemis$46trillioninsize(threetimesthesizeoftheUS’sbankingsystem).IftheEUbankingsystementersacrisisitwillhaveasystemiceffect.I’mwatchingthissituationclosely,butthisisHANDSDOWNthesinglebiggestissueforthemarketstoday.OutsideoftheEUbanks,thefinancialmarketstooktheFed’sdecisionasareasontoramphighertoday.Thekeyissueisifthere’sanyfollowthroughhere.Idon’tthinktherewillbe.TheS&P500bouncedhard.Thenextlineofresistanceisat2,175.HoweverIwouldn’tbesurprisedtoseearetestofthehighs.
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Ithinkthisisalastbumphighertoshredtheshorts.Onceitcompletes,theS&P500isfallingto2,100ifnot2,040.
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EveryoneisgoingbananasaboutGoldtoday.Butthetruthisthatit’stakenoutitstrendlinefromtheJanuarybottomandremainswellbelowitsrecenthighs.
Silveralsoremainswellbelowitsrecenthighandwellwithintheconfinesofanestablishedconsolidationpattern.
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Understand,IamSUPERbullishonbothpreciousmetalslong-term.Butrightnow,Istillbelievewe’regoingtoseeafinalmovelowerwithGoldbreakingbelow$1300andSilverbelow$16.50.EvenifIamwronghere,we’renotmissingmuch.Whenthenextmajorlegbeginsforpreciousmetalsinthenext6weeks,we’regoingtoseeabsolutelystratosphericgains.Thiswillbeparticularlytrueforpreciousmetalsminers.However,fornow,GoldandSilverminersneedtocorrectmore.GoldMiners(GDX).
Silverminers(SILJ)
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Iwanttokeepthisupdateshortbutsweet.Therealityisthattoday’smarketaction,whilestrong,isn’tenoughtochangeourcentralthesis.Thatthesisisthatwe’renotdonewiththedownwardmomentumyetandnewlowsarecoming.Thehardestpartofinvestingisfilteringoutthenoise.Daysliketodaymakeyouwanttobelievethey’repartofsomethingbigger,butit’sfarmorelikelythisisjustnoise.I’mwatchingthemarketscloselyandwillissueupdatesassoonasIhaveclearBUYsignals.Butrightnoweverythingappearstobeinaconsolidationpattern.ThereisnoreasontocommitmorecapitalonewayortheotheruntilwegetaREALbreakout.Thisconcludesthisweek’smarketupdate.Barringanynewdevelopmentsyou’llnexthearfrommenextWednesdayinourlongermonthlyissueofPrivateWealthAdvisory.Ibelievethatbythatpointthemarketswillhaveclearedupanditwillbetimetoact.Untilthen…
ChiefMarketStrategistPhoenixCapitalResearch
BestRegards,
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OPEN POSITIONS
US DOLLAR CARRY TRADE PORTFOLIO
POSITION SYMBOL BUY DATE
BUY PRICE
CURRENT PRICE
GAIN/ LOSS
UltraBullishDollarETF UUP 5/23/11 $21.79 $24.7714%
UltraShortEuro EUO 4/10/15 $27.68 $23.94 -14% UltraShortYenETF YCS 5/27/15 $94.48 $59.54 -37%
RELATIVE US STRENGTH PORTFOLIO
POSITION SYMBOL BUY DATE
BUY PRICE
CURRENT
PRICE
GAIN/ LOSS
NuveenMuni.Fund NIO 1/2/14 $13.12 $15.97 39% Wal-Mart WMT 7/30/14 $74.78 $72.19 2% Exxon XOM 9/24/14 $95.82 $83.30 -8% RPXCorp RPXC 8/5/15 $15.48 $10.50 -32% Apple AAPL 9/11/15 $114.21 $113.55 1%
Pricesasofmarket’scloseon9/21/16Priceincludedividends
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INFLATION PORTFOLIO
POSITION SYMBOL BUY DATE
BUY PRICE
CURRENT PRICE
GAIN/ LOSS
Gold 3/17/10
$1,120$1,337.00
19%
Silver* 3/17/10
$16.23$19.93 23%
UraniumETF URA 6/8/16 $15.49 $13.56 -12%*Avg.priceof$17.50and$14.97
RETAILMELTDOWNPORTFOLIO
POSITION SYMBOL BUY DATE
BUY PRICE
CURRENT
PRICE
GAIN/ LOSS
Amazon(SHORT) AMZN 2/25/15 $484.19 $789.74 -63% AmericanEagleOutfitters(SHORT) AEO 5/26/16 $15.36 $18.40 -20% *Avg.priceof$385.37and$583
Pricesasofmarket’scloseon9/21/16Priceincludedividends
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MARKET HEDGE PORTFOLIO
POSITION SYMBOL BUY DATE
BUY PRICE
CURRENT
PRICE
GAIN/ LOSS
UltraShortNikkeiETF EWV 1/6/15 $67.46 $39.81 -41% UltraShortEmergingMarketETF EEV 1/20/16 $24.03 $14.83 -38% UltraShortChinaETF FXP 1/20/16 $59.95 $29.23 -51% UltraShortBrazilETF BZQ 1/20/16 $74.40 $19.72 -73% UltraShortFinancials* SKF 2/10/16 $56.82 $39.60 -30% UltraShortRussell2000ETF** TWM 2/10/16 $47.92 $29.20 -39% UltraShortGoldETF GLL 5/26/16 $82.75 $68.58 -17% UltraShortSilverETF ZSL 7/20/16 $29.20 $26.63 -9% UltraShortS&P500ETF SDS 7/27/16 $16.60 $16.51 -1% RioTinto(SHORT) RIO 8/12/16 $31.08 $32.04 -3% SilverJuniors(SHORT) SILJ 8/31/16 $15.39 $17.00 -10% *Avgpriceof$60.95and$51.69**Avgpriceof$52.94and$42.90
EU BANKING CRISIS PORTFOLIO
POSITION SYMBOL
BUY DATE
BUY PRICE
CURRENT
PRICE
GAIN/ LOSS
EuropeanFinancialsETF EUFN 7/5/16 $14.86 $17.50 -18%CreditSuisses CS 7/5/16 $10.30 $13.19 -28% Santander(SHORT) SAN 2/3/16 $4.13 $4.51 -9% Barclays(SHORT) BCS 7/5/16 $7.92 $8.92 -13% FranceETF(SHORT) EWQ 9/16/16 $23.38 $24.02 -3% ItalyETF(SHORT) EWI 9/16/16 $10.78 $11.05 -3%
Pricesasofmarket’scloseon9/21/16Priceincludedividends