Weekly Market Update 12-14-16 · 2016. 12. 15. · Phoenix Capital Research is not obligated to...
Transcript of Weekly Market Update 12-14-16 · 2016. 12. 15. · Phoenix Capital Research is not obligated to...
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Weekly Market Update 12-14-16
©2016·PhoenixCapitalResearch,PhoenixCapitalManagementInc.AllRightsReserved.Protectedbycopyright laws of the United States and international treaties. This newsletter may only be usedpursuanttothesubscriptionagreementandanyreproduction,copying,orredistribution(electronicorotherwise, including on theworld wideweb), inwhole or in part, is strictly prohibited without theexpresswrittenpermissionofPhoenixCapitalManagementInc.·AllRightsReserved.
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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TheFedraisedratestoday.Thatisnotspecial.TheFedhasbeenbroadcastingthismoveforweeksnow.Afull100%ofcommercialtradersexpectedtheFedtoraiserates.WhatisunexpectedisthattheFedannouncedthatitexpectstoraiseratesanotherTHREEtimesnextyear.TheFedisdoingthis…whenthe$USDisalreadyata13yearhigh.
Thisisgoingtounleashanabsolutedisasterfor1Q17.The$USDenteredabullmarketin2014.Over47%ofcorporateprofitscomefromabroad.Soastrong$USDdestroyscorporateprofits.Indeed,sincethe$USDenteredabullmarket,corporateprofitsfortheS&P500havecollapsedto2012levels.
WEEKLY MARKET UPDATE 12-14-16
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ThiswasBEFOREthe$USDhit102.Withthe$USDnowattheselevels,1Q17resultsaregoingtobeabsolutelyhorrific.Thereisanotherissuehere.Thelasttimethe$USDwasanywhereneartheselevels,ittriggeredamarketmeltdown.
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Remember,theChineseYuanispeggedtothe$USD.Andwiththe$USDuparound100+ChinaisalreadyburningthroughreservesagaindefendingtheYuan.Thisisnotsmallchangewe’retalkingabouteither.
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China’sforeignexchangereservesfellnearly$70bnlastmonthasthecountry’scentralbankburntthroughmoreofitswarchestinitsbattletodefendtherenminbifromgreaterdepreciationonthebackofacceleratingcapitaloutflows.https://www.ft.com/content/f5243188-bc55-11e6-8b45-b8b81dd5d080
Youreadthatcorrectly…Chinaspent$70BILLIONinNovemberalonedefendingtheYuan.Sincethattimethe$USDhasgonestraightupwithbarelyabreather.
ChinawillbedevaluingtheYuanaggressivelyinthecomingweeks.AnditwillhaveanastyeffectonUSstocks.Finally,thereisthe$USDcarrytradetoworryabout.Globallythereareover$10TRILLIONinborrowed$USDsloshingaround.ThisisanamountgreaterthantheGDPsofJapanandGermanycombined.Andeverytickhigherinthe$USDthreatenstoblowupthis.JanetYellenisplayingaverydangerousgamehere.Thereissimplynologicalexplanationforwhatshe’sdoinghereIt’smadness.
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Astrong$USDhurts:
1) Corporateprofits.2) GDP.3) Bonds.4) Mortgagesandhomerefinancing.5) USmanufacturing.
Andmore.Indeed,therearefewifanybenefitstoastrong$USDinthecurrentfiat,debt-basedmonetarysystemtheFedismanaging.Pushingforthreeratehikeswiththe$USDat102islikepushingyourfriendtodrinkthreemorebeerswhenhe’salreadygotalcoholpoisoning.Moreover,theFedtriedthiswhole“we’regoingtoraiserates3-4timesinthenext12months”schemejustoneyearago.Thattriggereda10%dropinstocksinjusttwoweeks’time.
Mypointisthis…astrong$USDdoesNOTHINGgoodfortheeconomy,norforthecorporatesector.Andit’snotliketheFedcanclaimignoranceofthisaswewentthroughtheexactsamesituationthistimelastyear!
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Somethingsmellsverystrangehere.Ican’tputmyfingeronit,butsomethingisverywrong.EithertheFedisevenmorecluelessthanIthought(whichwouldREALLYbesayingsomething)ortherearelargerforcesatplayhere.Let’smoveontothemarkets…Basedontheabove,stocksaregoingtocorrectandsoon.ThemarkethasonlybeenmoreoverboughtTWICEinthelast100years.Thoseoccasionswerethe1929Bubblepeakandthe2000TechBubblepeak.IndeedEVERYONEis“allin”onthismarketrally.Hedgefundshaverecordlongsforthemarkets.Andretailinvestorshavefinallypiledinaswell.Stockallocationforinvestorsisatthesamelevelasatthe2007peak.
H/TLanceRoberts.
TheindexmostsusceptibletoacorrectionistheRussell2000(IWM).CurrentlytheRussell2000istradingataP/Eof237.Yes,237.TheRussell2000’s“official”P/Eis46(whichisalreadyridiculous).Butthatdoesn’tincludecompanieswithnegativeearnings.Whenyouincludenegativeearnings,theRussell2000’sP/Erisesto237(H/TMichaelLebowitz).Isuggestgoingshorthere.However,asIemphasizedinourSpecialReportHowtoBuildaMarketBeatingPortfoliokeepthispositionsmall.
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ActiontoTake:ShorttheRussell2000ETF(IWM).AnotheritemthathascaughtmyeyeisthefactthatGoldandSilverhavehelduprelativelydespitethecollapseoftheYen/$USD.Silverbottomedseveralweeksago.Ithasyettomakeaconfirmedbreakouttotheupside,butconsideringwhattheFedannouncedtoday,thefactSilverfellLESSthan1%isincredible.Silvershouldhavebeendown3%ifnot5%todaybasedonwhattheFedisplanning.
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EvenSilverMinershaveheldsupport…fornow.
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Perhapswegetabearishovershoothere,butthefactthatSILisroughlyflatsince11/14…whiletheYen/$USDpaircollapsedasitdid,isINCREDIBLE.
Iwanttobeclearhere…themarketsarepreparingforamoveinpreciousmetalsandpreciousmetalsminersthatwillshocktheworld.TheYen/$USDpairhasgonestraightdownbutSilverminershavebeenflat.ThatisQUITEthetell.Indeed,evenGoldMinershavehelduprelativelywell….
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…ashaveGoldMiningJuniors.
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AmIworriedaboutourminingpositions?Notintheslightest.Thisisa1-in20yeareventunfoldingintheYen/$USDpair.AndDESPITEthisabsolutecollapseintheYen/$USDpair,GoldandSilverminershaveheldupquitewell.ThisisaCLEARsignalthatthissectorispreparingforamassivebullmarketrun.Howmassive?ThinkSilverabove$20andGoldabove$1400within3-4months.Similarly,I’mastonishedbyhowwelltheEuroisholdingup.Thusfarthisweek,theEuroisdownamere0.2%.
Iwanttoemphasizethis:inaweekinwhichtheFedraisedratesto0.5%-0.75%...creatingafull1%ratedifferentialbetweentheEuroandthe$USD…theEurohasfallenlessthanhalfofapercentagepoint.Thisiswhylookingatchartsissoimportant…chartstellyouwhatthemarketisthinking…regardlessofhowworkedupeveryoneisgettingaboutsomething.RightnowIamhearingabsoluteDOOMabouttheEuro.TherearecallsthattheEuroisgoingtoparitywiththe$USDwithinsixweeks.MeanwhiletheEurojusttriggeredarare“buy”signalbyhittingthelowerbandofitsweekly
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Bollingerbands.
ThelasttwotimestheEurodidthiswere1Q15and4Q15.BothtimestheEuroralliedtotesttheupperbandoftheBollingerbandoverthenext3-6months.We’retalkingaboutmovesof8%and9%.Today,theweeklyupperBollingerbandfortheEuroisat115.Giventhenegativesentimenthere,wecouldgeta“ripyourfaceoff”rallyverysoon.IknowmycallforabullrunintheEurohasrubbedalotofyouthewrongway.Butbepatienthere.ThemarkethasbecomeonegiganticlopsidedtradewitheveryoneontheplanetbettingonUSstocksandtheUSDollar.AndwhenIsay“everyone”ImeanEVERYONE.Tosummate,todaytheFedscrewedupinabigway.Regardlessofwhatthey’retryingtoaccomplish,theFedisstagingavirtualrepeatofthelate2015-early2016debacleinwhichstockscollapsed.Witheveryinvestorclass(hedgefund,commercialtraders,andretailinvestors)now“allin”onstockswe’resetforsomethingworse.SentimentisatextremesassociatedwithHISTORICtops.Myviewisthatthemarketsarepreparedtodropatleast10%.
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Thiswillalsomarkthetimeinwhichthe$USDbeginstoselloffandtheEurobeginstorally.ThatwillbethefuelthatpropelsGoldandSilvertonewhighs.Iexpectthatwithin3-4months,Silverwillbeabove$20andGoldwillbeabove$1400.
Thisconcludesthisweek’smarketupdateforPrivateWealthAdvisory.Weareatahistoric
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turningpointinthemarkets.AgainIwanttoemphasize,USstockshaveonlybeenthisoverboughtTWICEinthelast100years.Getreadyforsomefireworks.I’mwatchingthemarketscloselyandwillissueupdatesifanythingchanges.Butourcentralthesisremainsthesame.TheonlychangebetweennowandlastweekisthatnowtheFed’sDecembermeetingisoverandtheFedisdonefortheyear.Thiswasthefinalitemweneededoutofthewayforthemarketstobegintheirnextmajormove($USDdown,USstocksdown,Euroup,GoldandSilverup).Barringanynewdevelopmentsyou’llnexthearfrommenextWednesdayinourusualweeklymarketupdate.Untilthen…
GrahamSummersChiefMarketStrategistPhoenixCapitalResearch
BestRegards,
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OPEN POSITIONS
STOCKS PORTFOLIO POSITION SYMBOL BUY
DATE BUY
PRICE CURRENT
PRICE GAIN/ LOSS
Exxon XOM 9/24/14 $95.82 $90.58 1% RPXCorp RPXC 8/5/15 $15.48 $10.86 -30%
ChinaETF ASHR 11/7/16 $24.80 $24.26 -2% EmergingMarketsETF EEM 11/25/16 $35.25 $35.25
0%
Ambev ABEV 11/25/16 $4.96 $4.78 -4%
Cemex CX 11/25/16 $8.07 $8.31 3% EnterpriseProductsPartners EPD 11/31/16 $25.93 $25.35
-2%
SmallcapEmergingMarkets DGS 12/7/16 $40.00 $38.95
-3%
PeruETF EPU 12/7/16 $33.23 $32.70 -2%
BONDS PORTFOLIO
POSITION SYMBOL BUY DATE
BUY PRICE
CURRENT
PRICE
GAIN/ LOSS
NuveenMuni.Fund NVG 1/2/14 $13.12 $14.13 28% EmergingMarketBonds EMB 11/21/16
$109.82$109.09 0%
LongUSTreasuries TLT 11/21/16 $121.05 $116.82 -3%
Pricesasofmarket’scloseon12/14/16atmarket’sclosePriceincludedividends
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POSITION SYMBOL BUY DATE
BUY PRICE
CURRENT
PRICE
GAIN/ LOSS
Gold 3/17/10 $1,120 $1,144.00 2% Silver* 3/17/10 $16.23 $16.81 4%
UraniumETF URA 6/8/16 $15.49 $13.67 -12%
GoldMinersETF GDX 10/5/16 $22.83 $19.89 -13% GoldMiningJuniorsETF GDXJ 10/5/16 $37.52 $32.18
-14%
SilverWheaton SLW 10/5/16 $22.59 $18.68 -17% SilverStandardResources SSRI 10/5/16 $10.30 $8.76
-15%
BarrickGold ABX 10/5/16 $15.54 $14.73 -5%
NewGold NGD 10/5/16 $3.88 $3.63 -6%
PRECIOUS METALS/ MINERS PORTFOLIO
Pricesasofmarket’scloseon12/14/16atmarket’scloseReturnsincludedividends*Averagepriceof$17.50and$14.97
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SPECIAL SITUATIONS/HEDGES/SHORTS PORTFOLIO
POSITION SYMBOL BUY DATE
BUY PRICE
CURRENT PRICE
GAIN/ LOSS
FranceETF(SHORT) EWQ 9/16/16 $23.38 $24.28 -4% ItalyETF(SHORT) EWI 9/16/16 $21.56 $23.65 -10% AmericanEagleOutfitters(SHORT) AEO 5/26/16 $15.36 $16.79 -9% Russell2000ETF IWM 12/14/16 $135.15 NEW SHORT
Pricesasofmarket’scloseon12/14/16atmarket’sclosePriceincludedividends
CASH/ CURRENCIES PORTFOLIO
POSITION SYMBOL BUY DATE
BUY PRICE
CURRENT
PRICE
GAIN/ LOSS
EuroTrust FXE 10/5/16 $108.80 $102.32 -6%
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RECENTLY CLOSED POSITIONS
POSITION SYMBOL BUY DATE
BUY PRICE
SELL DATE
SELL PRICE
GAIN/
LOSS
Gerdau GGB 11/7/16 $3.36 11/22/16 $4.18 24%CopperMinersETF COPX 11/7/16 $17.90 11/22/16 $21.10
18%
Conoco-Phillips COP 11/2/16 $43.46 11/25/16 $45.38 4%Schlumberger SLB 11/2/16 $77.93 11/25/16 $80.96 4%Chevron CVX 11/2/16 $105.53 11/25/16 $110.76 6%Apache APA 11/2/16 $58.46 11/25/16 $62.86 8% NaturalGasTrust UNG 10/5/16 $8.71 12/7/16 $9.32 7% Santander(SHORT) SAN 2/3/16 $4.13 12/7/16 $5.04 -22% Barclays(SHORT) BCS 7/5/16 $7.92 12/7/16 $11.90 -50%