Weekly Market Update

Transcription

1 1 Weekly Market Update Phoenix Capital Research, Phoenix Capital Management Inc. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Phoenix Capital Management Inc. All Rights Reserved.

2 Disclaimer: The information contained on this newsletter is for marketing purposes only. Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice by Phoenix Capital Research or any of its affiliates, nor is it to be relied upon in making any investment or other decision. Neither the information nor any opinion expressed on this newsletter constitutes and offer to buy or sell any security or instrument or participate in any particular trading strategy. The information in the newsletter is not a complete description of the securities, markets or developments discussed. Information and opinions regarding individual securities do not mean that a security is recommended or suitable for a particular investor. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. Opinions and estimates expressed on this newsletter constitute Phoenix Capital Research's judgment as of the date appearing on the opinion or estimate and are subject to change without notice. This information may not reflect events occurring after the date or time of publication. Phoenix Capital Research is not obligated to continue to offer information or opinions regarding any security, instrument or service. Information has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. Phoenix Capital Research and its officers, directors, employees, agents and/or affiliates may have executed, or may in the future execute, transactions in any of the securities or derivatives of any securities discussed on this newsletter. Past performance is not necessarily a guide to future performance and is no guarantee of future results. Securities products are not FDIC insured, are not guaranteed by any bank and involve investment risk, including possible loss of entire value. Phoenix Capital Research, OmniSans Publishing LLC and Graham Summers shall not be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. Phoenix Capital Research is not responsible for the content of other newsletters to which this one may be linked and reserves the right to remove such links. OmniSans Publishing LLC and the Phoenix Capital Research Logo are registered trademarks of Phoenix Capital Research. OmniSans Publishing LLC - PO BOX 2912, Alexandria, VA 22301

3 Weekly Market Update ( ) The Fed s annual Jackson Hole meeting begins on Friday of this week. However, the market is already smelling what is coming. First and foremost, the Euro pullback is over. The Euro is now going to 120 if not higher. I had thought we d see more of a correction here. The fact that the Euro only consolidated instead of correcting confirms my view that the ECB will be ending its QE program. As I ve noted numerous times before, the largest currency moves now occur when a Central Bank promises to start or end a QE program. When a Central Bank promises a new QE program its currency falls. And when a Central Bank begins ending a QE program its currency rallies. Currently the ECB is engaged in a 60 billion per month QE program. Based on the continued strength in the Euro, I expect ECB President Mario Draghi will be using the Fed s Jackson Hole meeting to announce that the ECB will be tapering its QE program shortly. The reason is that the ECB has created a truly massive bubble in EU bonds. As I write this, EU JUNK BONDS are yielding roughly the same as the 10-Year US Treasury Note (the risk-free rate of return). 3

4 Put another way, because of the ECB s QE program, the bond market is claiming that lending money to an individual company in Europe with a junk credit rating is as safe as lending money to the United States (the largest economy in the world with the Central Bank that controls the world s reserve currency). This is absolute insanity and the ECB knows it. Indeed, there are already signs that Germany is beginning to turn against the ECB s QE program. The European Central Bank may be violating laws on monetary financing in its 2.3 trillion euro ($2.7 trillion) asset purchase programme, Germany s constitutional court said on Tuesday, and it asked Europe s top court to make a ruling. In the biggest challenge yet to the ECB s unprecedented effort to revive growth, the court said bond buys under the scheme may go beyond the bank s mandate and inhibit euro zone members activities. 4

5 Again, I fully expect ECB President Mario Draghi to lay the foundation for additional tapering of the ECB s QE program at the Fed s Jackson Hole meeting starting Friday. This will ignite the Euro and push the $USD lower. With that in mind, it s time to close our US Dollar position. I had thought we d get a 2% bounce here. Instead we ve basically seen the $USD move sideways. Regardless, it s time to shift back into the Euro as it prepares for its move above 120, to its eventual target of 130. Action to Take: Sell the US Dollar ETF (UUP). Action to Take: Buy the Euro Trust (FXE). Going forward the Euro Trust will be our cash position. As the Euro surges, EU stock markets will collapse. The German DAX has bounced off support at 12,000 (purple line). It s now rolling over and will begin its next leg down to 11,250. 5

6 France s stock market is in a similar boat (bouncing off support, and now ready to roll over) 6

7 as is Italy s stock market. Put simply, the Euro is going to rally and EU stock markets are going to drop hard. The flip side of this trade is that the $USD will be dropping, which is going to ignite Oil. The Energy Sector ETF (XLE) is going to 65. 7

8 However, even more bullish is the Oil Services ETF (OIH). 8

9 Action to Take: Buy the Oil Services ETF (OIH) Other plays I like... Apache (APA) is going to $50. Action to Take: Buy Apache (APA) Halliburton (HAL) is going to $46, if not $48. 9

10 Action to Take: Buy Halliburton (HAL) Outside of this, Natural Gas (UNG) finally looks ready to breakout to the upside. We re already up on this position. But I expect much bigger gains soon. 10

11 Another major development concerns Gold, which has finally broken the 7-year downtrend line since the 2011 peak. 11

12 This is a VERY bullish development. We should break north of $1,300 this week and be on our way north of $1,320 in September. Gold Miners (GDX) have yet to follow suit but they are coiling in preparation for a truly violent breakout. Here is the comparable line for Silver. 12

13 Here is the comparable line for Silver Miners. 13

14 Put simply: we are about to enter another round of $USD weakness. This will be pushing Oil, Gold, and Gold Miners sharply higher. Again, feel free to add your positions in any of our Gold or Silver Mining plays. This concludes this week s Weekly Market Update for Private Wealth Advisory. For now, the key trend is $USD weakness. The fact that the greenback couldn t even generate a significant bounce from such oversold levels tells us that this remains a dominant theme. I m watching the markets closely and will issue updates as needed. Barring any new developments you ll next hear from me next Wednesday after the market s close in our longer monthly issue in which I will be delving more deeply into the key macro trends for the global economy. Until then Best Regards, Graham Summers Chief Market Strategist Phoenix Capital Research 14

15 OPEN POSITIONS STOCKS PORTFOLIO CURRENT GAIN/ POSITION SYMBOL DATE PRICE PRICE LOSS RPX Corp RPXC 8/5/15 $15.48 $ % Agricultural -7% RJA 1/12/17 $6.46 Commodities ETF $6.00 Public Storage PSA 3/23/17 $ $ % Verizon VZ 4/26/17 $47.17 $ % Vietnam ETF VNM 6/7/17 $14.64 $ % Transocean RIG 6/15/17 $8.56 $ % Pioneer Natural -17% PXD 6/15/17 $ $ Resources Helix Energy HLX $6.16 $6.16 0% 7/19/17 Solutions Southwestern SWN $6.17 $ % 7/19/17 Energy EOG Resources EOG 7/19/17 $95.00 $ % Natural Gas ETF UNG 8/2/17 $6.30 $6.57 4% Energy Transfer ETP $ % 8/2/17 $18.52 Partners Enterprise Products EPD $ % 8/9/17 $25.94 Partners Oil Services ETF OIH 8/23/17 $22.07 NEW! Apache APA 8/23/17 $40.33 NEW! Halliburton HAL 8/23/17 $39.06 NEW! BONDS PORTFOLIO POSITION SYMBOL DATE PRICE Long Treasury ETF TLT 7/27/17 $ Emerging Market Bonds ETF EMB 7/27/17 Prices as of market s close on 8/23/17 at 1PM. Gains include dividends CURRENT GAIN/ PRICE LOSS $ % $ $ % 15

16 PRECIOUS METALS/ MINERS PORTFOLIO POSITION SYMBOL DATE PRICE CURRENT PRICE GAIN/ LOSS Gold 3/17/10 $1,120 $1, % Silver* 3/17/10 $16.23 $ % Gold Miners ETF** GDX 10/5/16 $22.45 $ % Gold Mining Juniors 1% GDXJ ETF*** 10/5/16 $34.72 $33.51 Wheaton Precious -16% WPM Metals Corp 10/5/16 $22.59 $18.94 New Gold NGD 10/5/16 $3.88 $3.41-9% Barrick Gold ABX 4/26/17 $16.92 $ % Silver Mining ETF SIL 4/26/17 $34.44 $ % Silver Standard SSRI 4/26/17 $9.94 $ % First Majestic Silver AG 5/12/17 $8.70 $ % Randgold 4% GOLD 5/12/17 $96.78 Resources $93.25 Klondex Miners KLDX 8/9/17 $2.94 $3.19 9% Wesdome Gold Mines WDO.TO 8/9/17 $2.18 $2.12-3% Prices as of market s close on 8/23/17 at 1PM. Gains include dividends *Average price of $17.50 and $14.97 ** Average price of $22.83 and $22.07 *** Average price of $37.52 and $

17 SPECIAL SITUATIONS/HEDGES/SHORTS PORTFOLIO POSITION SYMBOL CURRENT GAIN/ DATE PRICE PRICE LOSS France ETF (SHORT) EWQ 9/16/16 $23.38 $ % Italy ETF (SHORT) EWI 9/16/16 $21.56 $ % Russell 2000 ETF (SHORT) IWM 12/14/16 $ $ % Apple (SHORT) AAPL 3/23/17 $ $ % Facebook FB 5/31/17 $ $ % Alphabet GOOGL 5/31/17 $ $ % Homebuilders ETF XHB 8/9/17 $37.94 $ % CASH/ CURRENCIES PORTFOLIO POSITION SYMBOL DATE PRICE CURRENT PRICE GAIN/ LOSS Euro Trust FXE 10/5/16 $ NEW! Prices as of market s close on 8/23/17 at 1PM. Gains include dividends 17

18 RECENTLY CLOSED POSITIONS POSITION SYMBOL DATE PRICE SELL DATE SELL PRICE GAIN/ LOSS American Eagle AEO 5/26/16 $15.36 Outfitters (SHORT) 1/31/17 $ % Cliffs Nat Resources 19% CLF 2/8/17 $10.15 $12.10 (FIRST HALF) 2/13/17 Ambev ABEV 11/25/16 $4.96 2/23/17 $ % Cemex CX 11/25/16 $8.07 2/23/17 $8.69 8% Cliffs Nat Resources 10% CLF 2/8/17 $10.15 $11.13 (SECOND HALF) 2/23/17 Exxon XOM 9/24/14 $ /8/17 $ % Enterprise Products 9% EPD 11/31/16 $25.93 Partners 3/8/17 $27.83 Natural Gas ETF UNG 2/22/17 $6.57 3/8/17 $7.11 8% Emerging markets ETF EEM 1/12/17 $ /10/17 $ % Barrick Gold ABX 10/5/16 $ /10/17 $ % Uranium ETF URA 6/8/16 $ /12/17 $ % Cameco CCJ 1/4/17 $ /12/17 $ % Coal ETF KOL 1/4/17 $ /12/17 $ % Silver Standard 10% SSRI Resources 10/5/16 $ /12/17 $11.32 Royal Gold RGLD 2/8/17 $ /12/17 $ % Silver Miners SIL 3/15/17 $ /12/17 $ % US Steel (SHORT) X 2/1/17 $ /13/17 $ % Copper Miners ETF COPX 3/23/17 $22.64 (SHORT) 4/18/17 $ % Financials ETF (SHORT) XLF 12/21/16 $ /26/17 $ % 18

19 POSITION SYMBOL DATE PRICE SELL DATE SELL PRICE GAIN/ LOSS 5% EPU 12/7/16 $33.23 Peru ETF 5/17/17 $34.77 Brazil ETF EWZ 2/8/17 $ /17/17 $ % Utilities ETF XLU 2/8/17 $ /17/17 $ % Solar Energy ETF TAN 4/19/17 $ /17/17 $ % Royal Gold RGLD 4/26/17 $ /17/17 $ % Southwestern Energy SWN 3/30/17 $8.15 5/24/17 $ % Gulfport Energy GPOR 3/30/17 $ /24/17 $ % US Oil Fund USO 4/26/17 $ /24/17 $ % Exxon Mobil XOM 5/3/17 $ /24/17 $ % Energy ETF (SHORT) XLE 5/24/17 $ /5/17 $ % Emerging Mkts Bond ETF EMB 11/21/16 $ /7/17 $ % Long US Treasuries TLT 11/21/16 $ /15/17 $ % Nuveen Enhanced Free $13.12 Muni Credit Fund NVG 1/2/14 6/22/17 $ % Rio Tinto RIO 6/19/17 $ /10/17 $ % Clear Energy ETF PBW 4/19/17 $4.06 7/10/17 $ % Enterprise Products EPD $26.00 $ % 6/22/17 Partners 7/17/17 US oil Fund USO 6/28/17 $9.20 7/17/17 $9.57 4% China ETF ASHR 2/1/17 $ /24/17 $ % Uranium URA 6/15/17 $ /24/17 $ % Cameco CCJ 6/15/17 $9.14 7/24/17 $ % US Steel X 6/19/17 $ /24/17 $ % Freeport McMoran FCX 6/19/17 $ /25/17 $ % Biotech ETF IBB 4/26/17 $ /25/17 $ % Baidu BIDU 6/7/17 $ /27/17 $ % Peru ETF EPU 6/22/17 $ /27/17 $ % Chevron CVX 6/22/17 $ /2/17 $ % Euro Trust FXE 10/5/16 $ /2/17 $ % US Dollar ETF UUP 8/2/17 $ /23/17 $ % 19