Upon What Data Does the Fed Depend? – Ep. 100

Upon What Data Does the Fed Depend? – Ep. 100


* This is my 100th Podcast
* This new format allows for timely analysis when is is most convenient for me and for you, the listener
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* My podcasts can be accessed on YouTube, on iTunes and other podcast sites and right here on my website
* Also don't forget to check out my Twitter feed, because I comment much more frequently on daily economic news
* Check out my post on Facebook about the CEO who established a $70,000 minimum salary for all his workers, and the latest news is that his policy is about to take the company down
* Today a bombshell was dropped on the labor markets on Friday in the form of Employment Cost Index
* Measures the cost to employers: wages and benefits
* The expected increase was .6, but the actual number came in at just .2 for the quarter
* This the weakest number since 1982, since they began keeping records
* Janet Yellen has been saying that improvements in the labor market must precede a rate hike
* This is understood to mean wages, labor participation rate and full time vs part time jobs
* We're 0 for three, right now - all three are falling
* As soon as this number came out, they dollar sold hard
* But then, the dollar clawed its way back, and gold was down again - gold stocks got crushed - Why?
* Jon Hilsenrath, the chief economics correspondent for The Wall Street Journal, came out with an article, speaking for the Fed, stating that the Fed does not need wage growth to hike rates
* Really? The Fed is going out of its way to preserve the pretense that it can actually raise rates
* They are seeking the psychological effect of rate hikes without the real world damage of actual rate hikes
* If the Fed still believes it won't raise rates unless the labor market improves and they are taking wage hikes off the table, then what are they waiting for?
* The other two remaining criteria are still down
* Janet Yellen still says she's data dependent and all the data that she is depending on is negative
* The stock market looks very toppy - it looks like it will roll over and when it does the Fed will bring in the cavalry in the form of stimulus
* The Fed built the recovery on a stock market bubble and a real estate bubble
* Ben Bernanke's goal for 7 years was to create a "wealth effect" on assets that are now at risk - they are not going to let them collapse
* All of the data would argue for no rate hike in September
* Janet Yellen is implying, by talking about rate hikes, that she believes that the economy is going to improve, when all signs indicate the opposite
* Therefore traders are ignoring bad economic data because they trust that Janet Yellen believes the economy will improve soon
* Don't pay any attention to the man behind the curtain, because Janet Yellen says the bad news is not real
* We can all see the negative data, but no one wants to acknowledge it because Janet Yellen is not recognizing it publicly
* They buy the dollar, they sell gold and there is a dichotomy between those who don't own gold and have no ability to deliver it and are selling gold to those who don't actually want it - they are gambling on the price of gold
* The amount of gold being gambled is greater than ever before
* Sales for those who want to hold gold are skyrocketing - the mints are running out of supply
* We are running out of some of our silver
* Schiff Gold
* Our customers who buy gold and silver are not offering to sell - they are buying more
* They are reacting to lower prices
* On the other side of the coin, clients are reacting negatively to the high dollar weighing on the relative value of foreign stocks
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