The Fed Flinches, Powell Put in Play – Ep. 418

The Fed Flinches, Powell Put in Play – Ep. 418

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The Fed's Game of Chicken
The big news was yesterday, when Fed Chairman, Jerome Powell, basically flinched. I've been talking about the game of chicken that the Federal Reserve has been playing with the markets. The way the game of chicken goes, is the markets keep moving lower and the Fed keeps talking about how great the economy is and how many rate hikes are coming in the future. Somebody has to flinch - somebody has to blink. It's like you have these two automobiles driving toward each other, and there's going to be a major crash unless somebody turns the wheel.It seems like it was Jerome Powell who turned the wheel first, and, in fact, was chicken.
The Fed Is Worried About All Asset Prices, Not Just the Stock Market
As much as the Fed wants to pretend they don't care about the stock market - they absolutely care about the stock market. They are tremendously worried about a weakening stock market. Remember the goal of quantitative easing was to lift the stock market - to create a wealth effect and it was that stock market-created wealth that was going to drive consumption and the economy. And it wasn't just the stock market; it was also the real estate market. So the Fed is worried about all asset prices, not just the stock market. Clearly the real estate market is in even more trouble than the stock market, but both of these markets were headed lower, and I think that is what really prompted the Fed to blink - to swerve in this game of chicken.
Powell Suddenly Dials Back the Narrative
Now, of course you also had President Trump pressuring the Fed, you had Mnuchin putting some pressure on the Fed, which I think should also be a worrying factor. We don't really know. There was a lot of speculation about what was behind the Fed's change of heart - change in policy. After all, up until yesterday, even when you had the Vice Chair speak, the tone was very hawkish: "Yep, we've got lots of rate hikes coming." And now all of a sudden, Powell dials it all back. Basically, what Powell said that convinced people that maybe there will not be as many rate hikes in the future, is, "We're just below neutral. We're almost there, maybe one more rate hike ought to do it."
Is 2.25% to 2.5% Neutral?
First of all, we're still at 2%, so that would imply neutral is 2.25% or 2.5%. That really shows you how low the neutrality bar has been lowered given the enormity of the debt bubble that have. Once upon a time, and not too long ago, a 2.5% Fed Funds rate would have been considered highly stimulative.

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Black and Blue Friday for Oil Producers and Gold Miners: Episode 27

Black and Blue Friday for Oil Producers and Gold Miners: Episode 27

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Despite Higher GDP, U.S. Economic Data Continues to Disappoint: Episode 26

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26 Marras 201428min

The Real Outrage in Ferguson is the Reaction Not the Verdict

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25 Marras 201417min

Paul Krugman Runs Premature Victory Lap: Episode 24A

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25 Marras 201417min

SchiffRadio Podcast Episode 24

SchiffRadio Podcast Episode 24

Big News out of the Central Banks * U.S. FOMC * Primary concern - inflation is too low * no policy to "correct" the problem * Preparing markets for additional stimulus * Japanese Central Bank Doublespeak * Japanese sales tax hike postponed * Continued calls for more inflation * Why is sales tax is different than inflation? * Euro Decline * Mandating "stability" by increasing inflation? * Chinese Central Bank * Cut interest rate to 5.6% * Money flows to the dollar as a hedge because the market believes the Fed * Gold has not dropped much against the dollar and has risen against other currencies Our Sponsors: * Check out FRE and use my code LISTEN20 for a great deal: https://frepouch.com * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

22 Marras 201431min

SchiffRadio Podcast Episode 23

SchiffRadio Podcast Episode 23

Episode 23: Going to Extreme to Prove a Point: Two articles about Peter Schiff: * MarketWatch - writer refused to address corrections before going to print except for my official title - The point of my forecasts is to help people avoid problems ahead of time - I did not call for a stock market crash; I predicted QE4 - The Fed can prevent a Dollar Crisis - I said hyperinflation is unlikely, but a possibility * New Republic - Writer quotes selectively from a Reason article to prove his own spin - Points to the CPI to refute real inflation - The price of a Big Mac mirrored the CPI until 2002 - Now price of Big Mac rises 2x as fast as CPI - This illustrates how the government measures inflation Our Sponsors: * Check out FRE and use my code LISTEN20 for a great deal: https://frepouch.com * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

21 Marras 201427min

SchiffRadio Podcast Episode 22

SchiffRadio Podcast Episode 22

Episode 22: Lessons from the Michael Brown Case: * Don't rob a convenience store. * Don't rob a convenience store while high. * Don't be conspicuous after robbing a convenience store while high. * If a policeman then stops you, obey the policeman. * Do not try to take the policeman's gun away from him. * But if you get shot in the hand going for the gun and run away, do not charge the policeman when he says, "freeze!" * The political narrative hides the real problem: unhealthy family life. Our Sponsors: * Check out FRE and use my code LISTEN20 for a great deal: https://frepouch.com * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

20 Marras 201421min

SchiffRadio Podcast Episode 21

SchiffRadio Podcast Episode 21

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19 Marras 201426min

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