Instead of Treasuries, Investors Are Buying Foreign Stocks - Ep 1017

RATE AND REVIEW this podcast on Facebook. https://www.facebook.com/PeterSchiff/reviews/ The Catalyst is Rising Interest Rates October is just one week old and the carnage on Wall Street has already begun. I wonder if the October complacency is beginning to be shaken with the down move that we see.  Now, the Dow Jones is not down very much; in fact, it barely fell on the week; but the S&P was down about 1%.  But the NASDAQ was down more than 3% on the week. The catalyst is rising interest rates, which of course, the markets have been ignoring up until Wednesday afternoon, when all of a sudden somebody started to worry about the markets. A Weak Thursday and Friday Led to 1987 Black Monday The big declines happened on Thursday and then again today. The declines are not really big; not by the standards of an October crash, but we still have several weeks left for a big down move in October.  We had a weak Friday, a weak Thursday - that's exactly what we had in October of 1987, which led to Black Monday. Economy Far More Vulnerable to a Rate Shock Remember, the backdrop there was rising interest rates. We have interest rates rising now, of course they're not nearly as high as they were back then.  But percentage-wise, this is probably even higher, given where we're starting from. Of course, the economy is much more highly leveraged now than it was in 1987 and it's actually far more vulnerable to a rate shock now, than it was then.  Of course, back then, people were worried about rising trade deficits - they're even bigger now than they were back then. Investors Not Smart Enough to Worry About Trade In fact, we got the trade deficit out today for August. Another jump following the jump we had in July.  I think it was the biggest increase in 6 months.  Imports are rising, exports are falling.  It's bad news on trade. People were worried about trade back in 1987.  They're not smart enough to worry about it now, but they should.  The trade deficit is probably more important today than it was back then. Our Sponsors: * Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.com Privacy & Opt-Out: https://redcircle.com/privacy

6 Loka 201851min

JOIN PETER at the New Orleans Investment Conference https://neworleansconference.com/conference-schedule/ NAFTA was the Worst Deal in World History? I want to talk about Donald Trump's new trade deal. When Donald Trump was running for President, he said that NAFTA (North America Free Trade Agreement) was the worst trade deal ever negotiated ever by anyone in world history. It wasn't just the worst trade deal that America got into, it was the worst trade deal that anybody ever got into. I don't know how many trade deals Donald Trump actually studied, and whether he compared them to NAFTA to know that NAFTA was worse than any other deal that had ever been negotiated, but that was his claim. In fact, even in the ceremony where he took credit for the new deal that he negotiated he repeated that NAFTA was the worst deal ever negotiated. We Went from a Good Name to a Lousy Name Then he unveiled his deal, which he now calls the greatest deal ever negotiated.  So we went from the worst deal in the history of deals to the best deal in the history of deals. The problem is, it is basically the same deal! The only thing that has really changed is the name. We went from a good name to a lousy name, and the funny thing about it is Donald Trump is claiming that the name is better. The old name was NAFTA. The new name is USMCA. Us-ma-ca! Us-ma-ca? What kind of name is that? We basically went from a nice name to a ridiculous name. NAFTA Re-Branded with a Worse Name But the bottom line is that's probably the most substantive difference between the two deals.  Pretty much, it is the same deal. Yet this is the greatest deal in history and the old deal was the worst deal ever. This is standard operating procedure for Donald Trump. Everything is great now that he is President. Donald Trump pretended everything was awful before he was elected, and now, he's made everything fantastic, but he hasn't done anything. You listen to Fox News, they're talking about this thing like it is the greatest thing since sliced bread. It is NAFTA re-branded with a worse name. Our Sponsors: * Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.com Privacy & Opt-Out: https://redcircle.com/privacy

3 Loka 201858min

JOIN PETER at the New Orleans Investment Conference https://neworleansconference.com/conference-schedule/ Ominous October Today was the end of the month of September; it's also the end of the third quarter we are now beginning the final quarter of the year.  When we come back to trading next week, we will be in the month of October, and as I mentioned on my last podcast, we have had some substantial stock market declines in October, obviously not every October has a big drop, in fact most of the Octobers don't, but some of the most notable declines have occurred in the month of October, including the crash of 1987 and the crash of 1929. You'd Think There Would Be More Concern But given that our valuations are probably higher now than they were at those prior peaks, you would think that there would be more concern right now about the possibility of another October surprise in the way of a major decline in the stock market.  But the stock market finished the day positive - on the week it was a mixed picture.  The Dow Jones was down a bit and the NASDAQ was up on a week that the Federal Reserve did, in fact, raise interest rates yet again, as expected. Now we're at 2-2.25%. Italy's Economy Putting Pressure on the Euro The yield, though, on the long bond actually went down, in fact, it was down a little bit again today (Buy the rumor sell the fact). The dollar continued to rise and I thought that maybe we would have seen a dollar sell-off following the rate hike. But I think the reason is because of the weakness in the euro, the result of what's going on in Italy. The Italian market is under a lot of pressure because the Italian government is running deficits that exceed 2% deficit guideline imposed by the Eurozone.  I think that Italy's proposed new budget deficit is 2.4% of Italian GDP. This puts pressure on Italy which is also putting pressure on the euro. Our Debt to GDP Is Twice That of Italy It's interesting that if America tried to get into the EU, we couldn't because out debt to GDP is about 5% and that's now. It will soar well over 10% in the next recession. Our debt is twice as high relative to our GDP as Italy's. If we keep running trade deficits like the trade deficit that we printed this month, we are going to be having a serious crisis in the dollar. It was bad trade deficits and concerns about the dollar was one of the biggest reasons we had the 1987 stock market crash. Our Sponsors: * Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.com Privacy & Opt-Out: https://redcircle.com/privacy

29 Syys 201855min

Eighth Interest Rate Hike As expected, the Federal Reserve raised interest rates for the eighth time, today. The rate is now 2 to 2.25 percent, so I guess the midpoint is 2.125%.  The move was highly anticipated, of course, even I expected the Fed to raise rates.  At this point I had been expecting that for some time ever since the Fed first began raising interest rates it became apparent that they would continue to move rates higher. "Accommodative" is Out The only thing that was potentially significant about this rate hike was the removal of the word "accommodative" by the Fed in their official statement to describe the current state of monetary policy.  I initially thought that that was a significant removal of the word.  Obviously, the Federal Reserve thinks very carefully about the written statements, so if they chose to remove a word, that was there, and they know that people parse through these words with a microscope.  The fact that the word was missing, obviously by intention - it wasn't just an accident - that they're trying to send a message. Maybe Neutral? What I first thought the message was, and I still believe that was in fact the message (even if the Fed is trying to backpedal), but that the Federal Reserve views a 2% as neither accommodative nor restrictive.  Maybe neutral. The Fed now believes that rates are high enough that they would no longer be described as accommodative. Interest Still Below Inflation: Negative Rates Meanwhile, rates are at 2%. Two percent in my mind is still a highly accommodative monetary policy, especially when the annual rate of inflation, even the way the government measures it, is above 2%. That means you still have negative rates of interest. How can you describe negative real rates as anything but accommodative? Powell:  "Don't Read Anything Into The Omission of Accommodative" Powell was specifically asked about the removal of the word accommodative from the statement during the Q&A period that followed the official announcement.  Basically, what Powell said was, "Don't read anything into the removal of that word". Our Sponsors: * Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.com Privacy & Opt-Out: https://redcircle.com/privacy

27 Syys 201848min

JOIN PETER at the New Orleans Investment Conference https://neworleansconference.com/conference-schedule/ Divided Government is Good? If the Democrats get control of Congress, which is a likely occurrence, what I'm hearing now is that this is bullish for the stock market! The stock market bulls are saying that if we have divided government that this is historically positive for the markets.  So even if the Republicans lose control of the House, and maybe even the Senate, it's OK, because it's divided government and that is good. Hoping for More Deregulation This is a bunch of nonsense. Has divided government historically been a positive? I think so, in that when you have a divided government you are less likely to make progress in legislation and since most legislation is harmful, the less legislation you get is better. But in the situation we have now, the hope is that we will have deregulation. That the progress that Trump will make will be in removing regulation.  Obviously if the Democrats take control of Congress, if you were hoping for more deregulation then your divided government will put a stop to that. So if divided government keeps government from getting smaller then it is not a good thing. If divided government stops the government from getting bigger, then maybe you could say it is positive. Building an Entire Stock Market Rally on Trump's Agenda But if you have built an entire stock market rally off of the supposed success of Donald Trump and his agenda, and his ability to get his agenda through Congress, that ability is going to be substantially curtailed, if not completely eliminated if the Democrats control Congress. Nothing that Trump wants to do will get through Congress so if you've been betting that it would, then the Republicans losing control of Congress is definitely a bad thing. Not The Contract with America This is not Newt Gingrich and The Contract with America, when Republican control of Congress forced Bill Clinton to move to the right and maybe stopped some of his big government agenda that would have gotten through a Democratic Congress.  When you had the Republican Congress putting a brake on Clinton's agenda, moving the nation more to the center, yes, that was a positive for the markets. We Don't Want to Even Fathom a Negative Influence on the Stock Market But why would losing a business-friendly Republican Congress to the Democrats, to Socialist Democrats, why is that bullish for stocks? How could you possibly think that is bullish for stocks if you think what we have now is bullish, and we lose a chunk of that, that just shows you that it doesn't matter what happens, these analysts are always going to say it's bullish. No matter what happens, it's bullish for stocks, because stocks are going up.  We don't want to even fathom the possibility that anything happening would be negative for stocks. Our Sponsors: * Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.com Privacy & Opt-Out: https://redcircle.com/privacy

25 Syys 201848min

JOIN PETER at the New Orleans Investment Conference https://neworleansconference.com/conference-schedule/ Illusion will be Replaced with Harsh Reality This is dangerous stuff.  This is the same thing thing that was being said when George Bush was President. Just because you're a Republican you don't have to claim that anything that was done by another Republican is great, in order to make the Democrats look bad. Ultimately that comes back and bites you because you loose credibility when the economy turns down. When it turns out that it was just a bubble, it was just an illusion, and when the illusion is replaced with harsh reality, you've got nothing and it makes it easier for the other side to scapegoat Capitalism for the problems and to hold out more government as the solution. The Trump Tariff Put One of the more ridiculous ideas that are floating around now is the existence of the so-called "Trump Tariff Put". I've heard a lot of talk about that and basically, it goes like this: Trump is very concerned about the stock market; yes, he is threatening these tariffs - we have additional tariffs.  If the tariffs actually prove to be harmful to the economy or to the stock market or to both, Trump can simply soften his stance, or maybe just surrender in the trade war. Just give up on the tariffs and the stock market will come roaring back. If the stock market is falling because of the tariffs and then we take the tariffs away, there's no reason the stock market won't just rally back up. So in other words, there's this put. It' s heads, the market wins, tails nobody loses. Even If the Market Goes Down, You're Going to Get Bailed Out As long as the tariffs aren't doing any damage, the markets keep going up, but if it turns out that the tariffs do damage, then they get rid of them, and the market resumes, even if it temporarily went down. So that is the Trump put, just like the Greenspan put, which became the Bernanke put, the Yellen put (whether or not there's a Powell put...).  The idea was, "Hey, if the market ever falls, the Federal Reserve will slash rates to make it go back up again. So you can't lose, even if the market goes down, you're going to get bailed out - whether by the Federal Reserve or by Donald Trump. If You're Looking to Invent Another Reason to Be Bullish and Not to Be Worried… I think this type of attitude is more just wishful thinking.  It's the kind of attitude that permeates a mania, a bubble. It's the fearless, "Hey if you're looking to invent another reason to be bullish and not to be worried…" If this stock market really starts to fall, it's not going to matter if we call off the tariffs. If the market is falling, chances are it is falling not simply because of the tariffs. The tariffs might be one element that is a problem for the markets, but it may simply be one of a number, and just getting rid of the tariffs will not be enough to turn around a bear market in stocks, which is long overdue. Our Sponsors: * Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.com Privacy & Opt-Out: https://redcircle.com/privacy

22 Syys 201855min

RATE AND REVIEW this podcast on Facebook https://www.facebook.com/PeterSchiff/reviews/ Sacrificed on the Altar of Political Correctness I want to spend the rest of this podcast talking about politics; in particular, what's going on with Brett Kavanaugh and his fading chances of sitting on the Supreme Court.  It appears that he may be sacrificed on the altar of political correctness. I also blame the Republicans for allowing this to happen - to have fallen into this trap; not just with Kavanaugh. No Sense of Proportion This has been slowly building, the camel's nose under the tent, and once the Democrats play this card - and this is not the racist card this is the rape card, the violence against women card. there's a zero tolerance now.  You can't even create the appearance that one is somehow tolerant of any kind of sexual abuse against women. There is no sense of proportion. Allegation About a 35-Year Old Event There was an allegation that became more significant 2 days ago when a previously unnamed woman who claimed that BrettKavanaugh assaulted her when they were in high school.  Now, of course, Kavanaugh is 53 years old now, so this is over 35 years ago. There Was a Lot of Alcohol at This Party Kavanaugh denied the initial allegation. Initially, the identity of the woman was unknown, as was the nature of the "sexual assault".  So Kavanaugh denied it. Now we actually have a name: Christine Blasey Ford, 51, a professor of Psychology, a registered Democrat. She has come forward now with the details of the encounter and the lack of details, because much of it she does not recall. After all, it happened 35 years ago, and according to the accuser, there was a lot of alcohol at this party.  She says that Kavanaugh was drunk, so she was probably drunk herself. I don't know if she has admitted to being drunk - there was alcohol at the party and the boys were drinking it.  It stands to reason that she probably had some alcohol herself. Our Sponsors: * Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.com Privacy & Opt-Out: https://redcircle.com/privacy

19 Syys 201848min

RATE AND REVIEW this podcast on Facebook https://www.facebook.com/PeterSchiff/reviews/ Making the Rich Pay Julia Salazar, another Democratic Socialist defeated Martin Dilan in the NY Senate primary.  The only reference to taxes on her website was to "make the rich pay their fair share".  That's it.  Nothing about what specifically she wants to raise, by how much she wants to raise it and how much money is going to come it.  This is going to be provided, that is going to be provided, and the people vote for her! This is how dumb the electorate has become. Shift to Democratic Socialism This is what I have been warning about on this podcast.  This shift in the political spectrum. The Democrats are moving to the left.  Democratic incumbents are going to be replaced by Socialists or will have to openly embrace Socialism themselves in order to maintain their seats. This is very dangerous, because when it does hit the fan, and it should hit the fan before the next elections a Democrat is going to be the next President, and the Democrats are going to control Congress. It's not going to be the Democratic party of Bill Clinton or even Barack Obama. It will be the Democratic party of Bernie Sanders. Sovereign Debt Crisis and Dollar Crisis We're going back to the anniversary of the Financial Crisis and the collapse of Lehman Brothers, and the next crisis, which will be a sovereign debt crisis and a dollar crisis.  It's going to be much much worse.  Bailouts are not going to work; stimulus is not going to work. Injecting Stimulus Directly into the Rears of the Democratic Voters But they're not going to try the same type of stimulus. They're not going to talk about injecting monetary heroin into the banking system to create a wealth effect. They're going to inject the stimulus right into the rear ends of the Democratic voters. They're going to want to give the money directly to the people, whether it is through some kind of basic income program or government make-work or forgiving student loans.  Whatever they do, it will be about showering money that the Fed creates out of thin air and putting it directly in the pockets of the voters. That is just pure unadulterated inflation. Our Sponsors: * Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.com Privacy & Opt-Out: https://redcircle.com/privacy

15 Syys 20181h 7min