FOMC Minutes Confirm Fed Rate Hike Rocket Not Ready for September Liftoff – Ep. 103

Second Consecutive 300-Point Drop in the Dow The Dow Jones was down 380 points today, in fact this is the second consecutive 300-point drop we've had in the Dow. The Dow is now down about 4% for the month of February which just ended today.  This also means the Dow's record-breaking monthly winning streak has also come to an end.  Remember, the Dow was up every month since Donald Trump was elected President including every single month in calendar year 2017. That is something that has never happened in the history of the stock market. There has always been at least one month during any year where the market went down - except for last year, when it went up every month and it was also up in January.Not so in February.  Big decline. The Dow dropped better than 1000 points on the month. We'll see if this is the beginning of a much bigger downturn.  In fact, it could easily be the beginning of a bear market. Powell's Congressional Testimony the Catalyst The supposed catalyst for the sell-off yesterday and today was Powell's testimony before Congress yesterday.  He goes before the Senate tomorrow - he was in front of the House yesterday to give his talk about the economy. The Congressmen's questions are all self-serving.  They are all talking for their own constituents and nobody really cares what Jerome Powell says - except the market. The stock market is looking and caring about what he says. Powell is Hawkish What Powell said that spooked the markets - he was optimistic! He was hawkish - he was bullish on the economy. First of all, what do we expect?  He is on Team Trump, just as Ben Bernanke said he was a team player when he supported the economy under Bush.  So the Republican narrative is that the economy is great - everything is booming and Powell is going to toe that same line. But of course, when Powell speaks, the markets listen, and the markets didn't like that upbeat tone. It made them think, oh, we're going to keep getting rate hikes. Maybe we're going to get 4 rate hikes instead of 3 - and the stock market sold off. Will Powell Try to Fix What He Broke? It rallied again a little this morning; we were up over 150 I think early in the day, but all of the decline happened in the last hour of trading, as is typically the case with some of these sell-offs.  So it doesn't bode well for tomorrow. - Unless Jerome Powell tries to fix what he broke. Our Sponsors: * 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

1 Mar 201836min

Remembering Irwin Schiff Today would have been my father, Irwin Schiff's 90th birthday. If you're not familiar with my father's story, and I'm sure most of the people who listen to this podcast are familiar with my father but if you're not go to schiffbooks.com and pick up a copy of "The Federal Mafia," which was one of only 2 books banned by the Federal Government.  We have a lot of books, "The Kingdom Moltz" a book that really shows off my father's sense of humor.  It's beautifully illustrated by an artist named Andy Ice.  I always liked that book as a kid. The book is very appropriate now, because it really explains inflation and where it comes from.  My dad's old website, paynoincometax.com is still up, which has an archive of his old radio shows that he did weekly from Las Vegas. If you listen to my Dad, you'll know what I'm coming from.  My dad talks a lot about economics. Everything is Great! But today, everything is great; Wall Street had a huge relief rally today; the Dow Jones was up almost 350 points, pretty much closing right on the highs of the day.  The NASDAQ had an even better day, by percentage, up 120 points.  The Dow was down on the week until today, but this big gain brought it up for the week. Down Day in the Bond Market I think the reason the market was so strong was we finally got a down day in the bond market. The yield on the 10-year treasury went back down. We closed at 2.871.  Remember, we got to 2.95, we almost got to 3% and now we're back down to 2.871 on the 30 year. We had gotten up to 3.22 a couple of days ago.  I think this took a lot of pressure off the stock market and people came in buying. "Everything is great; nothing to worry about!" Commodities Strong Across the Board The commodity market, though, was very strong across the board.  Look at the surprise strength in oil.  Everybody was talking about oil prices coming down - we're already back up to $63.50 and above. Almost back the the highs.  Oil prices are going a lot higher. It's not just oil prices that are going up; commodities in general.  I think we are in the early stages of another major boom in commodity prices.  We had a big boom that ended in 2008 with the financial crisis.  This is going to be a bigger boom, because it's not going to end in a financial crisis.  This is going to be a dollar crisis, which is music to the ears of the commodity markets because they're all priced in dollars. Our Sponsors: * 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

24 Feb 201828min

Dow Down Over 250 Points Today the Dow Jones was down just over 250 points; we're back below 25,000. I think we were down better than 300 on the lows of the day, but we went out pretty low.  The dollar was actually quite strong today; the dollar index had one of its better days of the year - +.61. We're back at 89.71. We had gotten back below 89, with an 88 handle.  Gold had a bad day today after having had some pretty good days last week.  The price of gold down almost $18 now; just below $1330. We got above $1350 last week, but we couldn't hold it.  I think we really need to go above $1400 to clear away this overhead resistance. Bond Market Continues Decline The only trend that really continued was the bond market, continuing to go down.  It's pretty much a daily affair.  Yields rising off the highs of the day - we're back below 2.9.  We got to 2.915 on the 10-year.  We closed at 2.893.  But I think it is the back-up in yields that continues to put downward pressure on gold and some upward pressure on the dollar. Now, in the scheme of things, it does not matter because the dollar has been falling all year, despite the fact that rates have been rising all year. False Narrative That High Rates Are Good for the Dollar But the narrative that higher rates is good for the dollar still permeates the markets. Traders still have not figured out that they've got this one wrong.  Likewise, they still haven't figured out that rising inflation is good for gold, not bad for gold.  In fact, I think the catalyst for today's rally in the dollar and the sell off in gold is the news that came out on inflation on Friday. Bad News about Inflation We got some really bad news that inflation is picking up.  We got the data for import prices and export prices.  Export prices were up by .8% but import prices, which were clearly more important, because we have to pay for our imports - our import prices shot up 1%. They were expecting a gain of .6%, so 80% higher than what was expected.  Year over year, you're talking about a 3.6% increase in the price of our imports. Import Prices Rising Faster Than Export Prices Now this is bad for a couple of reasons: 1) If our import prices are rising faster than our export prices, what does that mean about our trade deficit? That means its going higher. But 2) It's inflation, or the cost of living, because we have to pay for these imports.  If imports are 1% more expensive, month over month, that means it costs Americans more money to buy whatever is imported. Our Sponsors: * 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 Feb 201829min

St. Valentine's Day Rout I wouldn't really call what happened in the bond market and the U.S. dollar market as a St. Valentine's Day massacre, maybe it was a slaughter; even slaughter was too harsh a word.  It was a rout.  But this is nothing compared to what is going to come. The daughter is going to get slaughtered a lot more and the bond market is going to get slaughtered a lot more in the days ahead.  Maybe not exactly tomorrow, but there will be days ahead that will be much worse than today. This is the tip of a huge iceberg. Doing the Impossible Before I get into the tail of the tape today, and all the horrific economic numbers that came out today, I want to take a step back and talk about President Trump's budget, which was released on Monday.  Basically, the Republicans succeeded in doing something that you would have thought was impossible. They are making the Democrats look like the fiscally responsible party. A Farce First of all, there are some cuts in this budget that are never going to happen.  There are a lot of assumptions that are saving money, like they assume a total repeal and replace of ObamaCare, which isn't going to happen.  In fact, if it didn't happen when Republicans controlled Congress, how is it going to happen when the Democrats control Congress in 2019?  So this is all farcical. Assumptions... But one of the biggest farces of the entire budget is the underlying economic assumptions.  They're assuming that the very low unemployment rate gets even lower. But, the most farcical of all, is that they assume that the economy grows uninterrupted at an average of 3% for the next 10 years! This so-called expansion is already 9 years old. That makes it the second or third longest expansion in history, and if it continues this year, I think it will be the largest expansion in history. If it continued for another 10 years it would be almost twice as long as the next largest economic expansion in history.  What are the odds that that is going to happen?  But even if that happens, even if we get 10 years of 3% economic growth (we probably won't even get 1) but let's assume we get 10, even with that, the budget does not balance. Not Even Pretending the Budget will Balance This is the first time the Republicans are presenting a budget that, even in 10 years, does not balance.  Now, think about this: When they were presenting budgets that had a pretense of balancing in 10 years, and they were way off the mark, can you imagine how much further off they will be now when they are not even pretending the budget is going to balance? Trillion Dollar Deficits and no QE In the first couple of years they are forecasting trillion dollar deficits.  As I said on the podcast before, the last time we had trillion dollar deficits, the Fed was doing a trillion dollars a year in QE. Right now, the Fed is still posturing that it is not going to do any QE. In fact, it is posturing that it is going to do QT - it is going to shrink its balance sheet. Big Political Problem for the Republicans But here is going to be the big political problem:  Since the Democrats are now the fiscally responsible party, they will be able to hang these deficits around the necks of the Republican candidates like an Albatross.  I know a lot of people are thinking, "Wait a minute, Peter! Obama doubled the deficit & the national debt - there are all kinds of deficits under Obama, so how can the Democrats say that the Republicans are the big spenders and they are the fiscal Conservatives? Inevitable Keynesian Logic It is very easy.  It is basic Keynes.  They are going to say is when Obama ran deficits, they were necessary to get us out of the recession that Bush caused by cutting taxes on the rich, and the corporations.  So they were a necessary economic stimulus to get out of the ditch that Bush drove us into.  After all, Clinton, a Democrat, Our Sponsors: * 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

15 Feb 201840min

A Change of Trend Another volatile day of trading ended with the Dow gaining a little over 300 points - 330 points to be exact.  The NASDAQ composite was up just shy of 100 points - 97.33 - and the S&P gained 38.5 points.  But about 2 hours before the close, the Dow was down over 500.  And then, in about 20 minutes, it rallied from down 500 to positive, and then at the close it had that 300-point rally. But it started the day up about 200 points, so between up 200, down 500, up 300… Again, we're continuing massive volatility which, as I said is indicative of a change of trend.  We were so long in an uptrend with no volatility, now all of sudden we have this massive volatility. "Just a Reversal" Of course there are a lot of people jumping on this:"Oh, it's a reversal, it's a bottom, we rallied 800 points" Look, that's not how you make a bottom.  800 points is nothing. We had 2 thousand point drops, so I don't think the bottom is in. Is it possible that there will be a rally off of here? Of course, anything is possible, but I don't think it is probable.  I think it is a higher probability that we are going to re-test that low.  If this really is a correction, and not a bear market, I think the low that we put in earlier today is going to have to hold.  It is going to have to have some kind of test. Fundamentals Look Much More Like a Bear Market But, again, looking at the fundamentals, this looks so much more like a bear market.  In fact, when you listen to the talking heads on CNBC, they keep saying, "Relax, don't worry… this is a correction… the market is long overdue for a correction… we haven't had a correction in a long time…corrections are normal,  and all that is true. But we also haven't had a bear market in a long time, and bear markets happen. Bear markets are normal. So how do they know that what we're having now is not the long-overdue bear market? Our Sponsors: * 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

10 Feb 201830min

Orlando Money Show: 20 Trillion and Beyond I wasn't intending to do a podcast today;  I'm in Orlando at the Money Show, I'm on a stock market panel.  It's going to be fun: Louis Navellier, Mark Skousen, David Callaway  and Chris Gaffney.  My big talk tomorrow should be very interesting. The title is 20 Trillion and Beyond: What the Coming Debt Explosion Will Mean to Your Portfolio. Dow Jones Closed Down 1,032 Points Today Now, of course, it's already exploding, but I gave them that headline about a month ago because I already knew that the debt problem was percolating and that was going to be what was going to blow up everybody's portfolio. But when the Dow is down 1000 points twice in the same week, I have to come on and do a podcast.  If you haven't heard the news, the Dow Jones closed down 1,032 points today. The low of the day.  We closed below the intra-day low of Tuesday morning, when the Dow ended up 500. Successful Test? Now we're not back down to the lows we hit Monday night, in Asian trading.  We'll probably be there by tonight.  This market is looking ugly. That was a horrible close, we have to go lower.  It's crazy: I was watching CNBC in my hotel room and some guy was on saying, "This might be a successful test if we can just close above Monday's lows!"  Successful test?  A successful test is when you get a huge bounce off the lows.  Even if we had closed above it, that wouldn't have been a successful test - we could have crashed below it the following morning.  But we couldn't even hold it.  We closed on the lows. Horrible 30-Year Bond Auction Today And, you know what? Bond yields rose anyway.  1,000 points down in the Dow wasn't even enough to send bond prices higher and yields lower.  The yields on the 10-year and the 30-year rising to new highs for the move.  30-year closed at 3.137.  As I said, horrible, horrible 30-year bond auction today.  Again, why anybody showed up is beyond me, but obviously not as many people showed up as they expected.  Yields on the 10-year, another new high, 2.851 is where we closed.  We got up to 2.884, and the reason we probably didn't close there is because of the 1,000 point drop in the Dow. Government Spending is Behind the Carnage But that big drop didn't make interest rates go down, it just kept them from goin up even more.  But nothing is going to stop rates from rising.  Especially if we get this Budget Deal tonight.  Apparently, if they don't get the budget deal tonight, the Government is going to shut down. And if anybody thinks that the Dow is dropping because people are afraid the government is going to shut down, they don't know what they are talking about.  The reason the market is dropping is because the government's not going to shut down. Government spending and borrowing  is behind the carnage in the bond market, which is killing the stock market. Our Sponsors: * 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

9 Feb 201824min

Volatility The volatility is really continuing, in fact, today at one point this morning the Dow was up close to 400 points; ended up closing negative.  It wasn't a big drop; about 20 points, but I think that's the biggest reversal of a gain to a loss in a little over 2 years. The broader market did worse.  The S&P percentage-wise dropped about 13.5 points; the NASDAQ was down about 64 points. Turnaround Tuesday Of course the biggest reversal is the one we had yesterday.  In fact, when I recorded my podcast on Monday I thought we'd have a big drop on Tuesday, but then I though we could also have a rally - Turnaround Tuesday.  I thought we'd have a big drop in the morning and some kind of rally.  That's exactly what we did, except we had an even bigger drop in the evening. Dow Futures Loss On Monday night, looking at how U.S. stock futures were trading in Asia, the Dow futures were down the equivalent of 1300 points.  Now by the time New York markets opened, we had recouped almost all those losses.  But if you look at the 5 trading days, from the high, the Dow Futures lost about 13% of their value.  That just shows you how quickly the market can go down.  The next time it could lose even more. That was a big move.  Then we finished the day with a 500-point rally.  So, lots of volatility. Trend is Changing I will tell you something:  When you have a trend, and then all of a sudden you see lots of volatility, generally, that's a sign the trend is changing.  The trend has been up, obviously stocks have been trending up for years.  And they've been trending up with minimal volatility.  All of a sudden you see massive volatility. Does that mean the trend is likely to continue? No.  It's more likely a sign the trend has come to an end. Now you're getting all this volatility as people are jockeying around for position.  People are buying the dips, now they're selling the rips. Tail Wagging the Dog I think the close today is a very weak close. We could start selling off tonight.  I think the markets closed in a very weak way and there could be a lot more downside, especially if you look at what's happening in the bond market.  That is the tail that is wagging the stock market dog.  Yields on bonds are now back to the highs.  In fact, the yield on the 30-year is now the highest it has been all year. Higher than it was before this little crash.  The yield is 3.117 on the close. Our Sponsors: * 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

8 Feb 201843min

Stock Market Decline Predicted Last Friday I have to warn you up front that I seem to have come down with something last night after the game, and I am having trouble talking today.  I normally would not record, but I have to because on Friday's podcast I predicted the decline that we saw today. I Told You So Of course, we did not have a Black Monday like 1987; it wasn't a 20% decline. It was the biggest point decline in the history of the stock market by a large magnitude. We were down 1175 points. We were down 1600 points at the low.  Although this is not the biggest point decline and in terms of percentage, it is in the top 20 (I think it was number 14).  This is a major decline.  We rarely see declines this big, and I'm pretty much going to say, yeah, I told you so on Friday. Stocks Rising for All the Wrong Reasons I have been seeing this coming for a while.  I know a lot of Peter Schiff critics say, "he's a stopped clock, he says the stock market's going to crash every day, except I don't do that.  Anybody who actually listens to what I say, realizes that I rarely call for the stock market to crash, let alone even go down.  I have been saying the stock market was going to go up for all the wrong reasons during most of the time it was rising. I said it was a bubble as a result of cheap money. Big Drop in Bond Market Signaled Crash It wasn't until very recently that I began talking about a crash.  In fact, on the way up, one of the reasons I thought the market wouldn't crash, was because I thought the Fed would save it. It would reverse course, and take back the idea that it would raise rates or shrink its balance sheet.  But, recently, as it became obvious that the Fed was not giving up and the market was increasing its expectations of rate hikes and I saw a big drop in the bond market, (which I had been warning about for the last several weeks) I've been saying, "Hey wait a minute!  This stock market's going to crash!" Our Sponsors: * 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

6 Feb 201827min