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

Summary:  As an unexpected pro-labor vote in the U.K. weakened the pound and strengthened the dollar, the market reacted more to political news, abroad and at home.  The uncertain results of Comey's testimony dampened concerns about the Trump Presidency. Prior to Comey's testimony someone sold a huge amount of gold, causing gold to drop, although it finally closed only down about $7, with another selloff this morning. Gold stocks, though continue to trade much better. NASDAQ got clobbered,   Meanwhile, economic data continues to bring bad news: Consumer Credit numbers was a big miss with $8.2 billion instead the expected $17 billion. * Yesterday we had the trifecta of potentially market moving events * In hindsight, what looks like the most significant was the elections in the U.K. * With the surprise strength coming from the Labor Party to deny the Conservative Party a majority * It looks like May will remain Prime Minister even though the Conservatives do not have a majority in Parliament, because they can form a coalition, a minority government with another party * But May's position is weakened and she did not get the results she gambled on when she called the election * The reason the Labor party did so well was because of the young vote who overwhelmingly voted for Labor * Which shouldn't be much of a surprise, after they're the ones who are promising the most free stuff, and it's younger people who are the most susceptible to that message * Particularly people with little work or life experience * That's one of the reasons the voting age should be higher * In the U.S. the voting age is 18 and it was changed by Constitutional amendment * It used to be 21, and it was the Vietnam war that caused the voting age to be lowered from 21 to 18 * The cry was, if you're old enough to fight, you're old enough to vote * That's another example of how we lose every war * I would prefer the voting age stay at 21, in fact I think it should be 25 * "Old enough to fight old enough to vote" makes as much sense as, "If you're too old to fight, you're too old to vote * The one has nothing to do with the other * The weakening of the Conservative government in the U.K. brought the pound down * The pound was down about 1.6% today * And the weakness in the pound spilled over into strength for the dollar against other currencies * All the dollar's gains happened last night * During the session today, the dollar gave back some of its gains * It re-took the 97 handle, after making a new 6-month low earlier in the week, we got down about 96.50 * We closed out the week at 97.28 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 Juni 201731min

Summary: Gold and gold stocks are moving to new highs as the dollar index continues its slide. Although some connect this move to market jitters over the outcome of the upcoming James Comey testimony, economic factors are a more likely the force behind the move.  Moves in gold stocks have been telegraphing gold prices more often than not, and gold stocks have a plenty of room to move to even reach its highs of earlier this year. * Many of you probably expected me to do a podcast yesterday as a result of gold's move to new highs for the year * And the dollar's move to new lows * I happened to be traveling to Toronto, so I decided to wait until I got back to Connecticut where I can do the podcast from my studio * So we had the price of gold up about $15.00 yesterday, and of course the price of gold has been creeping higher and higher ever since its correction * And by the way, I think I did a pretty good job of nailing the correction itself * I said it would be a very shallow correction * I'm pretty sure I nailed the bottom * I did a podcast when it looked to me that the gold stocks were confirming and end of the correction in gold * Gold did rally, and initially gold stocks rallied, too, but then gold stocks came back down and almost re-tested their lows, didn't quite do it * But the price of gold never came back down * And yesterday, the price of gold hit a new high for the year * It reversed all of the correction and then went on to higher highs * Yet gold stocks are not even close to where they were a few months back * In fact, the smaller gold miners, if you look at the GDXJ, I think this think could move up 35% or so * But what we did get yesterday was finally a big move up in gold stocks * Most gold stocks were up 4-5% * I did notice some of the stocks I own up 8-10% * So this was one of the biggest up days that gold stocks have had in a while * In fact, we got a little bit of a warning about that the day before * I've been watching these stocks very closely * What I had noticed is that gold stocks were selling off every day into the close * After bitcoin initially got its high, like $2900 * Within a couple of days it was back at $1900 * It dropped $1000 in a day or so * How much volume did it actually take to do that? I don't think very much * So, if I'm right, if all of a sudden gold and sudden gold and silver break out * And now there is more enthusiasm * - I've heard people say gold and silver are manipulated so I'm buying cryptos because there is no manipulation there, and you can really get appreciation * Because the central banks are not letting gold and silver go up * Once they see it go up, that attitude could change 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

7 Juni 201720min

Summary:  Today's big miss in the Nonfarm Payroll report indicates further proof for the Fed that the Q1 weak economic data was not transitory.  Coupled with disappointing Labor Force Participation declines and increasing Trade Deficit numbers, the Fed will have no good news to justify a rate hike. All this news does not bode well for the U.S. dollar index, which closed at a new low for the year today. The next crisis is the dollar. * Following yesterday's much stronger than expected May ADP Jobs report, the consensus was for 170,000 jobs and the actual number was 253,000 * The stage was set for another strong number for today's employment report * But we didn't get it * We got the official number from the U.S. government earlier this morning * The consensus was for 185,000 jobs created * We actually created, according to the government, just 138,00 jobs - a big miss * In addition to that, they took last month's initial 211,000 report and they lowered that down to just 174,000 * In fact they made revisions to the prior month as well * The official unemployment rate actually went down to 4.3% * I think that is a new low * Why did the unemployment rate drop? * For the same reason it has been dropping; lots of people left the labor force * Labor Force Participation once again dropped .02 to 62.7% * That matches the all time record low * We actually had more than 600,000 people leave the labor force in the month of May * A new all-time record high * In fact, breaking it down by part-time and full-time, all of the net new jobs added were part time jobs * We actually lost 367,000 full-time jobs during the month of May * That is the biggest decline in full-time employment in 3 years * Of course, as usual, the jobs that we do create were in leisure and hospitality, education healthcare, temporary services * We actually lost some information technology jobs, we lost jobs in the retail trade; small gains in the wholesale trade, a little better than normal in manufacturing and logging * But a still a tiny portion of the overall jobs in goods-producing segments of the economy * So we continue to create non-productive jobs which is another reason that the trade deficit continues to rise, and we'll get to that in a minute * Weekly hourly earnings up just .02%, matching expectations on the lower end * But they went back to last month's, originally reported as +.03% and they moved that down to +.2% * So earnings are not growing, full-time jobs are disappearing, and this economy is weakening * In fact, also yesterday, Challenger job cuts report announced layoffs surged in the month of May from 36,602 in April to 51,692 in May * This is the highest number of announced layoffs of any month of the year * That doesn't bode well for future job creation if all of a sudden we're getting a spike in layoffs * In addition to the bad jobs report, which of course is going to weigh on GDP in Q2 * We got the trade deficit for April, which is the first month of the second quarter * They were looking for a deficit of $46.1 billion * Instead, the deficit ballooned all the way up to $47.6 billion * From what was originally reported at $43.7 billion in March, revised that up to $45.3 billion * So this is going to take away not only from Q2 GDP but it's going to go back and take away from Q1 GDP * Remember, in my last podcast, I pointed out that the Federal Reserve, specifically, in their minutes said that before they raise rates again they want confirmation that the Q1 weak economic data was transitory * Meanwhile all of the data that has come out since those minutes were released actually proves the opposite 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

3 Juni 201730min

Summary: Box office revenues for this holiday weekend were the weakest since 1999.  Why is that? Some say the movies were not very good, but I think it's more likely that this is just another piece of evidence that supports the fact that the consumer is in much worse shape than is generally perceived. * Hopefully everybody had a happy Memorial Day weekend; I spent my holiday weekend up in Vancouver at the International Metal Writers Conference * And when I came home, I came back to my home in Connecticut * This was the first year I spent the winter in Puerto Rico, from January 1 until just a few days ago * I bought a condo in Puerto Rico a few years ago, I moved my Euro Pacific Asset Management Company there from California at about that time, but I'd never moved there myself until this year * I like snow, it's pretty, but the next time I see snow it's because I'm skiing on it * I'm a snowbird now * But this time I'm not only flying out of bad weather, I'm flying out of high taxes * It's not just the high taxes in Connecticut; it's the high taxes in the U.S. * By the way, Connecticut is basically broke, if you read a lot of the articles now * The tax revenue is collapsing * I'm moving from a bankrupt state to a  bankrupt territory * Puerto Rico has already declared bankruptcy; Connecticut hasn't actually done that * Connecticut is admitting that they can't raise taxes on the rich anymore, because the rich are leaving * I moved down to Puerto Rico with my wife and two young children, and I love it * I live in a nice community, Dorado Beach; great neighborhood, many in the same situation as me * I read this article about box office - holiday weekends are usually a good time for Hollywood * Memorial weekend is a big weekend to kick off the summer movie season * The article I read stated that box office revenues for this holiday weekend were the weakest since 1999 * Why is that? 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 Juni 201723min

Summary: The Fed is now indicating it needs evidence that  the Q1 weak economic data is transitory and not a trend.  This is interesting for 2 reasons.  The Fed's narrative has always been to tout economic growth even in the face of flimsy or no supporting data.  Now the Fed is actually admitting there is weakness.  The other interesting thing is that, although the Fed continues to claim it is "data dependent", it has been ignoring the economic data ever since the first rate hike.  The market puts chances of a June rate hike at almost 100%.  Maybe that is because it believes the Fed will raise rates regardless of proof. * On Wednesday we got the release of the Federal Open Market Committee's minutes * As usual, the FOMC is indicating that as long as the economy continues to evolve according to their forecast, that it would be appropriate to remove additional accommodations soon * And, I guess the markets are assuming soon is in about 3 weeks when the Fed meets in June everybody anticipates that the Fed will hike rates again * Actually raising interest rates all the way back up to 1% - that would be the new floor on rates * That was the lowest that rates got during the Greenspan era that gave us the housing bubble and ensuing financial crisis * It's taken a long time even to get up to that insanely low level of interest rates * But everybody still assumes - I think the probability is near 100% - that the Fed is going to raise rates in June * But what I thought was interesting about those minutes, and nobody's talking about this * In the minutes, the Federal Reserve said that they are also looking for proof that the weak economic data from the first quarter was transitory * They're looking for proof in order to continue to raise rates * I'm thinking, if the Fed says they need proof that Q1 data was transitory, are they actually going to get that proof by the June meeting? * If they don't have the proof yet, are they going to have it by June? * Almost all the economic data that has come out recently, including this week, has been pretty bad * In fact, the data that we're getting confirms to me that rather than being transitory * The weakness in the first quarter is likely to continue * If it's transitory at all it is because we're transitioning into a recession * So if the Fed is looking for proof that the economic data was transitory, thus far they haven't gotten any * If they actually need the proof prior to raising rates, they maybe they are not going to raise rates in June * The market doesn't seem to even give that a possibility * Maybe it's because the Fed claims to be data dependent * Yet they've ignored data ever since the first rate hike * Now they are saying that the data they are depending on is data that is going to provide proof that the first quarter weakness is transitory * Maybe the markets aren't buying that, they're saying, "We think the Fed's going to raise rates regardless of whether or not there's any proof." * Even if there is no proof, they are going to pretend that there is 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

27 Maj 201725min

Summary:  The dollar's decline really started with the Fed's too-little-too late rate hikes.  The rally of 2014 - 2015 was fueled by expectations of more aggressive Fed monetary policy that did not materialize. We've been trending sideways since then with the exception of an upward spike after the Trump victory.  Now, as much of the hype surrounding Trump's election is losing its momentum, support for the dollar is waning. This is not a case of "buy the rumor, sell the fact".  This is going to be a situation where the fact does not live up to the rumor. * The dollar continued its losing streak today.  The dollar index was down for the 8th time in 9 days * The 9 day decline is about 2-1/2 percent * The dollar index actually traded below 97 today for the first time since Donald Trump was elected President * So we have wiped out 100% of the ill-gotten dollar gains that were racked up in the wake of that victory * If you remember, when the dollar was rallying as a result of the trump victory, I said it was a sucker's rally and sure enough, that's exactly what it was *  The dollar's decline is only just getting started * I think the dollar would have begun its decline a while ago had Hillary Clinton been elected * But because of Trump's unexpected victory and the prospects of faster economic growth, * Trump-flation (as if inflation were even good for the dollar) but to the extent that it made the Fed raise interest rates * That's what created the rally and it was a great selling opportunity for people who understood what really was going on * But all we've done thus far is get rid of gains that never should have been racked up * The dollar hasn't really even begun its decline, but I think that decline is going to begin in earnest * In fact, my next target for the dollar index is going to be around 92, which is about 5% below current levels * But if we get below 92, that will be the dollar's lowest level since January 2015, so about a 2-1/2 year low, assuming we get there in the next couple of months, depending how long it takes to trade down * But what really gets interesting once the dollar index gets below 92 * If you look at a chart, there's nothing but air between 92 and 80 * Because the dollar index rose in 2014 * The dollar had a huge rally anticipating the Fed's tightening monetary policy * Tapering and all the talk about rate hikes * That was probably the best year for the dollar * And that momentum continued into 2015 * The dollar didn't lose its momentum until the Fed started hiking rates 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

23 Maj 201734min

Summary: Republicans face chaos around Trump's political difficulties, causing some to consider potential advantages of a President Pence.  Market volatility has not yet brought the DJIA below pre-Trump numbers while the dollar index slides and gold moves up. Meanwhile, household debt is higher than 2008 levels even as fewer Americans own homes. * It looks like I picked a very volatile week to go out to Las Vegas, although I didn't pick this week; the week picked me * I have two conferences that I am attending here: the Las Vegas Money Show and the SkyBridge Alternatives Conference  otherwise known as SALT * A lot is going on, certainly the political chaos in the United States, the Dow was down 365 points yesterday based on new revelations with respect to why Donald Trump may have fired FBI Director James Comey * Was he doing it because Comey refused to give up on his investigation of Trump's Russian ties? * Now you've got Congress members on both sides of the aisle questioning whether the allegations are true * Apparently Comey has some contemporaneous notes of conversations he had with Donald Trump * Donald Trump may have asked him to give up the investigation * Although from what I've heard President Trump said it would be nice if Comey gave up the investigation - was that some kind of idle threat? * Did that mean "You'd better do it, or you're fired." * I have no idea, but this obviously is creating concerns for the Trump Administration * The market, as far as I'm concerned, is really not down very much at all, given how much it had rallied based on nothing but the optimism surrounding expectations for all the good things that would happen as a result of a Trump Presidency * We were going to get tax reform, we were going to get regulations; we were going to have all this stimulus * Not only has none of these things materialized yet, even before the scandals broke, it was obvious that even if we got any of the promised legislation * Of course I've always said it would not even help the economy * But regardless, people actually think it it is going to, which created the big stock market rally * Even before this controversy it was obvious that the expected improvements were going to take a lot longer than people thought * Now this is going to delay Trump's agenda even more * Because now, rather than concentrating on tax reform or repealing ObamaCare, or stimulus, now they've got to deal with damage control to hold on to the Presidency and fend off these calls for impeachment * Now they've got to get a special prosecutor and all of this is going to add additional delays * Of course, a lot of momentum we had in Q1, in spite of weak GDP, you had all this confidence, all this enthusiasm on the part of Republicans and Trump voters * And it was all this confidence that was supposed to lead to extra economic growth * Businesses were going to have more confidence to invest and hire * And consumers were going to have more confidence to spend * Well certainly, what is happening now in the White House is going to shake some of that confidence * Some of the people who were so enthusiastic about Trump don't even know if Trump is going to be there anymore * And to the extent that is is there, he is politically damaged * Now he has to use a lot of his political capital just to secure his position rather than to advance his agenda * Whether or not that agenda would actually help the economy * Despite that, the drop in the stock market is not very large 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

18 Maj 201729min

Summary: The retail sector is in worse shape today than it was in 2008 during and immediately following the financial crisis. Retailing has been responsible for 10% of the jobs gained during this so-called recovery. Clearly part of the problem is the increase in minimum wage.  Why are retailers adding so many jobs when their business is declining? * A quick little announcement at the beginning of this podcast; I'm going to try to keep the length of these podcasts down to 20 minutes in the future * It seems we have quite a bit of audience falloff after about 17 minutes * We're also skipping our ads at the end in favor of more informative content about Euro Pacific Capital, SchiffGold, Goldmoney and Euro Pacific Bank. * So I am going to do these shorter podcasts more frequently * First of all, it's the RetailPocalypse, which I have been talking about on this podcast that, from my perspective - not just my perspective, * In reality, the retail sector is in worse shape today than it was in 2008 during and immediately foll0wing the financial crisis * We got a lot of bad news from the retailers this week * Including JCPenny and Nordstrom's - horrible sales from these companies * We had other retailers earlier in the week that came out with bad news * Kohl's Department Store, Dillards * Kohl's stock is at 36.5 as I record this * That stock's high was $75-$80 in the summer of 2015 * So it's down 60% or so * Dillard's is at a 52-week low today, at just under $47 * That was over $120 - more than a 50% decline * Macy's was down another 3% today - a new 52-week low * Macy's is at $23.60 -it was a $70 stock * These are huge markdowns for retail stocks * Look at Nordstrom's - down almost 11% today on the bad news * $41.20 - Nordstrom's was an $80 stock is one of the best performers * JCPenny is going to get the prize for the biggest decline overall * This stock's been falling for a long time * It closed today at $4.55 * A lot of people are very complacent - they say, "Oh, it's no big deal because it's all about e-commerce * Everybody is shopping online * Look at Amazon - Amazon stock hit a new 52-week high today * All time high, not just a 52-week high * Jeff Bezos is on the way to being the richest man in the world 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

13 Maj 201724min