Confiscatory taxation is coming – Ep 591

* Hi everybody, this is Peter Schiff and I am recording this on Friday, January 8, and Wall Street just finished the worst opening week to a new year in the history of the stock market * The Dow Jones was down another 1% on Friday to finish the week better than 1,000 points - it was a 6% decline on the week * Now there have been weeks that have been down more than 6% in the history of the stock market, in fact we had one about 4 years ago, but we've never had a week this bad in the first week of January * Now, the financial media is coming up with all sorts of excuses to blame this big decline on * On Monday, they were blaming the sell-off on the rumors that North Korea tested a hydrogen bomb * But for most of the week, they were blaming the sell-off of the U.S. stock market on the sell-off in China, despite the fact that China rallied on Friday and we sold off * The Chinese market was down about 10% on the week, despite the Friday rally * The U.S. stock market is not falling because of the Chinese stock market. The Chinese stock market and the U.S. stock market are falling for the same reason * It's not that one is causing the other, they're both going down and the reason they're falling is because the Federal Reserve raised interest rates in December and they are threatening to raise them at least 4 more times, according to the most recent minutes. * The belief that the Fed is going to keep raising rates is putting pressure on the Chinese currency, the Yuan, to decline along with a lot of other currencies that have already fallen substantially against the dollar, on the anticipation of higher interest rates * It's the weakness in the Chinese currency that is pulling down the Chinese market, but it's all because of the Fed - but that's the same reason we're going down * If you remember, all year I was saying that I didn't think the Fed was going to raise rates at all in 2015, and the reasons were: * I thought thee economy would not be able to handle it - the Fed always claimed that they were data dependent and I thought they were hiding behind that, but I though they could use the weak data, which had been coming all year, as cover for not raising rates - in fact, that was their cover until they backed themselves into a corner because they had promised to raise rates by the end of the year and a refusal to raise rates would be an admission that the economy was weaker than forecasted * I also said I didn't think the market could handle a rate hike.  It had stopped rising based on the absence of QE, but if the Fed actually increased rates, the air would come out of the bubble a lot faster * So with the economy going down and the stock market going down, I thought the next thing they would do is reduce rates back to zero and launch QE4 and would look like complete fools * So by not raising rates, they would look like a lesser fool by acknowledging that the economy needed additional stimulus * We may already be in a recession * The Atlanta Fed has already downgraded their forecast for 2015 Q4 to just .8% * I think by the time we get the first estimate on the 29th the month, we could actually have a negative number for the fourth quarter * If you look at all the data that's coming in, and I'll get to that in a minute, we can easily have a negative first quarter of 2016, and we're in recession * If the economy is in recession, and we are in or close to a bear market in stocks, and without the Fed, there's nothing to stop this market from falling, the Fed will have to come to the rescue of both the economy and the market with QE * But if you remember, a lot of analysts were very sanguine about the market's ability to handle a rate hike, but here we are, the Fed raised rates just a few weeks ago, and the Dow has dropped better than 1, Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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 Jan 201628min

* Well the Dow Jones got clobbered again today, down 252 points at the close * The NASDAQ down about 55 * The transports continue to get clobbered down another 146 points, decisively in bear market territory * CNBC blamed the entire decline on jitters over North Korea's hydrogen bomb test * I admit that this prospect is not good, but I don't believe that announcement was the reason for the decline * The real problem is the Fed removing the monetary herion from the addicts on Wall Street and this is the withdrawal * Former President and CEO of the Federal Reserve Bank of Dallas, spoke on CNBC yesterday and he admitted that the Fed "engineered a stock market rally" * They wanted all this phony wealth to cause us to make irrational decisions * That's what happened during the dot com bubble and to a greater extent during the housing bubble * Here you have it from the words of a former Fed president, a voting member who voted for QE 1 & 2 who is saying that the Fed did this to create a "wealth effect" * He even said, don't be surprised if the market goes down 20% - it's still overvalued - he admits the Fed was propping it up * Obviously if the Fed removes the props the market will go down * After Simon Hobbs asked Fisher if he is going to apologize, he said," Don't blame me, I voted against QE3!" * He is throwing his colleagues, including Janet Yellen, under the bus * Now that he is no longer at the Fed, he refers to it as a "giant weapon that is out of ammunition" * The Fed still has ammo: cut rates (in this case, even to negative) and QE4, their big bazooka * There's plenty of ammo left and it will be fired a lot sooner than people think * Korea is an excuse, but Richard Fisher is letting the cat out of the bag, but no one in the media is picking up on this * Also in the markets today, while stocks were going down, gold was going up - gold hit a 2-month high today * As fast as it is going up in dollars, it is going up even faster in other currencies, like the Canadian dollar, which hit a 9-year low, the Australian dollar * The yen was up - the dollar/yen is breaking down - to me that is a very scary proposition for the markets to see this strength in the Japanese yen * Oil prices continued to drop, down another $2 today - we're trading below $34 * Gold stocks were up - you'd think they would be up a lot more because mining costs are plunging and revenue is going up, but Wall Street is oblivious to the bargains that exist in the mining stocks * We got a lot of economic news today and most of it was, as is typically the case, bad * Yesterday vehicle sales were at a 6-month low * Last year was a record for auto sales, but December was a 6-month low despite all the Christmas giveaways * Meanwhile the inventory to sales ratio continues to rise - a new high since the 2008-2009 great recession * Also GM got clobbered today, down about 4% - already down 9% for the year and down more than 20% from its 52-wk high - that is a bear market * This is telling me that the auto bubble has popped * There are going to be a lot of layoffs in the auto sector - good, high-paying jobs * I have said that starting in January 2016 we would start to see layoffs because the numbers have been horrible * Sure enough, Macy's today announced a restructuring, laying off thousands of workers because of disappointing sales throughout the year * We will see a huge blow-up in the securitized market for auto loans * They layoffs are coming - the low unemployment number is the rear view mirror * Looking at the actual economy in the windshield is a disaster for jobs * This is deja vu - in 2008 the subprime market had already exploded - the housing market problems should have bee... Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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 Jan 201632min

* The U.S. stock market opened the first trading day of 2016 with a bang, but not the type of bang the bulls were hoping for * The Dow was down 276 points-it was down as much as 450 points in the last hour of trading * In fact,we opened down 300 and change and we hung around the down 350 - 400, in fact down 276, at the close was about the best level of the day * The NASDAQ closed down around 104 *  The Dow Jones transports continues to get crushed - the weakest index on the day, down 156 points * We're now down more than 20% from last year's high, officially in bear market territory in the Dow Jones transportation - and don't blame this on weak oil prices because transports benefit from weak oil prices * This is all about weakness in the economy * A lot of the carnage was blamed on China because China was down 7% overnight, the worst first day of the year in the history of Chinese stocks * Supposedly the catalyst was a weaker than expected PMI in China - I don't believe for a second that the market was down 7% based on that report * First, there were two PMI's released, and one was slightly better than estimates and the one that was slightly below came in at 48.2 vs. expectation of 49 * I think the Chinese market would have gone down regardless of the PMI numbers * The irony of it is that our own recently-released Chicago PMI on New Year's Eve and our number was way worse than the Chinese number * We were expecting 50, an improvement from 48.7 - instead we went down to 42.9 * Bad economic news in China creates a terrible response, but bad economic news in the U.S. and no one even cares! * Why, because the Fed tells us everything is awesome and we can ignore all the evidence that the economy is far from awesome * Singapore reported a 5.7% increase in GDP for its 4th quarter, yet that number is being discounted * Yet no one wants to believe the good news from foreign governments, and no one believes bad news from the U.S. because the Fed's narrative is still out there * We got more bad economic news today: We got another PMI manufacturing number expected to be 52.8, it came in at 51.2 * Even worse was the December ISM number - last month was 48.6 - it was expected to improve to 49.2-  instead, it dropped to 48.2 * That's a bigger miss than China, yet no one here cared * Also, construction spending was a huge miss: the consensus was for a gain of .7; instead we lost .4 * It gets worse, because last month the gain was expected to be a full point * The numbers that came out today were so bad that the Atlanta Fed, who recently revised down its Q4 GDP forecast from 1.9 to 1.3 a week or so ago and today they went down to .7 * In my last podcast, I said that soon the Atlanta Fed is going to take their Q4 GDP estimate below 1 and that is just what they did * We have a lot more bad economic data that is going to come out between now and the end of the month when we get the first estimate of Q4 GDP and there's a pretty good chance that it will be negative, which is halfway to a recession * With a negative GDP in the 4th quarter, we have a better than 50/50 chance of having another negative GDP in the first quarter and that would put us officially in a recession * Just in time for the Fed to raise interest rates again - Not! * More people are coming to the same conclusion I have for a long time now, that the Fed had backed themselves into a corner and felt they had to raise rates regardless of the fact that the data didn't meet their criteria * I knew that if the Fed raised interest rates that they would regret it because they would have to reverse their direction based on the weak economy combined with a weak market *  Interestingly, there has only been one year ending in "5", Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

5 Jan 201623min

* Let me begin my final podcast of 2015 by wishing all of my listeners a Happy New Year * It certainly wasn't a happy New Year's Eve Day on Wall Street * Normally the last day of the year is a positive one; you normally have a Santa Clause rally and it continues on to New Year's Eve * That wasn't the case today.  The Dow Jones finished its first down year since 2008 - down 178 points * The S&P also negative on the year, the NASDAQ managed to gain about 5% or so * I'm hearing a lot of people blaming the weakness on oil prices * The transports were the weakest index of the year, I think they were down about 17% and this index stood to gain the most from low oil prices * So clearly, if transports are the weakest index, the overall weakness can't be solely because of oil prices * It has to be another reason, and I think it has to be the economy * Oil is being affected by weakness in the economy * Another interesting observation about today's selloff - the market not only closed on the lows, but made its lows on the close * We've been seeing this volatility - all of this selling into the close says that something big is going on here * You get more professionals selling when you sell market on close, and I think this is what is going on here * People are bracing for a very weak 2016 * The Fed had interest rates for all of 2015 - it didn't raise rates until the waning weeks of the year * Imagine how the Dow will contend with the threat of rising interest rates as 2016 continues * But the other problem for 2016 is the economy and we got more evidence of an extremely weak economy * I mentioned before the the Atlanta Fed GDP Now has Q4 GDP estimate down to 1.3 * Based on the numbers we got today, they are going to ratcheting those estimates down again * First, we got the weekly unemployment numbers, which have been low for a long time - We got the biggest unemployment claims numbers in one week in 10 months * The 4-week moving average is also the highest it has been in 5 months * Remember, when Yellen raised interest rates, the basis for the decision was supposed to be the strength in the labor market * No sooner did the Fed raise rates based on the labor market, but now the labor market is rolling over. * Unemployment is a lagging indicator * What is more indicative of what is coming, is the Chicago PMI number which came out a little later in the morning, which was abysmal * One of the worst economic reports of the entire year * Last month, we got 48.7, which was below expectation * They were looking for a December bounceback to 50 * Instead, the index crashed down to 42.9 * This is the lowest number since 2009 * Order backlogs has been down for 11 months in a row, and this is the worst performance since 1951 * The only time we've been at this level is during a recession * It is possible that we are in a recession * It is possible that they will originally report Q4 GDP as positive and then go back later in the year and revise the data to show we were in a recession * That's what they did with the Great Recession * Another reason I believe the economy is weaker than the numbers suggest is because the inflation rate is being under-reported * If the inflation rate is higher than the GDP deflator, then obviously we are in a contraction during most of this recovery * I am looking at what is happening in the economy not in what the government says about the economy * As bad as the numbers  were, it did not promote any reaction in the the markets * My guess is that if we had had a big drop in unemployment claims or a really good PMI number the dollar would have spiked up and gold would have sold off, Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

31 Dec 201526min

* Recording this podcast on Monday afternoon; the stock market closed about an hour ago, and the stock market was up over 100 points today, but the more dramatic days happened on Thrusday and Friday * Despite the initial euphoric increase in the stock market that greeted the Fed's highly anticipated quarter-point rate hike on Wednesday the market tanked on Thursday and Friday, down over 600 points * The most significant part of the sell-offs is that on both days the markets closed on the lows for the day * The Fed is getting dangerously close to losing what remains of its credibility * The Credibility Bubble might be the first to deflate in this recession * The Fed has been saying that the economy would be strong enough for a rate hike by the end of the year, so if they did not raise rates in December it would have been an admission that they were wrong * The Fed raised rates even though the economic data showed that, based on their own criteria, they should not have done it * More and more people are questioning whether the Fed has made a policy mistake * Look at the data that came out since the rate hike: * On Friday we got the PMI Flash Services Index came out at 53.7 - last month it was 56.5 * The Kansas City Fed Manufacturing - last month was +1 and December was -8 * Today we got the Chicago Fed National Activity, expected to be +.15 for November, instead it came out at -.3 and they revised down the prior month to -.17 * With all the horrible economic data, horrible retail sales, horrible corporate earnings it is obvious that the U.S. economy is heading toward recession * As the economy slows and the Fed is forced to admit it was wrong, there goes it's credibility * This coming collapse is the culmination of decades of bad monetary policy * Where we really went off the rails was in the Greenspan era, which sent us off on this trajectory of loose money * Yellen admitted in her recent press conference that they will still roll over all the maturing bonds and re-investing all the interest on those bonds so the Fed's balance sheet will continue to grow * The bubble economy will blow up in her face, though, because the market will not be able to withstand a sustained correction and it will require unprecedented quantitative easing that will result in failure * I wanted to discuss on this podcast an Sunday eening article on CNBC, "The Peter Meter"  that really took me to task on my gold predictions * They did not look at any of my many accurate predictions; they focused on the ones that haven't worked out * They singled me out for criticism on an 2012 interview I did with them when gold was at $1,700 and I said it could go to $5,000.  I never put a time horizon on my prediction, but this was labled as one of the worst * Back in 2005 I did an interview with Mark Haynes when gold was still below 500 and it more than tripled from that price * You can see articles I wrote recommending gold back in 2003 when gold was even below 500. * It is true that I did not see the near 40% correction in the price of gold because I thought the market would see past the bubbles * CNBC claims my prediction to be among the least prescient ever made * Twice in the last 15 years the U.S. stock market lost more than half its value * Anybody who was on CNBC in 1999 and recommended the stock market, which was about every guest, made a worse prediction than that * Every guest on CNBC in 2007 and 2008 and recommended the stock market made a worse prediction * What about all the dot com stocks that went to zero? * Obviously, CNBC is singling my gold prediction out above these other significantly less prescient predictions * If you look at all the predictions on CNBC over the years, Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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 Dec 201528min

*  Yesterday, the Federal Reserve finally met market expectations and increased interest rates to .25% * Actually, the official rate was 0 - .25 and now, the official rate is .25 to .5 * The actual rate was always in the middle between zero and .25 * Assuming the Fed tries to keep the rate closer to .25 than .5, the actual increase in rates could be less than 25 basis points * The initial reaction to this rate hike is to proclaim the end of the era of "cheap money" * .25% is still cheap money.  Alan Greenspan never went below 1%. * Some people are saying "Peter Schiff was wrong" because the Fed did raise rates * Actually, in a recent podcast I noted that the Fed changed their narrative away from "data dependent" to an expression of faith in the economy, opening the door to a symbolic rate hike unsupported by data * I was alone throughout the year believing that the Fed would not raise rates prior to this change in narrative * The Fed was afraid that to not raise rates this year, it would be a vote of "no confidence" in the economy * Ultimately, the Fed felt that even though the data didn't justify it, they had to raise rates because of psychological damage to the markets * If the economy were really sound, we would not need Janet Yellen to express confidence in the economy - a strong economy creates its own confidence. * We don't need propaganda in the form of a symbolic rate hike * The Fed did not even have the last recession in their forecast until we were well into the recession, so who cares about the Fed's level of confidence? * In an earlier podcast, I referred to Ben Bernanke's comment that he felt he was a representative of the administration * Janet Yellen is creating a sense of confidence in the economy for the same reason * The Fed is now pretending that we will have more rate hikes in the future, forecasting 4 more hikes during 2016 * I believe the economy is not strong enough to accommodate these rate hikes and neither does Janet Yellen * The ultimate irony is the data that came out the morning of the rate hike * Industrial Production: they were forecasting a drop of .2, which is still bad, instead, we got a drop of .6 * The PMI Manufacturing Index was the lowest in many years, 51.3 down from 52.6 * More bad news: The Philadelphia Fed last month showed an increase of 1.9, so 1.2 was forcasted - instead we dropped 5.9 * These numbers show an economy that is decelerating * If you look at a chart, these numbers are about to crash even lower * These numbers are flashing recession, recession, recession * If you're a Keynsenian, the prescription for the condition this economy has would be stimulus, not an interest rates * The air was coming out of this bubble anyway, all the Fed did was increase the hole for the air to come out * The market was up just before the hike, which was interpreted as a green light to raise rates. I said in an earlier podcast that that would be a mistake, because the market would then tank, and that is what happened today * Transports have been the weakest of all, despite oil prices * We continue to see weakness in the high-yield bond market as the air is coming out of that bubble * It is probable that the stock market is going to get a lot worse between now and the time the Fed is supposed to hike rates again * But the problem for the Fed now, is if the market starts to tank now, they can't do anything until the jobs numbers begin to show weakness * Janet Yellen actually referred to this move as "ahead of the curve", meaning that if she waited any longer, she would overshoot on her objectives: * One was unemployment.  How can that get too low? Especially with so many people out of the labor market, Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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 Dec 201532min

* The U.S. stock market finished up its worst week since August, when everybody though a rate hike was just around the corner * Substantial triple-digit losses across the board * The Dow Jones closed down 309 points - almost 4% * Similar percentage decline for the S&P 500 * The NASDAQ dropped 111 points, over 4% decline for the week * The media is blaming this decline on oil prices, and yes, oil prices are weighing on some stocks * Some stocks benefit from lower oil prices - case in point: transportation * Dow Transport was weaker than any other index - down more than the markets on a percentage basis * The truth is that oil prices and stock prices are going down for the same reason * The reason is a slower growing global economy, including the U.S. economy, and the fact that the Fed is threatening to slow it down further with an interest rate hike * Some of biggest losers are not even in the stock market, but in the bond market * The high-yield bond market is getting obliterated * A chunk of the high yield market is energy companies * Two things are hurting them: the fear of rising interest rates and the slowing of the U.S. economy * We are heading for a recession, if we are not already in one * This does not bode well for the high-yield bond market, because in a recession these companies will have more trouble servicing their debt * The Fed's monetary policy of zero percent interest rates forced a lot of Americans into these high-yield bonds - people are hungry for yield * A lot of risky companies who did not have access to credit, were able to borrow all sorts of money because of this hunger for yield * This is the same thing that happened in the sub-prime market * Customers all over the world needed yield, and the mortgage market was where they got it * There was so much demand for mortgage debt on Wall Street it was easy for non-credit-worthy customers to get a loan * The same thing is happening in this high-yield market. Carl Icahn was on CNBC on Friday morning, referring to the present situation as a "power keg" * It is a powder keg that the Federal Reserve created and in theory they will light the match if they raise interest rates next week * In fact in my last podcast I mentioned that for the first time, the Fed might actually raise rates, and I received quite a few comments asking me if I was ready to admit that I was wrong * The Fed is trying to change the nature of a rate hike - alter the narrative away from normalization to a one-and-done scenario * Markets anticipate future events and they price them in, so the beginning of the tightening - "liftoff" I felt markets would look toward the eventual destination and start pricing that in. * None of the markets can handle that * So the Fed assured the markets that liftoff didn't matter because the first hike will be small and the trajectory will be very low * That's why I called it a trial balloon.  The Fed wanted to see how the markets would respond to a tiny, symbolic rate hike just to prove we can do it, and then a long period of time, before another one, if there is another one * Initially it looked as if the markets was buying the idea, but remember I kept saying there is time, and the markets could decline - in fact that is already happening * Maybe the Fed's trial balloon is not going to go over very well * We had a "Black Monday" in August prior the potential September rate hike * We have another Black Monday coming up - the technicals on the market look awful * We could have a huge decline on Monday, and you'd better believe the stock market is going to be high on the Fed's agenda * When the Fed called off the rate hike last time and we got a huge bounce in the stock market<br... Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

12 Dec 201528min

* We are just about a week away from the Federal Reserve's first rate increase in about 10 years * Everybody believes the stage is set for liftoff based on the most recent better than expected Non-Farms Payroll report * The idea is that the only thing preventing the Fed from liftoff would have been a horrific jobs number * In fact the markets estimated 190,000 jobs added and we got 211,000 * We did beat estimates, and in fact they revised last month's number up to 298,000 * The unemployment rate held steady at 5% * This was not a strong report, any way you look at it * The labor force participation rate: 62.5% is just one-tenth of a percent from the lowest level since the mid-1970's * That is still going in the wrong direction * We had the biggest surge in involuntary part-time workers - 300,000 new workers really wanted full time employment - the biggest jump in more than 3 years * Janet Yellen has consistently stated until recently that before moving up interest rates she wanted to see improvement in the job market, specifically in participation and full-time vs part-time jobs * Thus far that has not happened * So why does everybody believe that the Fed is about to raise interest rates regardless of its stated criteria? * I believed that the Fed had no intention of raising rates and I believe they did not, except one thing has changed: they have backed themselves into a corner * They have floated some trial balloons as a litmus test * One change of rhetoric occurred during Yellen's press conference last week as she switched from waiting for the data to improve to confidence that it will improve some time in the next year * Another change is the idea that a rate hike would trigger a series of hikes with the goal of normalizing interest rates * That's why they were calling it liftoff * Now, since the markets tanked after September did not deliver a liftoff, the Fed Chair has changed her tune - liftoff does not matter, the trajectory does * She may be saying, don't worry, if we raise rates, there won't be another one any time soon, meaning it would be the end of the tightening cycle * The beginning of tightening during the taper, and if we get a rate hike it will end that process * If this is just a trivial rate hike, why raise rates at all, considering the fact that the data is still bad? * Manufacturing is already in a recession * The ISM number that came out last week hit a 6-year low and even the service sector ISM missed estimates * Retail sales and consumer confidence have been disappointing, indicating the end of this weak recovery which is actually a bubble * The Fed now feels their credibility is on the line - it is a symbolic gesture to show confidence in the economy * If they were truly confident, they would not assure everybody that the rate hikes are not likely to continue * In 2016 we will be in a recession unless the Fed does something to delay its onset, and it may be too late for them to put out the fire they have already lit * Why does Janet Yellen not say she believes the economy is still weak? * A window into Yellen's perception is an interview that Ben Bernanke gave on Freakonomics yesterday.  It's entertaining, but it doesn't tell you anything new about Ben Bernanke * The most important revelation occurred about halfway through the interview when the interviewer played some clips of Bernanke on television in 2005-2006. * During those clips, Bernanke was talking about the great shape the economy was in, minimizing the housing and mortgage market troubles * The interviewer asked how he felt listening to himself now, Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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 Dec 201530min