December 4, 2019
What Phase One? When the Phase One trade deal was first announced, it was October 11, I think was the date. And before that date, nobody ever heard, "Phase One". It was always, "trade deal, trade deal".  There was never any talk of Phase One.  Then all of a sudden Trump comes out and says, "We've completed Phase One! The Phase One deal is done. We have concluded negotiations, we have come to a deal. We have this great Phase One deal; it's already done. It's in the bag. We've agreed to it in principle, all we need is the formalities of putting it on paper. We're going to have a big signing ceremony, and it's all going to be done." Oh, and by the way, Trump said, "This is the greatest deal ever for American farmers. They have never had a deal this great; go out and buy some more tractors; I don't even know if we can fill this order, it's so big - it's the biggest order in the history of agriculture!"  It's a good thing farmers didn't go out and buy new equipment based on Trump's phony promises. Sending the Dow Up - Buy the Rumor! But in any event Marc Faber asked Wilbur Ross, "Do you regret this?" Do you think Trump should not have come out and said this?" And he said, "No, we don't regret it."  Of course, why should he regret it? The Dow rose by 1600 points following that comment! That comment sparked all sorts of more comments; the deal is imminent any day, any week or they're going to sign it here... "Buy the rumor, buy the rumor, buy the rumor!" And they pushed the market.  The Dow went through 28,000 on all that B.S. So why should Wilbur Ross regret that, when the comments worked? Bidding the Spoos Higher I said a long, time ago: "Trump is not talking to the Chinese. He's not negotiating, because if he was, he's the worst negotiator ever. He ought to read, "The Art of the Deal". What he is saying makes no sense, if you're trying to negotiate. The only way Trump's statements make any sense is if they're really designed to boost the stock market. He's not talking to the Chinese; he's talking to the algo's. He's talking to the traders. He's trying to bid the spoos higher.
November 27, 2019
Recorded November 26, 2019 The Radical Solution Should Be Free Market Capitalism The problem is, this coming crisis is going to be so bad, it's going to be so much worse than 2008 and you know it's all going to be blamed on capitalism. It's all going to be the left saying "We told you so!" "We cut taxes for the rich, we deregulated. Trump inherited a great economy from Obama and everything he inherited he squandered it with tax cuts for the rich." And things are going to be very tough. People will demand radical solutions. I wish the radical solution could be Free Market Capitalism, because we haven't had that in a long time - but everybody's convinced that that's all we've had. Even the people who supposedly defend capitalism think that it needs a makeover, that it needs to be re-done for the modern era. Get Government Out and Market Forces Back In We don't need to re-do capitalism. We just NEED capitalism. What we have to do is get all the socialism out of capitalism. It's giving it a bad name. We need to get government out of all this stuff so that market forces can get back in. How Old Is Too Young to Vote? I want to finish up the podcast talking about voting. So I read this article about a town, Brookline, that had approved a measure to lower the voting age down to 16. That's part of the Democrat platform. In addition to doing away with the Electoral College and making D.C. and Puerto Rico states, they want to lower the voting age to 16. I don't blame the Democrats for wanting the 16-year-olds to vote; almost all of them are going to vote Democrat, because, they're only 16 - what do you expect? In fact, the Democrats want 14-year-olds - 10-year-olds, 5-year-olds! The younger the better! Directly Pandering to Children for Votes They're not old enough to know any better. It's so much easier to fool these people.  But I can just imagine elections where the politicians have to directly pander to children in order to get their votes. Raise the Voting Age So I tweeted that this is a step in the wrong direction. We shouldn't be lowering the voting age, we should be increasing the voting age. The response was, "Oh, my God!  How could you want to do that?".  We've talked about that on this podcast before. The voting age up until the 26th Amendment in the early 7o's was 21.  The idea was, if you're old enough to fight for your country you're old enough to vote. No. That makes as much sense as saying that if you're too old to fight, you're too old to vote.
November 21, 2019
What a Shocker The phase one trade deal is not going to happen this year. What a shocker. If you remember, when Trump first surprised everybody and talked about a phase 1 deal. If you remember, it was never phases; it was one big comprehensive Deal. In fact early on, and I've said this before, the President scoffed at the idea that we would negotiate in stages. "That wasn't going to work, It's all or nothing, we need to get the big comprehensive deal. " Then all of a sudden he announces this phase 1 deal, and he say it's going to be the greatest deal, it's going to be great for farmers, the Chinese are going to buy 50 billion dollars worth of food; American farmers better buy some more equipment; we don't even know if they can fill this order, it's the biggest order anyone has ever had; it's the greatest achievement in the history of achievements - all this was supposedly a done deal. And then nothing happened. Phase One China Trade Deal Of course, Kudlow and other White House people would come out and,"Oh, the phase 1 deal is almost here - but now Reuters is saying it's not going to happen this year. Now, it's probably not going to happen next year either, I mean, maybe, because phase 1 - there's hardly anything involved in it, at least the way it is going to end up being. How About Phase 1a? But what I think the President should probably do is forget about phase 1. How about phase 1a? Let's break down phase 1 into a, b and c.  Let's at least do phase 1a.  First we could tease 1a, and then when we get phase 1a, if we ever get phase 1a well then we've got phase 1b to talk about! Surrender without Admitting Defeat Of course, none of this is going to matter, because none of the real stuff is going to be included in any of these phases. Whether it's 1,2,a,b…  Whatever it is, this is all a way for the President to try to save face and surrender in the trade war without actually admitting defeat.  
November 16, 2019
Markets Making More Milestones The Dow continued its weekly winning streak with another milestone, closing above 28,000 for the first time: 28,004.89 to be exact.  That's a gain of 222.93.  Now, I'm sure everybody is getting their "Dow 30,000!" hats ready, because obviously that's not too far off, now from 28,000.  But it's not just the Dow that is setting records and crossing milestones. The NASDAQ - another record high today - up 61.81, closing at 8,540.83.  That's the first time the NASDAQ has been above 8,500.  The S&P also making new highs, up 23.83 - 3120.46 is the close. This is the first time the S&P has been above 3100. Russell 2000 Sitting Out the Party The only major index really not enjoying the party, although it was up again today is the Russell 2000, still not quite near an all-time record high.  That index is at 1,596.  Again, the Russell is the one that most reflects the domestic economy, and it is the domestic economy that is in a lot of trouble. In fact, the Dow rose today, despite more weak economic data that was released during the day. Industrial Production: Weak Probably the weakest data point of them all was on industrial production. It was supposed to drop again after falling .4% in September, and they did revise the September drop to -.3% from -.4%.  But instead of a .4 drop in October, which was the consensus forecast, we dropped by .8.  So twice as large a decline. In fact, I think you have to go back to March of 2009 to see a larger decline than that in industrial production.  Capacity Utilization really contracted as well, from 77.5; it went all the way down to 76.7. Halfway to Recession And we also got more weak news on business inventories, which were revised lower.  And I think that, and industrial production and some other weak data points that had come out caused the Atlanta Fed to reduce its forecast for Q4 GDP all the way down to .3%. It was at 1%, and now it's at .3% which is close to zero. And in fact, it's very likely that we could end up with a negative print for Q4 GDP, which means we're halfway to recession.
November 13, 2019
Why is Michael Bloomberg Actively Preparing to Enter the 2020 Presidential Race? I want to talk a little bit about Michael Bloomberg, entering the primary - and the reason that I think Michael Bloomberg is in. Bloomberg is now a Democrat, but he was a Republican.  He served as mayor of New York as a Republican for 2 terms. Then, I think he served a third term as an independent. But he was a Republican and now he's a Democrat. The reality is, he is a very middle of the road guy. He's a liberal Republican or a conservative Democrat. But conservative Democrats have not place in the modern Democrat party.  I think Bloomberg's motivation to throw his hat in the ring is the diminishing prospects of Joe Biden. Initially, everybody thought, "OK, Joe Biden's the guy." I think Michael Bloomberg was fine with a President Biden because it represented a continuation of the status quo and the status quo has been very good to Michael Bloomberg, do why wouldn't he want to continue that status quo? Socialists are Frankenstein's Monster Consuming the Democratic Party But with the rise of Elizabeth Warren and Bernie Sanders and the increasing likelihood that Warren could actually be the next President, I think that scares the hell out of Mike Bloomberg and I think it also scares the hell out of Mike Bloomberg's rich friends who are also Democrats. This is an example of Frankenstein and the monster. Baron Von Frankenstein created a monster and then Frankenstein's monster turned on its creator. And I think that's what these limousine liberals have done with the Democrat party. They have created this monster and now the monster is about to consume them. Rich Democrats Would Rather Re-Elect Trump Than Support Warren or Sanders I think what wealthy liberals are afraid to admit is, as much as they claim they don't like Donald Trump (and some of them don't like Donald Trump) they dislike Warren even more. A lot of these rich Democrats would rather see Trump re-elected than have Warren or Sanders elected. Now they don't want to come out and admit that, but they don't want to support a socialist. They're not that crazy - but they don't want the rest of the crazies in the Democratic party to know that.
November 6, 2019
Better Luck Next Fall I just got back yesterday from the New Orleans Investment Conference, and I actually came to Connecticut for a few days; I really wanted to experience some of the fall foliage.  It's normally at its peak in the beginning of November. But, unfortunately we had a big storm here - a lot of rain, a lot of wind, and it knocked most of the leaves off of the trees.  So you know what they say about the best laid plans… hopefully I'll have better luck next fall. Stock Market High on Trade Rumors But as the leaves have been falling from the trees, stocks have been going the other direction.  Yesterday, all of the major stock market indexes hit new record highs. I think the catalyst, again, were rumors about a potential phase 1 trade deal. Of course, it really is ridiculous now.  What rallies the market is not the rumor of an actual trade deal but the rumors of a phony trade deal - a phase 1 deal which really isn't a deal at all. In fact, to the extent that anybody is even celebrating phase 1, what they really celebrating is that the trade war is over. That Donald Trump has basically surrendered without admitting that he has surrendered.  In fact a lot of the talk about what the Chinese even need to get the phase 1 deal is for all of the tariffs to be removed. Not just cancelling the future tariffs, but to take away all the tariffs that are already there, which, of course would be a relief for the American consumer, who, contrary to Donald Trump's claim, they're the ones who pay the tax - not the Chinese. Buy the Rumor, Sell the Fact… Again? But, basically, what the markets would really be celebrating, is if we went back to where we were before the trade war ever began. Of course, this is not a victory for the president if all the markets could hope for, is a return to the status quo, but again, once we get that deal - if we get that deal, it should be a "buy the rumor, sell the fact", especially since the fact is not going to live up to the height of the rumor.
November 2, 2019
New Highs in the Headlines We had record high closes today in the S&P 500, the NASDAQ composite; the Dow Jones not quite a new record but still up better than 300 points: 301.13 to be precise. Of course, all of the headlines, and President Trump - they're going to be claiming that the reason that we had these surging stock prices is because we had a stronger than expected jobs report.  We got the October nonfarm payroll that came out this morning and it was better than was expected. You had Larry Kudlow out there talking about how this is a fantastic jobs report.  It basically shows how we have this great economy; the greatest economy in the history of America, and that's the reason that the stock market is making record highs, because we have this great economy. Economic Data was a Mixed Bag Well, first of all, the jobs report is really not that great.  Sure, it was stronger than expected, but that's not why the stock market went up today. We had other economic data that came out that was weaker than expected, so it was an overall mixed bag. In fact, the Atlanta Fed came out today and downwardly revised their forecast for Q4 GDP from 1.5% down to 1.1%, and I think the New York Fed is actually below 1% in its forecast for fourth quarter GDP. So hardly the strongest economy in history, yet the markets and President Trump are certainly celebrating like the economy is strong. Nonfarm Payroll up from an Upwardly Revised Previous Month But let me get to the tale of the tape first in the jobs report, because we were looking for a weak number. So the bar was pretty low. The consensus was for 90,000 nonfarm payroll jobs, and one of the reasons was because of the striking GM workers, so they were going to be subtracted from the numbers.  So that was already baked into the cake. We ended up getting 128,000 jobs, so nicely above those diminished expectations.  But probably more significantly, they went back and upwardly revised the number they told us for the prior month, which was originally reported at +136,000.  Now the government claims it was +180,000.
October 31, 2019
The Fed Slashes Interest Rates for 3rd Time As expected, the Federal Reserve cut interest rates today.  This is the third rate cut of this cycle.  We're now down to 1.5%. But of course, what everybody has to remember is a year ago, when the Fed was hiking interest rates, the forecast from the Fed was that they were going to continue to hike rates.  They were supposed to have another 3 or 4 rate hikes in 2019.  And, of course, a year ago, as the Fed was hiking rates, they were still shrinking their balance sheet and they were going to continue to shrink it. They were talking about auto-pilot. They were going to continue to do $50 billion/month of quantitative tightening.  And they said this with a straight face.  And everybody believed them. Not a Surprise to Me Of course, everybody except me and maybe a few other people out there in the financial media. But I was telling anybody who would listen - which was not that many people in the mainstream, but certainly the people who listen to my podcasts, that none of this was going to happen. I said that the Fed was going to have to stop hiking rates, and that they would be cutting rates in 2019, and that not only were they going to stop quantitative tightening, that they were going to have to go back to quantitative easing. And that's exactly where we are. A Distinction without a Difference Although, Jerome Powell went out of his way - I think the first thing that he said when he made his prepared remarks - was to reassure everybody that what the Fed was doing now, with its repo program was not quantitative easing. He drew a distinction between what the Fed was doing when it was doing QE and what it is doing now when it is not doing QE.  The main distinction had to do with the maturities of the debt that the Fed was buying.  He said that when they were doing QE, they were buying longer term government bonds, but that now, they're buying shorter term government bonds and so therefore it's not QE. But this is really a distinction without a difference.        
October 25, 2019
I am Back! I am back! I know a lot of people have been upset that I haven't been able to do a podcast in almost 2 weeks. The reason I've been absent… I just haven't been feeling well.  I've been coughing a lot and and haven't been up for doing a podcast - I'm doing one today, though.  I'm still a little bit sick… but I figure it's been long enough, so I have to talk a little bit about what's on my mind. Dollar Index Trending Lower First of all, there hasn't been that much activity, I guess, in the markets over this time period. The U.S. dollar has generally been weaker.  It has been trending down.  It hasn't really broken down yet, but it is going lower.  In fact, the dollar index closed today near 97.69. so that is lower than it had been.  Remember, a few weeks ago, the dollar index was above 99. So the dollar is trending lower. Interest Rates Up - Bond Prices Down Interest rates are actually moving higher.  Bond prices are going down.  The yield on the 30-year U.S. Treasury now is at 2.26, and I think this is significant because it really shows the problems that are building in the economy because the dollar is weakening and interest rates are rising. That is going to mean higher consumer prices, it's going to mean higher borrowing costs; now of course, the Federal Reserve is doing everything it can to artificially suppress interest rates. One of the stories that I've read several times over the last couple of weeks is how the Federal Reserve is having to do more repurchase agreements; having to increase the size of the amount of Treasuries they're buying in the market. I didn't see that in today's balance sheet numbers; the balance sheet was up only about 2 billion over the prior week.  But I have a feeling that the number is going to be much, much higher than that when we get it a week from today.      
October 12, 2019
Don’t miss my upcoming appearances: The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 Dow jumps 300 points U.S. stocks finished out the week on a strong note; in fact we broke a 3-week losing streak. This was the first time in 4 weeks that the major averages finished higher on the week. When I recorded my podcast earlier in the week, the week was off to a rough start. But we had a turnaround.  In fact, today the Dow Jones was up 319 points on the day - about a 1.2% gain. The NASDAQ was up even more; 106 points, that's 1.34%.  The Russell 2000, even better, up 1.8%.  The Dow Transports were the stars of the day.  They were up 2.23% - 224 points.  Look at stocks like Apple, rising almost 3% to a new all-time record high. Rumors and News Driving the Market There was a lot of news driving the market today. Initially, we got rumors of some type of Brexit deal that potentially was imminent. Of course, there have been all sorts of rumors that have never panned out regarding a Brexit deal. But this morning, there was a rumor that really was causing a lot of buying in the European markets and that spilled over into the U.S. futures, which helped the U.S. market.  And of course there was a lot of brewing optimism over some kind of impending trade deal with China, although that news didn't come out until very close to the close. U.S. Consumer Sentiment Climbs to 3-Month High in October But, earlier in the day, we got the Consumer Sentiment number for October, and the markets are already higher by the time we got this release, which comes out at 10am; the market opens at 9:30. The prior month was 93.2, and the consensus was for a slight drop in consumer sentiment to 92.  After all, there are a lot of reasons for consumers to be less optimistic now than they were back then. But the consumer… surprise - ended up being more optimistic. The number came out at 96 and that sent the price of stocks much higher.
October 9, 2019
Don’t miss my upcoming appearances: The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 Another Weak Day in the Equity Market We had another weak day in the equity market, so the 4th quarter is starting off on a particularly sour note. The Dow, down 314 points today. Technically speaking, closing right near the lows: down 1.2%. NASDAQ had a much worse day, down 132 points - that's 1.67%.  Russell 2000, similarly beat up: 1.7%, down 25 points.  The Transports really took it on the chin. They down 1.85%. 185 points down on the Transports. The money losing stocks, the recent IPO's continue to get beat up. The real debacle du jour was Smile Direct. That one was down another 15% today: down $2 - it closed at $11.34 right off the new low of $11.20.  Remember, this stock came public less than 2 weeks ago and it was $23 a share.  The highest it actually traded was $21.10. Now we're down better than 50% from the IPO. Fed: QE but not QE But I really don't want to spend a lot of time talking about the markets today.  In fact, I only want to talk about one thing, and that's the Fed and the return to Quantitative Easing . I wasn't even going to do a podcast today; Yom Kippur starts in a couple of hours so I was just going to skip it. In fact, I wasn't even going to do one tomorrow - I was probably going to wait until Thursday. But then I was watching this press conference with Jerome Powell where basically the Fed came out and said they were doing QE, except they said they weren't doing QE. "Increasing Securities Holdings to Maintain an Appropriate Level of Reserves" There's an old saying: "Never believe something until it's been officially denied. Jerome Powell went out of his way today in his statement and in the Q and A that followed to emphatically say that the Fed is not doing QE. This is an exact quote from Powell: "This is not QE.  In no sense is this QE."  Except, in every sense it's QE, because it's exactly QE.  There's also an old saying," If it walks like a duck, it looks like a duck and it quacks like a duck, it's a duck." Well, this looks like QE, it smells like QE, it quacks like QE, it walks like it… it is QE! What is the difference between QE and what the Fed is now doing? I wish someone would really ask that question.  In his prepared remarks, this is what Powell said: “As we indicated in our March statement on balance sheet normalization, at some point, we will begin increasing our securities holdings to maintain an appropriate level of reserves,” he said. “That time is now upon us.” Already? In March they said that "at some point"?  Did anybody back then think "some point" meant "NOW"?
October 5, 2019
Don’t miss my upcoming appearances: The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 The Weakest First Two Days of Any Quarter Since 2008 Before I get into what happened with today's nonfarm payroll number and the 372.68 rally in the Dow that it helped spark, I want to back and talk about what happened on Wednesday and Thursday, which were the 2 days following my Tuesday podcast, from the first day of the 4th quarter of the year. On Wednesday, the market sold off sharply, in fact at one point we were down better than 600 points on the day. We managed to close down just under 500 - 494 points.  At that point, the first 2 days of the 4th quarter of 2019 were the weakest first 2 days of any quarter - not just a 4th quarter - but of any quarter going all the way back to 2008, which was the year the market imploded because of the '08 financial crisis. Weakness in Private Sector Jobs One of the data points that came out on Wednesday that may have been a contributing factor - but probably not - was the ADP employment number, which is an early look at the official numbers that came out today.  This is just the private sector, which is certainly weaker than the government sector, and I'm going to get into that when I discuss today's numbers later in the podcast. But, the estimate was for 152,000 jobs created in the private sector and we only got 135,000.  But, not only that, there was a downward revision to the prior month, from 195,000 to 157,000.  So, this was additional evidence of economic weakness that was weighing on the market. IPO's Cancelled Due to Insufficient Investor Demand Also, again we had the follow over from what I had pointed out on my podcast not only on Tuesday, but on Friday the prior week regarding the weakness in the newly publicly traded companies - money losing companies - the fact that some of these companies had to cancel their IPO's due to insufficient investor demand. All of that was weighing on the market and helped produce that sharp decline. ISM Non-Manufacturing Down A Lot - Not Just a Little Bit And when we got into the market on Thursday, the market had opened initially a little bit higher.  But then as soon as we got the ISM non-manufacturing number (remember, we had gotten a very weak manufacturing number and was part of the reason we had the big decline earlier in the weak) but now we got the ISM non-manufacturing number and this number was forecast to come in at 55.5.  This would have been a reduction in the 56.4 that we had for August.  But instead of going down a little bit, the number went down a lot - all the way down to 52.6.
October 2, 2019
Don’t miss my upcoming appearances: The Las Vegas Trading Conference, Oct. 4-5 The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 First Day of Q4 2019 Today was the first trading day of the 4th quarter of 2019.  And if today's action was a harbinger of things to come, it is going to be one difficult quarter for the bulls on Wall Street. In fact, when they rang the opening bell this morning, everybody was happy, the stock market was up, the dollar was up, gold was down again.  In fact, gold has had a pretty big correction since my last podcast. When You Live in Glass White Houses… Yesterday, gold saw a $25 decline; again, with a stronger dollar and a stronger stock market.  For some reason, I think investors were a little bit more optimistic over the last few days after my last podcast Donald Trump talked about - or there were some rumors that he was thinking about maybe de-listing Chinese companies from U.S exchanges, making it illegal or something for Americans to invest in China - which I thought was a very dangerous road for the President to go down. Remember, when you live in glass White Houses, you don't want to throw stones. Chinese Still Big U.S. Investors The United States benefits from a lot of direct investment from overseas, particularly China.  Chinese invest a lot in U.S. businesses; they're big buyers of U.S real estate, and, of course, they're still big holders of U.S. Treasuries. If the United States says, "Well, Americans can't invest in China." what happens if the Chinese return the favor?  I think we have a lot more to lose than they do. I think the following day or maybe over the weekend the President kind of backtracked away from that trial balloon and they said, "No, we're not considering that." So probably that was good news and a relief for the market that that wasn't going to happen.
September 25, 2019
Check out my podcast, "What it Means to be an American", Episode 265 Earthquake Hits Puerto Rico Last night, I was lying in bed, I wasn't asleep yet; I just finished watching television; my wife and I were still awake, and next thing we know, the house starts shaking. And it kept on shaking.  I couldn't believe I was in an earthquake. This was a decent-sized earthquake - it was over 6.0 on the Richter scale. The earthquake occurred in the ocean, but not too far from Puerto Rico.  I think it rattled a lot of the islands here in the Caribbean. I haven't felt an earthquake since I lived in California. To be honest, I never even considered earthquakes here in Puerto Rico.  I knew about hurricanes, but I really didn't think we would be hit by an earthquake - and we did.  Fortunately, it didn't do any actual damage; in fact, I don't think anything in Puerto Rico was damaged.  Of course, the big risk when you get earthquakes in the ocean is tsunamis - but that didn't happen.  In the meantime, I've got a tropical storm overhead as I am recording this podcast.  Tropical Storm Karen has arrived in Puerto Rico later than expected.  It was supposed to come this morning but it didn't get here until this afternoon, although "Karen" doesn't sound particularly menacing, and it's living up to its name. It's really just a little rain, not too much wind; so that's not bad. Disaster in the Cryptocurrency Markets The real disaster is not here in Puerto Rico with earthquakes and tropical storms; it's the disaster that is unfolding in the cryptocurrency markets.  We are seeing some real carnage - a real bloodbath over there. I think this is just getting started, because we've finally really broken down on the Bitcoin chart, although the biggest declines today are in the alt coins. Bitcoin is down about 13% right now. But this about the high that Bitcoin is been in the last half hour. We're trading up around $8500.  We did get as low as $8000; I think we maybe ticked below it briefly.  That means from the nearly $14000 high that's a better than 40% drop in the price of Bitcoin from that peak, which, by any definition constitutes a bear market.
September 21, 2019
Don’t miss my upcoming appearances: The Las Vegas Trading Conference, Oct. 4-5 The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 These two videos were referenced in today's podcast: How government programs drive up college tuitions Is a college degree worth the cost? You decide Fed Proving Me Right As I surmised, when I recorded my podcast on Wednesday, it seems pretty clear that the Federal Reserve has already returned to quantitative easing.  And that didn't take long, because they just ended QT (quantitative tightening) and they've already begun QE. - Although, the Fed is not going to admit that that's what they're doing. Apart from proving me right, which was one of my forecasts from the very beginning, even before the Fed was talking about ending QE, I said they could never end it before they even started it. Monetary Roach Motel I had forecast what the Fed was going to do before they did it. And when they announced quantitative easing, not only did I say it was a mistake, but I said the Fed was checking us into a monetary roach motel from which we could never check out.  It was the delusion that we could check out - the Fed was able to convince the markets that it was a temporary policy and that they would only be doing it in an emergency, then they would unwind the policy and shrink their balance sheet and the market believed them. QE Plus Zero Interest Rates Equals Bigger Problem I didn't believe them, and I was warning everybody that the Fed was either lying or didn't know what they were talking about or foolish, but the markets bought into this nonsense.  So, clearly, if the Fed were going to go back to quantitative easing, they would basically be admitting that the policy was a failure. Because the policy was intended to be temporary, not permanent. If they have to do it again, then it proves that it wasn't temporary.  Again, what I said, by doing quantitative easing in conjunction with lowering interest rates to zero, they were simply taking a debt problem and making it much bigger by encouraging even more debt. So once you load up with debt, once you encourage everybody to lever up, then you can't pull the rug out from under them.
September 19, 2019
Don’t miss my upcoming appearances: The Las Vegas Trading Conference, Oct. 4-5 The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 No Surprises from the Fed: Quarter Point Reduction A lot has actually happened since I recorded my last podcast on Friday. I want to start with what happened today and then work backwards.  First of all the big news of the day is the Federal Reserve did exactly what the markets expected and reduced interest rates by a quarter point. Fed: "Mid-Course Correction"? This is the second quarter point reduction since the Fed reversed course on monetary policy and started what it once called a 'mid-course correction".  The markets didn't really like that, so the Fed kind of walked that back. Although, in the press conference today, Powell was asked about the "mid-course correction" and he kind of dodged it a little bit, but still maintained the pretense that all is well in the economy. But anyway, the Fed delivered the quarter point cut #2.  It is now targeting the Fed Funds Rate at between 1.75% and 2%. Short Term Interest Rates Back Below 2% So we now have short-term interest rates back below 2% - certainly on the way to zero, maybe even lower, we'll see.  Jerome Powell was specifically asked about negative interest rates during the Q&A session following the announcement.  He basically said the Fed is not really thinking about negative interest rates, or don't think they're going to be doing  negative interest rates, but of course we'll see what happens when we get to zero, and the problems are not solved. The Fed may well do negative interest rates; they may well not want to let that cat out of the bag just yet. Bullard:  "Interest Rates are Too High" At one point there was some anticipation that the Fed would do 50 basis points but by the time we actually got the announcement this morning, I don't think anybody was really looking for 50 basis points. Although, in the decision to reduce rates, Jim Bullard actually dissented and said that he wanted a 50 basis point rate cut, rather than the 25, but there were 2 other dissenters who didn't want any cuts at all.
September 14, 2019
Don’t miss my upcoming appearances: The Las Vegas Trading Conference, Oct. 4-5 The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 Dow 200 Points from Record High It was pretty quiet today in the equity markets; the Dow Jones managed to inch up 37 points, closing at 27,219 but, you know, how we're less than 200 points away from a new all-time record high in the Dow Jones. Long on Bonds? Bad Friday 13th! But the real action today was in the bond market. If you're suspicious on this Friday the 13th, and you were looking for bad luck, that's where you would have found it, if you were long the bond market.  Now, I've been talking about this bond market bubble for a long time - it's been inflating for a long time. Whether or not it's actually popped, well, we'll have to wait a little longer to find out.  But the carnage in the bond market that I mentioned on my last podcast has continued, with bonds continuing to suffer. Biggest Single Day Decline on 10-Year Treasury In fact, today was the biggest single day decline of the entire move.  The yield on the 10-year Treasury up to 1.903%.  Now, of course, it's still a very, very low yield, but when you consider that a week ago, we were as low as 1.429%.  That is a huge increase, percentage-wise, in the yield on the 10-year bond, which means a big drop in prices. Risk in Bonds if Interest Rates Go Up I'm not sure the percentage decline; maybe 5 or 6% was the drop, which, in the stock market, that's not a big deal.  Stock prices could drip 5% in a week - no big deal. But when the price of a bond drops by 5% in a week, especially a Treasury bond - people think about Treasury bonds as being risk-free - well, there's actually a lot of risk.  Especially when you're buying a bond with such a low coupon. There's a lot of risk if interest rates go up, then the value of that bond is going to go down.
September 12, 2019
Don’t miss my upcoming appearances: The Las Vegas Trading Conference, Oct. 4-5 The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 Millions of Americans were Affected by the Terrorist Attack on 9/11 Today is the 18- year anniversary of the tragic events that surrounded the terrorist attack on the World Trade Center and the Pentagon back in 2001.  I do not wish to make light of the suffering of the individuals who died tragically, not only the people who lost their lives on the ground, but also the ones aboard the airplane that crashed into a field in Pennsylvania. And, of course, thousands of families were profoundly affected by those events, and they're still affected by those events today. Loss of Liberty and Freedom So, what I am about to say is not to minimize their suffering, but there are 300 million or so Americans who were not personally affected by those events, other than the fact that we certainly empathize with our fellow citizens who did have to endure the tragedy on a more personal level.  But on a broader level, the biggest loss, historically, from those events is not just the loss of lives and the family members who lost loved ones, but all Americans who lost individual liberty and freedom. Self-Inflicted Loss That is the real tragedy, historic tragedy of 9/11. The tremendous loss of individual liberty and freedom. America today is a far less free society than it was prior to those attacks 18 years ago. And that means that the terrorists won. They didn't win based on the damage that they inflicted.  They won based on the damage that we inflicted on ourselves. The self-inflicted wounds are much greater on a national scale than the terrorists' direct acts. And it's not just the 300 million Americans who are alive today. It's all the Americans yet to be born who are going to be born into a society that is far less free than America would have been but for these attacks.
September 7, 2019
Don’t miss my upcoming appearances: The Las Vegas Trading Conference, Oct. 4-5 The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 The Numbers Really Look Bad in Private Payrolls Where the  numbers really start  to get bad is when you look at the private payrolls.  There, they were expecting 150,000 private sector jobs created. The private sector jobs are far more important than the government jobs.  The private sector jobs are self-sustaining. The tax payers are on the hook for paying the salaries of the government workers and the private sector employees, by and large are actually productive.  They're making our lives better. Manufacturing is Very Weak They were looking for 150,000 private sector jobs; we got just 96,000 jobs. AND, they revised last month's private payrolls down from 148,000 to 131,000.  Manufacturing - very weak: they were looking for 8,000 jobs - instead, we added just 3,000 manufacturing jobs in August and last month, July, they originally said that we created 16,000 manufacturing jobs and we only created 4,000 manufacturing jobs. 34,000 Jobs Created in Category "Government" Now if you actually look at the breakdown of all the jobs that were created, 34,000 jobs were created in the category of "government".  So, of all the different job categories, the one that added the most was government - 34,000 jobs. I think about 20,000 of these people were temporary hires associated with the 2020 Census. Where's the money coming from to pay for these government jobs?  It's being borrowed. We're borrowing more money to hire more government workers.  Of course, ultimately the taxpayers are on the hook for paying all these salaries, for paying interest on the money  borrowed, to pay all these salaries. Slowest Job Growth in Private Sector Creation in 8 Years In fact, if you look at the private sector job creation so far in the Trump Presidency, this year, 2019, is on track to have the slowest growth in private sector job creation in 8 years. Trump is out there talking about how this is the greatest economy ever - he's the greatest jobs president ever.  We've got the manufacturing sector, the weakest it's been in 10 years, we have the slowest growth in private sector payrolls in 8 years - this is a disaster!
September 4, 2019
Don’t miss my upcoming appearances: The Las Vegas Trading Conference, Oct. 4-5 The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 Silver DID Join Gold's Party Back in mid-July I titled my podcast, "Is Silver Finally Joining Gold's Party?". Well, I think we know the answer to that question. Since I recorded that podcast about a month and a half ago, the price of silver is up another 15%.  In fact, it's up better than 30% since the end of May. Silver having a sterling performance today. As I am recording this podcast, it's about an hour after the close of the U.S. market, we're up almost 90 cents an ounce. We're at 19.22. Gold Still Meeting Resistance at $1,550 Gold, not quite having as strong a day as silver; gold isn't making a new high.  It's up $19.50 on the day: $1548.  Still having some problems with the $1550 resistance area. GLD, the exchange-traded ETF did make a new high for this move, but the spot market did not register a new high - but I think that's just a matter of days - if not hours - before that happens. Silver is Leading the Charge Because silver is leading the charge. It's leading gold higher; pretty much the way I said.  A week ago, I titled my podcast, "Hi Ho Silver, Away" and that prompted a number of people to comment that somehow I had just capped the silver rally by getting too optimistic on silver.  Well, that was a week ago.  We just hit $18.00, we're now over $19.00, and I said on that podcast, I thought we would have a pretty quick move up to about $20, and once we take out $20, I think this thing could really, really take off. Overdue Move Down in the Dollar What is going to be the catalyst, I think, for a much bigger move up in both gold and silver is going to be the long overdue move down in the dollar. Paradoxically, when the dollar starts its decline, it is even possible that gold and silver take a bit of a breather, or maybe pull back a little bit, in terms of dollars, but pull back even more in terms of other currencies. Remember, as strong as gold has been in dollars, it has been even stronger in other currencies.
September 2, 2019
Don’t miss my upcoming appearances: The Las Vegas Trading Conference, Oct. 4-5 The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 Let's Debunk Andy Yang's Platform I decided to take a little time out on my Labor Day to record a podcast debunking Democratic Presidential Candidate Andrew Yang. I've been getting a lot of emails about Yang; especially since he did the Joe Rogan Podcast about six months ago.  He said a lot of things that certain people find appealing, so I've been asked to comment on him and I've seen other notes about Andy Yang and I wanted to talk about him because, number one, he is rising in the polls. He's now in sixth place among the Democratic candidates; he's polling at about 3% ant that puts him ahead of established politicians like Cory Booker, Beto O'Rourke, Amy Klobuchar, so he's gaining in popularity and I think the trend is going to continue. Yang Rising in the Polls The next Democratic Debate is coming up in about a week and a half and they're no longer going to have two debates; they've narrowed it down to just ten candidates and Andy Yang is one of those 10.  I think as there are fewer candidates in the race, Yang is going to get more and more attention from the media and I think he is going to rise in the polls. Attractive Among a Bunch of Democratic Socialists To me, he is like the Bernie Sanders of this campaign. Sanders, and "Feeling the Bern"… he was popular in the 2016 campaign, mainly because he was the only alternative to Hillary Clinton, who was extremely unpopular.  So, given that matchup and there was only two choices, it made it very easy for Sanders to gain a lot of support.  He's having a much harder time galvanizing that support this time because people have a lot of alternatives. If you want a Democratic Socialist, there's a bunch of them to choose from. Clearly a Smart Guy… But But a guy like like Andy Yang, a younger guy, and clearly a smart guy.  I had not watched his appearance on the Joe Rogan Experience until just yesterday.  I decided to watch it, and that's the motivation for doing this podcast. Once I heard him talk about his ideas, I spent a lot of time on his website looking at a lot of things he didn't discuss with Joe Rogan.  One thing is certainly clear to me: he's a smart guy.  Clearly, if you gave an IQ test to all of the Democratic candidates, Yang would win.
August 31, 2019
Recorded August 30, 2019 Don't miss my upcoming appearances: The Las Vegas Trading Conference, Oct. 4-5 The Dallas Money Show October 13-14 and the New Orleans Investment Conference, Nov. 1-4 Waiting for Hurricane Dorian When I recorded my last podcast on Tuesday evening, we were getting ready for Hurricane Dorian, which was supposed to pass by the south coast 0f Puerto Rico on Wednesday.  But when I woke up on Wednesday morning, the meteorologists had the hurricane pretty much coming right over my house. It had changed course and had moved north, and it was supposed to come right through Puerto Rico, rather than just go by it to the South. But then the hurricane kept moving north, and it ended up missing Puerto Rico completely.  We were here, the kids were home from school, everybody was battened down waiting for what at that time was maybe a strong tropical storm… maybe a category 1 hurricane. Puerto Rico Spared from Hurricane But we didn't even get a rain drop. Not even a gust of wind, as the hurricane just missed Puerto Rico to the north. I think it did go by the U.S. and British Virgin Islands - didn't really do much damage, there, because the store hadn't intensified but Puerto Rico's gain will be Florida's loss. The storm did not go over Puerto Rico, and initially it was supposed to go over the Dominican Republic, and the mountains there, it's a much bigger island, and it would have really beaten up the storm, but because the storm was really uninterrupted, and it has been over water the entire time, now it looks like it will be a category 4 when it hits somewhere along the Florida coast. It looks like a pretty powerful storm. Broken Window Theory You're going to hear, as is always the case, economists are going to be saying, "Oh, well, this is good for GDP." Whenever there's a hurricane, people say, "Oh, look!  We have to spend all this money repairing and rebuilding everything that was destroyed."  But that is not good for the economy. If you haven't heard the "Broken Window Theory", Henry Hazlitt does a very good job of explaining that and refuting the Keynesian idea that disasters are somehow good for the economy.
August 28, 2019
Recorded August 27, 2019 Real Significant Action in the Market: Gold and Silver The real significant action today was in the gold & silver market. I wanted to mention today that on Friday, the U.S . dollar sold and then today we're back at 98. So the dollar is not weakening against other foreign currencies. In fact, most people are still talking about the strong dollar. Even Donald Trump talks about the fact that we have a strong dollar.  Now, Trump is bothered by the fact that we have a strong dollar, and he wishes it wasn't as strong, but he keeps talking about the strong dollar and everybody acknowledges that the dollar is strong. Silver is a Great Buy The problem is: the dollar is not strong. The price of gold going up shows you that the dollar is not strong. Gold was up $16 an  ounce: we closed at $1542.50. This is the highest close in over 6 years for the price of gold; but the real star today was silver. Silver was up 53 cents - $18.17. It's been a while now since silver was above $18. If you have been listening to my podcasts, you know that I have been pounding the table on silver. I've been telling people that silver is the key; it is really cheap relative to gold. In fact, it was better than 90:1. You needed more than 90 ounces of silver to buy a single ounce of gold. That was an all-time record low for the price of silver. Now we're at 85.  The ratio has moved back in silver's favor, but you still need 85 ounces of silver to buy one ounce of gold. That is historically extremely cheap. In fact, the only time it was cheaper was when it was 90. So it's still a great buy. Cash in some Gold to buy Silver I have been telling people, even at SchiffGold - we have actually been calling clients who we know own gold and have them sell us back their gold and buy silver, because you can get so much silver for your gold right now that it is a real bargain. Silver has never been this cheap, and so if you have gold and don't have any silver, it makes sense to buy some silver with your gold. Even after today's move, I would still say that that trade makes sense.  
August 24, 2019
Recorded August 23, 2019 A Bad Day for Everybody Except the Democratic Candidates If you are one of the Democrats running for President, today was a pretty good day for you. But it was a bad day for just about everybody else; I guess other than gold investors, which I clearly am, but I'm also an American and I hate to see bad things happening to my country, even though I know bad things are going to happen.  I would just rather be among those who profit from these events than suffer additional monetary loss in addition to the losses you endure as an American citizen as a result of the ensuing chaos and loss of liberties. President Trump Lost It on Twitter Today, President Trump really kind of lost it. On Twitter.  Real time.  Maybe what Trump needs is somebody to be his official Twitter filter. Maybe there should be a policy where when Trump wants to tweet, there is like a one or two hour cooling off period where the tweets get reviewed, maybe edited, maybe someone gets to talk a little sense into him before he tweets.  But today's tweet storm probably really indicates that the White House, I think, is in disarray. I think the President realizes that the air is coming out of this big, fat, ugly bubble.  That he's not going to get out of Dodge. CBO Revised Up Budget Deficit Estimate Again He's trying to pretend that the economy is in great shape, yet we're hearing rumors that we need a payroll tax cut, we need stimulus for the economy.  Why would you stimulate an economy that's doing great? If we have the greatest economy in the history of America, why does it need even more fiscal stimulus? After all, we already have the most fiscal stimulus ever. We have the largest budget deficits in history.  In fact the Congressional Budget Office this week came out and revised up again their estimates for the deficit.
August 21, 2019
Recorded August 20, 2019 The Day the Yield Curve Inverted I am finally back in the United States - well, in Puerto Rico, technically is part of the United States, it's a territory - after my extended trip through Italy. I recorded that one podcast, and on the very next day, we had probably the most volatile day in memory. What happened that morning was that we got some weak economic data that came out of China and then we got some more weak economic data that came out of Germany and that immediately caused yields to drop around the world. In the United States, for the first time, the yields on the 10-year treasury dipped below the Fed funds rate. So the entire yield curve, out to 10 years was inverted. In fact, the 30 year yield hit a new low for this whole "quantitative easing - zero percent interest rate" cycle. The 10-year did not quite do that yet, but the 30-year did, and as soon as this happened, as soon as the curve inverted, I think it triggered a lot of sell programs in the stock market. The Media was Waiting to Flip the Narrative Stocks got clobbered, in fact, by the end of the day the Dow Jones was down 800 points; one of the worst point drops in Dow Jones history - not one of the worst percentage drops, but 800 points is a lot of points. And of course, as soon as this happened, the media began to cover the possibility of a recession to a much greater degree than they had in the past. If you remember, I said that this was coming. I said that I thought that maybe the media was waiting to flip the narrative on Trump, which is exactly what they've done. Fake News? All of a sudden, a media which was pretty much buying the booming economy narrative now is questioning whether the economy is actually strong. In fact, now you have Donald Trump accusing the media of being involved in some kind of conspiracy to make the economy look bad. In other words, a lot of the data that's been coming out indicating that the economy is weak, that it is slowing, that this is just Fake News.
August 14, 2019
Catch Peter on Simon Black's podcast, "Sovereign Man" recorded yesterday in Italy. Catch Me on Sovereign Man There's been a lot of action over the last couple of days in the U.S. stock market.  In fact, the market just closed a few minutes ago, as I am recording. It is now after 10pm in the evening here in Italy. If you don't already know by now, I am out here in Italy with my son, and that's why I'm not recording as many podcasts as I normally would.  Although, I did record a podcast with my friend Simon Black, of Sovereign Man. I'm actually staying with Simon and some other guests of his for a few days in Umbria.  We leave tomorrow for Florence, then Venice and then home. So I recorded a podcast with Simon yesterday.  We talked for about an hour.  So if you want more material, just go ahead and have a listen to that.  You'll get over another hour discussion. Check out my Debate with Art Laffer on YouTube Also, I put up the YouTube video this morning that I meant to put up a couple of weeks ago. I uploaded
August 6, 2019
Recorded August 6, 2019 Trade War: New Tariffs and Accusation of Currency Manipulation Yesterday was the worst day of the year for the Dow Jones.  At one point, we were down about 950-odd points.  I think we closed down under 800; 767 points.  But it was a follow-though from the weakness that we had on Friday and the news, too, that we had on Friday about the escalation of the trade war, where Donald Trump announced the imposition of new tariffs on China. Normal Movements in a Currency Market But what happened overnight in China was the yuan went below 7:1 against the dollar. This is the first time it has been that low since China started to allow its currency to appreciate against the dollar. It had been appreciating… now 7 is not that much weaker than it was when Donald Trump became President.  The Chinese yuan is only down 2-3% since Trump took office. That's not a whole lot, when it comes to a currency. Everybody is up in arms; now Trump is upset that the Chinese are weakening their currency, when the currency has not weakened very much.  In fact, the U.S. dollar is down about 2 or 3% against the Swiss franc since Trump became President. So what's the big deal? Switzerland isn't accusing the United States of manipulating its currency, just because the currency dropped a few percent. These are normal movements in a currency market. Dow Trading Higher after China Blinks? But the minute the yuan dropped below 7:1, everybody was saying, "Currency War!"  and "Who knows how much further the yuan is going to drop?" And so that sparked a lot of selling in the Chinese market.  And so the U.S. market went down… I think the futures went down maybe about 300 Dow points or so before we opened.  But then, as soon as we opened, we sold off hard and we did have a little bit of a rally into the close, so we closed off the lows, but as soon as the U.S. stock market closed, the futures sold off again. I think at one point last night, the Dow was off another 4-500 points before reversing on the Chinese yuan having a fix, I think, that was a little bit higher than the markets were worried about, so that caused the traders to breathe a little sigh of relief that the yuan didn't fall again. So that sparked a rally.
August 3, 2019
Recorded August 2, 2019 July NonFarm Payroll Report: Great? Not so Great This morning we got the release of the July NonFarm payroll report, and the general consensus among the analysts seem to be that it was s strong report, a solid report. I saw Larry Kudlow this morning on Fox Business talking about another "solid performance" in job creation.  But once again, once you look beneath the surface, and you don't have to look too deep, this is not a good report. The Bar Was Set Pretty Low First of all, the bar was set pretty low.  The consensus was 151,000 jobs.  That's not a lot of jobs, so it's not that hard to beat it, and we did.  We got 164,000 jobs.  But the reason we beat it was because we created more government jobs than the market expected. For private payrolls, the consensus was 160,000 jobs and we only created 148,000 jobs.  So we created 12,000 fewer private sector jobs than had been expected and we made up the difference by creating government jobs, whether they are for the Federal government or state government. Public Sector Jobs vs Private Sector Jobs But there's a very big difference between private sector jobs and public sector jobs, in that the taxpayer isn't on the hook to pay the salaries of the private sector workers. They're working in companies that are generating profits, so the salaries are paid for by the profits that the businesses generate. The Government Does Not Generate Profits The government doesn't generate any profit. It just has to suck up tax revenue; we have to pay for these.  So it's not a good thing that government gets more bloated and hires more people.  Especially since a lot of government bureaucrats tend to complicate things. They make everybody less efficient.  If we're hiring more regulators to slow down the economy and get in everybody's way, that's not a good thing. I'd rather have a lean, mean government. Of course, that's not going to happen.
August 2, 2019
Recorded August 1, 2019 Trifecta Podcasts this Week I hadn't planned on recording a podcast today; I did one yesterday and I figured I'd wait until Friday, get the … payroll numbers and finish up the week with a Friday podcast.  But so much action in the markets today, that I just couldn't resist.  I knew there would be a lot of people who would be excited to get a podcast today, so we're going to have a trifecta - we're going to have three days in a row of podcasts. Nobody on CNBC saw the Rate Cut Coming… But I Did Before I even get into a lot of the market action today, I want to talk a little bit about what I heard on CNBC this morning. They're still talking about the rate cut that we got yesterday and the host said, "Six months ago, nobody could have possible predicted… nobody would have believed that we'd be here today and the Fed would be cutting rates. And nobody could have possibly believed that the Fed would be ending the quantitative tightening program, because it's now over!" So, according to CNBC, nobody could have possibly predicted this, yet it happened anyway. Wait a minute: what about me? I predicted it. I said it was going to happen.  I didn't say it on CNBC because they won't let me on, but I said it on my podcast.  I even said it on their competitor network, Fox Business. Maybe if they watched Fox Business they would've known about this. I Predicted, Live, That December Hike Would the Last Hike So, really, what they meant is nobody on CNBC saw it coming. None of their anchors, none of their regular guests saw an end to quantitative tightening. None of them saw the rate cut. But I did. Not only did I predict that the Fed would cut rates, I predicted, live, that the December hike was the last hike. and that the very next move by the Fed would be a cut. And that is exactly what they did.
August 1, 2019
I Bet an Ounce of Gold that Fed would Cut Rates Today I officially won an ounce of gold! I am referencing a bet that I made back in January of this year. During a panel discussion, I said that I though that the Fed was more likely to cut rates in 2019, than hike them.  I was the only person on the panel who believed that.  Everybody else thought that the Fed would be raising rates, which pretty much was the conventional wisdom in early January. Check out My Forecasts in December and January on YouTube So today, the Fed cut rates, which is what I have been saying they would do.  In fact, not only did I put up a small YouTube video of that bet, as well as a video of the entire panel on my YouTube channel. But I also cut a minute or so segment from my interview on the Monday in December 2018 the week the Fed raised rates, 2 days later on a Wednesday.  That was the final hike where the Fed went from 2% to 2.25%, to 2.25% to 2.5%. Fed Cut Rates by 25 Basis Points I was interviewed by Liz Claman- by the way I will be on Liz Claman's show tomorrow - they've renamed the show it is the Claman Countdown. But when I was on Liz' show back in December I made the forecast then: If the Fed raised rates in December that week, which, I thought they would, (everybody believed they would - they wouldn't want to disappoint the markets) I said that it would be the last hike, and that the very next move that the Fed would make would be to cut rates. And that is exactly what they did today. They cut rates by 25 basis points. December's Rate Hike Erased So they basically took away the last rate hike and the rate is now where it was prior to the December rate hike. Now, I believe that cutting rates was a mistake.  I think the Fed should have already raised rates by more than they have. Not because the U.S. economy is in great shape, because it's in lousy shape. It is a gigantic bubble.
July 30, 2019
Two Camps: Inflation vs Deflation I did the first live stream a couple of weeks ago; that was on bitcoin. I got a lot of feedback on that one and a lot of people were coming up with potential topics for the next one.  I think the most common request was for inflation or deflation: which one is it going to be? Because there are a lot of people out there who see the world similar to the way I do, as far as the problems that are confronting the U.S. economy in particular but the global economy, but everybody seems to fall into two camps as to how it is all going to go down; whether it is deflation that is coming - we should prepare for that, or whether it is inflation that's coming and you should prepare for that.  Now I am an inflationist.  I am in that camp. Other people in that camp may be, like Jim Rickards or Jimmy Rogers or Marc Faber - there are a number of people who would be in the inflation camp. Deflation would be guys like Robert Prechter, Harry Dent, there are a number of guys that are looking for deflation. Defining Terms Now before I really get into it, I want to talk a little bit about the terms, so we know what we're talking about.  Let's define the terms.  What is inflation? What is deflation? The actual definition of inflation, the actual meaning of the word, is an expansion of the money supply. What does "Inflate" Really Mean? That's what inflation is; it's not about prices.  If you think of the word, "inflate" - what does inflate mean? It means to expand. You inflate a balloon; when you inflate a balloon, it expands. Prices don't expand - they go up, they go down; they don't expand. What expands?  Money supply. When the government creates money, the money supply expands, like a balloon.  It blows up. So that's what inflation is, it is an expansion of the money supply. What is Deflation? Deflation is the opposite; it is a contraction of the money supply. Now when you inflate the money supply-you create more money - you have more money bidding up prices. So inflation will result in prices going up. But prices going up is not the inflation they are the consequence of inflation.
July 27, 2019
Participate in my next YouTube Live Challenge next Monday, July 29, 9pm EDT The Topic: It’s Inflation, NOT Deflation What is Really Happening to Corporate Profits? Both the S&P 500 and the NASDAQ rose to all-time record highs today; nominal highs, of course.  The Dow Jones didn't quite make it to a new high, it did close better than 50 points higher - 27,192.45, but probably the most interesting thing about the record high, is what's actually happening to corporate profits. I'm talking about operating profits, which are profits before you subtract interest and taxes.  I'm looking at some new statistics that came out today.  There were some revisions that came out from the government; some of them on the GDP, which I will get to a bit later in the podcast. Corporate Operating Profits Moved Sideways Since 2014 Just looking at corporate operating profits, it turns out that operating profits actually peaked in the third quarter of 2014.  That is while Obama was still President, a few years before Trump was President. So corporate profits - operating profits peaked in Q3 of 2014.  And they basically have been going sideways ever since, although they have been dipping recently.  If you take a look at the last quarter, operating profits are now the lowest they've been since 2011. Profits Have Gone up - but Not Operating Profits Now, the Dow Jones finished 2011 at about 12,000  - 12,200, I think was the end print. Well, we've more than doubled since then, but operating profits haven't gone anywhere. How are you doubling stock values when the profits are staying the same?  Now, of course it's not the profits - profits have gone up - but not operating profits. But operating profits are really more important if you want to look at what's going on in the companies in these averages. Operating profits is how much money the companies make from operating their businesses. Tax Cuts Boosted the Stock Market So, actual profits have risen even though operating profits have not. Why is that?  One: we got the big tax cuts. Corporate tax rates went way down so that enabled after tax earnings to rise. So that provided a boost to the U.S. stock market. But these corporate tax cuts are temporary. They are not permanent; corporate taxes are going to be raised.  Especially if I'm right about Trump being a 1-termer; the Democrat who succeeds Trump is going to raise corporate taxes.
July 24, 2019
Participate in my next YouTube Live Challenge next Monday, July 29, 9pm EDT The Topic: It's Inflation, NOT Deflation Not to Praise the Tea Party but to Bury It President Trump originally won the Republican nomination by appealing largely to what used to be the Tea Party. A lot of Tea Party Republicans ended up embracing Donald Trump; in fact I think a lot of the support that might have otherwise gone to Rand Paul (a Tea Party favorite who went to Washington in 2010 as part of the Tea Party movement); a lot of his thunder was stolen by Trump, who appealed a lot to Tea Party Republicans. Even Tea Party Corpse Seems to Approve of its Demise When Trump went to Washington, he wasn't exactly praising the Tea Party, but few people expected that he went to Washington to bury it, either. But that's just exactly what he just did by agreeing to this budget deal with the Democrats.  The Tea Party is dead! President Trump just put the final nail into the coffin, lowered it in the ground and covered it in dirt. The irony is, nobody seems happier about this than the corpse itself! The Tea Party Republicans are not up in arms against the Commander-in-Chief. Everybody still loves Donald Trump. Where is Rick Santelli? Even the father of the Tea Party, Rick Santelli, (he is credited for getting it all going) where's Rick? Where are his tears, where's the eulogy as his child is being buried? Again, no criticism, everybody thinks Trump is great… As I said, I was back at Freedom Fest, which they should have just re-named "Trump Fest". Continuation of Policies Once Criticized by Candidate Trump Donald Trump is simply continuing all of the policies that he once criticized in order to become President. When he was running for the Republican nomination,  he was extremely critical of the big deficits under Obama. He was even critical of the big deficits under Bush. That was one of the things I liked about Trump. He was criticizing big spenders of both parties. He was supposed to be different. He was rising above politics.  He was going to drain the swamp. And draining the swamp meant putting an end to the deficits.
July 20, 2019
A Podcast from Freedom Fest in Las Vegas I'm still here in Last Vegas at Freedom Fest, but I wanted to take some time out to come up to my hotel room here and record a short podcast - otherwise I'd have to wait until Tuesday.  There's been a lot of stuff that's happened over the last few days, so I definitely wanted to record something; the quality might not be up to snuff.  But I figured I'd talk a little bit about what's been going on in the market. The Action Was in the Metals Markets Really, the stock markets - not much action.  All the major markets finished the day and the week lower; bond prices a bit higher.  The real action, though, was in the metals markets.  You wouldn't really know it to look at the price of gold, which was only up maybe about a dollar or two on the week, although we did have a big $20 rise yesterday, followed by a $20 drop today. I'll get into why that happened in a minute. Strength in Silver But the real action was in silver, which finished the week better than up 90 cents, I believe.  So, a very strong week for silver - even on days when gold was down, silver was up. In fact, even this morning, silver was up for a while while gold was down. I titled my last podcast, "Is Silver Finally Joining Gold’s Party?" and, as of now, it really looks like the answer to that question is yes. We've see a lot of strength in silver. Clarida Shakes Markets with Rate Cut Comments In fact, we had the biggest two-day gain, going back several years, in the price of silver. The big jump that we has yesterday really was set into motion by some Fed comments, although that probably was just a catalyst; it probably would have moved up anyway. But in particular, we had Clarida came out and he said that the Fed should not wait for the data to turn before cutting rates. Meaning that, "We should cut rates, anyway, even if we don't get negative data; even if it doesn't look like the economy is going into recession, we should just preemptively cut rates."
July 17, 2019
See Peter at the Las Vegas Freedom Fest – July 17-20 Save $50 using promo code SCHIFF 93 Ounces of Silver for One Ounce of Gold I think the most interesting development today in the market was in the metals market. I've been talking on the podcast for some time about the spread between gold and silver, and the fact that silver has never been this cheap, in terms of gold. The spread got to almost 93:1, where you can buy 93 ounces of silver for one ounce of gold - which is incredibly cheap. Some Silver Stocks up 10% or More on the Day It's a great time to be buying silver, and I've really been pounding the table on people buying silver.  I recommended it again last night last night on my live YouTube event, I recommended it to my Managed Account clients on our last webinar, encouraging people to contact their brokers and maybe buy more silver stocks. In fact we had silver stocks today; some stocks up 10% or more on the day. Very, very significant jump up in the price of silver stocks, even thought the price of silver itself did not have that big a move. It was only up 19 cents. Silver Up as Price of Gold Fell But the significance of the move is that gold was down $8. So not only did silver have a relatively large move, although not large enough to normally cause silver stock to rise by 10%, but what was significant about it was that it rose as the price of gold was falling. This could signal - and it was looking to me technically that we saw some indications of this last week (I added to my own silver stocks last week  - but it looked to me like this trend was about to change.  We're still above 90:1. We're close to getting back to 90:1 even. But this is still an incredibly good opportunity to buy physical silver; to buy silver oriented stocks. But what I think this is showing me is that the bull market in gold is getting ready to kick into a higher gear.
July 16, 2019
First Live YouTube Event Welcome to the Peter Schiff Bitcoin Challenge. First of all, I have to make a confession. I really was not familiar with YouTube live streaming and live chatting, and so the way I thought about this in my head; I thought that people were going to be able to talk. Like a Skype group conversation. People would be able to actually engage me and make their case in their own voice, and to be able to have a little back and forth. Post a Cogent Argument I didn't realize that the way I had to do this was with a chat, where people who want to make a point have to do it by chat. So I'm going to try my best.  Hopefully, this format can work. There are so many chats going by, it is hard to keep track of them. But I want to see if people can put together a cogent, concise argument.  Think of it like you're composing a tweet. I can try to address each point, and try to take in what you're trying to tell me as to why I'm wrong about Bitcoin, and why I should actually be embracing it as digital gold. Don't Forget to Subscribe to My Podcasts So, what I'm going to try to do is to see the best points that are being made on this chat, then read it out loud, and then address it, make a statement and the person who authored that particular text listens to what I have to say, if they want to do a follow up or something, they can do that, and hopefully I will see that follow up. I'm doing this chat in my home studio in Connecticut. I'm in the studio where I normally do my video blogs, so if you're new to this channel, you should subscribe it.  Two or three times a week a do these video blogs (podcasts) where I talk about all sorts of things that are relevant to people who buy Bitcoin.  
July 12, 2019
Tune in to my first live YouTube event Monday, July 15, 9pm Eastern time U.S. Call in and convince me that I’m wrong on bitcoin! DJIA Record High Today Dow Jones set a record high today, closing above 27,000 for the first time ever.  We added 227.88 points on the day.  We closed at 27,088.08.  The record high, 27,088.45 set just before the close. You know, we added to yesterday's gains, the S&P 500 was also up again - not taking out the record that was set yesterday, but we did, for the second day in a row managed to trade above the 3000 mark, although we have yet to close above it - ever so close today: 2999.91. But a very small percentage gain for the S&P, not even a quarter of 1%. Russell 2000 Down .5% Broader market was weaker.  The NASDAQ was actually down slightly - 6.5 points.  The weakest index being the Russell 2000, down almost a half of a percent. It was lower during the day.  Again, the Russell 2000 is the index that is most sensitive to the domestic economy. I've pointed out on this podcast many times that it is the index that is the weakest, and is not even close to making a new high. And I don't believe it will. I think the broader market is going to roll over, and the small caps are going to lead the way. Traders Weren't Paying Attention to Bond Market In fact, if the traders were paying attention to what was going on in the bond market, we probably would have seen a bigger selloff today. I think we still have some euphoria left over from the two-day "Dove Fest" where Fed Chairman Jerome Powell was up on Capitol Hill basically green-lighting the July rate cut, which is coming up in a couple of weeks. Remember, when we got that better than expected nonfarm payroll report, the odds of a rate cut in July went down from about 100% to maybe 91%, and the odds really came down for the probability of a 50 basis points cut. So it was pretty much 91%, I think, 25 basis points, and that was it. Odds of Rate Cut in July Back up to 100% But after Powell released his prepared remarks, before he even made it up to Capitol Hill - just merely when the markets got a look at his prepared testimony, the odds of a rate cut in July immediately went back up to 100%, and, in fact the odds of a 50 basis point cut went back up to 20%.
July 10, 2019
Tune in to my first live YouTube event Monday, July 15, 9pm Eastern time U.S. Call in and convince me that I'm wrong on bitcoin! More Market News after Powell's Congressional Testimony The markets have been pretty quiet over the last couple of days, so I really don't feel like spending a lot of time on today's podcast talking about the markets.  I probably will have more to say, maybe on Thursday when I'll probably do another podcast because Jerome Powell is making his way up to Capitol Hill tomorrow and Thursday to testify before the House and the Senate. My guess is that some of his comments may move the markets; the currency markets, the gold market, maybe even the stock market. I'll probably have more market-oriented commentary to give you on Thursday. Laffer Curve for Dummies But there are a few things on my mind, which is why I wanted to take some time today and record this podcast.  One has to do with Art Laffer. Of course, Art Laffer gained fame back in the Reagan era. He came up with the "Laffer Curve" that he supposedly sketched out on a napkin one day and showed it to Ronald Reagan.  The Laffer Curve basically says that when you reduce taxes, or lower marginal tax rates, you actually end up collecting higher tax revenues because you incentivize people to work more, they earn more, and then they pay more taxes even if they are paying taxes at a lower rate. Obviously, the Laffer Curve bends at some point, because if taxes are zero, you collect no revenue and if taxes are 100%, you also collect no revenue.  Because if you're going to tax somebody 100% of their income, they're not going to work at all. Nobody is a complete idiot - they're not going to work for nothing. So at a 100% tax rate and a 0% percent tax rate the government collects exactly zero taxes. So somewhere along that curve is an optimal point where you would have the tax rate that generates the most amount of revenue.  
July 6, 2019
See Peter at the Las Vegas Freedom Fest – July 17-20 Save $50 using promo code SCHIFF Markets Up on Low Volume A lot of people on Wall Street probably took today off; after all yesterday was the Fourth of July, the market was closed.  On Wednesday they closed the markets early in preparation for the July Fourth holiday.  So when you have a Friday where the markets are open, but you have a Thursday when they're closed… most people probably left for the Hamptons on Wednesday afternoon, and so were not in their offices or down at the stock market when we released the nonfarm payroll numbers today. ADP Disappointing Number Teed Up Low Expectations The June number, highly anticipated, as always, especially with a rate cut on deck now by the Fed. Most of the people who were probably handicapping the jobs number thought that it would probably come out weaker than expected. After all, most of the data we've been getting has been weaker than expected.  In particular, the jobs numbers, including the ADP report that came out on Wednesday, on that holiday-shortened trading session.  We got a disappointing number.  The consensus for private-sector employment for ADP was 140,000, and we ended up with 102,000.  So we had a significant miss in the ADP numbers. Back-to-Back Declines in Small Business Jobs But also, look at the employment components of some of the other numbers that also came out weak on Wednesday, like the ISM non-manufacturing index.  It printed 55.1 versus an estimate of 55.8.  The employment component of that index was notably weak, especially for small businesses which had major reduction in jobs, no only in this month but the previous month. In fact, I read a tweet by Dave Rosenberg who pointed out that he hasn't seen back-to-back monthly declines like this since February/March of 2008. That was the year of the Financial Crisis. He basically said that small business job growth is the weakest it's been in over 9 years. Bigger Decline in Factory Orders Now, small business job growth, that is the heart of the job market. That's where most of the jobs are created. So, if you look at a lot of the other data that has been coming out that might reflect on employment, you might have thought that there might have been a weak number. Look at the factory orders number that also came out on Wednesday. They were looking for a drop of .5% in factory orders, and instead, the orders dropped by .7%. So a bigger decline.
July 3, 2019
Recorded July 2, 2019 See Peter at the Las Vegas Freedom Fest – July 17-20 Save $50 using code SCHIFF Markets Worried About Slowing Domestic Economy If you just looked at the U.S. stock market averages, you would conclude that not much happened today, but you would be wrong. Even though the S&P and the Dow and the NASDAQ were only up about a quarter of a percent, or maybe .3% - pretty small days.  Although, as has been typical recently the Russell 2000 was down .6% and the Dow Transports down .8%.  So the market, contrary to all the hoopla that  you hear about how great the U.S. economy is, the markets are more worried about the slowing domestic economy than they are the global economy. Strongest Economy in U.S. History? In fact, the Cheerleader-In-Chief, for how strong the U.S. economy is, of course, is Donald Trump. He is constantly up there tweeting about how strong the U.S economy is.  In fact, today, he proclaims that we currently have the strongest U.S. economy in history.  Now, I remember, when he used to tweet about h0w strong the economy was, that we had the strongest economy in history, he would say, "Oh it's probably the strongest economy in history…" I mean he would qualify it a little bit.  But now, no more qualifiers.  He is emphatic. Without a doubt, this is the strongest economy is U.S. history. Fake News Of course, I don't like hypocrites.  One of the things that Trump does, is he calls out the media for spreading fake news. The problem, is, he spreads fake news, too. When he is talking about how we have the strongest economy ever, that's fake news! So you can't live in a glass house and then throw stones and that's what the President does. More Weak Numbers In fact, if you look at the economic data that came out this week, the data was weak!  The ISM manufacturing number and the PMI number were weak . In fact they weren't as weak as they were expecting, but they were expecting weak numbers and we got weak numbers. Just not quite as weak. Although, the construction spending number that came out yesterday was considerably weaker than had been expected. Now, the Atlanta Fed is still at 1.54% .  
June 29, 2019
See Peter at the Las Vegas Freedom Fest – July 17-20 Save $50 using code SCHIFF Recorded June 28, 2019 Dow Jones Had Best June Since 1938 U.S. stocks finished a down week on an up note, but the gains were not that large today. But of course, they were very big for the month of June. In fact, the Dow Jones just had its best June since 1938. That was during the Great Depression. S&P, not as big a record; you only have to go back to 1955 to find a June where the S&P did better than June 2019.  So these are big moves up. Percentage-wise, though, I think it's about 7%, approximately, maybe a little bit less. Stock Market Actually Lost Value In Terms of Gold Now the price of gold was up 8% during the month of June. In other words, while the price of stocks went up in terms of paper money - dollars - in terms of real money - gold - stocks actually lost value during the month.  Now, the first half of the year also comes to an end today, as does the second quarter, and this is the best first half of the year in 22 years. the S&P was up about 17.5% or so, the Dow about 14%. I think I'm counting dividends -  I'm just talking about the appreciation, so the total return would be a little better when you throw in the meager dividends that you can collect on U.S. stocks. NASDAQ was up about 20% - not much in the way of dividends there. Russell 2000 was up about 9%.  This is on the first half of the year. Stocks Recovering From Worst December Since Great Depression I'm sure you're going to read a lot of tweets from Donald Trump about how great the stock market is in 2019; how great the month of June is and why we should thank him for this spectacular performance in the stock market.  But the only reason that the market has done so well this year is because it got destroyed in the 4th quarter of last year. Remember, we had the worst December since the Great Depression, as well.
June 26, 2019
See Peter at the Las Vegas Freedom Fest – July 17-20 Save $50 using code SCHIFF Gold: Six-Year High Overnight Overnight the price of gold rose to a six-year high.  We almost got to $1440.  I think the high I saw was maybe $1438 - 39… we were up about $19 at the high point. Then it became a very volatile session overnight into the wee hours of the morning.  But I think by the time we got into the New York time zone, gold was still up about $10-$12-$13 dollars on the day and it was up about that amount when the U.S. stock market opened for trading. Before Today, Gold Stocks Up 20% Gold stocks initially had a small rally, but nothing big. Then they spent most of the day on the downside.  Obviously the gold traders are still very cautious.  As I have been saying, this gold breakout, even though we did see pretty big moves in gold stocks, I think the GDX, not counting today's losses, (the GDX was down about 2% today) but not counting today, we were up 20% in the month of June. So, still, a very big rise.   But really not nearly as big a rise as it should be, considering, I think, the significance of this gold breakout.  Except, of course, if people don't believe it.  If they're cautious about it, so they're reluctant to bid up the price of gold stocks. Investors Still Reluctant on Gold and Silver - Why? The same thing with silver. In fact, silver never had much of a rally today, and it actually settled down, I think 8 cents on the day, even though gold ended up finishing up $4 - well off the highs. But it didn't close negative. At one point during New York trading, the price of gold was negative on the day, but it managed to bounce back for the close. Silver, I think, ended at 15.33.  The gold/silver ratio that I spoke about on the last podcast now, I think is close to 93:1.  Again, I think investors are reluctant to buy up silver because they are expecting the price of gold to roll over.
June 22, 2019
Recorded June 21, 2019 See Peter at the Las Vegas Freedom Fest - July 17-20 Save $50 using code SCHIFF S&P Record High: Why? U.S. stock market averages finished an up week on a down note. In fact, the S&P 500, before closing negative on the day made a new all-time record high. The S&P is the only major index that did make a new record high this week, in fact Donald Trump tweeted about the record high in the S&P twice yesterday.  As soon as the market gapped open at a record high, Donald Trump tweeted out a reminder that the S&P opened at a record high, and then when it closed at a record high, he sent out a second tweet to remind everybody that the stock market closed at a record high. Fed's Lower Rates Behind Stock Market Highs The idea is that he's taking credit for it.  The stock market is doing so well because Donald Trump is President, and if anybody else were President, the market would be collapsing. That's the impression that Donald Trump is trying to convey. But, of course, the reality is the opposite. The reason the market made a new high is because investors are relieved that the Fed is going to cut interest rates. So, it's lower interest rates that is behind the record high in the S&P - not anything Donald Trump has done. Low Interest Rates Needed to Bail out Economy Now, Donald Trump is saying, "Hey I've been telling the Fed to cut rates!".  So maybe he can claim credit for the fact that the Fed is cutting rates because he beat them up so much, but that's really not what he is trying to claim. He's trying to claim that the rising stock market is indicative of how great the economy is under his presidency. But, it's not because the economy is great that the Fed is cutting rates, it's because it's lousy! Heading for Recession The Fed is cutting rates because the economy is headed for recession.  So if that's the only reason the stock market is going up, that the economy is so bad that the Federal Reserve has to abort their rate-tightening campaign, and they have to come to an emergency rescue mission, they have to try to bail out the economy with rate cuts, is that really something that Donald Trump should be bragging about?
June 20, 2019
Visit me at the Benzinga Trading Conference, NYC tomorrow Fed Tweaking Language to Officially Adopt Easing Bias Keeping with its tradition of having a tendency to act incrementally, the Federal Reserve Open Market Committee today announced that it was leaving interest rates unchanged - which was the consensus. There was an 80% probability that the Fed would leave interest rates unchanged.  The other 20% was that they would cut rates. So there was a zero percent probability that the Fed would increase rates.  But before delivering an official rate cut, what the Fed wanted to do was to prepare the markets in advance and take one step in that direction, which was to tweak its language to officially adopt a bias toward easing, which is exactly what the Fed did. Fed to Sustain "Expansion" The Fed basically acknowledged that the economic data had been weakening and that they wanted to do what was appropriate, or that they were willing to do what was appropriate to sustain the expansion. Now, they didn't come right out and say that the economy is headed for a recession; even though that is exactly what is happening. They said they wanted to see more data before they moved. But after they failed to cut rates, the probability for a rate cut in July, which is the very next time the Fed meets, rose to 100%.  So they took the 20% probability for the cut in June, since we didn't get it, the markets added that to the 80% probability of a cut in July. Looking Toward Negative Data Which means the markets are convinced that whatever data the Fed sees between now and the July meeting in going to be bad. It's not going to be good (positive) data. Of course, it IS going to be bad data. The data has been bad.  The economy has been weakening. We've been seeing a series of weakening economic data.  The economy is not just slowing down, it is headed to a recession. That is something that the Fed will never admit.
June 15, 2019
Recorded June 14, 2019 Gold: Up Today When I recorded my podcast last Friday, I speculated that the price of gold might gap up the following Monday above $1350/oz., but that didn't happen because over the weekend Donald Trump managed to tweet out a face-saving way in which to not impose the tariffs on Mexican products that may have gone into effect on Monday.  The markets breathed a sigh of relief. So, instead of gapping up. the price of gold went the opposite direction and gapped down. Fourteen Month High This morning, we got the gap. It was on the last day of the week, not the first day of the week, but gold gapped higher on the day.  It was actually trading as high as $1356 or $1357 earlier this morning. That was a 52-week high in the price of gold.  In fact, it was a 14-month high.  We were actually up even before we got any economic data.  I think the high of the day might have been before the U.S stock market opened, when we were up about $15 or so. The Key is Above $1350 What happened was, at 8:30, prior to the opening of the U.S. market, we got some economic data that was a bit stronger than expected.  And that stronger than expected data rained on the gold rally parade, sending the price of gold down on the day. It only closed down about a buck or so, but we did not hold above $1350.  Now the key level is not really $1350 - it's a little bit higher up, because the price of gold has been above $1350 twice before, I think, in the last six years, not counting today. But it wasn't able to hold. That's the key. We need to see the price of gold get higher.  Maybe close above $1375. Gold the Favorite Trade for the Next 12-24 Months There's a lot of noise.  That's where all the resistance has been coming in - between $1350 and $1375. But nonetheless, I think, as I said in the last podcast, the more times we knock on this resistance door the more likely it is that the door is going to open. In fact, the buyers continue to come in to the price of gold. I was listening to an interview with Paul Tudor Jones.  He was asked what his favorite trade was for the next 12-24 months, and his answer was gold. And a lot of smart people are now coming out and saying that, "Yeah, gold's going higher.  Gold's got everything going for it, and they want to be involved.  And of course I think if the price of gold does what I think it is going to do, and what some other smart people think it's going to do, well then the price of gold stocks are going to do even better.
June 11, 2019
Recorded June 10, 2019 Tariffs Off, Gold Gapped Down On Friday's podcast, I speculated that potentially we could see a gap up in the price of gold, gapping above the $1350 resistance level that has capped every gold rally for the past 6 years.  But gold actually gapped in the other direction.  It gapped down about $13 and it was down all day - never filled that gap. Catalyst for Sell-off The catalyst for the gold sell-off was Donald Trump calling off the tariffs that were supposed to go into effect today.  The five percent across the board tariffs on Mexico.  That announcement came out on Friday, pretty much right after I finished recording my podcast, we got the news.  So I immediately knew that that forecast probably was not going to come to fruition, or that speculation, potentially. Because I knew the markets would react positively to this news. After all, everybody was rightly worried about the negative impacts that those tariffs would have on the U.S. economy, in particular.  They weren't as worried about Mexico, at least when it comes to the gold market, but they were worried about how it would impact the U.S. economy. One Less Thing for the Fed to Worry About And of course, one of the reasons (of course there are many) that the Fed is talking about cutting rates is because of all the uncertainty that is being created because of tariffs. If there aren't going to be as many tariffs, if the Mexico tariffs aren't going to actually happen, well then that's one less thing to worry about, and maybe that's one less reason for the Fed to cut rates. Mexican Tariffs are a Sideshow Of course, cutting rates is part of the reason that people have been buying gold; the reason we had that big 8-day rally, which came to an end today. What's been powering the gold rally is the talk of Fed rate cuts. Now I don't think today's sell-off is going to be significant.  It's just one more time we knocked on that resistance door and it didn't open, but it is ultimately going to open. Because at the end of the day, the Mexican tariffs are a sideshow. The main event is that the U.S economy is going into recession anyway, and the rate cuts are coming.
June 8, 2019
Recorded June 7, 2019 Dow Finished the Week with a 4.7% Gain The Dow Jones soared 263 points today, although at one point the index was up better than 350 points. But it managed to finish the week with a 4.7% gain. That is the best showing for the Dow Jones Industrials in 6 months and in fact we snapped a six-week losing streak this week.  All of the major averages had positive weeks.  The NASDAQ -  the best gainer on the day; up 1.7% - not quite as strong on the week because it took a shellacking on Monday with the FANG stocks leading the way down - but up about 3.7% on the week.  Similar gains for the Russell 2000, the Dow Transports, the S&P 500 not quite as strong as the Dow - I think up about 4.2% on the week. What was the Catalyst? But why? What was the catalyst for this big move up in the U.S. stock market? Was it better than expected earnings? Not really.  Some companies beat estimates. Take a look at some of these recent IPO's like Zoom Video. Zoom Video was up 18% today because it earned 3 cents a share instead of the one cent that Wall Street was expecting. Now, 3 cents per share is not a lot of earnings when you're a $94 stock, but that's where the stock is. Beyond Meat to Infinity and Beyond Even more ridiculous is Beyond Meat, which is beyond sanity as it's going to infinity and beyond. Now, Beyond Meat was up almost 40% today, $138.65.  The high was $149.46.  This stock is already more than tripled its IPO price - or quadrupled, I can't really tell.  Now they're still not making money at Beyond Meat, so they still haven't moved beyond losses.  The company lost $6.6 million on the quarter; that's 95 cents per share. But it is an improvement, because a year ago, in the same period, they lost 98 cents a share. If you adjust it, if you back out a lot of other stuff, like stock-based compensation and things that nobody likes to count, then they only lost 14 cents per share, which was better than the 15 cents a share loss that Wall Street was expecting.  So clearly that's worth an extra 40% on the price of the stock.  I forget what this thing is trading; 100+ times revenue.  It is a crazy multiple, but at least the stock has a viable product.
June 6, 2019
Recorded June 5, 2019 Volatility Led by NASDAQ There's been a lot of volatility in the stock market since I recorded my last podcast on Friday.  In fact, on Monday, the tech stocks in particular got beaten up.  The NASDAQ dropped by better than 150 points, led lower by the so-called FANG stocks (Facebook, Amazon, Netflix, Google).  Google and Facebook, the biggest drop - I think it was something like 6-8%.  Part of that had to do with the Justice Department investigating Google. Enlisting the Power of Government in the Marketplace Of course, I don't think that we should be involved at all in anti-trust.  Almost all of the companies that have been broken up or that had been put through the ringer by the U.S. government achieved whatever type of market dominance they had based on just being good competitors, delivering the best quality at the lowest price. And government just came in and really what they were doing was advocating for competitors that were having a problem competing.  It wasn't because the consumer was getting ripped off; in general the consumer was being rewarded with low prices and high quality.  But companies that couldn't compete, since they couldn't win in the marketplace, enlisted the power of government to work for them.  So government, really is not about preventing monopolies - they create monopolies. The government comes into a market and legally gives a company a monopoly and uses the power of government to make sure that nobody competes. This is all a bunch of nonsense that we need government to "keep the markets free". Moving Away from Risk But, in general, if you look at what was happening to the markets on Monday, there was a huge movement from growth stocks, momentum stocks, speculative stocks, riskier stocks, to defensive stocks - value oriented stocks. The Dow Jones was actually positive on the day - it wasn't up a lot, but it was up, even though you had a 150 point drop in the NASDAQ. I think that is an important key, because this is something that needs to happen and it is long overdue, that investors start to get more defensive in anticipation of a weakening economy. Dividend-Paying Stocks More Attractive You have all of these high-multiple stocks, their P/E's are going to have to come down to earth.  And, of course, people are looking at a slowing economy, they are looking at lower interest rates - they believe they are going to get lower interest rates, so it makes sense that dividend-paying stocks would be more attractive in a falling-rate environment.
June 1, 2019
Sell in May and Go Away U.S. stocks closed out the week and the month of May with heavy losses; the DJIA down 354.84 points.  Pretty much going out near the low of the day. That's a drop of 1.4%. NASDAQ also getting killed - 114.57 down - that was a 1.5% decline on the day.  The Russell 2000 continues to melt down.  That index falling 20 points - down 1.35% on the day.  But the biggest losses continue to be in the Dow Jones Transports. That index was down almost 2% - 1.9% - 188.4 points.  This is the worst May for U.S stocks since 2010. The Dow is down about 7% just in the month of May. Remember, "Sell in May and go away"?   Well it hasn't worked in a while, but this was a great time to sell May first! Russell 2000 and Dow Transports Weakest Indexes Again, I told everybody that I thought the bear market rally was over based on the Fed not being as dovish as the markets expected, and it's been down hill from there.  If you look at the Russell 2000 and the Transports, these two indexes did not make new highs. Remember the Dow and the S&P, the NASDAQ made new highs. Now, they're all down considerably - the Dow is 8% off those highs now. But the Russell 2000 and the Dow Transports did not make new highs, and now they are the weakest index and now the Russell 2000 is down just under 16% from its peak, and the Transports - over 16%.  So both of those indexes are about 4% points away from being officially back in bear market territory, which means 20% from the highs.  We could easily be there next week,  on these stocks. Debacle du Jour: Gap Now the other indexes have further to go, I mean the NASDAQ is only down about 9% from its peak.  So 1% away from what Wall Street would officially call a "correction".  The retailers continue to also be hammered.  The Debacle du Jour was Gap, which gapped down by about 15% on the day on weaker than expected sales. The stock managed to rally most of the day, so it only closed down a little over 9%.  But still, it closed better than 47% below its 52-week high. Domestically Focused Stocks Weakest But, when you have the Russell 2000 and the Transports the weakest part of the market, those are the most domestically focused stocks. Those are the stocks that are the weakest.  So everybody who keeps talking about how great the U.S. economy is, if they look at the market, the market is telling you a different story.
May 30, 2019
Recorded May 29, 2019 The End of the Bear Market Rally Back on May 1, when I did my podcast, I officially called for the end of the bear market rally that so many people had confused for a new bull market, and the impetus for that call was the Fed coming out and not living up to Wall Street's expectations for just how dovish the Fed was. Remember, the market was starting to factor in rate cuts, not just an end to the tightening cycle, but the beginning of the next easing cycle. And Jerome Powell basically threw cold water on that by talking about how low inflation was transitory, and how he expected it to go back up, and all of a sudden the markets were starting to think that the Fed wasn't going to cut rates and the market went down a bit. The Fed Giveth and the Fed Taketh Away I thought that given that the rally was built based on the Fed, that what the Fed giveth by being more dovish than the markets expected the Fed had finally taken away by being more hawkish. Even though I didn't believe that the Fed was as hawkish as the markets believed, I believe the Fed is far more dovish than the markets believe.  But once Powell dashed those hopes, that was enough, I thought, to take the wind out of the sail of the rally. Throwing Down the Gauntlet on Trade And then, of course, Donald Trump, himself, pulled the rug out from under the market when, the following weekend, he basically threw down the gauntlet on the trade war; tweeted out that he was going to be imposing 25% tariffs across the board on Americans who want to buy any Chinese products.  And then the markets really started to fall. Although, I said at the time, that if the markets really perceived how great the threat was, they would have been down quite a bit more. But we now have two back-to-back better than 200-point declines in the Dow.
May 23, 2019
Recorded May 22, 2019 Low Inflation is Transitory Today we got the release of the most recent minutes of the Federal Open Market Committee, and I guess it was a bit of a mixed bag for people who were looking for whether the Fed was going to be more hawkish or more dovish with respect to its next move on interest rates.  One thing that was revealed in the minutes that the governors still maintain, they are still saying that they feel that this "low inflation" that we've been experiencing is transitory.  What that means is that it's temporary and the low inflation is going to go back up toward their 2% target.  This is supposedly a hawkish statement, because if the Fed were worried that low inflation was going to persist, then they would do something about it to save us from the horrors of not having the cost of living rise at a fast enough clip. When It Comes to Inflation Fighting the Fed Is All Bark and No Bite But, as far as I'm concerned, none of this even matters, because a) they are right, inflation is transitory, and b) it's not even as low as they think because the CPI is not accurate. So inflation is already higher than what the official numbers reveal. But even if it is transitory, which it is, and even if the numbers go north of 2%, which they will, the Fed is going to do nothing.  People still don't get it, that when it comes to inflation fighting the Fed is all bark and no bite. "For Some Time" Means Forever But then if you look at what the Fed said in the same minutes with regard to their "patience" with respect to the next rate hike, remember, the Fed went from pretty much auto pilot - they were raising rates, they were tightening - to being "patient", and being "appropriate", and now, if you read what they said, they said that it is going to be appropriate to remain patient "for some time".  Now what does that mean - "for some time"? Basically, it means forever. What the Fed is basically saying by saying that it is appropriate to be patient for some time, meaning, "you don't have to worry about any rate hikes".
May 18, 2019
Don't miss the movie, "The Housing Bubble" premiering June 26, 2019 Back in Puerto Rico I am finally back in Puerto Rico, after having spent 8 long days in Las Vegas for both the SALT conference and The Las Vegas Money Show.  I really do enjoy coming back to Puerto Rico, I miss it quite a bit while I'm away.  A lot of people who are thinking about making the move to Puerto Rico to take advantage of the tax benefits that exist here… One of the reasons that people are reluctant to come down here is that they don't want to uproot their family and move to a place where they really don't know anybody, they leave their friends, they leave their family members… I'll tell you, for me, personally, probably the best thing about being here, other than the tax breaks and the beautiful weather are the people that you meet when you come down here.  It is an incredible group of people that have moved here.  I think we're building a great community of quasi-ex-pats here in Puerto Rico.  So, if you're worried about not having enough friends and not having enough to do, that's the least of your worries. So I certainly would recommend that more people would consider making the move to Puerto Rico. Visit Me at the Freedom Fest in Las Vegas July 17-20 But I am also looking forward to going back up to Connecticut, I'm going to be spending most of the summer there.  We'll be leaving the weekend of Memorial Day. By the way, if you didn't have an opportunity to come to any of the events in Vegas, I will be back in Vegas again in mid-July for the Freedom Fest. Appearing at the Premiere of "The Housing Bubble" I will also be in New York City on June 26 to attend the premier of the movie, "The Housing Bubble" on June 26.  You can buy tickets at the website The movie is a documentary about the 2008 housing bubble, but it features a lot of people who were predicting or warning about the bubble before it popped, and warning about the financial crisis.  Of course, I am one of those people who was issuing those warnings, but I'm not the only one.  It's a very good documentary; I'll be there.  I think there's going to be a Q&A period with me and some of the other people who were featured in the movie at the event. So it would be great, if you're in the New York area this summer, June 26, go on and buy yourself some tickets.
May 14, 2019
VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 – 15, 2019…/4532d84bf…/peter-schiff/ As Noted on My Last Podcast… As I suspected on Friday's podcast, the 400-point reversal that saw the Dow move from down 300 points + to up 100 points on the close was in fact, reversed today, and the Dow Jones actually closed below the Friday low, which is a huge negative, technically for the index.  The Dow was down 617 points; that's about 2.4 %.  But the real carnage was in the NASDAQ.  That was down 3.4%.  The Russell 2000 also down better than 3% - 3.2%, showing that domestically focused stocks are actually getting hit harder than the multi-nationals. Lyft and Uber Still Sinking More trouble again for the recent IPO's, in particular, the ride-hailing companies Lyft  - down again, another 5.8% off the lows of the day - the lowest $47.17, closed at $48.15.  The Uber disaster continues.  Uber was down almost 11% today.  At one point, it was down 12% - the low was $36.08.  We closed at 37.10. Remember we came public Friday. This is only the second trading day.  Uber came public at $45, and now it is at $37.10, and as I said again on last week's podcast, these types of stocks are going to get particularly hit hard if the market carnage continues, which I think it will. China: No Deal I think the bear market rally is over - I've been saying that, "Long live the bear market". The Bear market rally is dead.  We are going a lot lower.  The catalyst today was also something that I was pointing out on my podcast last week, and that was the fact that we are not going to get a deal with China. I've been saying for a long time, that even if we got a deal, it would be, "buy the rumor, sell the fact". But I also said that it was becoming obvious that Trump had so over-promised the "great deal" that it was almost impossible to have a deal without disappointing the markets. So, I think Trump made a calculated decision that no deal is better than a deal that disappoints, especially since he had already goosed the market up to new highs.  So even if we sold off, Trump could say, "Well, this is some short-term pain; it's necessary for the long-term gain." and it may, in fact be the catalyst that causes the Fed to cut interest rates and launch QE, which is what Trump wants.
May 10, 2019
VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 – 15, 2019 Recorded May 10, 2018 Why Escalate Trade War If Negotiations Are Going so Great? The U.S. stock markets finished off the worst week of the year with a gain despite the fact that, as expected, the trade talks between the United States and China broke down today, and no deal.  The new tariffs went into effect at 12:01am this morning.  Despite the fact that Trump is now retaliating by escalating the trade war, he still claims that the discussions are going well, that they are making a lot of progress.  None of that makes any sense. If things are going well, and you're making progress, you don't escalate the war. That makes no sense. All that is going to do is piss off the Chinese. So, if everything is going so well, you would not want to do that. Maybe Trump Would Rather Have the Tariffs This shows that things are breaking down, that there is some desperation and Trump feels he has to turn up the pressure in order to try to force the Chinese into a deal.  Although, I am not even sure Trump believes a deal is actually better than the tariffs.  First of all, I don't believe that Trump is going to be able to deliver the type of substantive, game-changing great deal that he has been promising. So, from that perspective, if Trump actually believes that tariffs are good for the U.S. economy because it means we're going to get some kind of windfall, that the Chinese are going to be sending us all this money, well then maybe he prefers the tariffs to a deal that does not live up to the hype. Tariffs Are Simply Another Tax on the American People But, of course, Trump is wrong if that's what he believes. The tariffs simply represent taxes on the American consumer.  They are just one type of tax.  You can have a sales tax, you can have an income tax, you can have a tariff.  All the taxes are paid by American people.  It doesn't matter what you call them or how you want to levy them, that's where the money is coming from. So, if you think lower taxes are good, then you can't think tariffs are good. Unless you're going to offset the tariffs by cutting taxes someplace else and say, "We're going to fund government through tariffs as opposed to funding government through another source. But the tariffs in and of themselves do not deliver a benefit to Americans.  They simply make products that are subject to the tariffs more expensive to buy.  So Americans have a choice: pay the higher price or don't buy the product.
May 8, 2019
See Peter at the SALT Conference at the Bellagio, Las Vegas May 7-10, 2019 Market Volatility I just arrived in Las Vegas, where I will be spending the next 8 days - I actually have 2 conferences heres; I have the SALT Conference (SkyBridge Alternative Asset Conference) that really kicks off tomorrow, though there is a welcome reception tonight, and then I do the Las Vegas Money Show, which kicks off on Monday.  So I'm here for quite some time.  I haven't even unpacked my bags, though.  I wanted to record a short podcast to comment mainly on the market volatility. Buyers Bought Dip on Monday The stock market was way down on Monday morning.  Of course,  the selloff started in the futures market on Sunday night, where the Dow futures was down over 500 points at one time. But by the time we opened, the Dow was only off about 450 and the dip buyers came in, and they bought the market all day, and we closed near the highs.  It couldn't close positive - I think the Dow was only off about 70 points.  So the buyers came in as they are trained to do.  They bought the dip. Trump's Tariff Tweets What caused the initial selloff was a pair of tweets; the two tweets were related. A lot of times, when Donald Trump sends out a tweet, he has a lot of stuff in there. or he will send out 2 tweets to make the same message. And, what happened is he basically said that he was going to impose more tariffs on China. He tweeted that, by this Friday, he is going to "up" the 10% tariffs to 25%.  So Americans who are now being taxed 10% for buying some Chinese goods, if they buy those Chinese goods starting on Friday, they will have to pay a 25% tariff on those goods. New Additional 25% Tariffs He also tweeted that he was going to apply the 25% tariff to goods that right now aren't paying any tariffs. So there are still a lot of Chinese goods that Americans could buy without being subject to tariffs, but now Trump is saying that now that is going to go away. At the end of this week, he's going to hit those goods.  So Americans buying pretty much any Chinese products are going to have to pay a 25% tariff. Additional Tax on American Consumers Now, of course, Donald Trump thinks these tariffs are great, because he believes the Chinese pay them, which, of course, is not true.  The tariffs are added on here in the United States, so it is the American consumers who pay those tariffs. Now, it can hurt China because if the higher prices cause fewer Americans to buy Chinese goods because they don't want to pay the higher price, then China doesn't sell its goods in America.
May 4, 2019
Recorded May 3, 2019 See Peter at the SALT Conference at the Bellagio, Las Vegas May 7-10, 2019 Jobs Surge in April, Unemployment Rate Falls Today is Jobs Friday; the first Friday of the month, that we get the nonfarm payroll number.  I don't know if the markets anticipated more or Donald Trump, because of course he's ready to send out a tweet when we get a better than expected number.  That's what happened today; we got another number that was better than expected.  Certainly the headline number - they were looking for an increase of 180,00 jobs, which would have been a bit of a reduction over last month's 196,000 jobs - which was revised down slightly to 189,000. We ended up getting 263,000 jobs, so another number with a 2-handle - a much bigger number than had been anticipated, and the unemployment number, also surprisingly dropped. Two tenths, from 3.8% to 3.6%.  Hispanic unemployment actually hit an all-time record low. I expected Donald Trump to tweet about that, because obviously he's being accused of being a racist.  Clearly, if he can show that, "Well, look, Hispanic unemployment is at an all-time record low, how are my policies racist, if we have a record low in unemployment among Hispanics?" He did tweet about the jobs numbers and the low unemployment numbers. Which Numbers are Fraudulent Now? But again, I reminded Trump (not that he actually ever reads my tweets, he gets so many) that when he brags about how low the unemployment rate is, the official rate, I always remind him, "Wait a minute, you are the person who accused these numbers of being fraudulent, fakes, phonies, a scam - Donald Trump as a candidate was very critical of Barack Obama's phony recovery mainly because Obama was hiding behind (what Trump said were) fraudulent statistics. Well, these are the same statistics that Donald Trump is embracing - the same statistics that he criticized.  So, I guess the President no longer about all of the discouraged workers who are no longer looking for work, he doesn't care about all the people who are working part time, but would prefer to work full time, but they can't find a full time job, so they settle for a part time jobs.  These are the people who are not included in that 3.6% unemployment rate.  The President cared about those people when he was a candidate.
May 2, 2019
Recorded May 1, 2019 VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 - 15, 2019 Market Looking for Validation of Expectations Today was the conclusion of the FOMC meeting in which the Federal Reserve left interest rates unchanged, and that is exactly what the market was expecting.  Nobody expected the Fed to hike, and nobody expected the Fed to cut. But apparently, a lot of people expected the Fed to be more dovish with respect to its outlook for a potential future rate cut. Remember, the Fed Fund futures are showing that the next move is likely to be a cut and that maybe the Fed will cut by 50 basis points by the end of the year, so the markets are probably looking for some reassurance from the Fed that the market's expectations of lower interest rates are valid, and that's not what they got today from Chairman Powell. Inflation Below 2%.  Who Cares? 'In fact, he was actually asked, point blank, by CNBC's Steve Liesman - it was one of the first questions asked, maybe it was the first - whether or not the Federal Reserve was going to do something about persistently low inflation, because, after all, the official inflation rate is slightly below their target. I mean, if the target is 2%, we're at 1.7%, 1.8%… Who cares?  But somehow this is an emergency, this is a disaster - we're not hitting our 2% target, even though we're pretty damn close.  But, is the Fed going to do something about it? And instead of saying, "Oh, yes, we're going to do something about it, we're going to cut rates to make sure that we have 2% inflation", what Powell said was, "Well, yes, we acknowledge that inflation is lower than we would like and its lower than our goal, but we're not worried, because we expect it to be transitory." In other words, we're not worried about inflation being too low, because we believe the inflation rate is going to rise, and so there's nothing to worry about. In fact, what Powell said was that the Fed will be patient, but as of right now, they can't see a reason why they should hike or they don't see a reason why they should cut.
April 27, 2019
Recorded April 26, 2019 VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 - 15, 2019 Q1 GDP Expected at 2.3% Today we finally got the first estimate for the U.S. GDP in the first quarter of 2019, and typically the first quarter of the year has been rather weak.  That has been the experience pretty much going back through the Barack Obama administration.  And the consensus was for a 2.3% rise in Q1 GDP, that would have been just a slight improvement over the 2.2% number that we got for the 4th quarter of 2018. Expectations Were Low If you remember, way back, a couple of months ago, everybody was really low. You had a lot of people who were looking for Q1 GDP to come out with a zero handle. But they had been ratcheting up those expectations now to a consensus of 2.3%.  A lot of it had to do with the fact that the trade deficits had come in a lot smaller than people thought. I think the reason for that is because the trade deficit really ramped up in the last couple of quarters, probably because businesses were trying to front-run the tariffs that were supposed to come in at the end of last year. That might have caused extra imports to try to get things in under the gun before they were subjected to the tariffs.  So because we pulled all that forward, imports weren't as much in the first quarter, so they did not subtract as much from the GDP. Inventories Continued to Build Also, the inventories continue to build, but most importantly, because they weren't selling. Goods weren't selling as much - inventories were building.  That ended up helping. We ended up getting a number that was much bigger than consensus.  We actually got 3.2% GDP growth for Q1. Delaying the Day of Reckoning Now, before you get all excited, "Aha, Peter, you were totally wrong on this, you were looking for a weak number…" - first of all, a lot of people were looking for a weak number.  It wasn't just me. But I do believe that we simply delayed the day of reckoning by a quarter.  I think this time, it's going to be the second quarter that will be a big disaster.
April 23, 2019
VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 - 15, 2019 Easter and Passover I hope everybody enjoyed their Easter holiday, in fact, today is Easter Monday, so many parts of the world are still celebrating, including here in Puerto Rico.  We are still in the holiday of Passover, so hopefully everybody who celebrates Passover, myself included, is still enjoying that holiday. In fact, this year, the first night of Passover coincided with Good Friday; a rare occasion that unites the two religions.  We generally end up celebrating both. Removal of Sanction Exemptions Drives Oil Prices Up The markets have been quiet around the holidays.  The big story today in the markets was the price of crude oil - up about $1.60/barrel.  We're now at $65.71 per barrel.  This is a new high for the year. Today, the catalyst was the Trump administration announcing that they would be withdrawing the exemptions that allow certain countries such as Japan, India, China - a number of countries currently buying oil from Ira. Now we're saying no more exemptions.  They're saying, if you buy oil from Iran, then you're going to get sanctioned.  Generally, what that means is the U.S. is going to shut you out of access to the dollar-based financial system - wiring and using the resources of the Fed.  Considering that most of the world still transacts internationally in U.S. dollars is a very very serious punishment that the U.S. is able to dole out to any nation that does not do its bidding. Effect on our Trading Partners? Now, of course, this angers our trading partners who do not like being dictated to by the United States, they do not like the United States being able to tell them who they can and cannot do business with, and to punish them if they do not do what the United States says. Of course, this is all a function of the U.S. dollar being the reserve currency, which certainly gives nations like China, or like Russia or any other nation an incentive to try to move away from the U.S. dollar as a reserve currency.
April 17, 2019
Recorded April 16, 2019 VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 - 15, 2019 Tax Day Yesterday was April 15th - Tax Day, or as my father, Irwin Schiff used to say, "April Fool's Day". My father thought it was April Fool's Day because he believed that that was the day on which Americans basically voluntarily paid a tax that no law required them to pay and voluntarily filed a 1040 tax form that no law required them to file.  Of course, my father ultimately went to jail and died and jail because of those beliefs.  I have been paying my taxes, although now that I live in Puerto Rico it's not nearly as painful as it used to be when I lived in Connecticut. 16th Amendment A lot of people don't realize that April 15 was not always Tax Day; a little bit of trivia. When the income tax first passed, or reared its ugly head in 1913 - although that's not the first time we had an income tax.  We had an income tax during the civil war. The North imposed the tax and when the war ended, the income tax went away. It came back again, and it was declared unconstitutional, correctly, by the Supreme Court in the Pollock Decision.  Then they resurrected it with the 16th Amendment, and following the 16th Amendment in 1913, the original Tax Day was March 1. Income Tax Why is that? Because the income tax is a tax on your income for an entire year. So, we are now in 2019 and we're paying our income taxes for 2018.  But you don't know what your income is in 2018 until the year is over. You may have earned a lot of money early in the year - you could lose it all back on the last day of the year and end up with no income at all - end up with a loss.  So the idea was, if you're going to tax your income, then we have to wait until the end of the year, and then we have to give you some time to add up your income and figure out what you owe and then pay the tax.
April 10, 2019
Recorded April 10, 2019 VISIT PETER AT THE LAS VEGAS MONEY SHOW  May 13 - 15, 2019 Lyft Sinking I began yesterday's podcast by pointing out the weakness in shares of the recent IPO of Lyft.  In fact, I mentioned that Friday's close above the IPO price (the first time it closed above that price since the day of the IPO) the fact that it couldn't hold on to that rally, I thought that meant the stock looked even weaker, technically. And we got a big follow through today.  Lyft sank about 11%, it closed near the lows of the day, 60.12.  In fact, we did trade as low as 59.75 on the closing minutes of trading.  We're now down about 32% from the opening print, after it went IPO on that day.  We're 17-18% below the IPO price.  If you happen to get the IPO price and you still have the stock, you're almost in a bear market from that purchase price. Catalyst: Uber News The catalyst today was the news that it looks like the Uber IPO is going to happen sooner than everybody thought. Maybe they will be filing as early as this week, and the IPO is going to be bigger than people initially thought, as far as how much stock they're looking to unload on investors.  Although, they're taking the valuation down from maybe $90 to $100 billion.  I think initially they were talking $110-120 billion, and they're going to look to unload about 10% of the company - $10 billion. Now, you would think, "Wait a minute, if Lyft is doing so poorly, what is the rush to bring Uber to the market?  Doesn't it seem like a bad time?"  But if you think about it, I think what Wall Street is worried about, is if they wait even longer, the price of Lyft will sink even further.  So it's a mad dash to get this thing out there before it really hits the fan, because this is showtime for all of these unicorns.
April 10, 2019
VERY IMPORTANT PODCAST! Please share with everyone you care about. Ray Dalio: Please start at 29:52 Extreme Inequality Is Not a Function of Capitalism I agree that wealth inequality is a problem, but it is a problem that is created by government - created by the Federal Reserve. I was warning years ago, when the Federal Reserve first launched Quantitative Easing, that this was going to happen! This policy would only benefit assets at the expense of the overall economy. I've been warning about this for years. The government is doing this, not the market. So, yes, I want the government to do something about wealth inequality by getting out of the way. I want Capitalism to do something about inequality.  Now, of course, there's always going to be inequality - that's part of capitalism. People are not going to be equal, because peoples' contributions are not equal. What is not normal right now is the extent of the disparity. That extreme inequality is not a function of Capitalism.  if we enjoyed Capitalism, there would be less inequality. We Need to Embrace and Re-Discover Capitalism Ray Dalio recently replied to a recent Tweet of mine, referring to his appearance on 60 Minutes, stating that if the only solution Ray Dalio has is to raise taxes on the rich, and to hope the government spends the money productively, then he has no solution.  So then he referred me to his article, which I read, word for word: Why and How Capitalism Needs to be Reformed, parts 1 and 2. Again, Capitalism does not need to be reformed. What needs to be reformed is Democracy. We need to embrace and re-discover Capitalism and what needs to be reformed is all of the Socialism that has been interjected into Capitalism. Government Makes It Difficult for Small Businesses to Hire Young People I told Ray Dalio that I would read his article and I read it and made some notes and I'm going to go over my thoughts now. Number one, right off the bat, Dalio talks about all the jobs he had by the time he was age 12. He came from humble beginnings, he wasn't born wealthy, he is a rags-to-riches story, an American Dream story. By the time his was 12, he made money delivering newspapers, mowing lawns, caddying, and he invested the money he earned in the stock market. The first thing that grabs my attention is, "how many 12-year-olds today have jobs?" Very few young people today have jobs. Why is that? one of the reasons is because the government has made it so difficult for small businesses to hire young people -  minimum wage laws, and workmen's comp, disability, unemployment make it difficult for young people to get jobs.
April 6, 2019
VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 - 15, 2019 Rebound Expected in Jobs Report Stock market in the U.S. continued to grind higher today, although I still believe that this is a bear market rally.  The Dow added a little better than 40 points; the NASDAQ up about 47, so a bigger percentage gain there.  The S&P was up about 13 points.  This was following the release of the March Nonfarm Payrolls numbers - aka the Jobs Report. There was a lot of hope that we would see a rebound in the month of March.  Remember, in February, they initially reported just 20,000 jobs created, which was well short of what had been expected.  It was probably something close to 200,o00 jobs.  And the consensus for March was for 170,000 jobs and we actually got 196,000 jobs. Pretty Weak Number That's the first look. So that is, what, 26,000 jobs better than had been expected.  The February number was revised upward, but just to 33,000, and I think I remember when this number first came out, that there were a lot of naysayers who were saying, "This is crazy, there is no way this is true, let's wait for the revisions".  Well, we've got a revision, and all we did is revise it up to 33,000. So it seems like the number was legitimate. We did have a rebound in the month of March, but 170,000 is not a lot of jobs, considering how few jobs were created in February.  In fact, if you average the two months, it's a pretty weak number. Weakness in Labor Force Participation Rate The official unemployment rate, that held steady at 3.8%, but the labor force participation rate, which I know a lot of people have been encouraged by, because they see that number notching higher, it dropped back down .o2, from 63.2% to 63%. So that's some weakness there.  Also, if you look at the manufacturing jobs, they were looking for a gain of 10,000 jobs.  Instead, we got a loss of 6,000 jobs.  They took the February gain, which was originally reported at 4,000, and we only gained 1,000. So the markets were looking for an improvement over the original estimate for February; instead, not only did we take February's number down, but instead of improving, we actually went in the other direction and lost manufacturing jobs. Average Hourly Earnings Posts Sharp Slowdown If you look at the average hourly earnings, they were looking for a gain of +.2 and we got half that of +.1, and that is a sharp slowdown from the gain the prior month, which was +.4, which was better than had been estimated at the time.  So now you average them out, and, again, we're not getting much in the way of earnings growth, although we are seeing a rise in the cost of living. Average Work Week Up The average work week was up; it ticked up from 34.4 hours to 34.5 hours. Nonetheless, most of the coverage of the jobs numbers was that is was a good report.  It was better than estimates, because they were looking for 170-whatever and they got 190-something, so it was better than estimates.
April 3, 2019
VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 - 15, 2019 Recorded April 2, 2019 February Durable Goods Order Declined Slightly Less Than Expected We had a quiet day in the U.S. stock market today.  Not much reaction from a slightly weaker than expected February Durable Goods Orders number that came out before the market opened.  They were looking for a weak number; the consensus was for a decline of 1.8% - we got a decline of slightly less than that: 1.6%. They revised the prior month down from +.4% to +.1%, so we declined less, but from a lower number. Overall, slightly weaker.  In fact, the Core Capital Goods number was also slightly weaker.  They were looking for a rise of .2%; instead, we had a drop of .1% - although they revised the prior month up from .8% to .9%.  Still a little weaker on the day. Lyft Hitting Lows But the market still seems to be oblivious to the weak data, in fact later in the day we did get the auto sales numbers that were disappointing, as well. A lot of bad news is being routinely overlooked by Wall Street.  Lyft, the company that went public on Friday: I discussed the lackluster performance of that IPO on Friday.  In fact, most of the commentary that I listened to or saw was positive.  They were describing the Lyft IPO as a big success… everything went great… the stock went up… But what concerned me about the stock was not how it went up, but how weakly it closed. It pretty much closed on the low of the day.  It had sold off pretty much all day, following the pop on the open. Lyft Sank into Bear Market on Day 2 The stock came public at $72 and it immediately traded as high as $88.6, but closed the first day of trading at $78.29. Still above the $72 opening, but anybody who bought the opening print was down.  Then it got clobbered on Monday and it fell again today.  It only closed down slightly.  It closed relatively near the highs of the day, but the low was $66.10.  That's 25% below the peak price on Friday. So that's a bear market.  In fact, officially Lyft sank into a bear market on its second day as a public company.  So that bear market got even worse today.  The stock is now better than 8% below its IPO price.
March 30, 2019
VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 - 15, 2019 A Gift from the Federal Reserve The Dow Jones closed out its best quarter since 1998 with a 211 point gain: 25,928.68 was the close.  The Dow, on the quarter up 10.3% - the broader averages doing even better.  The S&P 500 rose 12.3% on the quarter. The Russell 2000 - 13.8%, and the NASDAQ 15.6% gain on the quarter.  of course, the entire rally was a gift from the Federal Reserve. Had the Federal Reserve stayed on its course, indicating that more rate hikes were coming; 3 or 4 this year; had the Fed continued with its planned auto-pilot reduction in the size of its enormous balance sheet, the stock market would be considerably lower.  In fact, we probably would have added to the losses experienced in the 4th quarter of last year with additional losses this year. But the Fed, as I had been predicting for many years, reacted to the weakness in the stock market and the weakness in the economy by reversing course. Bigger Cuts Ahead then the Market is Currently Pricing In Now the Fed hasn't actually cut rates yet, although the markets are already anticipating rate cuts and not additional rate hikes. Where the markets got it wrong is that there will be much bigger cuts than what the market is currently pricing in.  I think the market is looking at maybe 25 or 50 basis points of cuts. In fact, we're going all the way back to zero. A reduction in interest rates of 25 basis points or 50 basis points would do absolutely nothing. Quackery: Substituting a Bubble for the Illusion of Economic Growth I think the Fed, again, is going to have to go all the way down to zero once it decides that's what it's going to do. But had the Fed not changed course, the markets and the economy would be quite a bit weaker. Although not weaker - more air would have come out of the bubble. That's all the Fed has been doing with its monetary policy is sustaining a bubble.  Allowing the bubble to get bigger and bigger, while preventing the underlying structural problems from being solved.  Even though those solutions involve some short-term pain, as a trade-off for long-term gain, it is a very healthy process that would be good for the economy in the long run.  But, instead, the Fed has interfered with the market's medicine and substituted its own quackery - substituting a bubble to create the illusion of economic growth as the economy is actually worsening.
March 27, 2019
VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 – 15, 2019 Recorded March 26, 2019 Feigned Attempt to Shrink the Balance Sheet I am finally back on land, having spent 9 days at sea, at the Investors Summit at Sea.  I've been doing this annually now, this is my 7th time doing that. I am now back, technically one calendar year older.  I want to catch up a little bit on what happened in the market later last week.  I did do that one podcast from the ship following the complete capitulation on the part of the Federal Reserve, basically calling off all of the rate hikes that anybody thought may have been coming for the remainder of the year.  Also calling off their feigned attempt to shrink the balance sheet - quantitative tightening.  The balance sheet will barely shrink between now and the end of the summer, when it will stop shrinking altogether; if they can even keep up the pretense for that long. Nobody Appreciates What the Fed Has Done If you remember, when I was forecasting that this was going to happen, at the very beginning, in fact even before the Fed began to shrink its balance sheet, before the Fed raised rates for the first time, I said that if they ever tried to normalize interest rates, if they ever tried to shrink the balance sheet, they would ultimately abort the process - that they would fail in their mission. They could not complete the journey. It would create a huge problem for the Fed, which up until this point, it hasn't happened yet. Nobody really appreciates what the Fed has done. There Will Be an Excuse A lot of the people in the investment community are still buying at face value what the Fed is saying. But remember, when I said the Fed was going to announce that it was going to stop the rate hikes or call off quantitative tightening, I said at the time, that they were going to come up with an excuse. That the Fed was not going to tell the markets the truth about why it had aborted this mission - it was just going to make up an excuse. The Fed had to pretend that they could actually do this - that they were going to normalize interest rates, that they were going to shrink their balance sheet but something prevented them from doing it.
March 21, 2019
VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 - 15, 2019 Recording Today's Podcast from Willemstad, Curaçao I am recording today's podcast from my cabin on a cruise ship, which is right now docked on the Dutch island of Curaçao, which is about 35 miles north of Venezuela.  I've never actually been to this island, even though I live in the Caribbean now, in Puerto Rico, there are still many places in the Caribbean that I have not visited. I really wish I'd come here sooner. I had no idea how beautiful this island was.  Not really the beaches, so much, although I'm sure they are equally spectacular. I didn't go to the beach.  I just spent the day walking around town. But it's probably the most charming Caribbean island I've been to, as far as the architecture and the way the town is laid out - how beautiful the streets are, and the buildings and how clean they are.  It really seems like a nice place to live. I think there is a permanent population of about 160,000 people. The Fed's Decision I want to spend my limited time on today's podcast talking about the Federal Reserve's decision today and the press conference.  I did get back on the boat in time to watch the press conference live, and I do want to limit today's podcast to that discussion. Before the Fed announced its decision on interest rates - nobody expected a rate hike, and we did not get a rate hike, but before the Fed announced today's decision, the markets were on the defensive.  Earlier in the day, Donald Trump had mentioned that he now thinks that the tariffs on Chinese imports, or on Americans who want to buy Chinese imports, may remain in effect for a much longer period of time; indicating that maybe this great trade deal is not as close as the President was letting on in the past. Unexpected Dovishness So the markets sold off. I think the Dow, maybe at the lows was down about 170-some odd points, not exactly sure, but then, when the Fed announced its decision not to hike, the market erased all of those losses, and I think at one point we were up close to triple digits. Nobody was expecting a hike; I think they were expecting the Fed to be dovish, but I don't think they were expecting the Fed to be this dovish.  
March 14, 2019
Recorded March 13, 2019 VISIT PETER AT THE LAS VEGAS MONEY SHOW May 13 - 15, 2019 Big Drop in Boeing: Opportunity to buy into Dip The Dow is continuing to rebound this week, up 148 points today - 25,702 was the close.  In fact, the Dow would be higher if it weren't for an about 11% decline in Boeing so far this week. I am going to talk on this podcast about the controversy surrounding Boeing and their 737 Max 8 aircraft.  But for now I want to talk just about the markets.  I actually think that it was the big gap down on Monday morning, where Boeing first reacted to the news of the plane crash in Ethiopia and the Dow was down better than 200 points - all of it the big drop in Boeing. I think traders looked at that news as an opportunity to buy into the dip.  I think you saw people rushing in at that point. That kind of marked a short term bottom in the market and now we're back up around the highs of this bear market correction. Smarter Money Selling into this Rally I do believe that we're going to be running into resistance again at this area - but that was probably an opportunity for some people, they saw that dip and they rushed in and they bought other stocks.  Typically there's some kind of news event that would coincide with some type of inflection point in the market.  I don't think it's a significant low; I just think it is a low in an ongoing process, this bear market rally, this correction in the bear market is not ending quickly, but I do believe it is ending. I think the smarter money is selling into this rally. Retail Sales: December was not a Fluke The economic news - a couple of items that came out this week were a little better than estimated.  But look at the Retail Sales number that came out on Monday. That one, to me, still confirms that the numbers that we got in December were not a fluke.  A lot of people initially dismissed the weak number in December.  The initial report for December Retail Sales was -1.2. They were looking for a rebound in January and the got one. They were only looking for a rebound of .1 and they got a rebound of .2. They actually revised the prior month that was originally reported as down 1.2, that moved to down 1.6. So an even bigger decline December than was originally reported.  Remember, this is a 10-year low.
March 9, 2019
RATE AND REVIEW this podcast on Facebook. Market Down Before the Bell A late-day rally wasn't enough to bring the U.S. stock market indexes into the black on the day.  In fact, this is the first down week that the U.S. stock market has had in 2019. Something tells me it's certainly not going to be the last. The market was down from the bell this morning. Even before the bell, if you look at the futures, even before we got the jobs number - the February jobs report (which I will get into a little later in this podcast) the markets were already down.  The Dow Futures, I think were off about 125, 135, something like that. Normally, the markets are not making a big move in either direction before the jobs report comes out, because people don't know what the number is going to be, and generally it's a market-moving number, so the markets are typically pretty flat before we get the number. Trade Deal Up in the Air This time, the markets were down.  Based on rumors that the trade deal with China may be delayed.  People were talking about this Mar-a-Lago Summit that was going to take place later in the month, and now I was reading about how there may not be a deal in time, and the Chinese may not want to go to Mar-a-Lago, and so the whole thing is up in the air. So people were getting a little nervous about the trade deal. So that's why the markets were already selling off, plus, I think the Chinese markets had been weaker overnight. Trump or someone else Tweeted out that Trump had said, as soon as we signed the trade deal, the markets are really going to spike. Apparently, nobody has explained to Donald Trump how the stock market works. Buy the rumor sell the fact. Maybe the President has more experience in the real estate market, not understanding how the stock market generally anticipates news, and sells off on the realization of that news.
March 7, 2019
RATE AND REVIEW this podcast on Facebook. Wall of Overhead Resistance It looks like the correction in the U.S. stock market, and by correction I am referring to the rally, the first correction in what I believe is a new bear market - but it's looking like that correction may have finally run its course as the stock market has run into a wall of overhead resistance. In fact, the technical action on Monday was quite telling, because early in the morning we opened quite a bit higher - 100 points or so higher, and then had a 350-point reversal to the downside.  The catalyst for the initial rally was yet another rumor of an impending trade deal with China.  And it seems to me that we've basically run out of the ability to continue to rally the market by regurgitating the same news story over and over again. Now They've Sold the Last Rumor Remember I was saying that, when we actually have a trade deal, with China, my thinking would be it would be a "buy the rumor, sell the fact"?  Well the problem is, traders have already bought that rumor over and over again and that they may have already sold the last rumor. They can't wait for the fact.  They've just had so many rumors, that now they've sold the last rumor, and it doesn't even matter if we get a deal - the market is going to sell off.  Of course, if we get no deal at all, then the market could sell off even more, because a great deal has already been priced in to the market.  But there isn't going to be a great deal. There will be a deal, there will be nothing great about it; there will probably be nothing substantive about it. Expectations have been raised so high, which is another reason that I don't think Trump is as good a negotiator as he pretends.
March 2, 2019
RATE AND REVIEW this podcast on Facebook. Market Keeps Rallying on Regurgitated News The Dow Jones started off the final day of the week with a pretty strong rally; we were up a little better than 200 points earlier in the day.  Then we got some weaker than expected economic data which I will get to a bit later, and the market sold off.  The Dow never quite went negative, and then we rallied back and the Dow managed to end the week back above 26,000 with a 110 point gain. In fact all of the major indexes were positive on the day.  What caused the early morning rally was optimism, once again, that a trade deal with China is about to be signed, and it's kind of amazing how often the markets can bite on this and keep rallying on regurgitated news, because, we've heard this before. According to Trump the Chinese Are Going to Pay, but According to Economics, Americans Are Going to Pay As I have said on this podcast before, we are going to get a trade deal.  A trade deal with China is inevitable. The only positive about the trade deal is going to be that it takes the prospect of a self-inflicted wound off the table. That's the only good thing.  If we have a trade deal, then Trump is not going to increase tariffs on American businesses and on American consumers. That is the empty threat that is out there:  "Hey, we're going to force China to the negotiation table because, if they don't, we're going to erect these tariffs, which, according to Trump the Chinese are going to pay, but according to economics, Americans are going to pay. That's one of the reasons that we can't afford to actually use this weapon that we are threatening the Chinese with. Promising the Moon In fact, one of the reasons that you had all this optimism about this new deal was Larry Kudlow was out talking about how great the new deal is going to be - how this is going to be a huge win for America, it's a fantastic deal, it's a boon, it's better than we could have expected, it is all-encompassing... He has really raised expectations. Doesn't Kudlow know anything about the expectation game?  The idea is to under-promise so you can over-deliver. It seems like we're destined for failure here because everybody in the Trump administration is promising the moon.
February 28, 2019
RATE AND REVIEW this podcast on Facebook. Jerome Powell Wades into the Deficit Debate This year Fed chairman Jerome Powell made his obligatory visit to Capital Hill, where he spoke to Senators and Representatives about monetary policy.  Of course, this really just amounts to a press conference for Democrats and Republicans to either talk up the economy or talk down the economy, depending on who's got the White House.  Trump is the President, so you have a lot of Democrats trying to talk about why the economy is actually weak and trying to get the Fed Chairman to say something negative about the economy, or negative about President Trump.  And, of course you have the Republicans trying to get Powell to validate how great the economy is, and how Trump's policies are helping the economy. Republicans Aren't Willing to Recognize Problems The biggest problem with all this is that the biggest promoters of how great the economy is are the Republicans. These are supposedly the defenders of capitalism and they're saying everything is great, everything is booming, and you have the Democrats, particularly the Democratic Socialists saying that there are a lot of problems.  And the Republicans are saying that these problems don't exist. Democratic Socialists Have no Idea Why the Economy is Screwed Up Unfortunately, when it hits the fan, when we end up in a recession, and I've been making this point over and over again, Capitalism is going to be thoroughly discredited because the people who advocate it were oblivious to the problems. They said everything was fine. Now the Socialists will appear to be the ons who had it right - even though they were right for the wrong reasons. They have no idea why the economy is screwed up, and their plans to solve the problems will just screw it up even more. But the voters aren't going to know that. They're going to say, "Oh, these Republicans who talk about Capitalism, they were wrong. They didn't realize what a mess it was.  These Democratic Socialists, they knew there was a problem, so let's vote for them."
February 23, 2019
RATE AND REVIEW this podcast on Facebook. Another "Greatest Deal Ever" 'The Dow rose a little over 180 points today, closing above 26,000 -26,031.81, to be exact, for the first time during this bear market rally.  I still believe that we are in a bear market rally, not a new bull market. the catalyst for today for today's stock market strength, and it was across the board; the markets were strong from the opening bell to the closing bell.  I think the high in the Dow was maybe just above 200; we sold off intra-day.  But the NASDAQ, the Russell 2000 were also higher on, again, optimism that there is going to be a trade deal between the U.S. and China.  Donald Trump is saying that he is negotiating the greatest deal ever, which is something that I have been saying, regardless of what the deal ends up being, Trump is going to say "It is the Greatest Deal Ever". What Helps China Is an Appreciating Yuan But there was a lot of attention being paid to the deal, a lot of stories coming out that were close to a deal.  In fact, I read that they do have a agreement on exchange rates.  Currencies, obviously the U.S. likes to accuse China of being a currency manipulator, and so maybe there's some type of deal that says they won't manipulate their currency - they won't use their currency as a weapon. Which is something China wasn't going to do, anyway. To the extent that we win any concessions from the Chinese, where they agree not to weaken their currency, that basically amounts to nothing. In fact, a weak currency is bad for China.  What helps China is an appreciating Yuan. Today's "Fedspeak" on Inflation More important than the talk about the trade deal was a lot of  "Fedspeak" today.  You had a lot of Fed officials that were talking; James Bullard, Clarida, John Williams - they were all talking.  The real common theme today was inflation. I have been talking about this for years.  How was the Federal Reserve going to basically respond to inflation above their 2% target? The real rate of inflation has probably been above 2%, in fact I'm confident that it's been above 2% every year.
February 21, 2019
RATE AND REVIEW this podcast on Facebook. FOMC Minutes Describe Abrupt About-Face This afternoon we got the minutes from the last Federal Open Market Committee meeting which took place a few weeks ago.  This was the meeting where the Federal Reserve did what is now being described as probably the biggest policy shift in the history of the Fed. This was really an abrupt about-face, where they went from "Everything is great; we're going to keep on raising interest rates, and we are on auto-pilot - we are going to let the balance sheet continue to decline."  All of a sudden, now they're "patient", meaning they're not going to raise rates at all in the foreseeable future, and not only is the balance sheet reduction program no longer on auto pilot, but it is now going to end prematurely sometime this year. Fed Balance Sheet North of $4 Trillion Of course, the balance sheet is still north of $4 trillion, and if the reduction program comes to an end this year, you're still going to be talking about a balance sheet $3.5 to $4 trillion in size.  This would mean that almost all of the mortgages and treasuries which the Federal Reserve purchased in the aftermath of the 2008 financial crisis as part of its Quantitative Easing Programs, 1,2&3.  Almost all of that debt will remain on its balance sheet after the Fed has finished shrinking it.  Also, FOMC officials are now talking about Quantitative Easing once again as just another tool in the Fed's tool box. It's no longer something that will pulled out for an emergency, it's just going to be a normal policy tool for the Fed to deal with recession.  Of course, that's going to be their main tool, given that this next recession is going to start when interest rates are at 2.25%. So there is not a lot of room for the Fed to try to artificially stimulate the economy when it hardly has any room to reduce rates. Quantitative Easing is Debt Monetization Of course, what does that mean about the Fed's balance sheet? That means the balance sheet will ultimately be much higher than it was when it began its current Operation Quantitative Tightening. We will be higher than we were before it started. All this does is confirm what I've been saying all along, that Quantitative Easing is Debt Monetization.
February 16, 2019
RATE AND REVIEW this podcast on Facebook. Market Rallies on Old News The U.S. stock market continues to rally on basically the exact same news story that keeps on getting replayed.  Today, it was the absence of another government shutdown.  I guess now, this is final when it comes to no more government shutdowns, although that should have been obvious to everybody when Trump caved the last time and decided to pay everybody and temporarily end the shutdown. I said on my podcast at that time that that was it; that there was no way that there was going to be another government shutdown - yet the market continues to celebrate when they think that the shutdown's not going to happen. A National Emergency for the Wall Well now they know for sure it's not going to happen.  Everything's signed, it's a done deal and Trump is getting his wall anyway because he has now declared a national emergency, and so now because it's a national emergency, we are now going to pull these funds from other parts of the budget and we are going to build the wall. The National Debt is the Real National Emergency Of course, the real national emergency is not the lack of a wall, the failure to build the wall, but building up the national debt. The $22 trillion national debt.  We eclipsed that dubious milestone earlier in the week.  And again, when you talk about the national debt at $22 trillion, we're talking about the tip of a huge iceberg. This is just the funded portion of the debt.  This is where the U.S. sells a bond and somebody owns that bond. The Tip of the Iceberg It doesn't include liabilities like what the government owes for Social Security, or guaranteed bank deposits, or mortgages or student loans - that's not there.  Those are contingent liabilities.  They're just as real. They're not even part of the national debt. So, when you look at all the liabilities that the U.S. government is on the hook for, you're talking about well over $100 trillion - so $20 trillion is maybe d5 or 10 percent of the debt. But that debt is the real national emergency.
February 13, 2019
RATE AND REVIEW this podcast on Facebook. The 7th Best Start Ever for the S&P 500 The Dow was up 372 points today, continuing the bear market rally.  In fact, this is the best start for a year in almost 30 years - 28 years to be exact. I think it is the 7th best start ever for the S&P 500.  Now I think the other 6 starts that were better; 3 of those happened during rather dubious circumstances. Two occurred during the Great Depression, and one of them happened in 1987, and we all know how that year ended up. So sometimes getting off to a good start doesn't necessarily mean that the year is going to finish strong, or the year, itself, is going to be a prosperous year. Again, I think the main reason that the market is so strong early this year is, A) because of the sharp decline we had at the end of last year and B) because the Federal Reserve came in to save the market precisely the way I had forecasted for many years. How Many Times Can the Market Rally on the Same Good News? We had a lot of news today that was supposedly good news which provided the extra catalyst for the market.  The question, of course, is, "How many times can the market rally on the same good news? One of the pieces of good news was the fact that it looks like maybe there is some kind of compromise on the border that will avert a second government shutdown, and that is supposedly good news. Of course, we've been having this type of good news over and over again. Also, on the trade front, there were some rumors that the negotiations were going well (some of these rumors started by Trump), so when the market hears that, and that they will probably extend the deadline.  If the negotiations were really going great, they wouldn't have to extend the deadline.
February 9, 2019
RATE AND REVIEW this podcast on Facebook. Disguising "Red" Goals in Green Wrapping I'm still here in my hotel room in Orlando at the Money Show, but before I went downstairs on this Saturday morning,  I wanted to record a podcast to address the issues raised by Alexandria Ocasio-Cortez, AOC, as she is now being referred to - I guess I'm just going to call her the bartender for simplicity.  Well, anyway, the bartender-turned-congresswoman has released the laughable details of her "Green New Deal".  Of course, the Green New Deal really lays bare the smokescreen that I have always believed existed with respect to extreme environmentalism.  I've always thought that it masked a real desire for socialism; that the real goal of some of these radical environmentalists was socialism: nationalizing the means of production, getting government control.  But they couldn't come out and say that. They had to disguise their "red" goals with green wrapping. This Bartender is Advocating Fascism They had to approach it as an environmental issue;"Hey, we have to save the planet!" and, yeah, who isn't in favor of that? Everybody wants clean air and clean water.  So the way the Socialists really try to wedge their way into the mainstream was with this veneer of Environmentalism.  But when you actually read the "Green New Deal", it blows all the smoke away. It really lays bare the Socialist agenda of environmentalists.  Really, that's what the Green New Deal is all about.  It's Red. It's all about turning America into a Socialist economy, or more particularly, a Fascist economy, because Fascism is really the form of Socialism that best describes what this bartender is advocating. The Government Taking over the Means of Production I have said from the beginning when Ocasio-Cortez ( the bartender) describes herself as a Democratic Socialist - "I'm not a real Socialist, I am a DEMOCRATIC Socialist - putting the word "Democratic before something bad doesn't make something bad into something good.  If you read this proposal, it is pure, unadulterated Socialism. It is about the government taking over the means of production.  The bartender actually believes that  the government, by micromanaging the economy, it will succeed in creating prosperity.  This is what every Socialist who has risen to power, rather by force or by vote, has promised the public. They always promise pie-in-the sky prosperity, all these great things that the government is going to provide. In order to get people to buy into this, they have to create a false threat of global warming.
February 6, 2019
See Peter in person at the Orlando Money Show Celebrate Peter's birthday with him on the 2019 Investor Summit at Sea! Visit State of the Union Not Addressed Last night President Trump delivered what purported to be a State of the Union address but really, Donald Trump talked about a lot of things, but he didn't really speak at all about the State of the Union. Bernie Sanders recorded his own response. He didn't do the official Democratic response; that was done by Stacey Abrams, the woman who ran for and lost the Governorship of Georgia in 2018. She was a Democratic candidate.  I think the Democrats are grooming her probably to run for Senate in 2020 so they wanted to put her up on that stage and shine the spotlight on her. Bernie Did a Better Job of Laying out Economic Problems But Bernie Sanders delivered his own response on YouTube, and Bernie Sanders did a much better job of describing the problems in the U.S. economy, that Donald Trump ignored in his State of the Union address.  He spoke a little bit about the economy; he said we're having an "economic miracle" here in the Unites States, that we were the envy of the world, the hottest economy in the world.  Everything is great, and theoretically the only thing that could screw it up is if the Democrats keep going after him with this ridiculous investigation, but everything is doing great, which, of course is a bunch of nonsense. Socialism, However, Won't Work Bernie Sanders did a much better job of presenting the facts. He pointed out that maybe, if Donald Trump is talking about his rich friends at Mar-a-Lago Country Club - for those guys, the economy is great. But for average Americans, the economy is lousy and Sanders describes some of the problems that Donald Trump overlooked or ignored when he gave his address.  This is going to be the problem for the Republicans in 2020 when they run for re-election, talking about how great the economy is, they don't have a chance.  It's the Democrats who will be feeling the pain of the voters and coming up with their own solution.  The problem is, the solutions that Bernie Sanders is putting forth, Socialism, aren't going to work.
February 2, 2019
See Peter in person at The MoneyShow Orlando Stronger than Expected Jobs Number We actually got a bunch of economic data released today; apparently the shutdown no longer is affecting some of these newer releases, although we still have a bunch of old data that has yet to be released. I have a feeling that there is a lot of weak economic data that has yet to come out. Today we got some stronger than expected data including the January jobs number. They were looking for 158,000 jobs to be created, which would follow the 312,000 number that we got for December, which was a surprisingly strong number.  So the consensus was that we would have a weaker number in January; but we ended up with 304,000 jobs allegedly being created in January. December Jobs Number Revised Down 90,000 Jobs But they now tell us that we didn't create 312,000 jobs in December - we only created 222,000 jobs, which is still a pretty big number, but it's 90,000 less.  That's a huge revision, to think that they were off by 90,000 jobs.  Maybe they're off by 90,000 jobs in January. I guess we'll have to wait another month to find out.  But that number was much bigger than what was expected; and of course, even if you take into consideration the revisions, it was still a better net number than what the markets were looking for. U6 Went from 7.6% to 8.1% The official unemployment rate rose to 4%.  Part of that was because the Labor Force Participation Rate continued to notch up. It went from 63.1 to 63.2, and since more people are now looking for work, those people are now officially unemployed. But a bigger story than the official rate is the U6 rate, which is far more accurate if you want to get a real look at the U.S. labor market.  Of course, it's not 100% accurate because it only includes discouraged workers who have discouraged for under a year.  So it doesn't capture any of the long-term unemployed, which are a big part of the American labor market. But the U6 rate includes the short-term discouraged workers, but also the people who are working part time, but who really want to work full time. We had a surge, like half a million part-time jobs were added according to household survey during the month, so a lot of people working part time - they probably want to work full time, but they are settling for part time work.  That meant that the U6 number went from 7.6 to 8.1.
January 31, 2019
See Peter in person at the The MoneyShow Orlando Monetary Drug Pushers Earlier today, the monetary drug pushers at the Federal Reserve gave the addicts on Wall Street exactly the fix that they have been craving. In fact, not only did Powell deliver exactly what the doctor ordered with respect to interest rates, saying the Fed was going to remain "patient", probably indefinitely, with respect to another rate hike, but Powell also made it clear that the balance sheet wind-down, otherwise known as quantitative tightening, was off of auto-pilot.  In fact, based on what Powell said, I would be surprised to see any significant reductions in the Fed's balance sheet from here.  Not surprising, the market rallied as a result of getting what they wanted out of the Fed.  At one point, I think, the Dow was up better than 500 points, but it did close up 434 points - back above 25,000 - 25,014.86, to be precise. Quantitative Easing and a Return to Zero But, you know, just like any addict, they can never get enough. I think that soon the markets are going to be demanding a lot more from the Fed than just a cessation of rate hikes and a commitment not to shrink the balance sheet.  I think what the addicts are going to require is going to be more quantitative easing and a return to zero, and that is exactly what the Federal Reserve is going to provide, once it realizes that that's what's necessary. Of course, I don't think that is going to work; I think that is going to deliver the overdose that I have been warning about since the Fed first went down this mistaken policy road. I knew that we would ultimately end up exactly where we're headed.  It's just that the markets still haven't figured this out. Markets Need to Focus on the Why The markets really need to be focusing on the Why. Not just looking at what the Fed is doing, but why the Fed is doing it, and what it actually means about the underlying health of the U.S economy or the efficacy of prior Fed policy. Now if you listened to the press conference, or even just read the prepared remarks, the Federal Reserve wants to pretend that everything is still great - that the U.S. economy is still in great shape.  In fact, the Fed wants to pretend the U.S. economy is just a good as it was when it hiked rates during the September meeting, let alone the December meeting. Continued Rate Hikes and Auto Pilot QT Going back to September, when the Fed was saying that they were going to do maybe 3 or 4 rate hikes in 2019, and that the balance sheet unwind was on auto-pilot, that the Fed was going to set that aside and sell off about $50 billion worth of treasuries and mortgages every month, just forget about it, not even worry about it and that the Fed was going to simply focus on interest rates.
January 26, 2019
RATE AND REVIEW this podcast on Facebook. Downwardly Moving Expectations The record-breaking partial U.S. government shutdown looks like it has now come to an end. Donald Trump today announcing that he is going to be re-opening the government for three weeks, and during that time we will have negotiations regarding funding for the border wall, the barrier, the smart wall - whatever it is being called now.  Donald Trump seems to be downwardly moving his expectations of what that wall would constitute, how much terrain it would cover, but at the end of the day, I don't believe that whatever compromise we get 3 weeks from now is going to include any type of funding for the wall. Democrats Trying to Teach Trump a Lesson And I think that the President talking about potentially shutting the government down again in 3 weeks if the wall money is not there, I think that's an empty threat; I think that is a bluff that would be easily called by the Democrats.  If you look at the Democratic press conference that followed the Trump announcement, Chuck Schumer basically said,"I hope the President learned his lesson." I'm surprised he even said that because it is admission that the Democrats were trying to teach Trump a lesson. That is, in fact, probably what they did.
January 24, 2019
RATE AND REVIEW this podcast on Facebook. Broader Averages Up The Dow Jones rose 171 points today recovering a little better than half of yesterday's 300 point decline, helped by some better than expected earnings in both IBM and Proctor and Gamble. The broader averages is also up, but not nearly as much, because of the impact from those stocks; obviously not as strong. In fact, the NASDAQ, and even the S&P 500 all took out yesterday's lows intra-day, but still managed to eke out small gains - actually the Russell 2000 was down slightly on the day. Dow Transports Down All Day But the Dow Transports were down all day. They didn't even recover; they closed off the lows, adding about 48 points to yesterday's decline.  But everybody in the financial media, in fact everybody at Davos (I'm going to talk about that in a minute) but everybody seems to be completely forgetting the bear market.  Ignoring the fact that we went into a bear market and pretending that either we're back in a correction of the bull market or we've actually left correction territory, as if the bull market is still intact, and that bear market that we had never even really took place. I Wouldn't Bet on the Fact That the Bear Market Is Over Now, it is possible that the bear market is over.  I am not saying it's impossible.  It seems to me again that it is extremely unlikely that the longest bull market in history is going to be followed by the shortest bear market in history. I guess it could happen but I wouldn't want to bet on it. A lot of people seem to be betting on it. To me, again, the rally that we had made a lot of sense. After all, the Fed came in and did exactly what I have been saying it is going to do since before they raised rates for the first time.
January 21, 2019
RATE AND REVIEW this podcast on Facebook. High School Students Smeared by Mainstream Media I am still out in Vancouver, British Columbia at the Resource Conference.  I will be back in Puerto Rico on Wednesday. But I wanted to take a little time out to record this podcast here in my hotel room to address just one topic. And that has to do with this viral video that was making the rounds early yesterday that purported to show a group of high school students taunting an elderly Native American.  As soon as this thing went out, spreading throughout the internet, the conduct of the high school students was condemned by everybody. Fanning the Flames All the celebrities and the media, everybody on the left we out there condemning the actions of these kids. In fact even the school - they were from an all-boys Catholic high school.  Of course, there is nothing racist about the fact that the high school was all boys; there are all-girl Catholic high schools. The idea being that maybe you can educate kids better if they are concentrating on their studies, rather than members of the opposite sex. But even the school administrators or the principal came out and said they condemn the conduct of their students and they're going to look into this and that this does not reflect their values. Of course they're very tolerant, they're not racist, they don't discriminate. Maybe they will even expel these boys. Of course, that comment actually helped fuel the fire. This Whole Thing is Made Up I really wish that people would not be so quick to throw people under the bus when confronted by this feigned outrage from the left. This whole thing is just made up. If the government had been skewing this with would be called propaganda. But it is not the government; it is the media elites, it is the left that has concocted a fake story. They have altered the facts to conform to their agenda.
January 19, 2019
RATE AND REVIEW this podcast on Facebook. It Is Not a New Bull Market The U.S. stock market averages continued the bear market correction - the correction actually extended for another week.  We capped a strong week with a strong gain today across the board.  But this is a correction. It is not a new bull market. But of course, if you watch stations like CNBC you wouldn't know that. All day today all they kept talking about on CNBC was that the market is now out of correction territory, meaning that it is no longer down 10% from the highs, and so we're no longer in a correction. We Entered a Bear Market First of all, we didn't enter a correction - we entered a bear market. Now, bear markets have corrections, too. They're called rallies, except people at CNBC don't get that. They think the only correction is a move down in a bull market. Now this bull market went on for 10 years, so a lot of these guys don't remember the last bear market, and it wasn't even that long.  A lot of these bear markets have been very short. They decline 40-50% and then the Fed was able to come in and save the day.  But people don't get that we are in a bear market now.  We haven't made new highs, so any rally is a correction.  Certainly a rally of more than 10%  - that's the same definition for the downward correction in a bull market.  So if you want to apply that definition to an upward correction in a bear market - we are in a correction. This is a pretty big correction, helping the bear market fall a slope of hope. Russell 2000 Had  Best Annual Start Since 1987 The Dow was up around 330 points today, back up to 24,706.35.  In fact, if you look at the Dow Jones year to date, we're up almost 6% so far this year. Strong move.  We're not even finished with the month of January.  Of course we have a holiday weekend,  s the markets will not be open on Monday celebrating Martin Luther King Day. But there are still quite a few days left in January.  The NASDAQ composite is actually outdoing the Dow, it is now up almost 8% on the year and the biggest gainer is the Russell 2000.  It's up almost 10%.  In fact the Russell 2000 is having its best annual start since 1987.  Now, of course, 1987 didn't end well for the Russell 2000 or any of the stock markets. That was the year of the stock market crash in October.
January 16, 2019
RATE AND REVIEW this podcast on Facebook. The Eye of the Financial Hurricane U.S. stock markets continue to bask in the eye of this financial hurricane.  Remember, we ended the hurricane following the September rate hike, and if you recall I titled my podcast, "The Hike that Broke the Camel's Back", and that's what really began the sell-off in the market. We had this horrific fourth quarter, the worst December since 1931.  It may have ended up being the worst December ever had it not been saved by that last-minute Santa Claus rally - the biggest Boxing Day (Day after Christmas) rally ever, which followed the worst Christmas Eve in stock market history. The Fed's New Dovish Outlook But we entered the eye when the Federal Reserve came out and rescued the markets by backtracking on their previously indicated path of continued rate hikes and quantitative tightening.  In fact, we had a lot of people come out this week from the Federal Reserve today, again, reiterating their new dovish outlook. Everybody is a dove. There are no more stock market hawks.  Like there are no atheists in a foxhole - in a bear market there are not hawks, there are only doves.  That included people who are no longer on the Federal Reserve. Fmr. Federal Reserve Chairperson Janet Yellen came out yesterday, and she said that she thinks it is very possible that the December rate hike is the last rate hike in the cycle. She's right about that.  It's not just very possible, it's probable. Yesterday we had Fed Vice Chair Richard Clarida said that the Fed is going to raise rates fewer times than they had indicated in their most recent press conference.  Of course, by then, they had indicated two rate hikes. Now he is saying they are going to raise rates fewer than two, which could be one, but it could also be zero.
January 12, 2019
RATE AND REVIEW this podcast on Facebook. Everything up on the Week Except Treasury Bonds and the Dollar The stock market ended a positive week on a little bit of a down note; all of the major averages had small losses today - well off the lows of the day.  The market tried a couple of times to sell off but the dips were bought on each occasion and we ended up closing near the highs of the day, even though we were down on the day. Pretty much everything was up on the week except treasury bonds and the dollar. The dollar fell, long-term interest rates rose.  Gold was up.  Oil was the big winner, even though it was down close to a dollar a barrel today, we closed right around $52; up better than 8% on the week. All Fed - No Change in Fundamentals But what has been driving the rally has all been the Fed. There's nothing fundamental that has changed about the U.S. economy or about the U.S. stock market other than the "Powell Put" is now back in play.  In fact, it's not just Powell putting that out there, he has been joined by a chorus of central bankers who came out today, yesterday, all throughout the week - they're all now reading from the same dovish playbook.  They've got their marching orders and they are talking up the market.  Now talking how the Fed has to listen to the market, be careful and take its cues from the market. It used to be that the market didn't matter.  The Fed was going to do its thing and the markets are going to do what they are going to do. And it didn't take long for that to change. The Fed Can Not Allow the House of Cards to Fall Of course, I've been saying that all along; that the Fed was not going to allow this house of cards that they deliberately inflated to just fall apart. Now they had to pretend that they didn't care about the markets but, of course the whole time, they were hoping the markets actually didn't go down because they didn't want to have to reverse policy.  They wanted to talk tough even though they didn't have a stick.
January 10, 2019
The Peter Schiff Show Podcast - Episode 433 RATE AND REVIEW this podcast on Facebook. A Bear Market Correction U.S. stocks continue their correction by moving higher yet again today. Remember, when you have a bull market, the corrections are down, because you're correcting the upward trend by moving backward.  In a bear market, it's the opposite. You correct a downward trend by retracing upwards.  That's what we're doing now. I think this is the first rally in this bear market, so this rally is, in fact, a correction. Powell is now "Super Dove" I think the U.S. stock market is off to its best annual start in about a decade; certainly the NASDAQ is up I think not quite 5% - 4.7% on the year.  Of course, what got the correction going was the complete 180 by Powell in that round table discussion, where he basically reversed everything he was saying and became the "Super Dove" when it comes to rate hikes. So the market is now pricing out many rate hikes it had probably priced in and that was the catalyst to really get the market going. Markets Have Not Priced in End of Quantitative Tightening Of course, what hasn't been priced in yet are the rate cuts or the end of the quantitative tightening program and the re-launching of quantitative easing.  All that is coming. The markets just aren't there yet. They just can't see beyond where we are now. They're looking at this mountain and they don't see the valley on the other side. Interest Rates High Relative to Mountain of Debt Again, it's not the rate hikes in the future that were going to cause the recession, the rate hikes from the past have already guaranteed a recession, even though interest rates in absolute terms and relative to where they've been historically are still very low, they are not very low considering the enormity of the debt that we now have; that we didn't have historically. So when you have this mountain of debt, a historically large amount of debt, you need a historically low rate. Even though the rates we have now are still low, they're not as low as they used to be and they're not as low as they need to be.
January 5, 2019
RATE AND REVIEW this podcast on Facebook. Big Move Up Today Another big move today in the U.S. stock market except this time the big move was to the upside, more than eradicating yesterday's big decline.  In fact, looking back historically, yesterday's drop was the second biggest drop in history for the second day of the New Year. The biggest drop on the second day of a new year was in the year 2000. That was the year when the NASDAQ bubble originally popped. That big drop happened at a time where the market was peaking and we were just beginning a bear market where the U.S. stock market went down by about half and the NASDAQ went down by abut 80%.  So not a good comparison. NASDAQ Biggest Mover Up 4.25% On the other hand, today's rise was the second biggest rise for the S&P on the third day of a new year in U.S. stock market history. The biggest rise happened in 1932, and that was during the great depression.  Clearly not a good period for the U.S. stock market or the U.S. economy to have to go back to 1932 to see a third trading day in January where you have this big a gain.  In fact, the Dow was up 3.3% on the day but the S&P up 3.4%.  The biggest mover was the NASDAQ, which was up 4.25%. So much bigger than the drop that we had yesterday.  The Russell 2000 was up 3.75%. What was the Catalyst? So what was the catalyst?  Why did the U.S. stock market go up so much today after being down so much yesterday? First of all, the market started off on a positive note.  I'm pretty sure we were up 2-300 points right out of the gate in the futures, even before we got the Nonfarm Payroll number that came out at 8:30 a.m.  Futures were already trading, and there was already a big gain before that number was released. So it wasn't the jobs report that actually was responsible for today's move. Fed Chairman Jerome Powell's Dovish Statements It had much more to do with the comments made by Fed Chairman Jerome Powell.  Those comments were made maybe an hour or so after the stock market opened.  But let's start off early this morning.  What was propping up the market in the morning, or overnight, was more optimism that a trade deal between the U.S. and China is imminent. Now, of course, whatever trade deal is negotiated is going to do nothing.
January 4, 2019
RATE AND REVIEW this podcast on Facebook. Big Moves in the Market Today For those of you who have been waiting all year for the first Peter Schiff Show Podcast of the new year, 2019, here it is.  We finally got a day with enough worthwhile news that it made sense for me to do a podcast.  I'll probably end up doing another one tomorrow, when we get the Nonfarm payroll numbers - the jobs numbers.  We'll see if that's a big market mover.  But we had a lot of movement in the markets today; all sorts of news came out as well, weighing on the markets. Apple Closed Down 9.7% The Dow was down 660 points today - pretty much about the same drop that we had on Christmas Eve.  Now I doubt that today will be followed by a repeat of Boxing Day, where we get a 1,000 - point rally, but we'll see. The excuse of the day was probably Apple.  You can say that Apple took a bite out of the stock market today.  Apple announced yesterday just after the close that its sales would be disappointing, and Apple stock was down just under 10%.  It closed down 9.7%, pretty close to the lows of the day - not the exact lows, but it has got to be one of the biggest losses in history for Apple. Everybody Got a Rotten Apple Today Apple is very widely owned; the Swiss Central Bank is a big holder of Apple stock.  A lot of hedge funds own Apple, Berkshire Hathaway (Warren Buffet) has a big position in Apple - pretty much in everybody's portfolio. So everybody got a rotten Apple today. In fact, Apple is now down almost 40% - 39% from its peak price.  Remember, when it was at peak, it was over a trillion dollars in market cap. It was Apple and Amazon that were trillion dollar companies.  Well, no more.  Apple, again, has dropped not quite $400 billion in market cap from its peak.
December 29, 2018
RATE AND REVIEW this podcast on Facebook. Published on: Dec 28, 2018  Or Did It? It looks like the Grinch may not have been able to stop Christmas from coming to Wall Street.  It looks like the Santa Claus Rally came just the same. - or did it? The worst Christmas Eve in the history of the stock market was followed by the biggest Boxing Day rally in the history of the stock market. We don't celebrate Boxing Day here in the United States; all the other English-speaking nations celebrate that holiday, but maybe we'll celebrate it in the future, given the fact that the Dow Jones rallied over 1,000 points this Boxing Day.  So that more than eradicated the 650 point drop which was the biggest Christmas Eve drop in history. A Bounce Could Come at any Time If you recall, on my last podcast, I mentioned that following Christmas Eve's drop, this December was the worst December in stock market history. We has finally beaten out the 1931 December.  But I also mentioned that given the extreme oversold condition that existed in the market, it was possible that a bounce could come any minute or any day, and I was not sure whether or not we would finish as the worst December in the history of the stock market because we still had several trading days left for the market to bounce, and that is exactly what happened. The Grinch May Have a Change of Heart In fact, we managed to close positive on the week. I think the Dow finished up about 617 points.  Now, of course, we still have one more day for the Grinch to have another change of heart. If on Monday, the Dow is down more than 617 points which is easy to do given the volatility that we're seeing, especially we're no longer oversold to the extent that we were on Tuesday - then the Grinch may have ended up stealing the Santa Claus Rally anyway.
December 24, 2018
RATE AND REVIEW this podcast on Facebook. Worst Christmas Eve Day in Stock Market History As I thought would be the case, it looks like the Grinch Stole the Santa Claus Rally.  Normally, the U.S. stock market rallies during the final five trading days of the year between Christmas and New Year's Day. But today was not only the worst Christmas Eve day in stock market history, it blew apart the old record.  In fact, there has never been a Christmas Eve day where the S&P or the Dow fell by as much as 1%. Today, the Dow Jones dropped better than 650 points - 2.9% on the day. Officially Not a Correction Although the Dow now is the only major index not officially in a bear market (now down 19.15% from its peak), but the S&P 500, which dropped 2.7% today is now down just over 20%.  So it's now official, Wall Street can stop pretending that it's a correction, they have to admit that it's a bear market. Now, if they want to hang their had on the Dow, O.K. well they can hang it there maybe for one more trading day, because it's not going to take much for the Dow to join the party.  Of course, other indexes are extending moves into bear market territory. The Dow Transports are down 25.7%; the NASDAQ just under 24% to the downside. The Russell 2000 Losing Gains Rapidly The Russell 2000 is down 27.3%.  This index is down better than 5-1/2% since Donald Trump was inaugurated.  This was the index that was supposed to benefit the most from Trump's economic policies.  It's still up about 6% since he was elected President. So all that hype is still in there. But at the rate the index is falling, this index is going to lose those gains pretty rapidly. Then, of course, Trump is not going to be able to talk about all the wealth that has been created in the stock market since he's been elected, because all that paper wealth will have been destroyed.
December 22, 2018
RATE AND REVIEW this podcast on Facebook. NASDAQ Now in Bear Territory It was a big down day, in fact there was even more carnage in the NASDAQ.  Today is the day that NASDAQ finally slipped into bear market territory. So, Wall Street's been calling this a correction the whole way, well now the NASDAQ is down 22%, joining the Russell 2000, down 26% and the Transports down 24%.  Those 3 indexes are now officially in bear markets. It's All a Matter of Time But what does that mean? That means when the NASDAQ was only down 5%, it was in a bear market. That's exactly what I was saying. They don't acknowledge the bear market until it's down 20%, but that doesn't mean it's not in a bear market. It just means nobody wants to admit that it's a bear market.   Now we still have 2 indexes that are not in bear markets, the S&P 500 is now down almost 18% and the Dow Jones is down just under 17%.  So Wall Street maybe can cling to the notion that these indexes are not in bear markets because they're not down 20%.  Look, it's all a matter of time.  As I said on the last podcast, I thought that the NASDAQ would be in a bear market by the end of the week and that's exactly what happened, and I'm pretty sure that the S&P 500 and the Dow are going to join this party before the end of the year. Huge Bear Market in FAANG Stocks Today's decline started off as a rally.  The Dow was up about 400 points this morning, before it collapsed.  So we basically reversed yesterday's decline and then we got clobbered and took out new lows. The NASDAQ was down 3%.  That was the weakest index, and it was led down by the FAANG stocks, which are now down collectively, on average, 35%. This is just generally in the last few months. So this is a huge bear market in the FAANG stocks. The worst of the FAANG's is Facebook, which was down big again today, like 5 of 6%.  Facebook is now down 43%.  Second place, is Netflix, down 42%, then Amazon down 33%, and lastly, Google, which is down only 23%. Google just finally went into a bear market this week. If you look at the charts, there is nothing but air - there is a long way down between where we are now and where any kind of trend lines or support lines could be drawn.
December 20, 2018
RATE AND REVIEW this podcast on Facebook. Seventh Rate Hike since Trump's Election As expected, earlier today, the Federal Reserve nudged up the Fed Funds rate by another quarter point.  The Fed is now targeting their rate at 2.25 - 2.5%.  So the range is somewhere in the middle, there. This marks the sixth time the Federal Reserve has hiked interest rates since Donald Trump has been President, and the seventh time that the Fed has hiked rates since Trump was elected. Remember, during the entirety of Obama's 8-year Presidency, the Fed raised interest rates only once. A 900-point Selloff What the markets did not expect was the dovish hike to be so hawkish. In fact, the minute I heard the language, I was surprised that the Dow didn't immediately sell off, more than it did. It had a bit of a bounce before it sold off, the Dow Jones ended up down just over 350 points.  The selloff from the high to the low was just under 900 points. Earlier in the day the Dow had rallied up about 300 points because there was a lot of anticipation that even though the Fed was going to hike rates today, that it would indicate it would pause.  That was on neutral - that it wasn't really planning any more rate hikes for 2019, and would just play it by ear. It was going to be data dependent. Dow's Worst December since 1932 But what the Federal Reserve said in their official statement that accompanied the news was that they had reduced their expectation for rate hikes for next year from 3 to just 2 anticipated rate hikes.  Now, that may be considered dovish, but it did not nearly meet the expectations of the market.  It was expecting something much more than that. When I heard that, I thought, "The market's going to get killed." And it did go down but I think a lot more of the carnage is going to happen probably later in the week and next week.  In fact, the market is now down so much that the Dow is having its worst December since 1932.  Of course, that was the beginning of the Great Depression.
December 18, 2018
RATE AND REVIEW this podcast on Facebook. Two Podcasts in One Day! For those of you who were worried that I wasn't going to be able to do a podcast today to talk about the stock market or the economy because I already did a podcast earlier this morning, well, you're wrong! Here I am, doing my second podcast of the day.  This may be an unprecedented event. I don't know if I've ever recorded 2 podcasts in the same day. Don't Miss This Morning's Podcast on the Unconstitutionality of Obamacare The reason I did the earlier podcast was because I wanted to address the topic of the Federal court in Texas striking down the ACA individual mandate and rendering the entire Affordable Care Act unconstitutional. I would encourage you to listen to that podcast if you are interested in this topic or the Constitution to listen to it in its entirety. Not a Crash, but Regular Volatility But let's talk about another big down Monday.  As I suggested when I did my podcast on Friday, I'm still thinking that there is a possibility of a Black Monday type event this year.  I said we were running out of Mondays because we only had 3 left, and now one down.  This, again was not a crash, but the Dow did close down better than 500 points.  At one point, we were down over 600.  You know, these big drops are not becoming a recurring event - they add up, right? Worst December Start Since 1980 If you look at the charts, we look extremely vulnerable to a big drop. I read that already, we're off to the worse start for a December since 1980. That was really the end of the last bear market. We had a bear market that went from 1966 to 1982, so the last time we had a December this week was at the tail end of that long-term secular bear market.
December 17, 2018
RATE AND REVIEW this podcast on Facebook. Decision May Well Stand up under Appeal A Federal Judge in the state of Texas, U.S. District Judge Reed O’Connor, has ruled that the Affordable Care Act, otherwise known as Obamacare, is unconstitutional, and therefore the law would be null and void, that it would be struck down.  Of course this will be the subject of appeal, so whether or not this decision is going to hold is still an open question. But if you listen to the way it is being reported in the media, the reaction from a lot of the people, particularly the Democrats, is that they are accusing this judge of being partisan, being a judicial activist, that this is a ridiculous crazy decision and that it will clearly be overturned.  All this is a bunch of nonsense. The judge in this case is completely correct. Obamacare was unconstitutional before this decision. The Rationale Behind Judge's Ruling This particular judge focused on one aspect of the law, but there are so many reasons this law is unconstitutional. But for the purpose of this podcast is to focus on the rationale behind the judge's ruling and why I believe the decision is valid and may, in fact stand up under appeal.   Under the new makeup of the Supreme Court, some of the new justices could easily side with the original dissent to form a new majority now that the law itself has been changed based on the Tax Cuts and Jobs Act, which is the basis of this particular decision. Read Article 1, Section 8, Clause 3 of the U.S. Constitution I did an earlier podcast on whether or not the U.S. government could require American citizens to purchase health insurance. Now the theory was that they had the right to do this under what is now known as the Commerce Clause (Article 1, Section 8, Clause 3 of the U.S. Constitution), one of the single most understood Constitutional clauses which has enabled the government to get away with all sorts of things that the Constitution does not authorize. This is where all the powers to the Federal government are delegated. One of the powers is to regulate commerce with foreign nations and among the several states and with the Indian tribes. That's it. Constitution Allows Federal Government to Regulate Commerce, not Companies Now based on that clause, you have had Supreme Courts validate government regulation of companies because the government claims that since those companies engage in interstate commerce, that it falls within that power, that Congress can regulate these companies because the company is engaged in commerce. Of course, that's not what it says.  The Constitution doesn't say the Federal government has the right to regulate companies that engage in interstate commerce, it just says it can regulate the commerce, itself. The commerce has to do with the flow of goods and services over state borders. So this is an unconstitutional expansion of Federal power. The Federal government does not have the constitutional authority to regulate businesses simply because these businesses happen to engage in interstate commerce. Federal Regulation of Business Outside of Constitutional Authority But that was even the camel's nose under the tent, because then it got worse.  Then what happened is companies that were regulated that did no interstate commerce were saying, "this law does not apply to me because I don't engage in interstate commerce." But the Supreme Court said that the Federal government under the Commerce Clause can regulate companies that do not even engage in interstate commerce if they can show that those companies somehow effect interstate commerce, even though they themselves do not participate in it. So now,
December 15, 2018
RATE AND REVIEW this podcast on Facebook. Technicals Portend Bear Market in Small Caps and Transports The Dow managed to finish off this Friday with a loss of less than 500 points.  The Dow Jones Industrial Average finished down just 496.87 points. So I guess the headline can be: "We Avoided a 500 Point Decline!".  At one point, the Dow was better than 550 points in the red.  But, when you close that close to your low of the day, within 10 percentage points of the low, that is a very weak close. The Dow finished the day weak, the week weak, and it is a very weak month.  In fact, the weakest indexes continue to be the Russell 2000 - I've been talking about the weakness in the small caps.  That index is now down better than 19% from its peak just about 4 months ago. So we're almost officially in bear market territory.  We'll probably be there by Monday, judging by the technicals. Possible Black Monday? The other index that is leading the way down is the Dow Jones Transports. This index is now down better than 18% from its peak.  Both the Transports and the Russell 2000 are at the lowest levels of the year. They took out the lows from the earlier decline that happened at the beginning of the year, so the Dow and the NASDAQ have yet to take out those lows set earlier in the year, but I believe they will.  In fact, they may even take them out before the end of the year. Monday, again, is looking extremely weak. I've been talking about this all quarter, where I think there is a potential for a Black Monday type of event. Obviously, we're running out of Mondays this year.  Both Christmas Eve and New Year's Eve fall on a Monday and there will probably be very light trading going on, so potentially the markets could see a lot of selling if there are not enough people there to buy. Appearance on Countdown to the Closing Bell this Monday I will be on Fox Business News, The Countdown to the Closing Bell this Monday, with Liz Claman.  Maybe if I get lucky we'll have a Black Monday on a day that I happen to be on television.  I will be there for the final hour of the day and often times, the biggest part of the sell-off on big down days happens at the very last hour, so I'll be live on Fox Business for that potential big drop. Make sure to tune in live.
December 13, 2018
RATE AND REVIEW this podcast on Facebook. Mainstream Forecasts Incorporating Recession We are in the early stages of this bubble popping.  That's why, if you look now at a lot of the mainstream forecasts, all of a sudden, they're all incorporating recession. The probability of recession is now very high over the next couple of years.  I read J.P. Morgan now is saying that there is a 70% probability that the U.S. is in recession by the end of 2020. In fact, most of the forecasts I'm looking at now predict that the U.S. will either enter recession next year or in the following year. This is a huge change from where people were just a few months ago, where there were no recessions as far as the eye can see. Now we're staring them in the face. Third Consecutive Drop in Small Business Confidence One thing that really hasn't changed so much is that you have all this optimism that still abounds. It doesn't make sense to me that people could be so optimistic about an economy that they concede is so close to recession. Now, I think on Tuesday we did get a drop in small business confidence, it's the third consecutive monthly drop, and three months ago, small business confidence hit an all-time record high. But if you have more of these small business owners thinking that we are a year away from recession, in fact less than a year if you think recession is going to start in 2019 - we're going to be in 2019 in a few weeks. So, if you think recession is so close, how much longer can you remain so confident? The Fed Doesn't Have Recession in its Forecast Now, of course, the Fed doesn't have recession in its forecast; not even close.  The National debt is careening toward $22 trillion and these guys are putting out their rosy estimates for economic growth.  They're not starting to factor in these recession forecasts that are becoming more and more mainstream. Fed Funds Rate in Negative Territory in Real Terms The problem for the Federal Reserve is that they are trying to keep this bubble from imploding, but the task is impossible because enough air has already come out of it. Interest rates have already risen to the point where the camel's back has been broken. The Fed has now backtracked into admitting that we're just slightly below "neutral". We're one more rate hike away from "neutral" even though one more rate hike will still leave the Fed Funds Rate in negative territory in real terms, not in nominal terms. If you accept the government's inflation numbers and we got CPI and PPI numbers that came out yesterday and today - if you look at the core, we've got the hottest core in 7 years.
December 8, 2018
RATE AND REVIEW this podcast on Facebook. Pearl Harbor Day 2018: A Very Interesting Technical Day Today is December 7th, a day that will live in infamy.  Unless you are a Millennial who was educated in the U.S. public school system.  In which case you have absolutely no idea what happened on December 7th 1941. You've probably never heard of Pearl Harbor, you certainly don't know where Pearl Harbor is located.  Maybe you've heard of World War II, but a lot of them haven't.  Even those who have heard of World War II probably have no idea who fought, or even who won. As Goes the NASDAQ, so Goes  the Rest of the Market Today, December 7th maybe won't live in infamy, but it seems to me it was a very interesting technical day in the U.S. stock market, which should give the bulls on the stock market something to think about. I think the action today, particularly in the NASDAQ, (I think as goes the NASDAQ, so goes  the rest of the market) but that action was particularly significant. An "Outside Day" One of the more reliable technical patterns is an "Outside Day". An outside day is when you trade above and below the highs and lows of the previous day, and then close above or below one of those lows. It's an outside day even if you close somewhere in the middle. An "Inside Day" is when you trade within the range of the previous day; you don't take out the high or the low. But the most significant type of an outside day is an outside day where you close above or below the previous day's high or low. That would be called an "Outside Reversal Day".  It' s a positive if you could take out the previous day's low, but then rally and then close above the previous day's high. The Russell 2000 and the NASDAQ Took out Yesterday's Lows What the NASDAQ did today was the opposite of that.  The NASDAQ rallied this morning on, I guess the weaker than expected jobs numbers and took out the highs from yesterday.  In fact, all of the major markets - the Dow, the NASDAQ, the Russell 2000 - they all took out yesterday's highs. But then they came crashing down,  The Dow did not take out yesterday's low - so the Dow did not have an outside day.  But both the Russell 2000 and the NASDAQ took out yesterday's lows.
December 7, 2018
RATE AND REVIEW this podcast on Facebook. Dow Volatility Started with Huawei News We had another very volatile day today on Wall Street, and it really got started last night with the news of the arrest in Canada of the CFO of the Chinese company, Huawei. Her father is the founder of the company and a very prominent, powerful and influential man in China and this set the mood.  the Dow futures dropped initially, I think about 500 points as soon as the story broke.  Obviously, anything that may throw a monkey wrench in the supposed deal that was made over dinner, mano a mano, down in South America between Trump and Xi.  So this caused some problems. Dow Down About 780 on the Lows The market clawed its way back; I think we were down maybe 200 and change, but then we started selling off early in the morning and when the Dow Jones opened up, we were down maybe about 400-500 very quickly and we sold off almost down to 800 points. The Dow was down about 780 points on the lows.  This is following yesterday's market holiday honoring the memory of the late President George Herbert Walker Bush. That day of mourning, however did not do anything to stop the carnage on Wall Street. Market Clawed its Way Back on Fed "Wait and See" News What it took was an article that came out later in the day in the Wall Street Journal.  That article basically said that the Fed was considering a new "Wait and See" strategy after the December rate hike. And the odds of a December rate hike, which are coming up, the probability is about 75%, which is lower than it was, so there is still a chance that the Fed does not hike in December. But according to the Wall Street Journal doesn't take place immediately.  This is after the December hike. So for 2019, the article suggests that maybe there'll be even fewer rate hikes than the markets believed. Debt Service Costs Creating a Drag Everything was weak until we got this news from the Fed that turned a lot of the tech stocks around and got the market moving higher. I don't think this does anything, because, it doesn't take the December rate hike off the table, and if the Fed raises rates in December, then all the problems that already exist because of higher rates, will be bigger. This means mortgage rates will be going up. Debt service costs will go up. One of the big drags on the economy now is that debt service costs have gone up. So if the Fed adds to that pain by following through with another rate hike in December, it will be just another weight on the economy's back. The Fed is still talking about raising rates in 2019 - they're saying one more, and we're going to wait and see.
December 5, 2018
RATE AND REVIEW this podcast on Facebook. No Relief As I said on yesterday's podcast, I did not we had a "Wall Street Relief Rally", based on the stand down or truce in the trade war following the backtracking by the Fed on the potential number of rate hikes and the distance we were from neutrality. Interest Rates Anything But Neutral By the way, yesterday I referred to the rate hikes as normal; I should have said neutral - obviously what we have now is not even close to being normal. The Fed is trying to convince us that the new "neutral" rate of interest is now lower than what was considered neutral in the past. Why is that? Because we have such an enormous amount of debt now, the Fed has to keep interest rates much lower in order to achieve neutrality.  But, of course, if the Fed needs to keep interest rates low, it's not neutral. Those low interest rates are actually stimulative. What the Fed is trying to do is use artificially low interest rates to prop up the economy and then claim that those artificially low rates are neutral. They're anything but neutral. They are accommodative.  This is cheap money, this easy money, and ultimately it is going to set off massive inflation. A Terrible Day, Technically Nobody seems to understand that yet, but that's what's coming. People are continuing to be complacent despite today's substantial drop in the value of stocks. Today the Dow was down just shy of 800 points - 799 points.  At the lows, it was down over 800. We didn't close on the exact low; maybe they're going to somehow claim that that was a rally or something - the fact that we closed slightly off the lows.  This was a terrible day, technically, and in fact I mentioned again on yesterday's podcast, the fact that the market made the highs on the open - it did not trade very well, and it looked to me that we would fall down. I did not know that we would drop this much this quickly, but it doesn't surprise me.
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