Saturday, December 8, 2018

Peter Schiff: Trump Backs down on Tariffs

The two things that everybody seems to agree were weighing down the markets were the Fed's relentless drive to normalize interest rates, and figure out where "normal" was, and, of course, the trade war - the threat of additional tariffs overhanging the markets. 

So I think it was pretty clear to President Trump who is hanging his hat on the stock market, has decided that the stock market performance is the best barometer of his Presidency. 

So the fact that the stock market was falling was really a big problem for the President so he had to do what he could to try to get the stock market to go back up.

- Source, Peter Schiff

Thursday, November 22, 2018

Peter Schiff: The Pundits Will Always Tell You to Buy the Dip

The Dow Jones dropped another 296 points on Friday. The Nasdaq is on pace for the largest monthly decline since the 2008 financial crisis. The Russell 2000 has dropped over 12%. And yet, everybody still seems to think everything is fine.

But as Peter Schiff said in his most recent podcast, nobody actually realizes when a bear market starts. When they finally do figure it out, it's too late. During the last two bear markets, the Federal Reserve has saved the day by re-inflating the bubbles. But Peter said the monetary magic isn't going to work this time around.

Peter had a feeling October was going to be a bad month. After the last Federal Reserve rate increase, he did a podcast and said it could be the hike that breaks the camel's back. He said he just didn't understand how the markets could ignore the rate increases, what was going on more generally with interest rates, the trade war, and the overseas markets that had already tanked.

It didn't make sense that the US markets could continue to defy gravity in the face of overwhelming negative evidence that was taking place. And it seemed to me that if the market was going to break, October was a pretty good time for that to happen, given the history we've had with October."

Peter said he doesn't see any indication that we've hit bottom, and yet, the market still appears to be complacent. Just look at the price of gold.

The price of gold is still creeping higher, but if there was more fear out there, if people were worried about the market, they would buying gold."

Peter said if you watch the financial news shows, everybody is saying there's nothing to worry about.

Which is exactly what they were saying before the 2008 financial crisis."

He pointed out that when bear markets begin, nobody realizes it's a bear market. A bear market is defined as a 20% decline. So, until stocks hit that level, it's not a bear. The pundits tell you to buy the dip.

So, whenever a bear market begins, all the perma-bulls say, 'It's a correction, buy.' Then, once the market is down 20% and we're in a bear market, then they say, 'Well, you know, it's too late to sell now. 

We've already had the bear market. Now it's time to buy more because we're about to have another bull market. So in other words, you never sell. You just hold forever and hope."

- Source, Seeking Alpha

Sunday, November 18, 2018

Peter Schiff: The Fed's Monetary Magic Won't Work This Time

Peter Schiff discusses the supposed 3.5% GDP numbers that will more than likely be revised. The fact that even recessions have day's when the stock market rallies. 

More about the housing market getting hit hard, but also the companies that are casualties of a soaring home buying market. Mohawk Industries is such a company as are others.

Peter will also touch on 2018 permabulls, the reverse wealth effect as well as the criticism he gets for the assumption that he's "always" bearish on the stock market which Peter denies and notes times he was actually bullish.

- Source, Peter Schiff

Wednesday, November 14, 2018

Peter Schiff: The markets are going to collapse due to Fed raising rates

Euro Pacific Capital CEO Peter Schiff and Steven Quirk, executive vice president of TD Ameritrade’s trader group, on the Federal Reserve’s impact on the stock market and whether corporate earnings can help the market make a comeback.

- Source, Fox Business

Saturday, November 10, 2018

Wages Are Rising, But the Cost of Living is Rising Faster

According to the Labor Department, the US economy added another 250,000 jobs in October. The unemployment rate held steady at 3.7%. Earnings took their biggest leap since 2009, rising 3.1% year on year.

Peter noted that everybody considered this a really good report, but we're working off a pretty low bar.

Two hundred thousand jobs a month in an economy the size of ours, especially given how few people, or what a large percentage of the workforce is not working, we should be creating a lot more than 200,000 jobs per month. But we're not."

The rising wages in the most recent report got a lot of attention in the media. But as Peter pointed out, the increase in wages is part of a broader increase in inflation. 

As we reported last week, US consumers face a wave of inflation. Everything from food prices to airline fares is going up.

Even though wages are rising for people that have jobs, the cost of living is rising faster. But the cost of servicing their debt is rising even faster than that."

Peter also said he thinks the wage increases might be fueling some of the volatility in the stock market.

Not just the wages going up, but all of the other prices going up that are driving interest rates higher. And interest rates are only starting to go up They're still ridiculously low, and they have no place to go but up, as long as the Fed stays out. And that's what they're doing. In fact, the Fed is going to continue to increase short-term interest rates, which means long-term interest rates should continue to move up even faster given how much higher inflation is going to go, because we're just getting started with inflation. We've barely seen what's coming."

Increasing prices is a direct result of a decade of Federal Reserve easy money policy. Over the last 10 years, the Fed has printed billions of dollars out of thin air.

- Source, Seeking Alpha

Wednesday, November 7, 2018

Peter Schiff: Jobs Are Another Bubble About To Burst

Two hundred thousand jobs a month in an economy the size of ours, especially given how few people, or what a large percentage of the workforce is not working, we should be creating a lot more than 200,000 jobs per month. But we're not.

- Source, Peter Schiff

Saturday, October 20, 2018

Peter Schiff: The Recession Is Obviously Coming

The Dow Jones fell 831 points Wednesday, a decline of more than 3%. Meanwhile, the S&P 500 charted its biggest daily decline since February and the Nasdaq Composite dropped 4.08 percent. This follows on the heels of a 200-point drop in the Dow last week after the 10-year US Treasury yield hit the highest level since 2011.

In a podcast last week, Peter Schiff said rising interest rates could serve as the pin that pricks the stock market bubble. In his most recent podcast, Peter said the stock market rout seems to confirm his feeling and warned a recession will follow.

Peter noted that the biggest losers of the day were the tech stocks. These have been the companies driving the recent market boom. Nvidia was down over 9%. Amazon fell 7.3%. Netflix plunged 10% on the day.

Despite the massive selloff, the mainstream still seems pretty complacent. A White House official said, “This is a bull market correction. It’s probably healthy. This will pass and the US economy remains strong.” Everybody is saying this is just a normal correction in a normal bull market. But as Peter said, this isn’t a “normal” market.

This bull market is already the longest bull market ever. So, based on duration, it ain’t normal. Also, based on all the stimulus that was required to create it — all the quantitative easing, the years of 0% interest rates — there is nothing normal about this bull market. If anything, it’s a bubble.”

And if it’s not a normal bull market, why would it have a normal correction? On the contrary, it seems more logical to think that a massive selloff in an abnormal bull market might be the beginning of a bear market.

Since it’s long overdue, why would you just assume that it’s a correction when we’re so overdue for a bear market?”

Peter conceded you could have said the same thing back in February when we saw a similar big market selloff. Everybody said that was a correction and it appears they were correct. The market went on to make new highs. But as Peter noted, those highs were based on a small segment of stocks. Peter said as of now, about 25% of the S&P 500 is in a bear market defined as a 20% or more decline.

So even though we had a rally from that big drop in February, it was not really that broad. It was led by a small section of the market. It was not healthy. But beneath the surface, we were seeing a deterioration. And from my vantage point, what we’re seeing now is a lot more ominous than what we saw in February. And to me, it looks a lot more like this is the beginning of the bear market that is so overdue. It is not simply a correction.”

It’s really impossible to know whether a given selloff is the beginning of a bear market or a mere correction. With all the euphoria that takes hold during a bull run, people are always optimistic. They always believe it’s “just a correction.”

Bull markets end. That means that sometimes corrections turn into bear markets. You don’t know that a correction is a bear market until you’re in the bear market.”

In the last couple of bear markets, the Federal Reserve has been able to ride in and save the day. Peter said he doesn’t think the central bank will be able to do it this time around.

Peter noted that despite the stock market selloff, the bond market was weak and the dollar was actually slightly down. Gold was up a bit, although not significantly. But Peter said a big move in gold is coming.

If you can’t hide in bonds and you can’t hide in the dollar, where are you going to hide? … Really, the only safe haven left standing is going to be gold. And that’s the only asset nobody owns.”

But at this point, people still aren’t worried. They really haven’t started buying gold. Complacency still rules the market. People still think the economy is strong.

The economy is not strong. It was never strong. It was just a bigger bubble … The recession is obviously coming. I mean, come on. We’re long overdue for that as well. And now the rest of the market is rolling over … There is nothing beneath this market. This is a huge bubble. The air is coming out. Interest rates are going to keep going up. And if the Fed tries to save the market by altering its policy … I mean it could end up being like waving a flag at a bull, or in this case a bear.”

Make sure you listen to the whole podcast. Peter breaks down what will happen if the Fed does lower rate. In a nutshell, it will crush the dollar.

- Source, Schiff Gold