The Peter Schiff Show Podcast

RATE AND REVIEW this podcast on Facebook

https://www.facebook.com/PeterSchiff/reviews/

Dovish Speech Given by Jerome Powell

The catalyst for the rise in gold and the decline in the dollar, I believe, was the dovish speech given by Jerome Powell today in Jackson Hole. Whether or not the speech is perceived as dovishly as I believe it is, I think we're going to have to see if we are going to get some follow through in the dollar and in the gold market next week. It is critical to see how the markets follow through to today's actions. If I'm right, we could see a big move up in the price of gold next week and a big move down in the dollar.

Hedge Funds Are Net Short Gold

Remember we've got a lot of people who are short gold now for the first time since 2001, the hedge funds were net short gold and I think they could get caught in a losing trade and have to scramble to buy back the gold that they sold. Also, lots of people are now loaded up long the dollar, short the emerging market currencies.  But the impetus for this trade, the momentum, had to do with the bullish posture of the Fed and the anticipation that the Fed will continue to raise interest rates and shrink its balance sheet.

Second-Guessing Assumptions

But if what Jerome Powell said today causes traders to second guess those assumptions and maybe dial back their expectations for rate hikes - maybe not necessarily the 2 rate hikes that everybody believes are coming in the balance of 2018 - but potentially the idea that there may be no rate hikes at all coming in 2019, that 2018 may be the end of it. In fact, maybe, we won't even get the December rate hike.  I think to the extent the traders start to re-price the odds of future rate hikes this could be a big move in the dollar, a big move in gold and again, we have got to see what happens, because maybe this was a one day event… maybe traders are not going to read into Powells comments what I think he meant. But, given the reaction that we had today, I think there is a reasonable chance that that is exactly the way the markets are going to take it. We have so many people on the wrong side of this trade right now that it's a perfect time for the market to swing the other way.

 

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Trump Suffers Huge Double Blow

Yesterday, two key people - one the President's former campaign manager Paul Manafort was convicted of multiple counts of serious financial crimes, and later that day, Michael Cohen, the President's personal attorney, copped a plea to multiple financial crimes. So you have two key figures in Trump's campaign who are not criminals.

Violation of Campaign Finance Laws

Now, obviously, the President has not admitted to a crime, he has not been convicted of a crime, but still - guilt by association. The most problematic, at least thus far, is the fact that one of the crimes that Micheal Cohen pled guilty to had to do with violation of campaign finance laws. He made two large payments ($100,000+) to two women, one was a porn star and one was an ex-Playboy playmate. Both of these women claimed that they had had affairs with Donald Trump. In order to buy their silence, to pay them off, Donald Trump funneled some money, through Michael Cohen, to these two women.

Trump's Original Story Doesn't Make Sense

Of course, Donald Trump claims that he knew nothing about it - that Michael Cohen just decided on his own to make these payments and Donald Trump didn't even know about it. That was his original story until he changed his story and said he found out about it later. Although, they even have a tape recording of Donald Trump and Michael Cohen discussing how to make the payments before they were made.

Guilt By Association

Of course, Trump's version of the story doesn't make sense. But now Michael Cohen, as part of his plea, said that the payments that he made were made at the direction of the President. Donald Trump asked him to make the payments, he made the payments, and he has now pled guilty to the crime of making those payments. So if it was criminal for Michael Cohen to pay off these women the way he did, well then obviously the President conspired to commit that crime.

 

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Trump Suffers Huge Double Blow

Yesterday, two key people - one the President's former campaign manager Paul Manafort was convicted of multiple counts of serious financial crimes, and later that day, Michael Cohen, the President's personal attorney, copped a plea to multiple financial crimes. So you have two key figures in Trump's campaign who are not criminals.

Violation of Campaign Finance Laws

Now, obviously, the President has not admitted to a crime, he has not been convicted of a crime, but still - guilt by association. The most problematic, at least thus far, is the fact that one of the crimes that Micheal Cohen pled guilty to had to do with violation of campaign finance laws. He made two large payments ($100,000+) to two women, one was a porn star and one was an ex-Playboy playmate. Both of these women claimed that they had had affairs with Donald Trump. In order to buy their silence, to pay them off, Donald Trump funneled some money, through Michael Cohen, to these two women.

Trump's Original Story Doesn't Make Sense

Of course, Donald Trump claims that he knew nothing about it - that Michael Cohen just decided on his own to make these payments and Donald Trump didn't even know about it. That was his original story until he changed his story and said he found out about it later. Although, they even have a tape recording of Donald Trump and Michael Cohen discussing how to make the payments before they were made.

Guilt By Association

Of course, Trump's version of the story doesn't make sense. But now Michael Cohen, as part of his plea, said that the payments that he made were made at the direction of the President. Donald Trump asked him to make the payments, he made the payments, and he has now pled guilty to the crime of making those payments. So if it was criminal for Michael Cohen to pay off these women the way he did, well then obviously the President conspired to commit that crime.

 

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Strong Dollar Policy?

There used to be a lot of talk about the so-called Strong Dollar Policy. We had the Strong Dollar Policy when Bill Clinton was President, George Bush; I guess when Barack Obama was President, as well.  I've talked about it, I've written about it in Crash Proof, How to Profit from the Coming Economic Collapse; I talked about it like it was the Loch Ness monster.  Everybody knows about it, everybody's heard about it but no one has actually seen it.

We Like the Strong Dollar. A Strong Dollar is Good for America

We didn't actually have an official policy that constituted the strong dollar policy.  It was simply talking about the strong dollar being in the national interest, and that was just the mantra that was repeated often by the Secretary of the Treasury or by the President. "We like the strong dollar. A strong dollar is good for America… and that pretty much constituted the policy.

The Trend Was Your Friend

But nonetheless, having the belief that there was some kind of hidden strong dollar policy helped to create confidence in the dollar, even in periods of time when the dollar was declining. Perhaps it would have declined even more had it not been for the belief that there was some kind of strong dollar policy. And of course, when the dollar was rising, the "strong dollar policy" really helped add fuel to the increase because after all, you were riding the policy.  So the dollar was going up and that was what the U.S. government wanted, so it was all good. The trend was your friend.

Donald Trump's Weak Dollar Policy

Well, it should be obvious that Donald Trump has a weak dollar policy, whether he wants to name it or not, that's the policy. Of course, the weak dollar policy will not involve actually doing anything, just as the strong dollar policy didn't involve doing anything, but I think the rhetoric will have the same impact in that when the dollar finally starts to fall, it will fall even faster when people think it's a deliberate policy.

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Strong Dollar Policy?

There used to be a lot of talk about the so-called Strong Dollar Policy. We had the Strong Dollar Policy when Bill Clinton was President, George Bush; I guess when Barack Obama was President, as well.  I've talked about it, I've written about it in Crash Proof, How to Profit from the Coming Economic Collapse; I talked about it like it was the Loch Ness monster.  Everybody knows about it, everybody's heard about it but no one has actually seen it.

We Like the Strong Dollar. A Strong Dollar is Good for America

We didn't actually have an official policy that constituted the strong dollar policy.  It was simply talking about the strong dollar being in the national interest, and that was just the mantra that was repeated often by the Secretary of the Treasury or by the President. "We like the strong dollar. A strong dollar is good for America… and that pretty much constituted the policy.

The Trend Was Your Friend

But nonetheless, having the belief that there was some kind of hidden strong dollar policy helped to create confidence in the dollar, even in periods of time when the dollar was declining. Perhaps it would have declined even more had it not been for the belief that there was some kind of strong dollar policy. And of course, when the dollar was rising, the "strong dollar policy" really helped add fuel to the increase because after all, you were riding the policy.  So the dollar was going up and that was what the U.S. government wanted, so it was all good. The trend was your friend.

Donald Trump's Weak Dollar Policy

Well, it should be obvious that Donald Trump has a weak dollar policy, whether he wants to name it or not, that's the policy. Of course, the weak dollar policy will not involve actually doing anything, just as the strong dollar policy didn't involve doing anything, but I think the rhetoric will have the same impact in that when the dollar finally starts to fall, it will fall even faster when people think it's a deliberate policy.

The Accountable Capitalism Act

Elizabeth Warren unveiled her new idea in an op-ed in the Wall Street Journal.  It is her new bill, called the Accountable Capitalism Act.  Of course, I have said this before, there is no truth in advertising when it comes to legislation. Whenever Congress passes a bill, the name of the bill is generally the opposite of what the bill actually does. So if they pass a bill called, "Tax Simplification", that means that they just complicated the tax code. But nobody wants to vote for a bill that's called "Tax Complication", so you can't label it "Tax Complication" when that's what we're doing, so you label it Simplification so everybody will like it.

This is All About Socialism

That's what Elizabeth Warren is doing in her Accountable Capitalism Act.  This is not about Capitalism. This is about Socialism. The idea here is that Capitalism is not accountable, and so this act is going to hold Capitalism accountable. In reality, capitalism holds everybody accountable. Under a Capitalist system, everybody is accountable for their own actions.  If you screw up, then you have to suffer the consequences. If you make a mistake, it's on you.  If your business fails, there's not bail-out.

Capitalism is the Ultimate in Accountability

So Capitalism is the ultimate in accountability. It's fair and everybody is held accountable for their own decisions and their own actions.  What Elizabeth Warren wants to do is to take that accountability away.  She wants to have the government get in there and take away the accountability inherent in the Capitalist system.

The Socialist Un-Accountability Act

Not only is the act mislabeled, it is actually the Socialist Un-Accountability Act. It wants to take people who would normally be accountable and make them unaccountable. It's all Socialism wrapped up in a Capitalist bow. What she wants to do is:

* She wants to force corporations with over $1 billion in revenue, regardless of their profit, to appoint at least 40% of their board from the ranks of their workers

* She wants to re-install the stakeholder accountability that existed until the 1980's

Warren: Profits have Screwed Up the Country

I read the op-ed and I listened to her interview with Kramer on CNBC and according to Elizabeth Warren's revisionist version of American History, corporations cared about their stakeholders, meaning their employees, customers, communities up until the 1980's. Then all of a sudden, in the 1980's, everything changed. All of a sudden, it was all about profits. It was all about maximizing shareholder value.  And that's what screwed up the country.,

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

RATE AND REVIEW this podcast wherever you listen.

https://itunes.apple.com/us/podcast/the-peter-schiff-show-podcast/id404963432?mt=2&ls=1

Turkey's Current Account Deficit

The "Turkey baste" continued on Monday, although Tuesday we did have a bit of a reversal, Tuesday bounce in the lira, rising about 7 percent or so, in today's trading.  But still, it is down considerably from where it was a few weeks - a few months ago. But I do believe that the financial media is exaggerating the problems that existed in Turkey prior to the crisis reaching the headlines.  Yes, Turkey has a current account deficit, but the current account deficit is not nearly as large as the media is making it out to be.  In fact, it is similar in size to the current account deficit that the United States is running, if you look it as a percentage of GDP. In fact, Turkey's trade deficit is a much smaller percentage of its GDP than is the American trade deficit.

Dollar Strength Hurting Emerging Markets

The problem in Turkey is twofold:  one is the strengthening dollar, which is putting pressure on all of the emerging markets' currencies and economies. It's just that Turkey was a weaker link in that chain, so Turkey is being disproportionately impacted by the outlook that the dollar is going to keep rising. This puts a lot of pressure on economies where there has been a lot of foreign investment. A lot of loans are in dollars.  A lot of the money that has been coming into the Turkish economy has been private investment, fueling capital investment within the Turkish economy. It 's not the government borrowing all this money; it's businesses borrowing money. The international community was willing to lend.  After all, interest rates were really low for a long period of time and so capital was chasing a higher yield and some of that capital went into emerging markets, including Turkey. But obviously, you have a lot of loans that are dollar denominated and that's one reason that a rising dollar is so bad for emerging market economies.

Erdogan's Populist Policies Critical of High Interest Rates

What really elevated the problem for Turkey was not simply that the currency was falling, but look at what President Erdogan was saying: he is a populist leader who is saying things that appeal to voters. He's also appealing to nationalism. Trying to make it "Turkey against the world". Pursuing policies that put Turkish interests first. He has been critical of the Central Bank raising interest rates.  He has been particularly critical of the whole concept of raising interest rates.

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

RATE AND REVIEW this podcast wherever you listen.

https://itunes.apple.com/us/podcast/the-peter-schiff-show-podcast/id404963432?mt=2&ls=1

Turkey's Current Account Deficit

The "Turkey baste" continued on Monday, although Tuesday we did have a bit of a reversal, Tuesday bounce in the lira, rising about 7 percent or so, in today's trading.  But still, it is down considerably from where it was a few weeks - a few months ago. But I do believe that the financial media is exaggerating the problems that existed in Turkey prior to the crisis reaching the headlines.  Yes, Turkey has a current account deficit, but the current account deficit is not nearly as large as the media is making it out to be.  In fact, it is similar in size to the current account deficit that the United States is running, if you look it as a percentage of GDP. In fact, Turkey's trade deficit is a much smaller percentage of its GDP than is the American trade deficit.

Dollar Strength Hurting Emerging Markets

The problem in Turkey is twofold:  one is the strengthening dollar, which is putting pressure on all of the emerging markets' currencies and economies. It's just that Turkey was a weaker link in that chain, so Turkey is being disproportionately impacted by the outlook that the dollar is going to keep rising. This puts a lot of pressure on economies where there has been a lot of foreign investment. A lot of loans are in dollars.  A lot of the money that has been coming into the Turkish economy has been private investment, fueling capital investment within the Turkish economy. It 's not the government borrowing all this money; it's businesses borrowing money. The international community was willing to lend.  After all, interest rates were really low for a long period of time and so capital was chasing a higher yield and some of that capital went into emerging markets, including Turkey. But obviously, you have a lot of loans that are dollar denominated and that's one reason that a rising dollar is so bad for emerging market economies.

Erdogan's Populist Policies Critical of High Interest Rates

What really elevated the problem for Turkey was not simply that the currency was falling, but look at what President Erdogan was saying: he is a populist leader who is saying things that appeal to voters. He's also appealing to nationalism. Trying to make it "Turkey against the world". Pursuing policies that put Turkish interests first. He has been critical of the Central Bank raising interest rates.  He has been particularly critical of the whole concept of raising interest rates.

RATE AND REVIEW this podcast wherever you listen.

Turkey is the Epicenter of Emerging Market Concerns

Right now, the epicenter of the concerns about the emerging markets is coming from Turkey. What is the problem with the Turkish lira?  Turkish President Erdogan is veering off into some very dangerous territory with his stance with the Central Bank of Turkey and now the political battle of egos that he is having with President Trump over the release of an American pastor who is imprisoned in Turkey. As a result of this, the President is now turning up the heat on Turkey with sanctions, which is compounding Turkey's problems.  Today was probably the biggest one day drop in the Turkish lira.  Today, the Turkish lira might have been down about 20% intra day.

Trump Doubling Down on Tariffs with Turkey

Throwing fuel on the fire, early in the morning, when the lira was already down 12%, Trump announced that he would be doubling the existing tariffs on Turkish steel and aluminum. Turkey has a trade surplus with the U.S. like just about everybody else.  Is this going to hurt Turkey?  A little bit. Obviously it hurts Americans more because now Turkish steel is that much more expensive.

Speculative Frenzy Shorting the Turkish Lira

All of this is adding fuel to the speculative frenzy to short the Turkish lira. I think you have a lot of hot speculative money that has been leaning down on that currency. It is basically fueling an even bigger problem.  They have high inflation, they have very high bond yields. The yields in Turkey up until recently, even though inflation was high, you had 400-500 basis points of positive bond yields.

Turkish Economy Essentially Strong

The Turkish economy has actually been quite strong over the years. As a result of that a lot of international money has been invested in Turkey. Foreign direct investment has been going into the Turkish economy, participating in the Turkish equity market, lenders have been loaning money.  Some of that debt of course, is dollar denominated and euro denominated which is the problem now, because if you are a company generating revenue in Turkish lira, if you have dollar or euro debt. Now a lot of people hedge; if your obligations are in a different currency, you would hedge that currency to the lira. But the weakness in the lira drives inflation even higher, because  as the lira loses value, you need more lira to buy stuff and as inflation goes higher, there is more pressure on the central bank to raise interest rates to try to fight that inflation. But higher rates also feed into inflation by increasing costs.

Turkish Debt to GDP Much Lower than in the U.S.

President Erdogan is putting pressure on the central bank not to raise interest rates high enough to crush all the speculators who are shorting the Turkish lira. What also should be done is they should dramatically reduce government spending in Turkey. Not that it was out of control to begin with, but they want to make sure they don't have deficits.  If you look at the debt to GDP in Turkey it is considerably lower than in the U.S.

The U.S. Dollar is Not the Subject of a Run - Yet

The U.S. is in far worse shape than in Turkey, in fact it's not even close.  But the difference is the U.S. dollar is not the subject of a run right now. But if you think about the predicament that Turkey is in, this is the same predicament that the U.S. is going to be in - we're just not there yet.

 

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

RATE AND REVIEW this podcast wherever you listen.

Turkey is the Epicenter of Emerging Market Concerns

Right now, the epicenter of the concerns about the emerging markets is coming from Turkey. What is the problem with the Turkish lira?  Turkish President Erdogan is veering off into some very dangerous territory with his stance with the Central Bank of Turkey and now the political battle of egos that he is having with President Trump over the release of an American pastor who is imprisoned in Turkey. As a result of this, the President is now turning up the heat on Turkey with sanctions, which is compounding Turkey's problems.  Today was probably the biggest one day drop in the Turkish lira.  Today, the Turkish lira might have been down about 20% intra day.

Trump Doubling Down on Tariffs with Turkey

Throwing fuel on the fire, early in the morning, when the lira was already down 12%, Trump announced that he would be doubling the existing tariffs on Turkish steel and aluminum. Turkey has a trade surplus with the U.S. like just about everybody else.  Is this going to hurt Turkey?  A little bit. Obviously it hurts Americans more because now Turkish steel is that much more expensive.

Speculative Frenzy Shorting the Turkish Lira

All of this is adding fuel to the speculative frenzy to short the Turkish lira. I think you have a lot of hot speculative money that has been leaning down on that currency. It is basically fueling an even bigger problem.  They have high inflation, they have very high bond yields. The yields in Turkey up until recently, even though inflation was high, you had 400-500 basis points of positive bond yields.

Turkish Economy Essentially Strong

The Turkish economy has actually been quite strong over the years. As a result of that a lot of international money has been invested in Turkey. Foreign direct investment has been going into the Turkish economy, participating in the Turkish equity market, lenders have been loaning money.  Some of that debt of course, is dollar denominated and euro denominated which is the problem now, because if you are a company generating revenue in Turkish lira, if you have dollar or euro debt. Now a lot of people hedge; if your obligations are in a different currency, you would hedge that currency to the lira. But the weakness in the lira drives inflation even higher, because  as the lira loses value, you need more lira to buy stuff and as inflation goes higher, there is more pressure on the central bank to raise interest rates to try to fight that inflation. But higher rates also feed into inflation by increasing costs.

Turkish Debt to GDP Much Lower than in the U.S.

President Erdogan is putting pressure on the central bank not to raise interest rates high enough to crush all the speculators who are shorting the Turkish lira. What also should be done is they should dramatically reduce government spending in Turkey. Not that it was out of control to begin with, but they want to make sure they don't have deficits.  If you look at the debt to GDP in Turkey it is considerably lower than in the U.S.

The U.S. Dollar is Not the Subject of a Run - Yet

The U.S. is in far worse shape than in Turkey, in fact it's not even close.  But the difference is the U.S. dollar is not the subject of a run right now. But if you think about the predicament that Turkey is in, this is the same predicament that the U.S. is going to be in - we're just not there yet.