I wanted to record a short podcast today just to discuss the FOMC (Federal Open Market Committee) minutes that were released at 2:00pm this afternoon ET, which reflect the views of the Fed when they had their April meeting, some 6 weeks ago, when the Fed decided not to raise rates

As a result of the release of these minutes, everybody has now jumped to the conclusion that a June rate hike is not only on the table, but basically a done deal

I heard people talking about it on CNBC, "The Fed had to do this to show they are on a path to normalization - they said they would have a gradual pace, so they had no excuse but to do this."

Do what?  They haven't actually raised rates, they've just talked about it

Let me read you the statement they made about rates:

Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee's 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June.

They didn't say they would do it, they said it would LIKELY be appropriate

Likely doesn't mean definitely, and appropriate doesn't mean they're going to do it

Because even if they determine that it is appropriate it doesn't mean they will do it

Before you even get to the likely and appropriate part of the statement, 2 things have to happen, or 3 things if you want to count inflation, but inflation has already happened

The economy has to pick up in Q2 - It doesn't look likely that that's going to happen - it is possible that we could get a second quarter stronger than the horrible Q1 but is 1 - 1.5% economic growth in Q2 picking up? It will still average out to a weak first half of the year

But the Fed also wants to see that labor conditions continue to strengthen

* Another volatile day in the stock market sees the major averages deep in the red

* The Dow was down just over 1%; down 180 points, 17,529

* The NASDAQ actually got walloped a little more; down just shy of 60 points, 1.25%

* I think the catalyst for today's declines was a couple of Fed officials talking about how June is a live meeting - live from the perspective of, "We might raise interest rates"

* I don't think it's live at all, I think it's dead, and if it were alive, the stock market decline would kill it

* If Wall Street actually believes that the Fed is serious about raising rates in June, the market would be tanking

* In fact, if more people believed it, the market would be down more than 180 points today

* As we got closer and closer to the date that the Fed was theoretically going to raise rates, the market would be so low, that any talk of a rate hike would be dead, because the Fed would be dealing with tighter financial conditions

* The Fed doesn't want to tighten monetary policy with financial conditions are tightening on their own

* It's interesting, too, that you hear people asking, "Why does the Fed have a June rate hike on the table"? I keep hearing about the economy strengthening

* The economy is not strengthening! That's just the point, the economy is weakening

* Yes we did get a little data in the last few days that was better than expected, buy we also got data that was worse than expected

* Most of the financial data that has come out since the last time the Fed hiked rates has been bad

* If the Fed is talking about raising rates, it's not because the economy is getting stronger, it is despite the fact that the economy is getting weaker

* What is getting stronger is inflation

* The problem is, even though inflation is above the Fed's so-called 2% target, I don't think this raises the probability of a rate hike

* If anything, the increase in prices will slow down the economy even more

* We actually got some official inflation data today, we got the April CPI

* The consensus was for a move +.3, following the prior month's +.1

* We got a bigger jump than was expected - we got +.4

* The year-over-year headline number - not the core number - is now 1.1

* So the year-over-year is below 2% but if you annualize that .4 for the next 11 months that would be a 6% annualized rate of CPI-based inflation

* I read articles about the jump in the CPI and the jist was that this is good news, because the Fed is making progress on its policy goal of price stability -

* If you think about how ridiculous that comment is:

* We had a big spike in consumer prices, which if you annualize the rate of increase that's 6% increase in prices and that's progress on price stability?

* If anything, the Fed is moving away from price stability

*  If you're going for price stability, the less prices go up the more stable it is

* I don't know how much more "stability" people can stand -

* If prices get any more "stable" than this, we're going to have runaway inflation

* This is not about price stability - this is about generating inflation on purpose because there is no alternative for the Fed

* In recent times, a hotter than expected inflation number, causes the currency goes up

* And when inflation is lower than expected, the currency goes down

* Now, you might think that's counter-intuitive, and actually it is

* Why would higher inflation be good for a currency?  After all, inflation measures how quickly a currency loses purchasing power

* So why would a currency that is losing purchasing power more quickly be more valuable?

* In today's world, low inflation is bad for your currency and high inflation is good for your currency

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Another volatile day in the stock market sees the major averages deep in the red

The Dow was down just over 1%; down 180 points, 17,529

The NASDAQ actually got walloped a little more; down just shy of 60 points, 1.25%

I think the catalyst for today's declines was a couple of Fed officials talking about how June is a live meeting - live from the perspective of, "We might raise interest rates"

I don't think it's live at all, I think it's dead, and if it were alive, the stock market decline would kill it

If Wall Street actually believes that the Fed is serious about raising rates in June, the market would be tanking

In fact, if more people believed it, the market would be down more than 180 points today

As we got closer and closer to the date that the Fed was theoretically going to raise rates, the market would be so low, that any talk of a rate hike would be dead, because the Fed would be dealing with tighter financial conditions

The Fed doesn't want to tighten monetary policy with financial conditions are tightening on their own

It's interesting, too, that you hear people asking, "Why does the Fed have a June rate hike on the table"? I keep hearing about the economy strengthening

The economy is not strengthening! That's just the point, the economy is weakening

Yes we did get a little data in the last few days that was better than expected, buy we also got data that was worse than expected

Most of the financial data that has come out since the last time the Fed hiked rates has been bad

If the Fed is talking about raising rates, it's not because the economy is getting stronger, it is despite the fact that the economy is getting weaker

What is getting stronger is inflation

The problem is, even though inflation is above the Fed's so-called 2% target, I don't think this raises the probability of a rate hike

If anything, the increase in prices will slow down the economy even more

We actually got some official inflation data today, we got the April CPI

The consensus was for a move +.3, following the prior month's +.1

We got a bigger jump than was expected - we got +.4

The year-over-year headline number - not the core number - is now 1.1

So the year-over-year is below 2% but if you annualize that .4 for the next 11 months that would be a 6% annualized rate of CPI-based inflation

I read articles about the jump in the CPI and the jist was that this is good news, because the Fed is making progress on its policy goal of price stability -

If you think about how ridiculous that comment is:

We had a big spike in consumer prices, which if you annualize the rate of increase that's 6% increase in prices and that's progress on price stability?

If anything, the Fed is moving away from price stability

 If you're going for price stability, the less prices go up the more stable it is

I don't know how much more "stability" people can stand -

If prices get any more "stable" than this, we're going to have runaway inflation

This is not about price stability - this is about generating inflation on purpose because there is no alternative for the Fed

In recent times, a hotter than expected inflation number, causes the currency goes up

And when inflation is lower than expected, the currency goes down

Now, you might think that's counter-intuitive, and actually it is

Why would higher inflation be good for a currency?  After all, inflation measures how quickly a currency loses purchasing power

So why would a currency that is losing purchasing power more quickly be more valuable?

In today's world, low inflation is bad for your currency and high inflation is good for your currency

The reason for that is that everybody is fixated on central bankers

The idea is that if inflation is high, that means the central bank of that country will not cut rates

So it's the tighter monetary policy which is a consequence of higher inflation, that is good for the currency

* The markets continue, really, to ignore all of the overwhelming bad news

* Bad news on the economy, bad news on the corporate earnings front, retail sales - you name it, the news is bad

* But the markets seem to shrug it off

* All the markets - the equity markets, the foreign exchange markets, bond markets, the gold and silver markets

* Sure, there is usually a knee-jerk reaction - you get some bad news, the gold spikes up, the dollar dumps, but then it recovers what it lost and gold surrenders its gains and we continue to stay the course, because to me the bad news isn't sinking in

* Yes, the stock market has been trending down, particularly the NASDAQ

* But it really hasn't rolled over

* Yes we had the big drop yesterday, the Dow was down about 200 points, but it was up 200 points the day before

* So over two days, we didn't go anywhere, despite the fact that we continue to get bad news

* I'll start with some of the bad news that came out today and then work back

* I think the worse news of the day was the weekly unemployment claims which is now finally started to move higher


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The markets continue, really, to ignore all of the overwhelming bad news

Bad news on the economy, bad news on the corporate earnings front, retail sales - you name it, the news is bad

But the markets seem to shrug it off

All the markets - the equity markets, the foreign exchange markets, bond markets, the gold and silver markets

Sure, there is usually a knee-jerk reaction - you get some bad news, the gold spikes up, the dollar dumps, but then it recovers what it lost and gold surrenders its gains and we continue to stay the course, because to me the bad news isn't sinking in

Yes, the stock market has been trending down, particularly the NASDAQ

But it really hasn't rolled over

Yes we had the big drop yesterday, the Dow was down about 200 points, but it was up 200 points the day before

So over two days, we didn't go anywhere, despite the fact that we continue to get bad news

I'll start with some of the bad news that came out today and then work back

I think the worse news of the day was the weekly unemployment claims which is now finally started to move higher

* Today I really want to talk more about Donald Trump, in particular, the firestorm that I think I lit with respect to Trump comments with respect to defaulting on the National Debt

* Now I really believe that I am the first guy to have picked up on that because, when he originally talked about that on CNBC, and Becky Quick said, "Wait a minute, are you talking about compromising  our credit rating?"

* That's when Donald Trump said, "No, no, no, I'm not talking about defaulting I'm talking about refinancing and Becky Quick let it go, she accepted the explanation, and nobody else on CNBC at the time said anything

* Later that day, I was contacted by CNBC - I had already agreed to do Futures Now on CNBC.com in reaction to the article I had written at the end of last week on Donald Trump and I said, "Hey, wait a minute, why don't we also talk about his comments today about defaulting on the debt

* And the producer said, "What are you talking about?"

* I described his comments and said, go get the clip and we'll talk about it on the program

* She had no idea that Trump had said anything like that and nobody was talking about it, but I had tweeted about it in real time as soon as I heard Trump say that, as he was still in the studio talking

* I heard nothing about it until after my CNBC interview took place and then there were articles about it - even the New York Times wrote a big article about it

* In fact, so much was written about it that Donald Trump had to officially respond to the idea that he said he wanted to default on the debt

* Which of course he never actually did - he never actually said it, but it's clear to me that that is exactly what he meant - he wasn't just implying it, that's what he was thinking

* But Donald Trump is not a career politician, so he's not always thinking about the political ramifications of just speaking off the cuff, and talking honestly, which is what he was doing

* All of a sudden, when he put his presidential candidate hat back on, when Becky Quick called him out and all of a sudden he had to process what he let slip, then he back tracked

* I think he would have died right there, had it not been for me

* Of course Donald Trump doesn't want to be the candidate advocating default

* Even though we can't possibly repay this debt, I guess there are some truths that even Donald Trump is afraid to utter when you're running for President, so he immediately started to back track

* But I wanted to talk about why his explanation makes no sense at all and it shows that I was 100% right about what he was thinking, and all he's doing now is spin, he doesn't want to deal with the genie that he just let out of the bottle

* I think the press, in general will probably accept his explanation, because they don't really know very much, but let's go into it

* First of all, he said, "Of course we're not going to default on the debt - why would we default? We print the money!

* Now, when he was talking about the debt, he wasn't talking about printing money, not at all

* In fact, if anything, he acknowledged that printing money would be a problem, because he said, "We have to keep interest rates low but if inflation picks up we have a real problem

*


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Today I really want to talk more about Donald Trump, in particular, the firestorm that I think I lit with respect to Trump comments with respect to defaulting on the National Debt

Now I really believe that I am the first guy to have picked up on that because, when he originally talked about that on CNBC, and Becky Quick said, "Wait a minute, are you talking about compromising  our credit rating?"

That's when Donald Trump said, "No, no, no, I'm not talking about defaulting I'm talking about refinancing and Becky Quick let it go, she accepted the explanation, and nobody else on CNBC at the time said anything

Later that day, I was contacted by CNBC - I had already agreed to do Futures Now on CNBC.com in reaction to the article I had written at the end of last week on Donald Trump and I said, "Hey, wait a minute, why don't we also talk about his comments today about defaulting on the debt

And the producer said, "What are you talking about?"

I described his comments and said, go get the clip and we'll talk about it on the program

She had no idea that Trump had said anything like that and nobody was talking about it, but I had tweeted about it in real time as soon as I heard Trump say that, as he was still in the studio talking

I heard nothing about it until after my CNBC interview took place and then there were articles about it - even the New York Times wrote a big article about it

In fact, so much was written about it that Donald Trump had to officially respond to the idea that he said he wanted to default on the debt

Which of course he never actually did - he never actually said it, but it's clear to me that that is exactly what he meant - he wasn't just implying it, that's what he was thinking

But Donald Trump is not a career politician, so he's not always thinking about the political ramifications of just speaking off the cuff, and talking honestly, which is what he was doing

All of a sudden, when he put his presidential candidate hat back on, when Becky Quick called him out and all of a sudden he had to process what he let slip, then he back tracked

I think he would have died right there, had it not been for me

Of course Donald Trump doesn't want to be the candidate advocating default

Even though we can't possibly repay this debt, I guess there are some truths that even Donald Trump is afraid to utter when you're running for President, so he immediately started to back track

But I wanted to talk about why his explanation makes no sense at all and it shows that I was 100% right about what he was thinking, and all he's doing now is spin, he doesn't want to deal with the genie that he just let out of the bottle

I think the press, in general will probably accept his explanation, because they don't really know very much, but let's go into it

First of all, he said, "Of course we're not going to default on the debt - why would we default? We print the money!

Now, when he was talking about the debt, he wasn't talking about printing money, not at all

In fact, if anything, he acknowledged that printing money would be a problem, because he said, "We have to keep interest rates low but if inflation picks up we have a real problem

* Today we got the government's Non-Farm Payroll report, otherwise known as the Jobs Report, for the month of April and pretty much all the mainstream Wall Street guys were looking for another strong report

* In fact, earlier in the week Goldman Sachs was out saying that the 200,000 consensus estimate was too low!

* The optimism was unfazed by the much weaker than expected ADP report I spoke about on my last podcast on Wednesday, which came in much lighter than expected

* So, people didn't care, they said, "That's a one-off event, we're still looking for a good number, and we got a weak report

* Instead of 200,000 jobs we only got 160,000 jobs

* And they actually revised down the last couple of months

* But let's get into some of the details, because it gets worse, the further beneath the surface you look

* The unemployment rate held steady at 5%; they were expecting it to notch down to 4.9% - that did not happen

* Private payrolls also much lighter than expected; they were looking for 195,000; they got 171,000 and they revised down last month's from 195K to 184K

* They did get the .3% increase in average hourly earnings, but they forgot to point out that they revised month's .3% increase down to .2% so you can chalk that one up as a miss, despite the fact that nobody was talking about it

* The bigger miss was in the Labor Force Participation Rate

* Last month it was 63%, which was a move up, but in April it came back down to 62.8%

* 562,000 people left the labor force during the month of April

* A massive exodus led by young people

* A breakdown in the Household Survey for ages 20-24 reported 155,000 job losses in April

* For ages 25 - 54 -  284,000 jobs losses

* For ages over the age of 55 - this is the highest it has ever been

* Janet Yellen still wants to pretend that the reason the Labor Force Participation Rate is declining is because the Baby Boom is retiring - how much longer is she going to get away with that lie?

* The Baby Boom is too broke to retire

* The people leaving the workforce are young people in their 20's and 30's

* A breakdown of job gains by sector shows the biggest sector is professional business and temporary services - 56,000 gains

* Healthcare and education was high, and leisure and hospitality came in third

* Manufacturing barely gained any jobs after a huge loss the prior month

* Wholesale trade barely gained any

* Construction, after a big jump last month - only 1,000 jobs

* Retail trade lost 3,000 jobs

* Mining and logging continues to lose jobs

* On a good note, government actually lost jobs

* That's a good thing - we don't need so many people working for government - they're not productive

* Rick Santelli made a very good point today on CNBC, talking about all the jobs created at the TSA

* We're not better off with those jobs - they decrease our productivity

* As I mentioned on my last podcast, we've now had 2 consecutive quarters of losses in productivity

* Despite this bad jobs report, the market shrugged it off

* The stock market rallied because bad news is good news - the odds of a Fed rate hike are now the lowest they've ever been

* If you look at the Foreign Exchange markets, the dollar was broadly higher today

* It was up big against the Australian dollar because the Reserve Bank of Australia lowered their inflation forecast

* They lowered it from 2-3% to 1-2%

* You would think that's good news, because it means the cost of living will rise only 1-2%

* Back in the day, news of low inflation sent a currency higher, because it was not losing purchasing power

* The news sent the Australian dollar tumbling because the market now expects the Australian Reserve will have to c...

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Today we got the government's Non-Farm Payroll report, otherwise known as the Jobs Report, for the month of April and pretty much all the mainstream Wall Street guys were looking for another strong report

In fact, earlier in the week Goldman Sachs was out saying that the 200,000 consensus estimate was too low!

The optimism was unfazed by the much weaker than expected ADP report I spoke about on my last podcast on Wednesday, which came in much lighter than expected

So, people didn't care, they said, "That's a one-off event, we're still looking for a good number, and we got a weak report

Instead of 200,000 jobs we only got 160,000 jobs

And they actually revised down the last couple of months

But let's get into some of the details, because it gets worse, the further beneath the surface you look

The unemployment rate held steady at 5%; they were expecting it to notch down to 4.9% - that did not happen

Private payrolls also much lighter than expected; they were looking for 195,000; they got 171,000 and they revised down last month's from 195K to 184K

They did get the .3% increase in average hourly earnings, but they forgot to point out that they revised month's .3% increase down to .2% so you can chalk that one up as a miss, despite the fact that nobody was talking about it

The bigger miss was in the Labor Force Participation Rate

Last month it was 63%, which was a move up, but in April it came back down to 62.8%

562,000 people left the labor force during the month of April

A massive exodus led by young people

A breakdown in the Household Survey for ages 20-24 reported 155,000 job losses in April

For ages 25 - 54 -  284,000 jobs losses

For ages over the age of 55 - this is the highest it has ever been

Janet Yellen still wants to pretend that the reason the Labor Force Participation Rate is declining is because the Baby Boom is retiring - how much longer is she going to get away with that lie?

The Baby Boom is too broke to retire

The people leaving the workforce are young people in their 20's and 30's

A breakdown of job gains by sector shows the biggest sector is professional business and temporary services - 56,000 gains

Healthcare and education was high, and leisure and hospitality came in third

Manufacturing barely gained any jobs after a huge loss the prior month

Wholesale trade barely gained any

Construction, after a big jump last month - only 1,000 jobs

Retail trade lost 3,000 jobs

Mining and logging continues to lose jobs

On a good note, government actually lost jobs

That's a good thing - we don't need so many people working for government - they're not productive

Rick Santelli made a very good point today on CNBC, talking about all the jobs created at the TSA

We're not better off with those jobs - they decrease our productivity

As I mentioned on my last podcast, we've now had 2 consecutive quarters of losses in productivity

Despite this bad jobs report, the market shrugged it off

The stock market rallied because bad news is good news - the odds of a Fed rate hike are now the lowest they've ever been

If you look at the Foreign Exchange markets, the dollar was broadly higher today

It was up big against the Australian dollar because the Reserve Bank of Australia lowered their inflation forecast

They lowered it from 2-3% to 1-2%

You would think that's good news, because it means the cost of living will rise only 1-2%

Back in the day, news of low inflation sent a currency higher, because it was not losing purchasing power

The news sent the Australian dollar tumbling because the market now expects the Australian Reserve will have to cut rates several times this year in order to protect Australians from a cost of living that is not rising fast enough

This is keeping pressure on other currencies

Even though we're pushing the next U.S. rate hike further and further into the future, because every place else is cutting rates,

* And then there was one; Donald Trump is now the presumptive Republican Presidential nominee for 2016

* I remember when this Republican Primary started and the field was very wide

* They had to split the debates up between the main event and the under card because there were so many candidates

* Nobody in the mainstream really gave Donald Trump a shot

* Even though I wasn't supporting, Trump - I was supporting Rand Paul and more recently Ted Cruz as the candidates who were ideologically closest to me

* I always thought that Donald Trump was a very serious candidate and thought that he had the best odds of winning and that's what happened

* I always recognized the appeal of his message

* I know the economy is much worse than is generally perceived and, for the typical American, living in a rotten economy, Trump seems to be the candidate that is going to appeal to them

* He's not talking about cutting social security or taking away government benefits, he's trying to be all things to all people

* It's a populist message - Everybody's going to win, just elect me and I'm going to make all your problems go away

* How am I going to make them go away? Because I'm different

* I'm not your typical politician, I'm a billionaire businessman who knows what I'm doing and everybody in government are incompetent fools

* He's right about that part - everybody in government is incompetent

* But that does not mean that Trump is a panacea to immediately make these problems go away

* But you know what? Why not take a shot at it?

* I knew that his message is powerful and would resonate

* Everybody is writing him off, saying he will lose to Hillary Clinton

* I don't believe so

* I think the media is still underestimating Donald Trump, despite the fact that they completely surprised them by winning the Republican nomination

* He might surprise them again by winning the General Election and being our next President

* Because, if you are anti-establishment, why would you vote for Hillary Clinton, even if you are a Democrat

* Why do you think Bernie Sanders continues to get so much support?

* He beat Hillary again in Indiana yesterday

* But of course Hillary has such a massive lead, thanks to all these super delegates, it doesn't even matter how many primaries he wins - he can win all the primaries from now until the election and Hillary is still going to be the nominee

* Unless Bernie Sanders can flip the super delegates

* Maybe if she gets indicted between now and the convention, well maybe that will do the trick

* But Hillary Clinton couldn't win in Indiana because there weren't enough minorities there

* When you just look your basic Democratic American, they're overwhelmingly going for Bernie Sanders

* The reason they're doing that is for the same reason that Republicans are going for Donald Trump

* I said many times I think Donald Trump will be able to tailor his message specifically to appeal to the Bernie Sanders Democrats

* He's not going to get all of the Bernie Sanders Democrats - the far left Socialists

* But there are a lot of people who are voting for Bernie Sanders because they can't stand Hillary Clinton

* Trump has a good shot at getting those people, in fact I think Donald Trump can do better with the Democrats than Ronald Regan

* And it was those Regan Democrats that really put Ronald Regan in the White House

* Many people are too young to remember, but when Ronald Regan first got the nomination, the media said, well that's it, he's going to lose in a landslide

* Nobody thought he could beat Jimmy Carter, an incumbent President and Ronald Regan was so far to the right, he was even more to the right than Barry Goldwater,

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