The Peter Schiff Show Podcast

* So far the month of February is just 4 trading days old, and already the U.S. dollar index is down just over 3 percent

* We closed January at 99.6 and we closed at 96.5

* Gold, going the other way, now up about $13 today, closing above $1,155; the price of gold is up almost 3.5% in the first 4 days of February

* That shows you that most of the move in gold is the result of the dollar going down

* This move is just getting started

* The markets are just beginning to price in the fact that the Fed is not going to raise rates in March

* They are pricing 3, rather than 4 rate hikes this year, and that's the only thing that is not driving the markets

* A more realistic look what the Fed is likely to do is to not raise rates, but cut them below zero

* Despite that we're seing all this momentum in the dollar and in gold

* Gold stocks are just soaring, many of these names have been up 5-10% each day in February

* None of this is attracting the attention of Wall Street

* A guest on CNBC today alluded to short covering as the reason for gold going up

* He commented on how lousy the fundamentals are for these stocks

* The fundamentals have never been lousy

* They have appeared lousy because there was so much belief that the dollar would continue to rise because the U.S. is having a genuine recovery and the Fed will continue to raise rates

* The media and Wall Street are still very biased; I was on CNBC Asia last night debating an American guest who touted the strength of the economy based on the strong jobs market, how household balance sheets are better than ever and real incomes are rising

* The only reason homeowners have better balance sheets is because they no longer have a house; home ownership is at a 50 year low

* While gas prices are lower, rents, healthcare and most other costs are going up

* It was an example of how the public ignores all the bad economic news and assumes that the economy is great

* Another writer for CNBC.com attributes gold's rise to low inflation

* He actually said that my explanation about the economy slowing with inflation did not make sense, because in his mind, high inflation is a result of a strong economy

* This is exactly backwards. Strong, productive economies keep prices low

* Weak economies that lack production end up having higher prices, and those weak economies produce budget deficits and the central banks have to print money, causing inflation

* The actual definition of inflation is an expansion of the money supply; higher prices are a result of the fact that the currency then buys less

* The government wants people to be confused about inflation and where it comes from because they are the source of the problem

* By blurring the meaning of inflation, it is easier to shift the blame for economic problems on everything else but monetary policy

* CNBC highlighted my call on gold, but omitted all the correct calls I have made, especially 3 recent market predictions:

* One: if the Fed raises rates, the stock market is going to tank

* Why did I say that the market was going to tank? The conventional wisdom that if the Fed is raising rates, the economy must be stronger - I said if the Fed raises rates it will be doing it into a weak economy. In fact, it probably happened in a recession

* Two: I said that there is no historical precedence for this monetary policy because we have been at zero interest rates for 7 years, so the effect of higher rates on the economy appears to have more effect because they have been talking about tightening for years

* I also said that if the Fed raised rates, gold prices would rise; it was unanimous that gold would collapse.  Gold is up more than $100 since the initial knee-jerk sellof
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So far the month of February is just 4 trading days old, and already the U.S. dollar index is down just over 3 percent

We closed January at 99.6 and we closed at 96.5

Gold, going the other way, now up about $13 today, closing above $1,155; the price of gold is up almost 3.5% in the first 4 days of February

That shows you that most of the move in gold is the result of the dollar going down

This move is just getting started

The markets are just beginning to price in the fact that the Fed is not going to raise rates in March

They are pricing 3, rather than 4 rate hikes this year, and that's the only thing that is not driving the markets

A more realistic look what the Fed is likely to do is to not raise rates, but cut them below zero

Despite that we're seing all this momentum in the dollar and in gold

Gold stocks are just soaring, many of these names have been up 5-10% each day in February

None of this is attracting the attention of Wall Street

A guest on CNBC today alluded to short covering as the reason for gold going up

He commented on how lousy the fundamentals are for these stocks

The fundamentals have never been lousy

They have appeared lousy because there was so much belief that the dollar would continue to rise because the U.S. is having a genuine recovery and the Fed will continue to raise rates

The media and Wall Street are still very biased; I was on CNBC Asia last night debating an American guest who touted the strength of the economy based on the strong jobs market, how household balance sheets are better than ever and real incomes are rising

The only reason homeowners have better balance sheets is because they no longer have a house; home ownership is at a 50 year low

While gas prices are lower, rents, healthcare and most other costs are going up

It was an example of how the public ignores all the bad economic news and assumes that the economy is great

Another writer for CNBC.com attributes gold's rise to low inflation

He actually said that my explanation about the economy slowing with inflation did not make sense, because in his mind, high inflation is a result of a strong economy

This is exactly backwards. Strong, productive economies keep prices low

Weak economies that lack production end up having higher prices, and those weak economies produce budget deficits and the central banks have to print money, causing inflation

The actual definition of inflation is an expansion of the money supply; higher prices are a result of the fact that the currency then buys less

The government wants people to be confused about inflation and where it comes from because they are the source of the problem

By blurring the meaning of inflation, it is easier to shift the blame for economic problems on everything else but monetary policy

CNBC highlighted my call on gold, but omitted all the correct calls I have made, especially 3 recent market predictions:

One: if the Fed raises rates, the stock market is going to tank

Why did I say that the market was going to tank? The conventional wisdom that if the Fed is raising rates, the economy must be stronger - I said if the Fed raises rates it will be doing it into a weak economy. In fact, it probably happened in a recession

Two: I said that there is no historical precedence for this monetary policy because we have been at zero interest rates for 7 years, so the effect of higher rates on the economy appears to have more effect because they have been talking about tightening for years

I also said that if the Fed raised rates, gold prices would rise; it was unanimous that gold would collapse.  Gold is up more than $100 since the initial knee-jerk sellof

Remember that I recorded a video blog where I specifically said, if the Fed raises rates, and there's a knee-jerk reaction sending gold lower, that will be a great buying opportunity and that was the exact low

My third prediction is that the dollar would go down,

* It was another tough day in the stock market today; the Dow Jones finished down 295 points, NASDAQ fared even worse, down 103 points, that's about 2.25%

* These 100-point moves are coming quite often now; in the NASDAQ, the transports were hardest hit once again down 204 points - that's almost 3%

* When I saw this carnage, I wondered if North Korea had tested another nuclear bomb - early in January the market was down about 250 points and they blamed it on the North Korean bomb test

* The markets have been moving about that much every single day! What are the odds that the Korean test had anything to do with the market drop that day?

* Everybody wants to find a way to rationalize a weak market, but look, nothing happened today

* The financials got clobbered - Goldman Sachs is down 5% on the day, getting ready to break through $150; it was a $200 stock not too long ago

* There's a lot of air beneath this chart - is that all oil related?

* You might as well blame today's selloff on the fact that Ted Cruz won the Iowa Caucus

* The reality is the market is going down because it's a bear market

* The market's going down because the U.S. economy is in a recession

* There's nothing the Fed can do without loosing credibility or acknowledge that the economy is much weaker that it thought

* Going back prior to the rate hike, one of the reasons I constantly said I did not expect the Fed to raise rates is because I knew if they did, they would be in a very bad position

* I said, what's going to happen if the Fed raises rates and the stock market starts to decline, how are they going to stop it?  They cant.

* Since QE1 in 2009, every time the stock market has faltered the Fed has either launched another round of QE or hinted that it was considering another round

* That's what saved the market

* That how "Buy the Dips" worked - you had the Bernanke put or the Yellen put

* If that put expired with that rate hike in December, then how was the Fed going to stop the carnage?

* It can't hint about another round of quantitative easing while it's raising rates

* Most people believe that the Fed will not raise rates 4 times this year, maybe only once or twice

* But if the market is already collapsing based on the first rate hike, how much lower will it fall if the Fed puts a couple more nails in the coffin?

* The only the Fed can save this market is to come out and:

* a) Take future rate hikes off the table and

* b) Lower rates

* They are trying to get the ECB and the Bank of Japan to help, and that hasn't worked - each rally has reversed

* The Fed will have to get in on this: sending the ECB and the Bank of Japan in will not do it.  This is a woman's job, and it's going to be Janet Yellen is the only one who can stop the market from falling

* We're going to get the jobs number this week - with a first look at it with the ADP number tomorrow but we get the big Non-Farm Payroll number on Friday

* The only thing that can really save this market is a horrific jobs number is really bad, then Janet Yellen can talk about not raising rates based on the jobs numbers, so she doesn't have to claim it is based on the stock market

* If we get another on of these good jobs numbers, of course it's only good superficially, it's not really good, it's just a high number, then this market's going to tank

* Because the Fed is back in the predicament of not cutting rates because they don't want to admit that the jobs numbers are bogus

* I happen to be in the supermarket with my 13-year old son and he noticed a help wanted sign on the door, saying, "Part Time Positions Available - Multiple Departments"

* They don't want any more full time people - that is the secret to the "strength" in our econo...

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It was another tough day in the stock market today; the Dow Jones finished down 295 points, NASDAQ fared even worse, down 103 points, that's about 2.25%

These 100-point moves are coming quite often now; in the NASDAQ, the transports were hardest hit once again down 204 points - that's almost 3%

When I saw this carnage, I wondered if North Korea had tested another nuclear bomb - early in January the market was down about 250 points and they blamed it on the North Korean bomb test

The markets have been moving about that much every single day! What are the odds that the Korean test had anything to do with the market drop that day?

Everybody wants to find a way to rationalize a weak market, but look, nothing happened today

The financials got clobbered - Goldman Sachs is down 5% on the day, getting ready to break through $150; it was a $200 stock not too long ago

There's a lot of air beneath this chart - is that all oil related?

You might as well blame today's selloff on the fact that Ted Cruz won the Iowa Caucus

The reality is the market is going down because it's a bear market

The market's going down because the U.S. economy is in a recession

There's nothing the Fed can do without loosing credibility or acknowledge that the economy is much weaker that it thought

Going back prior to the rate hike, one of the reasons I constantly said I did not expect the Fed to raise rates is because I knew if they did, they would be in a very bad position

I said, what's going to happen if the Fed raises rates and the stock market starts to decline, how are they going to stop it?  They cant.

Since QE1 in 2009, every time the stock market has faltered the Fed has either launched another round of QE or hinted that it was considering another round

That's what saved the market

That how "Buy the Dips" worked - you had the Bernanke put or the Yellen put

If that put expired with that rate hike in December, then how was the Fed going to stop the carnage?

It can't hint about another round of quantitative easing while it's raising rates

Most people believe that the Fed will not raise rates 4 times this year, maybe only once or twice

But if the market is already collapsing based on the first rate hike, how much lower will it fall if the Fed puts a couple more nails in the coffin?

The only the Fed can save this market is to come out and:

a) Take future rate hikes off the table and

b) Lower rates

They are trying to get the ECB and the Bank of Japan to help, and that hasn't worked - each rally has reversed

The Fed will have to get in on this: sending the ECB and the Bank of Japan in will not do it.  This is a woman's job, and it's going to be Janet Yellen is the only one who can stop the market from falling

We're going to get the jobs number this week - with a first look at it with the ADP number tomorrow but we get the big Non-Farm Payroll number on Friday

The only thing that can really save this market is a horrific jobs number is really bad, then Janet Yellen can talk about not raising rates based on the jobs numbers, so she doesn't have to claim it is based on the stock market

If we get another on of these good jobs numbers, of course it's only good superficially, it's not really good, it's just a high number, then this market's going to tank

Because the Fed is back in the predicament of not cutting rates because they don't want to admit that the jobs numbers are bogus

I happen to be in the supermarket with my 13-year old son and he noticed a help wanted sign on the door, saying, "Part Time Positions Available - Multiple Departments"

They don't want any more full time people - that is the secret to the "strength" in our economy

People who dad one full-time job now have 3 part-time jobs, and if those 3 jobs are held by the same individual and collectively equal 35 hrs/wk the government counts each of these full time jobs as full time jobs

So now,

* First it was the ECB, and then it was the Bank of Japan, cutting interest rates overnight to -.1%

* That is the first time in this 20-year experiment of cheap money - I think they've been at zero, but they've never gone negative until just now

* One of the most ironic aspects of the move is that Kuroda, just 8 days ago told the Japanese Parliament that the Bank of Japan was not seriously considering negative interest rates, yet in a span of a week, they went from not considering it, to actually doing it!

* In fact, what Kuroda said is that, not only have they moved rates to negative, they may make them even more negative in the future, so no who knows how much more negative they will go

* He also hinted that they might expand their asset purchase program, their own Quantitative Easing

* That was enough to send global stock market rising, in fact, here in the U.S. the Dow Jones finished up almost 400 points - 396 points - the NASDAQ was up better than 100 points

* Obviously this is still a big down month, but not the worse January ever

* As I said from the beginning, 2 out of 3 ain't bad, but it won't work

* The Fed is going to have to join the rate-cutting party

* Right now the Fed is the lone hold-out among central banks and that is still helping the dollar

* The dollar was very strong today against the yen and also against the euro - the dollar index now almost back up to 100

* The QE currencies got clobbered

* The economic data in the U.S. is not good. We got the first estimate of Q4 GDP

* When the year began, everybody was looking for Q4 to be around 2 - 2.5%

* As all the horrible economic news poured in throughout the quarter, expectations gradually reduced so that by yesterday, the consensus for Q4 was just .9%

* We managed to come in below that at .7%

* I have been saying that by the time we get the final revision of this GDP number, we could be below zero.  It doesn't take much to take an initial estimate of .7 to below zero and we still have more data on Q4 coming out, that will bear on this, and I think the data will be bad news

* The only way the government could manufacture a GDP of .7 was to pretend that the inflation rate was just .8, and of course, the Fed supposedly have this 2% target and they need to raise rates to get to 2%

* That means nominal GDP is only going up 1.5%, which means if the inflation rate is actually higher than 1.5%, then we are in a contraction

* In fact, I've pointed this out many times before, if we had an honest look at inflation in the GDP, I think it would reveal that the economy has been in recession for almost the entire recovery, which makes more sense to me, because this recovery feels a lot like a recession

* It's not like any other recovery we've ever experienced, and maybe that's because it's not a recovery - it's a recession

* I think the recession is going to get a whole lot worse, because of what's going on

* The way the media has been spinning this all day, even though they have reported that the GDP is .7, they are reporting that for the entire year, GDP grew by 2.4% for 2015.

* Just Google it yourself: any article on the U.S. economy and GDP states that the economy grew by 2.4% in 2015

* That's not true! The actual growth rate is 1.8%

* If the economy grew by 1.8%, why is the media spinning the story at 2.4%?

* Here's what's going on: if you just measure the increase in GDP from December 31, 2014 through December 31 2015, the increase is 1.8%.  That is how to measure the GDP.  It grew 1.8%.

* The government doesn't want to admit that because 1.8% is a pretty low number, the lowest it's been in 3 years, and why would the Fed wait for the lowest annual growth rate in 3 years to finally raise rates, in fact why did they wait for a quarter when it was...

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First it was the ECB, and then it was the Bank of Japan, cutting interest rates overnight to -.1%

That is the first time in this 20-year experiment of cheap money - I think they've been at zero, but they've never gone negative until just now

One of the most ironic aspects of the move is that Kuroda, just 8 days ago told the Japanese Parliament that the Bank of Japan was not seriously considering negative interest rates, yet in a span of a week, they went from not considering it, to actually doing it!

In fact, what Kuroda said is that, not only have they moved rates to negative, they may make them even more negative in the future, so no who knows how much more negative they will go

He also hinted that they might expand their asset purchase program, their own Quantitative Easing

That was enough to send global stock market rising, in fact, here in the U.S. the Dow Jones finished up almost 400 points - 396 points - the NASDAQ was up better than 100 points

Obviously this is still a big down month, but not the worse January ever

As I said from the beginning, 2 out of 3 ain't bad, but it won't work

The Fed is going to have to join the rate-cutting party

Right now the Fed is the lone hold-out among central banks and that is still helping the dollar

The dollar was very strong today against the yen and also against the euro - the dollar index now almost back up to 100

The QE currencies got clobbered

The economic data in the U.S. is not good. We got the first estimate of Q4 GDP

When the year began, everybody was looking for Q4 to be around 2 - 2.5%

As all the horrible economic news poured in throughout the quarter, expectations gradually reduced so that by yesterday, the consensus for Q4 was just .9%

We managed to come in below that at .7%

I have been saying that by the time we get the final revision of this GDP number, we could be below zero.  It doesn't take much to take an initial estimate of .7 to below zero and we still have more data on Q4 coming out, that will bear on this, and I think the data will be bad news

The only way the government could manufacture a GDP of .7 was to pretend that the inflation rate was just .8, and of course, the Fed supposedly have this 2% target and they need to raise rates to get to 2%

That means nominal GDP is only going up 1.5%, which means if the inflation rate is actually higher than 1.5%, then we are in a contraction

In fact, I've pointed this out many times before, if we had an honest look at inflation in the GDP, I think it would reveal that the economy has been in recession for almost the entire recovery, which makes more sense to me, because this recovery feels a lot like a recession

It's not like any other recovery we've ever experienced, and maybe that's because it's not a recovery - it's a recession

I think the recession is going to get a whole lot worse, because of what's going on

The way the media has been spinning this all day, even though they have reported that the GDP is .7, they are reporting that for the entire year, GDP grew by 2.4% for 2015.

Just Google it yourself: any article on the U.S. economy and GDP states that the economy grew by 2.4% in 2015

That's not true! The actual growth rate is 1.8%

If the economy grew by 1.8%, why is the media spinning the story at 2.4%?

Here's what's going on: if you just measure the increase in GDP from December 31, 2014 through December 31 2015, the increase is 1.8%.  That is how to measure the GDP.  It grew 1.8%.

The government doesn't want to admit that because 1.8% is a pretty low number, the lowest it's been in 3 years, and why would the Fed wait for the lowest annual growth rate in 3 years to finally raise rates, in fact why did they wait for a quarter when it was only .7?

The last time we had a quarter this low, it was in a double-seasonally adjusted Q1, when we were buried under snow

That did not happen in the 4th quarter; we had a very mild December and that probably helped out t...

* As I said in my last podcast, when the the Federal Reserve issued its press release yesterday at 2:00pm, Janet Yellen did not give the markets they were hoping for; in a way, it was almost as if she threw them an anchor instead, because the Dow Jones ended up falling about 200 points as a result of the disappointing statement

* The statement was dovish, but it wasn't dovish enough, and even though the Dow recovered about half those gains, I think the market is still on the defensive, given the fact that Janet Yellen still did not veer from the projected rate hike path, even though the Fed went out of its way to say that the tightening would be very gradual and that rates would still be low for a long time

* And the Fed will continue reinvesting all all the maturing bonds, so the balance sheet will not shrink at all

* They will continue to reinvest interest and principal payments, meaning the balance sheet will continue to grow, so it's still QE, just a slimmed down version

* But I do expect full-blown QE4 to come before the November election

* I do believe that this is the first step in a reversal of policy because Janet Yellen did acknowledge that economic growth slowed last year

* In fact, it slowed more at the end of the year, as we will see when we get the first look at the Q4 GDP tomorrow; I think the economic slow-down is continuing in 2016

* The Fed also said that they were monitoring the financial and global markets and will take in consideration the effects that these might have on economic growth, inflation and employment

* Obviously, the effects on economic growth are going to be negative - it's the reverse wealth effect

* The Fed puts a lot of stock in the wealth effect, but it's a two-edge sword

* The Fed statement also mentioned that they are still targeting 2% inflation but that they're not quite there, and expressed concern that they might not meet that goal

* To me, acknowledging the economy is slowing, going out of their way to mention that they are monitoring the global economy is an easing from their rhetoric

* The Fed is going to have to do a lot more than that subtle suggestion

* I think it is enough to turn the dollar; it has been weakening across the board today

* Oil prices have moved up a bit

* Gold stocks have actually done a little bit better than gold - gold and silver were both hit today: gold was down about $10/11, silver was down about .30

* There was a huge sell order that came in early in the morning and just knocked the markets down in about a minute, which has been typical

* It looked like the metal was poised to continue to move higher

* We'll see what happens tomorrow when we get the GDP

* But one of the reasons it looked like today should have been a big day for gold was the economic news that came out early this morning on December Durable Goods

* They were looking for a +.2 increase, following a 0% gain in November

* Instead, first they revised the November's number to -.5 and then, instead of improving, we dropped 5.1 - Huge decline!

* You have to go back to the '08 financial crisis to find a Durable Goods that bad

* It gets worse when you look at the details

* Strip out transportation: they were looking for zero, instead we got -1.2

* On top of that, they took last month's -.1 and made it -.5

* The worst one is Core Capital Goods: last month was down .4 and we got -4.3

* Year-over-year Capital Goods is down 7.5%

* So, given this number and the Fed's statement yesterday, I expected gold to build on its momentum, but for that big sell order that happened early in the morning

* The gold stocks held up today, despite the big drop in gold

* I expect a rally tomorrow if we get a weak GDP number, and now a lot of people are looking for a weak...

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As I said in my last podcast, when the the Federal Reserve issued its press release yesterday at 2:00pm, Janet Yellen did not give the markets they were hoping for; in a way, it was almost as if she threw them an anchor instead, because the Dow Jones ended up falling about 200 points as a result of the disappointing statement

The statement was dovish, but it wasn't dovish enough, and even though the Dow recovered about half those gains, I think the market is still on the defensive, given the fact that Janet Yellen still did not veer from the projected rate hike path, even though the Fed went out of its way to say that the tightening would be very gradual and that rates would still be low for a long time

And the Fed will continue reinvesting all all the maturing bonds, so the balance sheet will not shrink at all

They will continue to reinvest interest and principal payments, meaning the balance sheet will continue to grow, so it's still QE, just a slimmed down version

But I do expect full-blown QE4 to come before the November election

I do believe that this is the first step in a reversal of policy because Janet Yellen did acknowledge that economic growth slowed last year

In fact, it slowed more at the end of the year, as we will see when we get the first look at the Q4 GDP tomorrow; I think the economic slow-down is continuing in 2016

The Fed also said that they were monitoring the financial and global markets and will take in consideration the effects that these might have on economic growth, inflation and employment

Obviously, the effects on economic growth are going to be negative - it's the reverse wealth effect

The Fed puts a lot of stock in the wealth effect, but it's a two-edge sword

The Fed statement also mentioned that they are still targeting 2% inflation but that they're not quite there, and expressed concern that they might not meet that goal

To me, acknowledging the economy is slowing, going out of their way to mention that they are monitoring the global economy is an easing from their rhetoric

The Fed is going to have to do a lot more than that subtle suggestion

I think it is enough to turn the dollar; it has been weakening across the board today

Oil prices have moved up a bit

Gold stocks have actually done a little bit better than gold - gold and silver were both hit today: gold was down about $10/11, silver was down about .30

There was a huge sell order that came in early in the morning and just knocked the markets down in about a minute, which has been typical

It looked like the metal was poised to continue to move higher

We'll see what happens tomorrow when we get the GDP

But one of the reasons it looked like today should have been a big day for gold was the economic news that came out early this morning on December Durable Goods

They were looking for a +.2 increase, following a 0% gain in November

Instead, first they revised the November's number to -.5 and then, instead of improving, we dropped 5.1 - Huge decline!

You have to go back to the '08 financial crisis to find a Durable Goods that bad

It gets worse when you look at the details

Strip out transportation: they were looking for zero, instead we got -1.2

On top of that, they took last month's -.1 and made it -.5

The worst one is Core Capital Goods: last month was down .4 and we got -4.3

Year-over-year Capital Goods is down 7.5%

So, given this number and the Fed's statement yesterday, I expected gold to build on its momentum, but for that big sell order that happened early in the morning

The gold stocks held up today, despite the big drop in gold

I expect a rally tomorrow if we get a weak GDP number, and now a lot of people are looking for a weak number; the consensus is now down to about 1%

Whatever number we get, it will be revised even lower and after the final revision I would expect Q4 to be a negative number and the the beginning of a recession

* The Mario Draghi "No-Limits"-inspired rally from Thursday and Friday of last week ended on Monday with the Dow Jones down just over 200 points; the NASDAQ was down about 75 points, so an even bigger percentage drop

* But today the market reversed; the Dow actually recouped 100% of what it lost, it rose 282 points by the close

* A lot of volatility in the oil markets; down yesterday and up above $30/barrel today

* The bigger action today was in gold, up another $12 or so, the highest price for gold since the first week in November, last year

* Gold stocks had a big up day today, but they still have to rise about 8% to get back to where they were when gold was the price it is today

* Some of the battered down currencies in the commodities space had a good rally; the Canadian dollar and the Aussie dollar

* I think what the markets are preparing for is some type of statement from the Fed tomorrow; they began their 2-day meeting today and they will release a statement - there's no press conference

* People are looking for the Federal Reserve to acknowledge some type of change in the economy and therefore soften their stance on their 2016 rate increase projection

* The last time we heard from Janet Yellen, the Fed was on track for 4 rate hikes in 2016, and since then, no one has said anything to contradict that, despite what has happened in the U.S. and global markets

* Perhaps this recent market rally will give Janet Yellen a reason not to show her hand

* Of course, if she disappoints the markets and continues to pretend everything is great, this market's going down hard and all the gains will be surrendered

* Maybe she'll try to walk a middle ground by acknowledging the problems in China and in the oil market and say that the Fed is monitoring the situation in case there us unexpected spillover to the U.S. economy which is still otherwise in great shape

* She may save face by suggesting that if these outside influences somehow wash up on our shores, and they effect employment and inflation, maybe it will adjust its policy

*  I'm not sure if that will be enough for the market; if the market sells off, the Fed is going to have to come back and quickly release more dovish rhetoric

* I read an article on Monday's Wall Street Journal and I posted it on my Facebook pageand it really was the equivalent of, This Time It's Different

* The headline was, "Recession Signals are Flashing Red" - they've been flashing red for a long time and the WSJ has been ignoring it

* The article says that, despite all the bad economic events and data that in the past have led to recession, that this time it's different

* The article tells us why we don't have to worry this time, while acknowledging the bad data and events, they say we can rest easy because we have this really strong labor market, and in prior recessions the labor market wasn't as strong

* Therefore, since the labor is so strong, we can ignore all the other signals that seem to be flashing recession

* I have said many times on this podcast, there is no strong labor market; it exists only in the eyes of statisticians who simply look at a rate of 5% and ignore how we got there

* They want to ignore the millions of people who have left the weak labor market and millions more who have settled for part time jobs

* So the weak labor market is consistent with all the other data that the WSJ is acknowledging, but tells us to ignore

* If we counted all the people outside of the labor market who are discouraged as unemployed, and we also counted all the underemployed people, and the unemployment rate was over 10%, then the WSJ would have to say, "Well, it's a recession!"

* How can a recession wait for the government to decide how it ...

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The Mario Draghi "No-Limits"-inspired rally from Thursday and Friday of last week ended on Monday with the Dow Jones down just over 200 points; the NASDAQ was down about 75 points, so an even bigger percentage drop

But today the market reversed; the Dow actually recouped 100% of what it lost, it rose 282 points by the close

A lot of volatility in the oil markets; down yesterday and up above $30/barrel today

The bigger action today was in gold, up another $12 or so, the highest price for gold since the first week in November, last year

Gold stocks had a big up day today, but they still have to rise about 8% to get back to where they were when gold was the price it is today

Some of the battered down currencies in the commodities space had a good rally; the Canadian dollar and the Aussie dollar

I think what the markets are preparing for is some type of statement from the Fed tomorrow; they began their 2-day meeting today and they will release a statement - there's no press conference

People are looking for the Federal Reserve to acknowledge some type of change in the economy and therefore soften their stance on their 2016 rate increase projection

The last time we heard from Janet Yellen, the Fed was on track for 4 rate hikes in 2016, and since then, no one has said anything to contradict that, despite what has happened in the U.S. and global markets

Perhaps this recent market rally will give Janet Yellen a reason not to show her hand

Of course, if she disappoints the markets and continues to pretend everything is great, this market's going down hard and all the gains will be surrendered

Maybe she'll try to walk a middle ground by acknowledging the problems in China and in the oil market and say that the Fed is monitoring the situation in case there us unexpected spillover to the U.S. economy which is still otherwise in great shape

She may save face by suggesting that if these outside influences somehow wash up on our shores, and they effect employment and inflation, maybe it will adjust its policy

 I'm not sure if that will be enough for the market; if the market sells off, the Fed is going to have to come back and quickly release more dovish rhetoric

I read an article on Monday's Wall Street Journal and I posted it on my Facebook pageand it really was the equivalent of, This Time It's Different

The headline was, "Recession Signals are Flashing Red" - they've been flashing red for a long time and the WSJ has been ignoring it

The article says that, despite all the bad economic events and data that in the past have led to recession, that this time it's different

The article tells us why we don't have to worry this time, while acknowledging the bad data and events, they say we can rest easy because we have this really strong labor market, and in prior recessions the labor market wasn't as strong

Therefore, since the labor is so strong, we can ignore all the other signals that seem to be flashing recession

I have said many times on this podcast, there is no strong labor market; it exists only in the eyes of statisticians who simply look at a rate of 5% and ignore how we got there

They want to ignore the millions of people who have left the weak labor market and millions more who have settled for part time jobs

So the weak labor market is consistent with all the other data that the WSJ is acknowledging, but tells us to ignore

If we counted all the people outside of the labor market who are discouraged as unemployed, and we also counted all the underemployed people, and the unemployment rate was over 10%, then the WSJ would have to say, "Well, it's a recession!"

How can a recession wait for the government to decide how it wants to measure the labor market?

It is what it is, regardless how the government wants to spin it

If we honestly assess the situation, the conclusion is that the labor market is weak

Since all the data is weak, and it is not something to ignore,