The Peter Schiff Show Podcast

* The U.S. stock market ended the week with a 2-day rally, in fact the Dow Jones closed better than 200 points today, to about 1690

*  NASDAQ, even stronger, up 119, closing at almost back up to 4600

* The rally actually began early yesterday morning, and not just in stocks

* Oil had a huge rally, in fact, today alone, crude was up $2.72 back above $30, at $32.25

* What sparked the rally was comments made by Mario Draghi at an ECB press conference that followed their official statement that they were leaving interest rates unchanged - they are already negative

* Right about that time, the Dow futures were already down 100 points and it wasn't looking good for the open of the U.S. stock market

* But then, in Draghi's press conference, he said there was no limit to what the ECB is prepared to do to generate more inflation in Europe

* He strongly hinted that in the next meeting in March, they may announce additional stimulus

* He saw the weakness in the markets and decided to take one for the Fed, because ultimately it's the Federal Reserve who has to come out with the "Whatever it takes" comment" to shore up the markets

* I don't think the ECB is going to be enough, even if Japan joins the party, it won't be a real party until the Federal Reserve shows up

* This was enough to cause a small, short-covering rally

* What's interesting, though, about the Draghi comments, is that he specifically addressed the problems of low oil prices and low food prices

* Do you think the population of Europe worries that food is too inexpensive?

* Is it really so important that gas is more expensive in Europe?

* None of these are real concerns, and the proof is, if they really wanted the prices to be higher, they could just adjust the Value Added Tax to increase prices to exactly 2%

* Why print all this money, hoping that the result is higher gas prices?

* The truth is, the price of gas and food in Europe is not the problem - Mario Draghi knows its not the problem

* He wants to create inflation to prop up the equity markets

* But the press takes Draghi at his word, that inflation is the problem

* Stock prices are the prices they are worried about being too low

* They also want more inflation to mitigate the effect of government-mandated higher wages

* So the one motivating factor behind Draghi's comments was not food or gas prices

* Obviously lower food and gas prices help the European economy

* All the markets went up on the hint that the ECB is going to further stimulate the economy

* That proves that the only reason the stock market has rallied is because the central banks - it's not about the fundamentals

* The Fed will have to capitulate and acknowledge that more stimulus is coming

* The press is focusing on the idea that the Fed will slow down its initial goal of 4 rate hikes in 2016

* But that's not enough

* If the Fed tightens more slowly, and the ECB and Japan are easing, then the story is still about the tighter U.S. monetary policy vs Europe and Japan, which will continue to create the global problem of a high U.S. dollar

* We aren't going to get drunk on Europe's liquor - we need our own bartender pouring the drinks

* Is it enough to get a short-covering rally? Sure.

* Nothing goes down in a straight line

* We don't know that Draghi will actually deliver stimulus in March. What if the price of oil goes up above $40/barrel before then?

* Mario Draghi went out of his way to praise Janet Yellen, agreeing with the Fed's December rate hike decision

* Ironically, the U.S. economy is doing better than Europe, but the U.S. economic data is getting worse, and in Europe it is improving

* By the time all the revisions are done,

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The U.S. stock market ended the week with a 2-day rally, in fact the Dow Jones closed better than 200 points today, to about 1690

 NASDAQ, even stronger, up 119, closing at almost back up to 4600

The rally actually began early yesterday morning, and not just in stocks

Oil had a huge rally, in fact, today alone, crude was up $2.72 back above $30, at $32.25

What sparked the rally was comments made by Mario Draghi at an ECB press conference that followed their official statement that they were leaving interest rates unchanged - they are already negative

Right about that time, the Dow futures were already down 100 points and it wasn't looking good for the open of the U.S. stock market

But then, in Draghi's press conference, he said there was no limit to what the ECB is prepared to do to generate more inflation in Europe

He strongly hinted that in the next meeting in March, they may announce additional stimulus

He saw the weakness in the markets and decided to take one for the Fed, because ultimately it's the Federal Reserve who has to come out with the "Whatever it takes" comment" to shore up the markets

I don't think the ECB is going to be enough, even if Japan joins the party, it won't be a real party until the Federal Reserve shows up

This was enough to cause a small, short-covering rally

What's interesting, though, about the Draghi comments, is that he specifically addressed the problems of low oil prices and low food prices

Do you think the population of Europe worries that food is too inexpensive?

Is it really so important that gas is more expensive in Europe?

None of these are real concerns, and the proof is, if they really wanted the prices to be higher, they could just adjust the Value Added Tax to increase prices to exactly 2%

Why print all this money, hoping that the result is higher gas prices?

The truth is, the price of gas and food in Europe is not the problem - Mario Draghi knows its not the problem

He wants to create inflation to prop up the equity markets

But the press takes Draghi at his word, that inflation is the problem

Stock prices are the prices they are worried about being too low

They also want more inflation to mitigate the effect of government-mandated higher wages

So the one motivating factor behind Draghi's comments was not food or gas prices

Obviously lower food and gas prices help the European economy

All the markets went up on the hint that the ECB is going to further stimulate the economy

That proves that the only reason the stock market has rallied is because the central banks - it's not about the fundamentals

The Fed will have to capitulate and acknowledge that more stimulus is coming

The press is focusing on the idea that the Fed will slow down its initial goal of 4 rate hikes in 2016

But that's not enough

If the Fed tightens more slowly, and the ECB and Japan are easing, then the story is still about the tighter U.S. monetary policy vs Europe and Japan, which will continue to create the global problem of a high U.S. dollar

We aren't going to get drunk on Europe's liquor - we need our own bartender pouring the drinks

Is it enough to get a short-covering rally? Sure.

Nothing goes down in a straight line

We don't know that Draghi will actually deliver stimulus in March. What if the price of oil goes up above $40/barrel before then?

Mario Draghi went out of his way to praise Janet Yellen, agreeing with the Fed's December rate hike decision

Ironically, the U.S. economy is doing better than Europe, but the U.S. economic data is getting worse, and in Europe it is improving

By the time all the revisions are done, it is likely to come out that the first time the Fed raised rates in 8 years, we were already in a recession

Thursday's weekly jobless number went up again to  293,000 vs an expected 275,000

This is the highest number of first time unemployment claims since July

The 4-wk moving average is now at 285,

* The bear market in global stocks continues, and I believe we're in a bear market in the U.S.

* Technically the major averages are not quite down 20%, although some of the averages are

* Transports were down 30% from their highs

* The Russell 2000 was down more than 25%

* Many individual sectors are way down into bear market territory, as are some individual stocks

* IBM hit a new 6-year low; and, of course, IBM is the poster boy for share buy-backs

* Imagine how much shareholder money has been flushed down the toilet buying back stock at over $200/sh and now we're looking at 12o and falling

* But remember: all bear markets begin as corrections

* The bear market of 2001, when the S&P was cut in half, and the NASDAQ fell by 80%, started as a correction

* The same thing in 2008 - they were calling that a correction, too, until they realized that it was a bear market

* In fact, the main thing I am hearing today is the comeback - the Dow had a huge comeback because it was down more than 560 points at the low and it closed down at just 249

* The NASDAQ was down more than 160 and it closed down only 5

* Had we closed at the lows of the day maybe we would be closer to a short-term bottom

* This is another short-covering inter-day rally creating a slippery slope of hope for the market to continue to slide down

* Today, we have hit the most 52-week lows in any month since September of 2008

* Earlier in the day, we were showing the biggest monthly point drop in the history of the stock market

* It's not just the worst January, it's the worst month of any year, ever

* The market has got to be telling us that not only are we in a bear market, but we are in a recession

* The market is forward-looking: it is telling us that we are in a recession

* The bond market is priced as if we are in a recession

* Maybe that is because we are in a recession

* All the economic data indicates a severe recession

* The market is behaving as though something bad is happening - we haven't seen action like this since 2008, yet people are dismissing all of this evidence

* If it walks like a recession, quacks like a recession, smells like a recession, it is a recession

* There are now more people acknowledging that the Fed should not continue raising rates in the near future - an article in the Guardian says:"Janet Yellen and Fed left with face full of egg after interest rate rise blunder" accuses the Fed of raising rates too early

* The problem isn't that they raised rates early, it is that they raised them too late

* Actually the real problem is that they never should have lowered rates to zero in the first place

* I said this from the beginning: They sealed their fate as soon as they dropped rates to zero - no matter when they raised rates it would be a disaster, and the longer they waited it would be a disaster

* What is ridiculous is that the Fed wants us to believe that they can raise rates, after leaving them at zero for so long, and that we could sometime just be fine

* The narrative that Ben Bernanke, Janet Yellen and the Obama administration have been selling is that they saved the economy

* The economy is in much worse shape now than it was 7 years ago

* Instead the Fed's poisonous cure made us sicker than ever - That is what I wrote in "Crash Proof"

* When I forecasted the bursting of the real estate bubble and the Great Recession and financial crisis, I said the economy could withstand that

* What would kill it was the Fed's cure, they came up with the exact remedy I was afraid they would and it is having this exact effect

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The bear market in global stocks continues, and I believe we're in a bear market in the U.S.

Technically the major averages are not quite down 20%, although some of the averages are

Transports were down 30% from their highs

The Russell 2000 was down more than 25%

Many individual sectors are way down into bear market territory, as are some individual stocks

IBM hit a new 6-year low; and, of course, IBM is the poster boy for share buy-backs

Imagine how much shareholder money has been flushed down the toilet buying back stock at over $200/sh and now we're looking at 12o and falling

But remember: all bear markets begin as corrections

The bear market of 2001, when the S&P was cut in half, and the NASDAQ fell by 80%, started as a correction

The same thing in 2008 - they were calling that a correction, too, until they realized that it was a bear market

In fact, the main thing I am hearing today is the comeback - the Dow had a huge comeback because it was down more than 560 points at the low and it closed down at just 249

The NASDAQ was down more than 160 and it closed down only 5

Had we closed at the lows of the day maybe we would be closer to a short-term bottom

This is another short-covering inter-day rally creating a slippery slope of hope for the market to continue to slide down

Today, we have hit the most 52-week lows in any month since September of 2008

Earlier in the day, we were showing the biggest monthly point drop in the history of the stock market

It's not just the worst January, it's the worst month of any year, ever

The market has got to be telling us that not only are we in a bear market, but we are in a recession

The market is forward-looking: it is telling us that we are in a recession

The bond market is priced as if we are in a recession

Maybe that is because we are in a recession

All the economic data indicates a severe recession

The market is behaving as though something bad is happening - we haven't seen action like this since 2008, yet people are dismissing all of this evidence

If it walks like a recession, quacks like a recession, smells like a recession, it is a recession

There are now more people acknowledging that the Fed should not continue raising rates in the near future - an article in the Guardian says:"Janet Yellen and Fed left with face full of egg after interest rate rise blunder" accuses the Fed of raising rates too early

The problem isn't that they raised rates early, it is that they raised them too late

Actually the real problem is that they never should have lowered rates to zero in the first place

I said this from the beginning: They sealed their fate as soon as they dropped rates to zero - no matter when they raised rates it would be a disaster, and the longer they waited it would be a disaster

What is ridiculous is that the Fed wants us to believe that they can raise rates, after leaving them at zero for so long, and that we could sometime just be fine

The narrative that Ben Bernanke, Janet Yellen and the Obama administration have been selling is that they saved the economy

The economy is in much worse shape now than it was 7 years ago

Instead the Fed's poisonous cure made us sicker than ever - That is what I wrote in "Crash Proof"

When I forecasted the bursting of the real estate bubble and the Great Recession and financial crisis, I said the economy could withstand that

What would kill it was the Fed's cure, they came up with the exact remedy I was afraid they would and it is having this exact effect

The Fed is going to take interest rates to negative and they will launch QE4, which will be bigger than 1,2 & 3, but it will be too late to stop the recession

At this point the dose of monetary stimulus will be lethal for the dollar

The dollar is still rising based on the idea that the Fed is going to continue to tighten monetary policy

This is causing turmoil in global markets

*  The Dow  Jones ended another down week on a down note, dropping 390 points

* The NASDAQ was down 126 points

*  This is the worst January in the history of the stock market the Dow is off about 13% from its highs, the NASDAQ about 15%, firmly in correction territory

* We are probably in a bear market right now, because ultimately these indexes will be down 20%

* Some indexes are already firmly in the bear camp; the transportation average is down about 27.5%; the Russel 2000 is down aboutr 23%

* Many sectors are in a bear market - the auto market, retailers, financials

* Home builders not quite in bear market territory yet but they are at 4-year lows

* Beneath the sectors there are many individual stocks that are down 30 - 80% - GoPro now down 82% from last year as a highly touted IPO

* Yesterday we had about a 200 point rally because the Fed's Dudley, who saved the market in October of 2014 by hinting of QE4 causing the market to take off

* This time, Bullard came out and did say something dovish, but not dovish enough, and did not want to say  there was something wrong with the economy, so he simply stated that oil prices were too low and inflation might not rise quickly enough, so the Fed should hike more slowly

* Today, another Fed governor came out, William Dudley and contradicted Bullard, strongly optimistic, saying the market is going to grow above trend in 2016 and he said that some of the negative economic data that has come out recently (which may qualify as the understatement of the decade) should be ignored, in the context of a strong labor market

* In other words, no matter what other negative data is out there, in the markets or in the economy, as long as we're still creating 200,000-300,000 mostly low-paying, part time jobs monthly, everything is fine

* If everything is fine, and there are so many people with jobs, why are retail sales plunging?  Why are corporate earnings plunging?

* Assuming all these jobs really exist, they won't for long because if sales and earnings are collapsing, what are companies going to do with their work force?

* Walmart announced today they are closing about 150 stores in the U.S., laying off about 10,000 people

* I have saying for a while I expected retailers to announce significant layoffs, but I think it is going to be across the board

* Everything that was built on the Fed's bubble is imploding; all the phony wealth that was the result of QE is disappearing rapidly

* It's amazing that the Federal Reserve believes in the wealth effect on the way up, but somehow it is oblivious to it on the way down

* I think it is going to work even stronger in reverse; the amount of spending from cut backs will produce a reverse effect even larger than the one they tried to create with QE and zero percent interest rates

* How could Bullard, in the face of all this negative economic data say that since the Fed raised rates, his outlook on the economy has not diminished at all?

* It's so ridiculous that he must not believe it - he is trying to pretend that everything is good

* The whole rate hike was about instilling confidence

* Based on the data, they should not have hiked rates

* Now, as the markets are imploding and the data is getting worse, Dudley is out there saying everything is great

* How much longer can he get away with saying that?

* Pretty soon, he is not going to have that much credibility

* That's what is going on with the Fed, in fact JP Morgan today pushed back their estimate for the first rate hike in 2016 from March to June

* That's how is started last year; everybody was looking for a rate hike, in March, then June then September, then they finally got it in December and now people are already dialing back estimates of the next rate hike

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The Dow  Jones ended another down week on a down note, dropping 390 points

The NASDAQ was down 126 points

 This is the worst January in the history of the stock market the Dow is off about 13% from its highs, the NASDAQ about 15%, firmly in correction territory

We are probably in a bear market right now, because ultimately these indexes will be down 20%

Some indexes are already firmly in the bear camp; the transportation average is down about 27.5%; the Russel 2000 is down aboutr 23%

Many sectors are in a bear market - the auto market, retailers, financials

Home builders not quite in bear market territory yet but they are at 4-year lows

Beneath the sectors there are many individual stocks that are down 30 - 80% - GoPro now down 82% from last year as a highly touted IPO

Yesterday we had about a 200 point rally because the Fed's Dudley, who saved the market in October of 2014 by hinting of QE4 causing the market to take off

This time, Bullard came out and did say something dovish, but not dovish enough, and did not want to say  there was something wrong with the economy, so he simply stated that oil prices were too low and inflation might not rise quickly enough, so the Fed should hike more slowly

Today, another Fed governor came out, William Dudley and contradicted Bullard, strongly optimistic, saying the market is going to grow above trend in 2016 and he said that some of the negative economic data that has come out recently (which may qualify as the understatement of the decade) should be ignored, in the context of a strong labor market

In other words, no matter what other negative data is out there, in the markets or in the economy, as long as we're still creating 200,000-300,000 mostly low-paying, part time jobs monthly, everything is fine

If everything is fine, and there are so many people with jobs, why are retail sales plunging?  Why are corporate earnings plunging?

Assuming all these jobs really exist, they won't for long because if sales and earnings are collapsing, what are companies going to do with their work force?

Walmart announced today they are closing about 150 stores in the U.S., laying off about 10,000 people

I have saying for a while I expected retailers to announce significant layoffs, but I think it is going to be across the board

Everything that was built on the Fed's bubble is imploding; all the phony wealth that was the result of QE is disappearing rapidly

It's amazing that the Federal Reserve believes in the wealth effect on the way up, but somehow it is oblivious to it on the way down

I think it is going to work even stronger in reverse; the amount of spending from cut backs will produce a reverse effect even larger than the one they tried to create with QE and zero percent interest rates

How could Bullard, in the face of all this negative economic data say that since the Fed raised rates, his outlook on the economy has not diminished at all?

It's so ridiculous that he must not believe it - he is trying to pretend that everything is good

The whole rate hike was about instilling confidence

Based on the data, they should not have hiked rates

Now, as the markets are imploding and the data is getting worse, Dudley is out there saying everything is great

How much longer can he get away with saying that?

Pretty soon, he is not going to have that much credibility

That's what is going on with the Fed, in fact JP Morgan today pushed back their estimate for the first rate hike in 2016 from March to June

That's how is started last year; everybody was looking for a rate hike, in March, then June then September, then they finally got it in December and now people are already dialing back estimates of the next rate hike

The next one ain't happening because we are already in a recession

I am talking about a statistical recession that the government will have to acknowledge

I think we have been in a recession throughout the entire recovery

* Last night I watched President Obama deliver the State of the Union Speech and probably the only good thing about the speech is that it was his last one

* It will probably go down in history as the most clueless State of the Union Address ever

* All he talked about was how great the economy is - how he created all these jobs

* He even had the chutzpah to take credit for reducing the budget deficit!

* President Obama will have doubled the national debt during his presidency

* He added more debt than every president from George Washington to George Bush, combined, yet he's taking credit for reducing the deficit

* At least when George Bush gave his final State of the Union Address he acknowledged problems brewing in the economy

* He acknowledged concerns being addressed by the American people and validated them

* He talked about the stimulus plan he had, which I did not agree with, but at least he knew the economy was in some trouble

* Although he acknowledged that economic growth was slowing and that housing was down, he didn't come close to preparing Americans for what was about to unfold by the middle of the year

* In fact, when the President delivered that State of the Union Address, the economy was already in recession, although the government had not acknowledged it yet

* He had no idea how precarious the state of the economy was, we were on the precipice of  a big cliff and he was still optimistic, long term, but cautious given the slowdown in the economy and he wanted to come up with some kind of stimulus to mitigate the slowdown

* He did not foresee or warn about the severity of the problem, but at least he acknowledged some problem

* In contrast, rather than at least acknowledging weakness in the economy, President Obama claims victory over the Great Recession, that he restored economic health and vitality

* The few problems in the economy are beyond his control because the economy is changing

* What we do need is more government money for education, to train people for this new economy, we need a higher minimum wage, we need higher taxes on the rich, but other than that everything is great

* President Obama's State of the Union Address is on the order of magnitude more clueless that George W. Bush's last SOTU on the eve of the Great Recession

* We are now on the eve of a collapse even greater, yet President Obama is saying everything is awesome

* What President Obama did is to lecture the American people as to why they have nothing to be concerned about - basically saying that anyone who says that the economy is in decline is peddling fiction.

* Obviously the people who don't recognize the decline in our economy are in denial, or have a political agenda

* What the President said is, "If you think the economy is headed in the wrong direction, if you think America is in decline, you're wrong, it's just that the economy is changing

* Remember, you voted for me and I promised change

* It's changing because it's getting worse, that's the change

* President Obama points to technology as the problem in the economy - a transition that only makes you feel like you're falling behind even though you're not

* The technological revolution did not begin with the election of President Obama

* It has been no more transformative, even less so, than the industrial revolution

* Machines put a lot more people out of work than computers but we saw an expanding labor force, but women left the labor force, because their husbands started making more money

* Real wages were rising

* The industrial revolution took place in a free market economy

* The technological revolution is taking place in a government controlled economy

* The reason so many people are suffering is not because so many techno...

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Last night I watched President Obama deliver the State of the Union Speech and probably the only good thing about the speech is that it was his last one

It will probably go down in history as the most clueless State of the Union Address ever

All he talked about was how great the economy is - how he created all these jobs

He even had the chutzpah to take credit for reducing the budget deficit!

President Obama will have doubled the national debt during his presidency

He added more debt than every president from George Washington to George Bush, combined, yet he's taking credit for reducing the deficit

At least when George Bush gave his final State of the Union Address he acknowledged problems brewing in the economy

He acknowledged concerns being addressed by the American people and validated them

He talked about the stimulus plan he had, which I did not agree with, but at least he knew the economy was in some trouble

Although he acknowledged that economic growth was slowing and that housing was down, he didn't come close to preparing Americans for what was about to unfold by the middle of the year

In fact, when the President delivered that State of the Union Address, the economy was already in recession, although the government had not acknowledged it yet

He had no idea how precarious the state of the economy was, we were on the precipice of  a big cliff and he was still optimistic, long term, but cautious given the slowdown in the economy and he wanted to come up with some kind of stimulus to mitigate the slowdown

He did not foresee or warn about the severity of the problem, but at least he acknowledged some problem

In contrast, rather than at least acknowledging weakness in the economy, President Obama claims victory over the Great Recession, that he restored economic health and vitality

The few problems in the economy are beyond his control because the economy is changing

What we do need is more government money for education, to train people for this new economy, we need a higher minimum wage, we need higher taxes on the rich, but other than that everything is great

President Obama's State of the Union Address is on the order of magnitude more clueless that George W. Bush's last SOTU on the eve of the Great Recession

We are now on the eve of a collapse even greater, yet President Obama is saying everything is awesome

What President Obama did is to lecture the American people as to why they have nothing to be concerned about - basically saying that anyone who says that the economy is in decline is peddling fiction.

Obviously the people who don't recognize the decline in our economy are in denial, or have a political agenda

What the President said is, "If you think the economy is headed in the wrong direction, if you think America is in decline, you're wrong, it's just that the economy is changing

Remember, you voted for me and I promised change

It's changing because it's getting worse, that's the change

President Obama points to technology as the problem in the economy - a transition that only makes you feel like you're falling behind even though you're not

The technological revolution did not begin with the election of President Obama

It has been no more transformative, even less so, than the industrial revolution

Machines put a lot more people out of work than computers but we saw an expanding labor force, but women left the labor force, because their husbands started making more money

Real wages were rising

The industrial revolution took place in a free market economy

The technological revolution is taking place in a government controlled economy

The reason so many people are suffering is not because so many technology is changing

What's changing is the size of government

We used to be a free market and now we're not

The reason for so much poverty and decline, and that the President is unwilling to admit, is that the government is responsible

* Hi everybody, this is Peter Schiff and I am recording this on Friday, January 8, and Wall Street just finished the worst opening week to a new year in the history of the stock market

* The Dow Jones was down another 1% on Friday to finish the week better than 1,000 points - it was a 6% decline on the week

* Now there have been weeks that have been down more than 6% in the history of the stock market, in fact we had one about 4 years ago, but we've never had a week this bad in the first week of January

* Now, the financial media is coming up with all sorts of excuses to blame this big decline on

* On Monday, they were blaming the sell-off on the rumors that North Korea tested a hydrogen bomb

* But for most of the week, they were blaming the sell-off of the U.S. stock market on the sell-off in China, despite the fact that China rallied on Friday and we sold off

* The Chinese market was down about 10% on the week, despite the Friday rally

* The U.S. stock market is not falling because of the Chinese stock market. The Chinese stock market and the U.S. stock market are falling for the same reason

* It's not that one is causing the other, they're both going down and the reason they're falling is because the Federal Reserve raised interest rates in December and they are threatening to raise them at least 4 more times, according to the most recent minutes.

* The belief that the Fed is going to keep raising rates is putting pressure on the Chinese currency, the Yuan, to decline along with a lot of other currencies that have already fallen substantially against the dollar, on the anticipation of higher interest rates

* It's the weakness in the Chinese currency that is pulling down the Chinese market, but it's all because of the Fed - but that's the same reason we're going down

* If you remember, all year I was saying that I didn't think the Fed was going to raise rates at all in 2015, and the reasons were:

* I thought thee economy would not be able to handle it - the Fed always claimed that they were data dependent and I thought they were hiding behind that, but I though they could use the weak data, which had been coming all year, as cover for not raising rates - in fact, that was their cover until they backed themselves into a corner because they had promised to raise rates by the end of the year and a refusal to raise rates would be an admission that the economy was weaker than forecasted

* I also said I didn't think the market could handle a rate hike.  It had stopped rising based on the absence of QE, but if the Fed actually increased rates, the air would come out of the bubble a lot faster

* So with the economy going down and the stock market going down, I thought the next thing they would do is reduce rates back to zero and launch QE4 and would look like complete fools

* So by not raising rates, they would look like a lesser fool by acknowledging that the economy needed additional stimulus

* We may already be in a recession

* The Atlanta Fed has already downgraded their forecast for 2015 Q4 to just .8%

* I think by the time we get the first estimate on the 29th the month, we could actually have a negative number for the fourth quarter

* If you look at all the data that's coming in, and I'll get to that in a minute, we can easily have a negative first quarter of 2016, and we're in recession

* If the economy is in recession, and we are in or close to a bear market in stocks, and without the Fed, there's nothing to stop this market from falling, the Fed will have to come to the rescue of both the economy and the market with QE

* But if you remember, a lot of analysts were very sanguine about the market's ability to handle a rate hike, but here we are, the Fed raised rates just a few weeks ago, and the Dow has dropped better than 1,

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Hi everybody, this is Peter Schiff and I am recording this on Friday, January 8, and Wall Street just finished the worst opening week to a new year in the history of the stock market

The Dow Jones was down another 1% on Friday to finish the week better than 1,000 points - it was a 6% decline on the week

Now there have been weeks that have been down more than 6% in the history of the stock market, in fact we had one about 4 years ago, but we've never had a week this bad in the first week of January

Now, the financial media is coming up with all sorts of excuses to blame this big decline on

On Monday, they were blaming the sell-off on the rumors that North Korea tested a hydrogen bomb

But for most of the week, they were blaming the sell-off of the U.S. stock market on the sell-off in China, despite the fact that China rallied on Friday and we sold off

The Chinese market was down about 10% on the week, despite the Friday rally

The U.S. stock market is not falling because of the Chinese stock market. The Chinese stock market and the U.S. stock market are falling for the same reason

It's not that one is causing the other, they're both going down and the reason they're falling is because the Federal Reserve raised interest rates in December and they are threatening to raise them at least 4 more times, according to the most recent minutes.

The belief that the Fed is going to keep raising rates is putting pressure on the Chinese currency, the Yuan, to decline along with a lot of other currencies that have already fallen substantially against the dollar, on the anticipation of higher interest rates

It's the weakness in the Chinese currency that is pulling down the Chinese market, but it's all because of the Fed - but that's the same reason we're going down

If you remember, all year I was saying that I didn't think the Fed was going to raise rates at all in 2015, and the reasons were:

I thought thee economy would not be able to handle it - the Fed always claimed that they were data dependent and I thought they were hiding behind that, but I though they could use the weak data, which had been coming all year, as cover for not raising rates - in fact, that was their cover until they backed themselves into a corner because they had promised to raise rates by the end of the year and a refusal to raise rates would be an admission that the economy was weaker than forecasted

I also said I didn't think the market could handle a rate hike.  It had stopped rising based on the absence of QE, but if the Fed actually increased rates, the air would come out of the bubble a lot faster

So with the economy going down and the stock market going down, I thought the next thing they would do is reduce rates back to zero and launch QE4 and would look like complete fools

So by not raising rates, they would look like a lesser fool by acknowledging that the economy needed additional stimulus

We may already be in a recession

The Atlanta Fed has already downgraded their forecast for 2015 Q4 to just .8%

I think by the time we get the first estimate on the 29th the month, we could actually have a negative number for the fourth quarter

If you look at all the data that's coming in, and I'll get to that in a minute, we can easily have a negative first quarter of 2016, and we're in recession

If the economy is in recession, and we are in or close to a bear market in stocks, and without the Fed, there's nothing to stop this market from falling, the Fed will have to come to the rescue of both the economy and the market with QE

But if you remember, a lot of analysts were very sanguine about the market's ability to handle a rate hike, but here we are, the Fed raised rates just a few weeks ago, and the Dow has dropped better than 1,100 points since the Fed raised rates.

The one thing that hasn't declined since the Fed raised rates is gold

Gold is up better than $40/oz. since we got that hike, and,