The Peter Schiff Show Podcast

* Well the Dow Jones got clobbered again today, down 252 points at the close

* The NASDAQ down about 55

* The transports continue to get clobbered down another 146 points, decisively in bear market territory

* CNBC blamed the entire decline on jitters over North Korea's hydrogen bomb test

* I admit that this prospect is not good, but I don't believe that announcement was the reason for the decline

* The real problem is the Fed removing the monetary herion from the addicts on Wall Street and this is the withdrawal

* Former President and CEO of the Federal Reserve Bank of Dallas, spoke on CNBC yesterday and he admitted that the Fed "engineered a stock market rally"

* They wanted all this phony wealth to cause us to make irrational decisions

* That's what happened during the dot com bubble and to a greater extent during the housing bubble

* Here you have it from the words of a former Fed president, a voting member who voted for QE 1 & 2 who is saying that the Fed did this to create a "wealth effect"

* He even said, don't be surprised if the market goes down 20% - it's still overvalued - he admits the Fed was propping it up

* Obviously if the Fed removes the props the market will go down

* After Simon Hobbs asked Fisher if he is going to apologize, he said," Don't blame me, I voted against QE3!"

* He is throwing his colleagues, including Janet Yellen, under the bus

* Now that he is no longer at the Fed, he refers to it as a "giant weapon that is out of ammunition"

* The Fed still has ammo: cut rates (in this case, even to negative) and QE4, their big bazooka

* There's plenty of ammo left and it will be fired a lot sooner than people think

* Korea is an excuse, but Richard Fisher is letting the cat out of the bag, but no one in the media is picking up on this

* Also in the markets today, while stocks were going down, gold was going up - gold hit a 2-month high today

* As fast as it is going up in dollars, it is going up even faster in other currencies, like the Canadian dollar, which hit a 9-year low, the Australian dollar

* The yen was up - the dollar/yen is breaking down - to me that is a very scary proposition for the markets to see this strength in the Japanese yen

* Oil prices continued to drop, down another $2 today - we're trading below $34

* Gold stocks were up - you'd think they would be up a lot more because mining costs are plunging and revenue is going up, but Wall Street is oblivious to the bargains that exist in the mining stocks

* We got a lot of economic news today and most of it was, as is typically the case, bad

* Yesterday vehicle sales were at a 6-month low

* Last year was a record for auto sales, but December was a 6-month low despite all the Christmas giveaways

* Meanwhile the inventory to sales ratio continues to rise - a new high since the 2008-2009 great recession

* Also GM got clobbered today, down about 4% - already down 9% for the year and down more than 20% from its 52-wk high - that is a bear market

* This is telling me that the auto bubble has popped

* There are going to be a lot of layoffs in the auto sector - good, high-paying jobs

* I have said that starting in January 2016 we would start to see layoffs because the numbers have been horrible

* Sure enough, Macy's today announced a restructuring, laying off thousands of workers because of disappointing sales throughout the year

* We will see a huge blow-up in the securitized market for auto loans

* They layoffs are coming - the low unemployment number is the rear view mirror

* Looking at the actual economy in the windshield is a disaster for jobs

* This is deja vu - in 2008 the subprime market had already exploded - the housing market problems should have bee...

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Well the Dow Jones got clobbered again today, down 252 points at the close

The NASDAQ down about 55

The transports continue to get clobbered down another 146 points, decisively in bear market territory

CNBC blamed the entire decline on jitters over North Korea's hydrogen bomb test

I admit that this prospect is not good, but I don't believe that announcement was the reason for the decline

The real problem is the Fed removing the monetary herion from the addicts on Wall Street and this is the withdrawal

Former President and CEO of the Federal Reserve Bank of Dallas, spoke on CNBC yesterday and he admitted that the Fed "engineered a stock market rally"

They wanted all this phony wealth to cause us to make irrational decisions

That's what happened during the dot com bubble and to a greater extent during the housing bubble

Here you have it from the words of a former Fed president, a voting member who voted for QE 1 & 2 who is saying that the Fed did this to create a "wealth effect"

He even said, don't be surprised if the market goes down 20% - it's still overvalued - he admits the Fed was propping it up

Obviously if the Fed removes the props the market will go down

After Simon Hobbs asked Fisher if he is going to apologize, he said," Don't blame me, I voted against QE3!"

He is throwing his colleagues, including Janet Yellen, under the bus

Now that he is no longer at the Fed, he refers to it as a "giant weapon that is out of ammunition"

The Fed still has ammo: cut rates (in this case, even to negative) and QE4, their big bazooka

There's plenty of ammo left and it will be fired a lot sooner than people think

Korea is an excuse, but Richard Fisher is letting the cat out of the bag, but no one in the media is picking up on this

Also in the markets today, while stocks were going down, gold was going up - gold hit a 2-month high today

As fast as it is going up in dollars, it is going up even faster in other currencies, like the Canadian dollar, which hit a 9-year low, the Australian dollar

The yen was up - the dollar/yen is breaking down - to me that is a very scary proposition for the markets to see this strength in the Japanese yen

Oil prices continued to drop, down another $2 today - we're trading below $34

Gold stocks were up - you'd think they would be up a lot more because mining costs are plunging and revenue is going up, but Wall Street is oblivious to the bargains that exist in the mining stocks

We got a lot of economic news today and most of it was, as is typically the case, bad

Yesterday vehicle sales were at a 6-month low

Last year was a record for auto sales, but December was a 6-month low despite all the Christmas giveaways

Meanwhile the inventory to sales ratio continues to rise - a new high since the 2008-2009 great recession

Also GM got clobbered today, down about 4% - already down 9% for the year and down more than 20% from its 52-wk high - that is a bear market

This is telling me that the auto bubble has popped

There are going to be a lot of layoffs in the auto sector - good, high-paying jobs

I have said that starting in January 2016 we would start to see layoffs because the numbers have been horrible

Sure enough, Macy's today announced a restructuring, laying off thousands of workers because of disappointing sales throughout the year

We will see a huge blow-up in the securitized market for auto loans

They layoffs are coming - the low unemployment number is the rear view mirror

Looking at the actual economy in the windshield is a disaster for jobs

This is deja vu - in 2008 the subprime market had already exploded - the housing market problems should have been obvious

Yet everybody said, "don't worry, it's contained." and I said why can't anybody see that everything I have been warning about for years is happening

People were still denying what I was saying even as the financial crisis had already begun

* The U.S. stock market opened the first trading day of 2016 with a bang, but not the type of bang the bulls were hoping for

* The Dow was down 276 points-it was down as much as 450 points in the last hour of trading

* In fact,we opened down 300 and change and we hung around the down 350 - 400, in fact down 276, at the close was about the best level of the day

* The NASDAQ closed down around 104

*  The Dow Jones transports continues to get crushed - the weakest index on the day, down 156 points

* We're now down more than 20% from last year's high, officially in bear market territory in the Dow Jones transportation - and don't blame this on weak oil prices because transports benefit from weak oil prices

* This is all about weakness in the economy

* A lot of the carnage was blamed on China because China was down 7% overnight, the worst first day of the year in the history of Chinese stocks

* Supposedly the catalyst was a weaker than expected PMI in China - I don't believe for a second that the market was down 7% based on that report

* First, there were two PMI's released, and one was slightly better than estimates and the one that was slightly below came in at 48.2 vs. expectation of 49

* I think the Chinese market would have gone down regardless of the PMI numbers

* The irony of it is that our own recently-released Chicago PMI on New Year's Eve and our number was way worse than the Chinese number

* We were expecting 50, an improvement from 48.7 - instead we went down to 42.9

* Bad economic news in China creates a terrible response, but bad economic news in the U.S. and no one even cares!

* Why, because the Fed tells us everything is awesome and we can ignore all the evidence that the economy is far from awesome

* Singapore reported a 5.7% increase in GDP for its 4th quarter, yet that number is being discounted

* Yet no one wants to believe the good news from foreign governments, and no one believes bad news from the U.S. because the Fed's narrative is still out there

* We got more bad economic news today: We got another PMI manufacturing number expected to be 52.8, it came in at 51.2

* Even worse was the December ISM number - last month was 48.6 - it was expected to improve to 49.2-  instead, it dropped to 48.2

* That's a bigger miss than China, yet no one here cared

* Also, construction spending was a huge miss: the consensus was for a gain of .7; instead we lost .4

* It gets worse, because last month the gain was expected to be a full point

* The numbers that came out today were so bad that the Atlanta Fed, who recently revised down its Q4 GDP forecast from 1.9 to 1.3 a week or so ago and today they went down to .7

* In my last podcast, I said that soon the Atlanta Fed is going to take their Q4 GDP estimate below 1 and that is just what they did

* We have a lot more bad economic data that is going to come out between now and the end of the month when we get the first estimate of Q4 GDP and there's a pretty good chance that it will be negative, which is halfway to a recession

* With a negative GDP in the 4th quarter, we have a better than 50/50 chance of having another negative GDP in the first quarter and that would put us officially in a recession

* Just in time for the Fed to raise interest rates again - Not!

* More people are coming to the same conclusion I have for a long time now, that the Fed had backed themselves into a corner and felt they had to raise rates regardless of the fact that the data didn't meet their criteria

* I knew that if the Fed raised interest rates that they would regret it because they would have to reverse their direction based on the weak economy combined with a weak market

*  Interestingly, there has only been one year ending in "5",

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The U.S. stock market opened the first trading day of 2016 with a bang, but not the type of bang the bulls were hoping for

The Dow was down 276 points-it was down as much as 450 points in the last hour of trading

In fact,we opened down 300 and change and we hung around the down 350 - 400, in fact down 276, at the close was about the best level of the day

The NASDAQ closed down around 104

 The Dow Jones transports continues to get crushed - the weakest index on the day, down 156 points

We're now down more than 20% from last year's high, officially in bear market territory in the Dow Jones transportation - and don't blame this on weak oil prices because transports benefit from weak oil prices

This is all about weakness in the economy

A lot of the carnage was blamed on China because China was down 7% overnight, the worst first day of the year in the history of Chinese stocks

Supposedly the catalyst was a weaker than expected PMI in China - I don't believe for a second that the market was down 7% based on that report

First, there were two PMI's released, and one was slightly better than estimates and the one that was slightly below came in at 48.2 vs. expectation of 49

I think the Chinese market would have gone down regardless of the PMI numbers

The irony of it is that our own recently-released Chicago PMI on New Year's Eve and our number was way worse than the Chinese number

We were expecting 50, an improvement from 48.7 - instead we went down to 42.9

Bad economic news in China creates a terrible response, but bad economic news in the U.S. and no one even cares!

Why, because the Fed tells us everything is awesome and we can ignore all the evidence that the economy is far from awesome

Singapore reported a 5.7% increase in GDP for its 4th quarter, yet that number is being discounted

Yet no one wants to believe the good news from foreign governments, and no one believes bad news from the U.S. because the Fed's narrative is still out there

We got more bad economic news today: We got another PMI manufacturing number expected to be 52.8, it came in at 51.2

Even worse was the December ISM number - last month was 48.6 - it was expected to improve to 49.2-  instead, it dropped to 48.2

That's a bigger miss than China, yet no one here cared

Also, construction spending was a huge miss: the consensus was for a gain of .7; instead we lost .4

It gets worse, because last month the gain was expected to be a full point

The numbers that came out today were so bad that the Atlanta Fed, who recently revised down its Q4 GDP forecast from 1.9 to 1.3 a week or so ago and today they went down to .7

In my last podcast, I said that soon the Atlanta Fed is going to take their Q4 GDP estimate below 1 and that is just what they did

We have a lot more bad economic data that is going to come out between now and the end of the month when we get the first estimate of Q4 GDP and there's a pretty good chance that it will be negative, which is halfway to a recession

With a negative GDP in the 4th quarter, we have a better than 50/50 chance of having another negative GDP in the first quarter and that would put us officially in a recession

Just in time for the Fed to raise interest rates again - Not!

More people are coming to the same conclusion I have for a long time now, that the Fed had backed themselves into a corner and felt they had to raise rates regardless of the fact that the data didn't meet their criteria

I knew that if the Fed raised interest rates that they would regret it because they would have to reverse their direction based on the weak economy combined with a weak market

 Interestingly, there has only been one year ending in "5", going back to 1885 when the Dow Jones was down - that was in 2005

There hasn't been a year prior to a presidential election where the market was down since 1939, during the Great Depression

We're getting a lot of firsts, and of course, and today,

* Let me begin my final podcast of 2015 by wishing all of my listeners a Happy New Year

* It certainly wasn't a happy New Year's Eve Day on Wall Street

* Normally the last day of the year is a positive one; you normally have a Santa Clause rally and it continues on to New Year's Eve

* That wasn't the case today.  The Dow Jones finished its first down year since 2008 - down 178 points

* The S&P also negative on the year, the NASDAQ managed to gain about 5% or so

* I'm hearing a lot of people blaming the weakness on oil prices

* The transports were the weakest index of the year, I think they were down about 17% and this index stood to gain the most from low oil prices

* So clearly, if transports are the weakest index, the overall weakness can't be solely because of oil prices

* It has to be another reason, and I think it has to be the economy

* Oil is being affected by weakness in the economy

* Another interesting observation about today's selloff - the market not only closed on the lows, but made its lows on the close

* We've been seeing this volatility - all of this selling into the close says that something big is going on here

* You get more professionals selling when you sell market on close, and I think this is what is going on here

* People are bracing for a very weak 2016

* The Fed had interest rates for all of 2015 - it didn't raise rates until the waning weeks of the year

* Imagine how the Dow will contend with the threat of rising interest rates as 2016 continues

* But the other problem for 2016 is the economy and we got more evidence of an extremely weak economy

* I mentioned before the the Atlanta Fed GDP Now has Q4 GDP estimate down to 1.3

* Based on the numbers we got today, they are going to ratcheting those estimates down again

* First, we got the weekly unemployment numbers, which have been low for a long time - We got the biggest unemployment claims numbers in one week in 10 months

* The 4-week moving average is also the highest it has been in 5 months

* Remember, when Yellen raised interest rates, the basis for the decision was supposed to be the strength in the labor market

* No sooner did the Fed raise rates based on the labor market, but now the labor market is rolling over.

* Unemployment is a lagging indicator

* What is more indicative of what is coming, is the Chicago PMI number which came out a little later in the morning, which was abysmal

* One of the worst economic reports of the entire year

* Last month, we got 48.7, which was below expectation

* They were looking for a December bounceback to 50

* Instead, the index crashed down to 42.9

* This is the lowest number since 2009

* Order backlogs has been down for 11 months in a row, and this is the worst performance since 1951

* The only time we've been at this level is during a recession

* It is possible that we are in a recession

* It is possible that they will originally report Q4 GDP as positive and then go back later in the year and revise the data to show we were in a recession

* That's what they did with the Great Recession

* Another reason I believe the economy is weaker than the numbers suggest is because the inflation rate is being under-reported

* If the inflation rate is higher than the GDP deflator, then obviously we are in a contraction during most of this recovery

* I am looking at what is happening in the economy not in what the government says about the economy

* As bad as the numbers  were, it did not promote any reaction in the the markets

* My guess is that if we had had a big drop in unemployment claims or a really good PMI number the dollar would have spiked up and gold would have sold off,

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Let me begin my final podcast of 2015 by wishing all of my listeners a Happy New Year

It certainly wasn't a happy New Year's Eve Day on Wall Street

Normally the last day of the year is a positive one; you normally have a Santa Clause rally and it continues on to New Year's Eve

That wasn't the case today.  The Dow Jones finished its first down year since 2008 - down 178 points

The S&P also negative on the year, the NASDAQ managed to gain about 5% or so

I'm hearing a lot of people blaming the weakness on oil prices

The transports were the weakest index of the year, I think they were down about 17% and this index stood to gain the most from low oil prices

So clearly, if transports are the weakest index, the overall weakness can't be solely because of oil prices

It has to be another reason, and I think it has to be the economy

Oil is being affected by weakness in the economy

Another interesting observation about today's selloff - the market not only closed on the lows, but made its lows on the close

We've been seeing this volatility - all of this selling into the close says that something big is going on here

You get more professionals selling when you sell market on close, and I think this is what is going on here

People are bracing for a very weak 2016

The Fed had interest rates for all of 2015 - it didn't raise rates until the waning weeks of the year

Imagine how the Dow will contend with the threat of rising interest rates as 2016 continues

But the other problem for 2016 is the economy and we got more evidence of an extremely weak economy

I mentioned before the the Atlanta Fed GDP Now has Q4 GDP estimate down to 1.3

Based on the numbers we got today, they are going to ratcheting those estimates down again

First, we got the weekly unemployment numbers, which have been low for a long time - We got the biggest unemployment claims numbers in one week in 10 months

The 4-week moving average is also the highest it has been in 5 months

Remember, when Yellen raised interest rates, the basis for the decision was supposed to be the strength in the labor market

No sooner did the Fed raise rates based on the labor market, but now the labor market is rolling over.

Unemployment is a lagging indicator

What is more indicative of what is coming, is the Chicago PMI number which came out a little later in the morning, which was abysmal

One of the worst economic reports of the entire year

Last month, we got 48.7, which was below expectation

They were looking for a December bounceback to 50

Instead, the index crashed down to 42.9

This is the lowest number since 2009

Order backlogs has been down for 11 months in a row, and this is the worst performance since 1951

The only time we've been at this level is during a recession

It is possible that we are in a recession

It is possible that they will originally report Q4 GDP as positive and then go back later in the year and revise the data to show we were in a recession

That's what they did with the Great Recession

Another reason I believe the economy is weaker than the numbers suggest is because the inflation rate is being under-reported

If the inflation rate is higher than the GDP deflator, then obviously we are in a contraction during most of this recovery

I am looking at what is happening in the economy not in what the government says about the economy

As bad as the numbers  were, it did not promote any reaction in the the markets

My guess is that if we had had a big drop in unemployment claims or a really good PMI number the dollar would have spiked up and gold would have sold off, but we get horrible numbers and nobody seems to care

No matter how bad the data is, the Fed doesn't acknowledge it

No one will believe the economy is weak until the Fed comes out and admits it

The only data the markets won't ignore is the non-farm payroll data, because jobs are all the Fed seems to talk about

* Recording this podcast on Monday afternoon; the stock market closed about an hour ago, and the stock market was up over 100 points today, but the more dramatic days happened on Thrusday and Friday

* Despite the initial euphoric increase in the stock market that greeted the Fed's highly anticipated quarter-point rate hike on Wednesday the market tanked on Thursday and Friday, down over 600 points

* The most significant part of the sell-offs is that on both days the markets closed on the lows for the day

* The Fed is getting dangerously close to losing what remains of its credibility

* The Credibility Bubble might be the first to deflate in this recession

* The Fed has been saying that the economy would be strong enough for a rate hike by the end of the year, so if they did not raise rates in December it would have been an admission that they were wrong

* The Fed raised rates even though the economic data showed that, based on their own criteria, they should not have done it

* More and more people are questioning whether the Fed has made a policy mistake

* Look at the data that came out since the rate hike:

* On Friday we got the PMI Flash Services Index came out at 53.7 - last month it was 56.5

* The Kansas City Fed Manufacturing - last month was +1 and December was -8

* Today we got the Chicago Fed National Activity, expected to be +.15 for November, instead it came out at -.3 and they revised down the prior month to -.17

* With all the horrible economic data, horrible retail sales, horrible corporate earnings it is obvious that the U.S. economy is heading toward recession

* As the economy slows and the Fed is forced to admit it was wrong, there goes it's credibility

* This coming collapse is the culmination of decades of bad monetary policy

* Where we really went off the rails was in the Greenspan era, which sent us off on this trajectory of loose money

* Yellen admitted in her recent press conference that they will still roll over all the maturing bonds and re-investing all the interest on those bonds so the Fed's balance sheet will continue to grow

* The bubble economy will blow up in her face, though, because the market will not be able to withstand a sustained correction and it will require unprecedented quantitative easing that will result in failure

* I wanted to discuss on this podcast an Sunday eening article on CNBC, "The Peter Meter"  that really took me to task on my gold predictions

* They did not look at any of my many accurate predictions; they focused on the ones that haven't worked out

* They singled me out for criticism on an 2012 interview I did with them when gold was at $1,700 and I said it could go to $5,000.  I never put a time horizon on my prediction, but this was labled as one of the worst

* Back in 2005 I did an interview with Mark Haynes when gold was still below 500 and it more than tripled from that price

* You can see articles I wrote recommending gold back in 2003 when gold was even below 500.

* It is true that I did not see the near 40% correction in the price of gold because I thought the market would see past the bubbles

* CNBC claims my prediction to be among the least prescient ever made

* Twice in the last 15 years the U.S. stock market lost more than half its value

* Anybody who was on CNBC in 1999 and recommended the stock market, which was about every guest, made a worse prediction than that

* Every guest on CNBC in 2007 and 2008 and recommended the stock market made a worse prediction

* What about all the dot com stocks that went to zero?

* Obviously, CNBC is singling my gold prediction out above these other significantly less prescient predictions

* If you look at all the predictions on CNBC over the years,

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Recording this podcast on Monday afternoon; the stock market closed about an hour ago, and the stock market was up over 100 points today, but the more dramatic days happened on Thrusday and Friday

Despite the initial euphoric increase in the stock market that greeted the Fed's highly anticipated quarter-point rate hike on Wednesday the market tanked on Thursday and Friday, down over 600 points

The most significant part of the sell-offs is that on both days the markets closed on the lows for the day

The Fed is getting dangerously close to losing what remains of its credibility

The Credibility Bubble might be the first to deflate in this recession

The Fed has been saying that the economy would be strong enough for a rate hike by the end of the year, so if they did not raise rates in December it would have been an admission that they were wrong

The Fed raised rates even though the economic data showed that, based on their own criteria, they should not have done it

More and more people are questioning whether the Fed has made a policy mistake

Look at the data that came out since the rate hike:

On Friday we got the PMI Flash Services Index came out at 53.7 - last month it was 56.5

The Kansas City Fed Manufacturing - last month was +1 and December was -8

Today we got the Chicago Fed National Activity, expected to be +.15 for November, instead it came out at -.3 and they revised down the prior month to -.17

With all the horrible economic data, horrible retail sales, horrible corporate earnings it is obvious that the U.S. economy is heading toward recession

As the economy slows and the Fed is forced to admit it was wrong, there goes it's credibility

This coming collapse is the culmination of decades of bad monetary policy

Where we really went off the rails was in the Greenspan era, which sent us off on this trajectory of loose money

Yellen admitted in her recent press conference that they will still roll over all the maturing bonds and re-investing all the interest on those bonds so the Fed's balance sheet will continue to grow

The bubble economy will blow up in her face, though, because the market will not be able to withstand a sustained correction and it will require unprecedented quantitative easing that will result in failure

I wanted to discuss on this podcast an Sunday eening article on CNBC, "The Peter Meter"  that really took me to task on my gold predictions

They did not look at any of my many accurate predictions; they focused on the ones that haven't worked out

They singled me out for criticism on an 2012 interview I did with them when gold was at $1,700 and I said it could go to $5,000.  I never put a time horizon on my prediction, but this was labled as one of the worst

Back in 2005 I did an interview with Mark Haynes when gold was still below 500 and it more than tripled from that price

You can see articles I wrote recommending gold back in 2003 when gold was even below 500.

It is true that I did not see the near 40% correction in the price of gold because I thought the market would see past the bubbles

CNBC claims my prediction to be among the least prescient ever made

Twice in the last 15 years the U.S. stock market lost more than half its value

Anybody who was on CNBC in 1999 and recommended the stock market, which was about every guest, made a worse prediction than that

Every guest on CNBC in 2007 and 2008 and recommended the stock market made a worse prediction

What about all the dot com stocks that went to zero?

Obviously, CNBC is singling my gold prediction out above these other significantly less prescient predictions

If you look at all the predictions on CNBC over the years, my predictions have been better than most.

The CNBC article also took me to task on my view that quantitative easing would not help the economy, but only create asset bubbles. That criticism will be proven wrong, as the the economy has not revived under QE.

*  Yesterday, the Federal Reserve finally met market expectations and increased interest rates to .25%

* Actually, the official rate was 0 - .25 and now, the official rate is .25 to .5

* The actual rate was always in the middle between zero and .25

* Assuming the Fed tries to keep the rate closer to .25 than .5, the actual increase in rates could be less than 25 basis points

* The initial reaction to this rate hike is to proclaim the end of the era of "cheap money"

* .25% is still cheap money.  Alan Greenspan never went below 1%.

* Some people are saying "Peter Schiff was wrong" because the Fed did raise rates

* Actually, in a recent podcast I noted that the Fed changed their narrative away from "data dependent" to an expression of faith in the economy, opening the door to a symbolic rate hike unsupported by data

* I was alone throughout the year believing that the Fed would not raise rates prior to this change in narrative

* The Fed was afraid that to not raise rates this year, it would be a vote of "no confidence" in the economy

* Ultimately, the Fed felt that even though the data didn't justify it, they had to raise rates because of psychological damage to the markets

* If the economy were really sound, we would not need Janet Yellen to express confidence in the economy - a strong economy creates its own confidence.

* We don't need propaganda in the form of a symbolic rate hike

* The Fed did not even have the last recession in their forecast until we were well into the recession, so who cares about the Fed's level of confidence?

* In an earlier podcast, I referred to Ben Bernanke's comment that he felt he was a representative of the administration

* Janet Yellen is creating a sense of confidence in the economy for the same reason

* The Fed is now pretending that we will have more rate hikes in the future, forecasting 4 more hikes during 2016

* I believe the economy is not strong enough to accommodate these rate hikes and neither does Janet Yellen

* The ultimate irony is the data that came out the morning of the rate hike

* Industrial Production: they were forecasting a drop of .2, which is still bad, instead, we got a drop of .6

* The PMI Manufacturing Index was the lowest in many years, 51.3 down from 52.6

* More bad news: The Philadelphia Fed last month showed an increase of 1.9, so 1.2 was forcasted - instead we dropped 5.9

* These numbers show an economy that is decelerating

* If you look at a chart, these numbers are about to crash even lower

* These numbers are flashing recession, recession, recession

* If you're a Keynsenian, the prescription for the condition this economy has would be stimulus, not an interest rates

* The air was coming out of this bubble anyway, all the Fed did was increase the hole for the air to come out

* The market was up just before the hike, which was interpreted as a green light to raise rates. I said in an earlier podcast that that would be a mistake, because the market would then tank, and that is what happened today

* Transports have been the weakest of all, despite oil prices

* We continue to see weakness in the high-yield bond market as the air is coming out of that bubble

* It is probable that the stock market is going to get a lot worse between now and the time the Fed is supposed to hike rates again

* But the problem for the Fed now, is if the market starts to tank now, they can't do anything until the jobs numbers begin to show weakness

* Janet Yellen actually referred to this move as "ahead of the curve", meaning that if she waited any longer, she would overshoot on her objectives:

* One was unemployment.  How can that get too low? Especially with so many people out of the labor market,

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Yesterday, the Federal Reserve finally met market expectations and increased interest rates to .25%

Actually, the official rate was 0 - .25 and now, the official rate is .25 to .5

The actual rate was always in the middle between zero and .25

Assuming the Fed tries to keep the rate closer to .25 than .5, the actual increase in rates could be less than 25 basis points

The initial reaction to this rate hike is to proclaim the end of the era of "cheap money"

.25% is still cheap money.  Alan Greenspan never went below 1%.

Some people are saying "Peter Schiff was wrong" because the Fed did raise rates

Actually, in a recent podcast I noted that the Fed changed their narrative away from "data dependent" to an expression of faith in the economy, opening the door to a symbolic rate hike unsupported by data

I was alone throughout the year believing that the Fed would not raise rates prior to this change in narrative

The Fed was afraid that to not raise rates this year, it would be a vote of "no confidence" in the economy

Ultimately, the Fed felt that even though the data didn't justify it, they had to raise rates because of psychological damage to the markets

If the economy were really sound, we would not need Janet Yellen to express confidence in the economy - a strong economy creates its own confidence.

We don't need propaganda in the form of a symbolic rate hike

The Fed did not even have the last recession in their forecast until we were well into the recession, so who cares about the Fed's level of confidence?

In an earlier podcast, I referred to Ben Bernanke's comment that he felt he was a representative of the administration

Janet Yellen is creating a sense of confidence in the economy for the same reason

The Fed is now pretending that we will have more rate hikes in the future, forecasting 4 more hikes during 2016

I believe the economy is not strong enough to accommodate these rate hikes and neither does Janet Yellen

The ultimate irony is the data that came out the morning of the rate hike

Industrial Production: they were forecasting a drop of .2, which is still bad, instead, we got a drop of .6

The PMI Manufacturing Index was the lowest in many years, 51.3 down from 52.6

More bad news: The Philadelphia Fed last month showed an increase of 1.9, so 1.2 was forcasted - instead we dropped 5.9

These numbers show an economy that is decelerating

If you look at a chart, these numbers are about to crash even lower

These numbers are flashing recession, recession, recession

If you're a Keynsenian, the prescription for the condition this economy has would be stimulus, not an interest rates

The air was coming out of this bubble anyway, all the Fed did was increase the hole for the air to come out

The market was up just before the hike, which was interpreted as a green light to raise rates. I said in an earlier podcast that that would be a mistake, because the market would then tank, and that is what happened today

Transports have been the weakest of all, despite oil prices

We continue to see weakness in the high-yield bond market as the air is coming out of that bubble

It is probable that the stock market is going to get a lot worse between now and the time the Fed is supposed to hike rates again

But the problem for the Fed now, is if the market starts to tank now, they can't do anything until the jobs numbers begin to show weakness

Janet Yellen actually referred to this move as "ahead of the curve", meaning that if she waited any longer, she would overshoot on her objectives:

One was unemployment.  How can that get too low? Especially with so many people out of the labor market, is she worried about the economy creating too many jobs?

She is talking about the outdated Phillips Curve, which states that too many people with jobs creates inflation

Then she said we might overshoot on GDP - meaning that if interest rates didn't go up, the GDP would be too strong.