The Peter Schiff Show Podcast

Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

No Surprises from the Fed: Quarter Point Reduction

A lot has actually happened since I recorded my last podcast on Friday. I want to start with what happened today and then work backwards.  First of all the big news of the day is the Federal Reserve did exactly what the markets expected and reduced interest rates by a quarter point.

Fed: "Mid-Course Correction"?

This is the second quarter point reduction since the Fed reversed course on monetary policy and started what it once called a 'mid-course correction".  The markets didn't really like that, so the Fed kind of walked that back. Although, in the press conference today, Powell was asked about the "mid-course correction" and he kind of dodged it a little bit, but still maintained the pretense that all is well in the economy. But anyway, the Fed delivered the quarter point cut #2.  It is now targeting the Fed Funds Rate at between 1.75% and 2%.

Short Term Interest Rates Back Below 2%

So we now have short-term interest rates back below 2% - certainly on the way to zero, maybe even lower, we'll see.  Jerome Powell was specifically asked about negative interest rates during the Q&A session following the announcement.  He basically said the Fed is not really thinking about negative interest rates, or don't think they're going to be doing  negative interest rates, but of course we'll see what happens when we get to zero, and the problems are not solved. The Fed may well do negative interest rates; they may well not want to let that cat out of the bag just yet.

Bullard:  "Interest Rates are Too High"

At one point there was some anticipation that the Fed would do 50 basis points but by the time we actually got the announcement this morning, I don't think anybody was really looking for 50 basis points. Although, in the decision to reduce rates, Jim Bullard actually dissented and said that he wanted a 50 basis point rate cut, rather than the 25, but there were 2 other dissenters who didn't want any cuts at all.

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Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

No Surprises from the Fed: Quarter Point Reduction

A lot has actually happened since I recorded my last podcast on Friday. I want to start with what happened today and then work backwards.  First of all the big news of the day is the Federal Reserve did exactly what the markets expected and reduced interest rates by a quarter point.

Fed: "Mid-Course Correction"?

This is the second quarter point reduction since the Fed reversed course on monetary policy and started what it once called a 'mid-course correction".  The markets didn't really like that, so the Fed kind of walked that back. Although, in the press conference today, Powell was asked about the "mid-course correction" and he kind of dodged it a little bit, but still maintained the pretense that all is well in the economy. But anyway, the Fed delivered the quarter point cut #2.  It is now targeting the Fed Funds Rate at between 1.75% and 2%.

Short Term Interest Rates Back Below 2%

So we now have short-term interest rates back below 2% - certainly on the way to zero, maybe even lower, we'll see.  Jerome Powell was specifically asked about negative interest rates during the Q&A session following the announcement.  He basically said the Fed is not really thinking about negative interest rates, or don't think they're going to be doing  negative interest rates, but of course we'll see what happens when we get to zero, and the problems are not solved. The Fed may well do negative interest rates; they may well not want to let that cat out of the bag just yet.

Bullard:  "Interest Rates are Too High"

At one point there was some anticipation that the Fed would do 50 basis points but by the time we actually got the announcement this morning, I don't think anybody was really looking for 50 basis points. Although, in the decision to reduce rates, Jim Bullard actually dissented and said that he wanted a 50 basis point rate cut, rather than the 25, but there were 2 other dissenters who didn't want any cuts at all.

Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

Dow 200 Points from Record High

It was pretty quiet today in the equity markets; the Dow Jones managed to inch up 37 points, closing at 27,219 but, you know, how we're less than 200 points away from a new all-time record high in the Dow Jones.

Long on Bonds? Bad Friday 13th!

But the real action today was in the bond market. If you're suspicious on this Friday the 13th, and you were looking for bad luck, that's where you would have found it, if you were long the bond market.  Now, I've been talking about this bond market bubble for a long time - it's been inflating for a long time. Whether or not it's actually popped, well, we'll have to wait a little longer to find out.  But the carnage in the bond market that I mentioned on my last podcast has continued, with bonds continuing to suffer.

Biggest Single Day Decline on 10-Year Treasury

In fact, today was the biggest single day decline of the entire move.  The yield on the 10-year Treasury up to 1.903%.  Now, of course, it's still a very, very low yield, but when you consider that a week ago, we were as low as 1.429%.  That is a huge increase, percentage-wise, in the yield on the 10-year bond, which means a big drop in prices.

Risk in Bonds if Interest Rates Go Up

I'm not sure the percentage decline; maybe 5 or 6% was the drop, which, in the stock market, that's not a big deal.  Stock prices could drip 5% in a week - no big deal. But when the price of a bond drops by 5% in a week, especially a Treasury bond - people think about Treasury bonds as being risk-free - well, there's actually a lot of risk.  Especially when you're buying a bond with such a low coupon. There's a lot of risk if interest rates go up, then the value of that bond is going to go down.

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

Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

Dow 200 Points from Record High

It was pretty quiet today in the equity markets; the Dow Jones managed to inch up 37 points, closing at 27,219 but, you know, how we're less than 200 points away from a new all-time record high in the Dow Jones.

Long on Bonds? Bad Friday 13th!

But the real action today was in the bond market. If you're suspicious on this Friday the 13th, and you were looking for bad luck, that's where you would have found it, if you were long the bond market.  Now, I've been talking about this bond market bubble for a long time - it's been inflating for a long time. Whether or not it's actually popped, well, we'll have to wait a little longer to find out.  But the carnage in the bond market that I mentioned on my last podcast has continued, with bonds continuing to suffer.

Biggest Single Day Decline on 10-Year Treasury

In fact, today was the biggest single day decline of the entire move.  The yield on the 10-year Treasury up to 1.903%.  Now, of course, it's still a very, very low yield, but when you consider that a week ago, we were as low as 1.429%.  That is a huge increase, percentage-wise, in the yield on the 10-year bond, which means a big drop in prices.

Risk in Bonds if Interest Rates Go Up

I'm not sure the percentage decline; maybe 5 or 6% was the drop, which, in the stock market, that's not a big deal.  Stock prices could drip 5% in a week - no big deal. But when the price of a bond drops by 5% in a week, especially a Treasury bond - people think about Treasury bonds as being risk-free - well, there's actually a lot of risk.  Especially when you're buying a bond with such a low coupon. There's a lot of risk if interest rates go up, then the value of that bond is going to go down.

Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

Millions of Americans were Affected by the Terrorist Attack on 9/11

Today is the 18- year anniversary of the tragic events that surrounded the terrorist attack on the World Trade Center and the Pentagon back in 2001.  I do not wish to make light of the suffering of the individuals who died tragically, not only the people who lost their lives on the ground, but also the ones aboard the airplane that crashed into a field in Pennsylvania. And, of course, thousands of families were profoundly affected by those events, and they're still affected by those events today.

Loss of Liberty and Freedom

So, what I am about to say is not to minimize their suffering, but there are 300 million or so Americans who were not personally affected by those events, other than the fact that we certainly empathize with our fellow citizens who did have to endure the tragedy on a more personal level.  But on a broader level, the biggest loss, historically, from those events is not just the loss of lives and the family members who lost loved ones, but all Americans who lost individual liberty and freedom.

Self-Inflicted Loss

That is the real tragedy, historic tragedy of 9/11. The tremendous loss of individual liberty and freedom. America today is a far less free society than it was prior to those attacks 18 years ago. And that means that the terrorists won. They didn't win based on the damage that they inflicted.  They won based on the damage that we inflicted on ourselves. The self-inflicted wounds are much greater on a national scale than the terrorists' direct acts.

And it's not just the 300 million Americans who are alive today. It's all the Americans yet to be born who are going to be born into a society that is far less free than America would have been but for these attacks.

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Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

Millions of Americans were Affected by the Terrorist Attack on 9/11

Today is the 18- year anniversary of the tragic events that surrounded the terrorist attack on the World Trade Center and the Pentagon back in 2001.  I do not wish to make light of the suffering of the individuals who died tragically, not only the people who lost their lives on the ground, but also the ones aboard the airplane that crashed into a field in Pennsylvania. And, of course, thousands of families were profoundly affected by those events, and they're still affected by those events today.

Loss of Liberty and Freedom

So, what I am about to say is not to minimize their suffering, but there are 300 million or so Americans who were not personally affected by those events, other than the fact that we certainly empathize with our fellow citizens who did have to endure the tragedy on a more personal level.  But on a broader level, the biggest loss, historically, from those events is not just the loss of lives and the family members who lost loved ones, but all Americans who lost individual liberty and freedom.

Self-Inflicted Loss

That is the real tragedy, historic tragedy of 9/11. The tremendous loss of individual liberty and freedom. America today is a far less free society than it was prior to those attacks 18 years ago. And that means that the terrorists won. They didn't win based on the damage that they inflicted.  They won based on the damage that we inflicted on ourselves. The self-inflicted wounds are much greater on a national scale than the terrorists' direct acts.

And it's not just the 300 million Americans who are alive today. It's all the Americans yet to be born who are going to be born into a society that is far less free than America would have been but for these attacks.

Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

The Numbers Really Look Bad in Private Payrolls

Where the  numbers really start  to get bad is when you look at the private payrolls.  There, they were expecting 150,000 private sector jobs created. The private sector jobs are far more important than the government jobs.  The private sector jobs are self-sustaining. The tax payers are on the hook for paying the salaries of the government workers and the private sector employees, by and large are actually productive.  They're making our lives better.

Manufacturing is Very Weak

They were looking for 150,000 private sector jobs; we got just 96,000 jobs. AND, they revised last month's private payrolls down from 148,000 to 131,000.  Manufacturing - very weak: they were looking for 8,000 jobs - instead, we added just 3,000 manufacturing jobs in August and last month, July, they originally said that we created 16,000 manufacturing jobs and we only created 4,000 manufacturing jobs.

34,000 Jobs Created in Category "Government"

Now if you actually look at the breakdown of all the jobs that were created, 34,000 jobs were created in the category of "government".  So, of all the different job categories, the one that added the most was government - 34,000 jobs. I think about 20,000 of these people were temporary hires associated with the 2020 Census. Where's the money coming from to pay for these government jobs?  It's being borrowed. We're borrowing more money to hire more government workers.  Of course, ultimately the taxpayers are on the hook for paying all these salaries, for paying interest on the money  borrowed, to pay all these salaries.

Slowest Job Growth in Private Sector Creation in 8 Years

In fact, if you look at the private sector job creation so far in the Trump Presidency, this year, 2019, is on track to have the slowest growth in private sector job creation in 8 years. Trump is out there talking about how this is the greatest economy ever - he's the greatest jobs president ever.  We've got the manufacturing sector, the weakest it's been in 10 years, we have the slowest growth in private sector payrolls in 8 years - this is a disaster!

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

Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

The Numbers Really Look Bad in Private Payrolls

Where the  numbers really start  to get bad is when you look at the private payrolls.  There, they were expecting 150,000 private sector jobs created. The private sector jobs are far more important than the government jobs.  The private sector jobs are self-sustaining. The tax payers are on the hook for paying the salaries of the government workers and the private sector employees, by and large are actually productive.  They're making our lives better.

Manufacturing is Very Weak

They were looking for 150,000 private sector jobs; we got just 96,000 jobs. AND, they revised last month's private payrolls down from 148,000 to 131,000.  Manufacturing - very weak: they were looking for 8,000 jobs - instead, we added just 3,000 manufacturing jobs in August and last month, July, they originally said that we created 16,000 manufacturing jobs and we only created 4,000 manufacturing jobs.

34,000 Jobs Created in Category "Government"

Now if you actually look at the breakdown of all the jobs that were created, 34,000 jobs were created in the category of "government".  So, of all the different job categories, the one that added the most was government - 34,000 jobs. I think about 20,000 of these people were temporary hires associated with the 2020 Census. Where's the money coming from to pay for these government jobs?  It's being borrowed. We're borrowing more money to hire more government workers.  Of course, ultimately the taxpayers are on the hook for paying all these salaries, for paying interest on the money  borrowed, to pay all these salaries.

Slowest Job Growth in Private Sector Creation in 8 Years

In fact, if you look at the private sector job creation so far in the Trump Presidency, this year, 2019, is on track to have the slowest growth in private sector job creation in 8 years. Trump is out there talking about how this is the greatest economy ever - he's the greatest jobs president ever.  We've got the manufacturing sector, the weakest it's been in 10 years, we have the slowest growth in private sector payrolls in 8 years - this is a disaster!

Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

Silver DID Join Gold's Party

Back in mid-July I titled my podcast, "Is Silver Finally Joining Gold's Party?". Well, I think we know the answer to that question. Since I recorded that podcast about a month and a half ago, the price of silver is up another 15%.  In fact, it's up better than 30% since the end of May. Silver having a sterling performance today. As I am recording this podcast, it's about an hour after the close of the U.S. market, we're up almost 90 cents an ounce. We're at 19.22.

Gold Still Meeting Resistance at $1,550

Gold, not quite having as strong a day as silver; gold isn't making a new high.  It's up $19.50 on the day: $1548.  Still having some problems with the $1550 resistance area. GLD, the exchange-traded ETF did make a new high for this move, but the spot market did not register a new high - but I think that's just a matter of days - if not hours - before that happens.

Silver is Leading the Charge

Because silver is leading the charge. It's leading gold higher; pretty much the way I said.  A week ago, I titled my podcast, "Hi Ho Silver, Away" and that prompted a number of people to comment that somehow I had just capped the silver rally by getting too optimistic on silver.  Well, that was a week ago.  We just hit $18.00, we're now over $19.00, and I said on that podcast, I thought we would have a pretty quick move up to about $20, and once we take out $20, I think this thing could really, really take off.

Overdue Move Down in the Dollar

What is going to be the catalyst, I think, for a much bigger move up in both gold and silver is going to be the long overdue move down in the dollar. Paradoxically, when the dollar starts its decline, it is even possible that gold and silver take a bit of a breather, or maybe pull back a little bit, in terms of dollars, but pull back even more in terms of other currencies. Remember, as strong as gold has been in dollars, it has been even stronger in other currencies.

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


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

Don’t miss my upcoming appearances:

The Las Vegas Trading Conference, Oct. 4-5

The Dallas Money Show October 13-14

and the New Orleans Investment Conference, Nov. 1-4

Silver DID Join Gold's Party

Back in mid-July I titled my podcast, "Is Silver Finally Joining Gold's Party?". Well, I think we know the answer to that question. Since I recorded that podcast about a month and a half ago, the price of silver is up another 15%.  In fact, it's up better than 30% since the end of May. Silver having a sterling performance today. As I am recording this podcast, it's about an hour after the close of the U.S. market, we're up almost 90 cents an ounce. We're at 19.22.

Gold Still Meeting Resistance at $1,550

Gold, not quite having as strong a day as silver; gold isn't making a new high.  It's up $19.50 on the day: $1548.  Still having some problems with the $1550 resistance area. GLD, the exchange-traded ETF did make a new high for this move, but the spot market did not register a new high - but I think that's just a matter of days - if not hours - before that happens.

Silver is Leading the Charge

Because silver is leading the charge. It's leading gold higher; pretty much the way I said.  A week ago, I titled my podcast, "Hi Ho Silver, Away" and that prompted a number of people to comment that somehow I had just capped the silver rally by getting too optimistic on silver.  Well, that was a week ago.  We just hit $18.00, we're now over $19.00, and I said on that podcast, I thought we would have a pretty quick move up to about $20, and once we take out $20, I think this thing could really, really take off.

Overdue Move Down in the Dollar

What is going to be the catalyst, I think, for a much bigger move up in both gold and silver is going to be the long overdue move down in the dollar. Paradoxically, when the dollar starts its decline, it is even possible that gold and silver take a bit of a breather, or maybe pull back a little bit, in terms of dollars, but pull back even more in terms of other currencies. Remember, as strong as gold has been in dollars, it has been even stronger in other currencies.