The Peter Schiff Show Podcast

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Mainstream Forecasts Incorporating Recession

We are in the early stages of this bubble popping.  That's why, if you look now at a lot of the mainstream forecasts, all of a sudden, they're all incorporating recession. The probability of recession is now very high over the next couple of years.  I read J.P. Morgan now is saying that there is a 70% probability that the U.S. is in recession by the end of 2020. In fact, most of the forecasts I'm looking at now predict that the U.S. will either enter recession next year or in the following year. This is a huge change from where people were just a few months ago, where there were no recessions as far as the eye can see. Now we're staring them in the face.

Third Consecutive Drop in Small Business Confidence

One thing that really hasn't changed so much is that you have all this optimism that still abounds. It doesn't make sense to me that people could be so optimistic about an economy that they concede is so close to recession. Now, I think on Tuesday we did get a drop in small business confidence, it's the third consecutive monthly drop, and three months ago, small business confidence hit an all-time record high. But if you have more of these small business owners thinking that we are a year away from recession, in fact less than a year if you think recession is going to start in 2019 - we're going to be in 2019 in a few weeks. So, if you think recession is so close, how much longer can you remain so confident?

The Fed Doesn't Have Recession in its Forecast

Now, of course, the Fed doesn't have recession in its forecast; not even close.  The National debt is careening toward $22 trillion and these guys are putting out their rosy estimates for economic growth.  They're not starting to factor in these recession forecasts that are becoming more and more mainstream.

Fed Funds Rate in Negative Territory in Real Terms

The problem for the Federal Reserve is that they are trying to keep this bubble from imploding, but the task is impossible because enough air has already come out of it. Interest rates have already risen to the point where the camel's back has been broken. The Fed has now backtracked into admitting that we're just slightly below "neutral". We're one more rate hike away from "neutral" even though one more rate hike will still leave the Fed Funds Rate in negative territory in real terms, not in nominal terms. If you accept the government's inflation numbers and we got CPI and PPI numbers that came out yesterday and today - if you look at the core, we've got the hottest core in 7 years.

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Pearl Harbor Day 2018: A Very Interesting Technical Day

Today is December 7th, a day that will live in infamy.  Unless you are a Millennial who was educated in the U.S. public school system.  In which case you have absolutely no idea what happened on December 7th 1941. You've probably never heard of Pearl Harbor, you certainly don't know where Pearl Harbor is located.  Maybe you've heard of World War II, but a lot of them haven't.  Even those who have heard of World War II probably have no idea who fought, or even who won.

As Goes the NASDAQ, so Goes  the Rest of the Market

Today, December 7th maybe won't live in infamy, but it seems to me it was a very interesting technical day in the U.S. stock market, which should give the bulls on the stock market something to think about. I think the action today, particularly in the NASDAQ, (I think as goes the NASDAQ, so goes  the rest of the market) but that action was particularly significant.

An "Outside Day"

One of the more reliable technical patterns is an "Outside Day". An outside day is when you trade above and below the highs and lows of the previous day, and then close above or below one of those lows. It's an outside day even if you close somewhere in the middle. An "Inside Day" is when you trade within the range of the previous day; you don't take out the high or the low. But the most significant type of an outside day is an outside day where you close above or below the previous day's high or low. That would be called an "Outside Reversal Day".  It' s a positive if you could take out the previous day's low, but then rally and then close above the previous day's high.

The Russell 2000 and the NASDAQ Took out Yesterday's Lows

What the NASDAQ did today was the opposite of that.  The NASDAQ rallied this morning on, I guess the weaker than expected jobs numbers and took out the highs from yesterday.  In fact, all of the major markets - the Dow, the NASDAQ, the Russell 2000 - they all took out yesterday's highs. But then they came crashing down,  The Dow did not take out yesterday's low - so the Dow did not have an outside day.  But both the Russell 2000 and the NASDAQ took out yesterday's lows.

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

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Pearl Harbor Day 2018: A Very Interesting Technical Day

Today is December 7th, a day that will live in infamy.  Unless you are a Millennial who was educated in the U.S. public school system.  In which case you have absolutely no idea what happened on December 7th 1941. You've probably never heard of Pearl Harbor, you certainly don't know where Pearl Harbor is located.  Maybe you've heard of World War II, but a lot of them haven't.  Even those who have heard of World War II probably have no idea who fought, or even who won.

As Goes the NASDAQ, so Goes  the Rest of the Market

Today, December 7th maybe won't live in infamy, but it seems to me it was a very interesting technical day in the U.S. stock market, which should give the bulls on the stock market something to think about. I think the action today, particularly in the NASDAQ, (I think as goes the NASDAQ, so goes  the rest of the market) but that action was particularly significant.

An "Outside Day"

One of the more reliable technical patterns is an "Outside Day". An outside day is when you trade above and below the highs and lows of the previous day, and then close above or below one of those lows. It's an outside day even if you close somewhere in the middle. An "Inside Day" is when you trade within the range of the previous day; you don't take out the high or the low. But the most significant type of an outside day is an outside day where you close above or below the previous day's high or low. That would be called an "Outside Reversal Day".  It' s a positive if you could take out the previous day's low, but then rally and then close above the previous day's high.

The Russell 2000 and the NASDAQ Took out Yesterday's Lows

What the NASDAQ did today was the opposite of that.  The NASDAQ rallied this morning on, I guess the weaker than expected jobs numbers and took out the highs from yesterday.  In fact, all of the major markets - the Dow, the NASDAQ, the Russell 2000 - they all took out yesterday's highs. But then they came crashing down,  The Dow did not take out yesterday's low - so the Dow did not have an outside day.  But both the Russell 2000 and the NASDAQ took out yesterday's lows.

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Dow Volatility Started with Huawei News

We had another very volatile day today on Wall Street, and it really got started last night with the news of the arrest in Canada of the CFO of the Chinese company, Huawei. Her father is the founder of the company and a very prominent, powerful and influential man in China and this set the mood.  the Dow futures dropped initially, I think about 500 points as soon as the story broke.  Obviously, anything that may throw a monkey wrench in the supposed deal that was made over dinner, mano a mano, down in South America between Trump and Xi.  So this caused some problems.

Dow Down About 780 on the Lows

The market clawed its way back; I think we were down maybe 200 and change, but then we started selling off early in the morning and when the Dow Jones opened up, we were down maybe about 400-500 very quickly and we sold off almost down to 800 points. The Dow was down about 780 points on the lows.  This is following yesterday's market holiday honoring the memory of the late President George Herbert Walker Bush. That day of mourning, however did not do anything to stop the carnage on Wall Street.

Market Clawed its Way Back on Fed "Wait and See" News

What it took was an article that came out later in the day in the Wall Street Journal.  That article basically said that the Fed was considering a new "Wait and See" strategy after the December rate hike. And the odds of a December rate hike, which are coming up, the probability is about 75%, which is lower than it was, so there is still a chance that the Fed does not hike in December. But according to the Wall Street Journal doesn't take place immediately.  This is after the December hike. So for 2019, the article suggests that maybe there'll be even fewer rate hikes than the markets believed.

Debt Service Costs Creating a Drag

Everything was weak until we got this news from the Fed that turned a lot of the tech stocks around and got the market moving higher. I don't think this does anything, because, it doesn't take the December rate hike off the table, and if the Fed raises rates in December, then all the problems that already exist because of higher rates, will be bigger. This means mortgage rates will be going up. Debt service costs will go up. One of the big drags on the economy now is that debt service costs have gone up. So if the Fed adds to that pain by following through with another rate hike in December, it will be just another weight on the economy's back. The Fed is still talking about raising rates in 2019 - they're saying one more, and we're going to wait and see.

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

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Dow Volatility Started with Huawei News

We had another very volatile day today on Wall Street, and it really got started last night with the news of the arrest in Canada of the CFO of the Chinese company, Huawei. Her father is the founder of the company and a very prominent, powerful and influential man in China and this set the mood.  the Dow futures dropped initially, I think about 500 points as soon as the story broke.  Obviously, anything that may throw a monkey wrench in the supposed deal that was made over dinner, mano a mano, down in South America between Trump and Xi.  So this caused some problems.

Dow Down About 780 on the Lows

The market clawed its way back; I think we were down maybe 200 and change, but then we started selling off early in the morning and when the Dow Jones opened up, we were down maybe about 400-500 very quickly and we sold off almost down to 800 points. The Dow was down about 780 points on the lows.  This is following yesterday's market holiday honoring the memory of the late President George Herbert Walker Bush. That day of mourning, however did not do anything to stop the carnage on Wall Street.

Market Clawed its Way Back on Fed "Wait and See" News

What it took was an article that came out later in the day in the Wall Street Journal.  That article basically said that the Fed was considering a new "Wait and See" strategy after the December rate hike. And the odds of a December rate hike, which are coming up, the probability is about 75%, which is lower than it was, so there is still a chance that the Fed does not hike in December. But according to the Wall Street Journal doesn't take place immediately.  This is after the December hike. So for 2019, the article suggests that maybe there'll be even fewer rate hikes than the markets believed.

Debt Service Costs Creating a Drag

Everything was weak until we got this news from the Fed that turned a lot of the tech stocks around and got the market moving higher. I don't think this does anything, because, it doesn't take the December rate hike off the table, and if the Fed raises rates in December, then all the problems that already exist because of higher rates, will be bigger. This means mortgage rates will be going up. Debt service costs will go up. One of the big drags on the economy now is that debt service costs have gone up. So if the Fed adds to that pain by following through with another rate hike in December, it will be just another weight on the economy's back. The Fed is still talking about raising rates in 2019 - they're saying one more, and we're going to wait and see.

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

No Relief

As I said on yesterday's podcast, I did not we had a "Wall Street Relief Rally", based on the stand down or truce in the trade war following the backtracking by the Fed on the potential number of rate hikes and the distance we were from neutrality.

Interest Rates Anything But Neutral

By the way, yesterday I referred to the rate hikes as normal; I should have said neutral - obviously what we have now is not even close to being normal. The Fed is trying to convince us that the new "neutral" rate of interest is now lower than what was considered neutral in the past. Why is that? Because we have such an enormous amount of debt now, the Fed has to keep interest rates much lower in order to achieve neutrality.  But, of course, if the Fed needs to keep interest rates low, it's not neutral. Those low interest rates are actually stimulative. What the Fed is trying to do is use artificially low interest rates to prop up the economy and then claim that those artificially low rates are neutral. They're anything but neutral. They are accommodative.  This is cheap money, this easy money, and ultimately it is going to set off massive inflation.

A Terrible Day, Technically

Nobody seems to understand that yet, but that's what's coming. People are continuing to be complacent despite today's substantial drop in the value of stocks. Today the Dow was down just shy of 800 points - 799 points.  At the lows, it was down over 800. We didn't close on the exact low; maybe they're going to somehow claim that that was a rally or something - the fact that we closed slightly off the lows.  This was a terrible day, technically, and in fact I mentioned again on yesterday's podcast, the fact that the market made the highs on the open - it did not trade very well, and it looked to me that we would fall down. I did not know that we would drop this much this quickly, but it doesn't surprise me.

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

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

No Relief

As I said on yesterday's podcast, I did not we had a "Wall Street Relief Rally", based on the stand down or truce in the trade war following the backtracking by the Fed on the potential number of rate hikes and the distance we were from neutrality.

Interest Rates Anything But Neutral

By the way, yesterday I referred to the rate hikes as normal; I should have said neutral - obviously what we have now is not even close to being normal. The Fed is trying to convince us that the new "neutral" rate of interest is now lower than what was considered neutral in the past. Why is that? Because we have such an enormous amount of debt now, the Fed has to keep interest rates much lower in order to achieve neutrality.  But, of course, if the Fed needs to keep interest rates low, it's not neutral. Those low interest rates are actually stimulative. What the Fed is trying to do is use artificially low interest rates to prop up the economy and then claim that those artificially low rates are neutral. They're anything but neutral. They are accommodative.  This is cheap money, this easy money, and ultimately it is going to set off massive inflation.

A Terrible Day, Technically

Nobody seems to understand that yet, but that's what's coming. People are continuing to be complacent despite today's substantial drop in the value of stocks. Today the Dow was down just shy of 800 points - 799 points.  At the lows, it was down over 800. We didn't close on the exact low; maybe they're going to somehow claim that that was a rally or something - the fact that we closed slightly off the lows.  This was a terrible day, technically, and in fact I mentioned again on yesterday's podcast, the fact that the market made the highs on the open - it did not trade very well, and it looked to me that we would fall down. I did not know that we would drop this much this quickly, but it doesn't surprise me.

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Interest Rates and Trade War

The two things that everybody seems to agree were weighing down the markets were the Fed's relentless drive to normalize interest rates, and figure out where "normal" was, and, of course, the trade war - the threat of additional tariffs overhanging the markets.  So I think it was pretty clear to President Trump who is hanging his hat on the stock market, has decided that the stock market performance is the best barometer of his Presidency. So the fact that the stock market was falling was really a big problem for the President so he had to do what he could to try to get the stock market to go back up.

Fed Restated "Normal"

The first part of the two-pronged attack was the interest rates. Whether he was able to convince Powell to change his tune or whether Trump just got lucky and the Fed decided to backtrack, as I mentioned in my last podcast, the Fed has now said, "We are just below normal." Meaning that we only need one more rate hike before we get to normal, whereas in the past the Fed had said that normal was quite a ways away, and that the Fed would have to raise rates many, many more times in order to achieve normal.  And of course, anybody who knows anything about the history of interest rates would have to agree that where we are now, at 2% is historically abnormal. It obviously could not be considered neutral based on any kind of past precedent. So the fact that the market was able to backtrack so quickly really threw a bone that the market and Donald Trump badly needed..

Trade Tensions Weighing Down the Market

But the other factor that was weighing down the market was all the trade tensions, and all the talk about the tariffs that were going to be imposed in less than a month. The first of next year we were going to get these 25% across-the-board tariffs.

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

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

Interest Rates and Trade War

The two things that everybody seems to agree were weighing down the markets were the Fed's relentless drive to normalize interest rates, and figure out where "normal" was, and, of course, the trade war - the threat of additional tariffs overhanging the markets.  So I think it was pretty clear to President Trump who is hanging his hat on the stock market, has decided that the stock market performance is the best barometer of his Presidency. So the fact that the stock market was falling was really a big problem for the President so he had to do what he could to try to get the stock market to go back up.

Fed Restated "Normal"

The first part of the two-pronged attack was the interest rates. Whether he was able to convince Powell to change his tune or whether Trump just got lucky and the Fed decided to backtrack, as I mentioned in my last podcast, the Fed has now said, "We are just below normal." Meaning that we only need one more rate hike before we get to normal, whereas in the past the Fed had said that normal was quite a ways away, and that the Fed would have to raise rates many, many more times in order to achieve normal.  And of course, anybody who knows anything about the history of interest rates would have to agree that where we are now, at 2% is historically abnormal. It obviously could not be considered neutral based on any kind of past precedent. So the fact that the market was able to backtrack so quickly really threw a bone that the market and Donald Trump badly needed..

Trade Tensions Weighing Down the Market

But the other factor that was weighing down the market was all the trade tensions, and all the talk about the tariffs that were going to be imposed in less than a month. The first of next year we were going to get these 25% across-the-board tariffs.

RATE AND REVIEW this podcast on Facebook.

https://www.facebook.com/PeterSchiff/reviews/

The Fed's Game of Chicken

The big news was yesterday, when Fed Chairman, Jerome Powell, basically flinched. I've been talking about the game of chicken that the Federal Reserve has been playing with the markets. The way the game of chicken goes, is the markets keep moving lower and the Fed keeps talking about how great the economy is and how many rate hikes are coming in the future. Somebody has to flinch - somebody has to blink. It's like you have these two automobiles driving toward each other, and there's going to be a major crash unless somebody turns the wheel.It seems like it was Jerome Powell who turned the wheel first, and, in fact, was chicken.

The Fed Is Worried About All Asset Prices, Not Just the Stock Market

As much as the Fed wants to pretend they don't care about the stock market - they absolutely care about the stock market. They are tremendously worried about a weakening stock market.  Remember the goal of quantitative easing was to lift the stock market - to create a wealth effect and it was that stock market-created wealth that was going to drive consumption and the economy. And it wasn't just the stock market; it was also the real estate market.  So the Fed is worried about all asset prices, not just the stock market.  Clearly the real estate market is in even more trouble than the stock market, but both of these markets were headed lower, and I think that is what really prompted the Fed to blink - to swerve in this game of chicken.

Powell Suddenly Dials Back the Narrative

Now, of course you also had President Trump pressuring the Fed, you had Mnuchin putting some pressure on the Fed, which I think should also be a worrying factor.  We don't really know. There was a lot of speculation about what was behind the Fed's change of heart - change in policy.  After all, up until yesterday, even when you had the Vice Chair speak, the tone was very hawkish: "Yep, we've got lots of rate hikes coming." And now all of a sudden, Powell dials it all back.  Basically, what Powell said that convinced people that maybe there will not be as many rate hikes in the future, is, "We're just below neutral. We're almost there, maybe one more rate hike ought to do it."

Is 2.25% to 2.5% Neutral?

First of all, we're still at 2%, so that would imply neutral is 2.25% or 2.5%. That really shows you how low the neutrality bar has been lowered given the enormity of the debt bubble that have.  Once upon a time, and not too long ago, a 2.5% Fed Funds rate would have been considered highly stimulative.

 

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