The Peter Schiff Show Podcast

Fed Raises Rates for the 7th Time The Federal Reserve raised interest rates today.  I think this is the 7th rate hike. Six of these rate hikes have now taken place since Donald Trump was elected; five of them since he was inaugurated. The official rate now is 1.75% to 2%.  The Federal Reserve targets the midpoint of that range.  But the Fed has been tightening a lot longer than those 7 rate hikes, because, remember, before they hiked rates, they talked about it and they were tapering.  And the tapering was a De Facto tightening, because interest rates were effectively negative while the fed was doing QE. So, as it was tapering those purchases, it was reducing how much rates were actually negative, and that was, in fact tightening. Press Conference After Every Meeting? So the Fed has been tightening for a lot longer than the markets believe, which is why the recession is probably going to come a lot sooner and be a lot deeper than what anyone believes. There were rumors that came out earlier in the week that Powell thinks there should be a press conference after every single meeting. Right now, they just do it quarterly, and when they initially announced that, the reaction in the markets was, "Oh, maybe that means more rate hikes." because every time the Fed hikes rates, they have a press conference. So the thinking was, if they have more press conferences, they would have more rate hikes. Powell's Bullish Comments Contrarian Indicator I don't think it means that at all, in fact, there is no rule that says that the Fed needs a press conference to hike rates. They can hike rates at any meeting; in fact, they don't even need a meeting! They can hike rates between meetings.  They just haven't been doing it, but there's nothing that says they can't. So, I don't think having more press conferences means anything, but people are always looking for an excuse to do something, so that might have been an excuse.  But if you listen to what Powell said at this press conference, he sounded bullish on the economy.  Listen to the words he chose.  Given the fact that he is so bullish and the fact that the Fed is a pretty good contrarian indicator, if Powell is extremely bullish, it likely means that the best days of our so-called growth are behind us, and it is all down hill from here.Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy

Market Movers: Singapore Summit We've got a lot of potentially market-moving events going on this week; we've got the Summit which I think is getting underway this evening with North Korea's President Kim Jong Un and President Trump meeting in  Singapore. No Market Move Expected on Rate Hike We've got the Federal Open Market Committee Meeting beginning tomorrow, it's a 2-day meeting ending on Wednesday.  The odds of a rate hike are 100%! So in all probability there will be a rate hike.  Eventually the Fed is going to reverse course and that will come as a surprise; odds are the surprise won't happen on Wednesday. Right now we are at one and a half to one and three quarters, so  the next hike will be one and three quarters to two. I think what might surprise the markets, is if the Fed dials back expectations for later hikes. A lot of people are still looking for 2 more hikes this year in addition to the one we will get on Wednesday.  They may indicate that they are closer to the end of their rate-hiking cycle.  Maybe they will dial back their anticipated "Quantitative Tightening". I don't think the Fed is going to deliver much at all in the way of Quantitative Tightening but they may indicate to the markets that they're not going to do as much as what the the markets believe.  But in any event, given a 100% probability of a hike this time, the hike itself will not move markets at all. What If They Don't Hike? If the Fed does not hike, that would provide a big boost to gold and a big drop in the dollar. If they do not hike, that would be an indication that there may not be as many future hikes.  But, again, if you look at how gold has traded in the past, if you look at how gold has traded in this cycle, it has generally been bullish for gold, if not the very day, then within the next few days.  Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy

Focusing on Emerging Markets I'm going to spend most of today's podcast talking about what is going on in the emerging markets, in the currency market and in the stock markets; what the speculators are doing, why they are doing it and why I think they are wrong and why I think it creates an excellent opportunity for investors to fade this trade and prepare for the ultimate reversal of these moves. Freedom Fest in Las Vegas But before I get into that, I want to talk about a few other topics of interest that happened after my last podcast.  I also want to talk about Freedom Fest in July.  I am going to Freedom Fest again, as I do every year in July. Not the greatest time of the year in Las Vegas - not that there's really a bad time to be in Las Vegas, you're going to have fun in Las Vegas whenever you go - but it is quite hot in July.  Of course I spend almost all my time indoors, so the heat really does not affect me.  And when I do go out, it is at night, and it is not so hot. The event is July 12-14 and if you have not already registered you can do it now.  It will be at the Paris Hotel & Casino; I will be there with my entire family - my wife and 3 kids.  We'll be at our booth, you can come by and have a chance to meet my wife and kids and say hello. Presentation on Tax Incentives of Working and Moving to Puerto Rico I am going to be participating in several events; I am going to be doing a talk on Puerto Rico and the tax incentives of working from and moving to Puerto Rico. Most of you should know by now, I am Puerto Rican. Puerto Rico is my main residence; I summer in Connecticut, but I am a resident of Puerto Rico. Euro Pacific Asset Management and Euro Pacific Bank are both  based in Puerto Rico. Bitcoin Debate Moderated by Naomi Brockwell Also I am going to be doing a Bitcoin debate against Jeffrey Tucker and Gary Smith - is it real, or is it Tulipmania? All of you realize what side I am on.  The debate will be moderated by Naomi Brockwell, who is known as "The Bitcoin Girl" in fact she appeared on my old radio show, the Peter Schiff Show, and I sure wish I'd listened to her and bought a bunch of bitcoin - obviously I would have a lot more money today.Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy

Current Events Not much has been going on in the economy or the financial markets the last couple of days.  Its been  pretty quiet, so I'm going to take an opportunity to record a podcast more on current events and politics, so if you're not interested in those topics, then maybe just wait for my next podcast, although, when I did the Peter Schiff Radio Show 5 days a week, there were people who complained when I did not talk about the markets, or even the economy.  But I always enjoyed talking more about politics and current events, and I think the feedback I got was more engaging, so the show was more interesting. Supreme Court Wedding Cake Case So, I am going to talk about a couple of topics today; one has to do about that ruling that came out of the Supreme Court yesterday on the baker in Colorado who had refused to bake a cake for a gay wedding.  I know I have talked about this topic in the past; it is not the first time it has come up, but it has come up again in the wake of this ruling so I want to revisit that topic. No More Swimsuit Competition for Miss America Before I get to that topic, I would like to address a lighter topic, but nonetheless just as interesting.  The Miss America Pageant is no longer going to consider beauty as the criteria for the pageant.  In other words, it is a beauty pageant, but beauty doesn't count.  It's not outer beauty, it's just going to be, I guess inner beauty. They are going to get rid of the swimsuit competition, they are going to get rid of the evening gown competition and they will select a winner based on other characteristics.  I'm really not sure what.  I know they've got the talent competition; no one really paid too much attention to talent. Some of the women actually had some talent. Usually the most humorous part of the Miss America Pageant was the Q&A where there were often political questions asked and the contestants would try to give the most politically correct answer they could come up with.  Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy

Jobs Friday Today is the first day of June and it's also jobs Friday. But before we get to the always highly-anticipated nonfarm payroll number, I want to talk about some of the economic data that came out yesterday, on Thursday. Personal Income and Spending I think the most significant release was the Personal Income and Spending number for the month of April. The spending numbers were so strong that it prompted the Atlanta Fed to adjust its estimate for Q2 GDP all the way up to 4.6% and I think they notched it up another tenth today to 4.7%, so this is the highest estimate they've had since they had that 5.4% estimate for Q1.  Of course we now know that we got 2.2%, so they were much too optimistic on Q1 and my gut is they're equally overly optimistic on Q2. Spending Went Up as Income Went Down Let's talk about this Personal Income and Spending data.  The surprise was not on the income, but on the spending. In fact, the revisions, when they went back to March. the original report was for a .3% gain in income and a .4% gain in spending. They ended up revising the income number down, so income rose only by .2%, but they revised spending up. Spending went up by .5%. What does that mean? That means savings went down quite a bit, because, where did the money come from to finance the extra spending?  It didn't come from income, so it came from savings, or it came from debt. Either people depleted their existing savings, or they went deeper into debt by putting their purchases on the credit card. Spending Money Twice as Fast as They Are Earning It But then, for the month of April, we got a .3% increase in income, which was anticipated, but spending, instead of rising by .4%, rose by .6%. So consumers are spending money twice as fast as they are earning it for the month of April: .6 up on spending, .3 up on earnings . So, again, what does this tell you? People are tapping into an already shallow savings pool or they are running up m0re credit card debt to buy stuff.Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy

Economy Slowing Down We got quite a bit of economic data that was released today, pretty much all of it confirming what everybody seems to be denying, and that is that the U.S. economy is, in fact, slowing down, at least the way we like to measure it.  We will get more data later in the week, of course we get the big number, the nonfarm payroll number, on Friday. We always get that number the first Friday of the month; this Friday is June 1, so we are going to get the May jobs number. Last Month's ADP Jobs Number Revised Down We got the ADP number that came out this morning.  It was weaker than expected.  In fact, there was a significant downward revision to the prior month, which was originally reported at 204,000 jobs.  That was revised down to 163,000 jobs, so about a 20% reduction.  This month, the consensus was 187,000 and we got 178,000; of course, that number will also be subject to revision next month.  But, to me, that shows that we can potentially get a weaker number on Friday as well. Decline in Refinances at an 18-Year Low Earlier this morning, we got some data on mortgage re-fi's, which we get every week.  We get the numbers on new mortgages and mortgage re-fi's.  Everything is down.  This makes sense, because mortgage rates are going up. In particular, the decline in refinances is to an 18-year low in mortgage re-fi's. One of the reasons that the inability to refinance your mortgage is going to become a problem is that re-fi's have been providing a lifeline to consumers to enable them to continue to spend. Refinances Available as Property Values Rise When you refinance your mortgage, you're generally doing it to reduce your monthly payment because you are able to qualify for a lower monthly payment.  Some people who perhaps could not qualify a couple of years ago because they did not have enough home equity, but as real estate prices have risen that has enabled people who have been unable to refinance in the past to re-fi now.  Especially for those who are doing a re-fi and are also doing a cash out.Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy

Biggest Move in Crude Oil Not much action today in the stock markets on this Friday before a 3-day Memorial Day holiday weekend.  The action was really in the oil markets, the bond markets and the foreign exchange markets. The biggest move happening in crude oil.  Crude was down just over $3/barrel today; one of the biggest declines I've seen in some time.  We're back down to $67.50. Earlier in the week, we almost hit $73/barrel for crude, and here we are now at $67.50 - a pretty big drop today. We were down yesterday, also. Speculation in the Market The rumors today were that Russia and Saudi Arabia may be upping their production and it was that news that sent the market falling. But remember, markets don't move in a straight line.  You get a lot of speculators who get into the market and generally they're not there for the long run; they're there to catch a trend, and they're there to ride it as long as they can.  They tend to put stop orders in beneath the market.  In the case of oil, if you're long, you'll have a sell stop and many of those stops likely got triggered today. Technical Noise You probably had some people trying to minimize their exposure.  Either they limited their loss to the extent that they got in recently and they got stopped out with a loss or maybe they've been long for a while and they've been moving their stops higher to protect their profits and now they got stopped out of the trade.  But I think this is more technical noise.  I don't think this uptrend in the price of oil has changed based on this pullback from $73 now to $67.50.  Maybe we've got a little more downside, but if you look at the chart, you can barely see the decline.  The more recent uptrend that goes back to July - you look at this uptrend and it is holding perfectly.  We're not even down to the line yet.  We still have a little bit to fall before we hit that line.Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy

Markets Rallied on Fed Minutes Interpreted as Dovish Earlier today we got the release of the latest Federal Open Market Committee minutes and before the minutes came out (they come out at 2pm Eastern Time). Prior to the release, all the stock markets were down; the Dow was down maybe about 150 points or so, and when the minutes came out, we got a rally, and the Dow closed up about 50 points.  So, a 200-point rally on the minutes, and the reason the minutes acted as a catalyst for the rally is that they were interpreted to be a bit more dovish than expected. The Fed's Symmetrical Inflation Target To me, the minutes were as expected; I had already been talking about the Fed's view that inflation can go above 2%. That they were willing to allow for some kind of "symmetrical" inflation.  The symmetry in this case meaning, we were below 2% for a long time and so now we can be above 2%. I guess for some reason the markets focused in on that. Specifically, the minutes read that "A temporary period of inflation modestly above 2 percent would be consistent with the Committee's symmetric inflation objective and could be helpful in anchoring longer-run inflation expectations at a level consistent with that objective." What does "Modest" Mean? Now, I don't know why allowing inflation to be higher than 2% is somehow helpful toward achieving their 2% objective. To me, It would be more helpful if they just kept it at 2%, if indeed that was their real objective.  But, even if you look at the language that they use, they don't really define what symmetrical could mean.  They talk about inflation being "modestly" above 2%: What is "modestly"? Is is 2.1%? What about 2.5%? Is .5% "modest"? They don't really define what "modest" is.  I have a feeling, again, that there's never going to be a definition, that it is going to be an ever-moving goal post.  Even 3% could be "modest".  "Hey, it's only 1%, right that's "modest", right? Fed Is Impotent When It Comes to Inflation But on a percentage basis, you wouldn't consider 3% modest.  You're above 2% by 50%.  50% is not a modest percentage, but they could say 1% is a modest percentage. Who knows?  I think the Fed is going to be looking for every excuse not to raise interest rates aggressively, no matter how high inflation gets.  Of course, they're not going to be that transparent. The last thing they would want to do is to let the markets know that they are that impotent when it comes to inflation.Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy

Solid Gains Today in the Major Stock Market Averages We had solid gains today in the major stock market averages; the DJIA putting in the largest percentage gain, just over 1.2% or 298 points.  I think at the highs, the Dow was up 370 and change, so a strong day, S&P, NASDAQ also up not quite as much calculated as percentages. The Russell 2000 was not up as much as the other averages but it is at a record high again today.  I think it's the Russell 2000 that ultimately could make the biggest percentage drop once stock market traders start to figure out what's actually going to happen. A Lot of Saber Rattling and Not a Lot of Fencing But in the meantime, today, they were celebrating the cease fire in the trade war.  Although, I don't think I should call it a cease fire because nobody actually fired a shot.  It has been more of a war of words than a real conventional battle, I mean there was basically a lot of saber rattling and not a lot of fencing.  But I think what happened today is that we callee a truce.  Both sides sheathed their sabers and agreed that there is not going to be a war. The Markets Have Not Adequately Priced in the Cost of a Trade War And I think the markets were relieved, and so we got a relief rally based on that good news.  Although I don't think the markets sufficiently priced in the cost of a hot trade war.  I know Donald Trump said, "Oh, trade wars are easy to win." Believe me, if they were easy to win, we would have waged one.  They're not easy to win.  I don't think the markets really discounted how bad it would have been had the cold war turned hot. Peace Dividend Nonetheless, the fact that it wasn't going to happen - I think most people would agree that a trade war would be bad, and if now there is going to be trade peace, well there is a peace dividend and so we got that today.Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy

Las Vegas to Vancouver to Las Vegas I'm recording today's podcast from my hotel room in Vancouver, Canada.  I'm up here for a couple of days at the 2018 Vancouver Resource Investment Conference and actually I left Las Vegas to come here; I am at the Las Vegas Money Show, I was there yesterday and I will be back again tomorrow for another talk, and on Thursday I am flying to Puerto Rico for another conference before heading back to Weston, Connecticut for the summer. Debating Bonds with Gary Shilling I was on a panel yesterday in Las Vegas at the Money Show and it was moderated by Mark Skousen, and one of the guys on the panel with me was Gary Shilling. And I've been arguing with Gary Shilling for a long time; there are plenty of YouTube videos of Shilling and myself over the years, arguing. He is basically a perma-bull when it comes to U.S. Treasuries. He is always bearish on the stock market and he's always bullish on the bond market.  For a while, he was right to be bullish on the bond market, because we had a huge bull market in bonds. But the bull market appears to be over, yet Gary Shilling is as bullish as I have ever seen him on the U.S. bond market. He is also bullish on the dollar; I guess if you are always bullish on the bond market you are also bullish in the dollar because bonds are dollar I.O.U.'s. Shilling: China Would Never Sell U.S. Bonds Now I think this is one of the times when Gary Shilling is dead wrong.  One if the points that he made that I challenged him on was when he started talking about China.  He said the Chinese would never sell their U.S. Treasuries because if they sold them, the prices would collapse, and they would be destroying their own portfolio; therefore they are not going to sell because they do not want to destroy the value of the assets they might want to sell. China Can Just Let Their T-Bills Mature I pointed out to Gary that the Chinese don't have to sell any Treasuries to get out of them.  They simply have to let them mature. Then it is not China who has to sell the Treasuries, but the U.S. Treasury who has to find a new buyer to replace China.  If China were dumb enough to own a lot of 30-year government bonds, then they would have to put those bonds on the market.  That would affect the price.  In fact, if you were China, and you owned a trillion dollars worth of 30-year bonds, and you did try to sell, the price would collapse.  China may be dumb, but they are not that dumb. They own a lot of T-bills, so they will mature in 30 days, 60 days, 90 days; they don't have to sell anything.  Our Sponsors:* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com* Check out GhostBed: https://ghostbed.com/PETER* Check out Grammarly: https://grammarly.com* Check out Quince: https://quince.com/GOLD* Check out TruDiagnostic and use my code GOLD20 for a great deal: https://www.trudiagnostic.comPrivacy & Opt-Out: https://redcircle.com/privacy