Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

2015 May Be Worst Recovery Year; Revise Your Rate Hike Expectations (Video)

  by    1   0

Peter Schiff’s digs into Friday’s jobs numbers and the great expectations for a September rate hike from the Federal Reserve. In this Schiff Report, Peter walks us through the options Janet Yellen has right now and the repercussions they will have on the economy and US stocks.

This year, 2015, is probably going to be the weakest year of the entire recovery. And that’s with interest rates at zero for the entirety of the year. If the Fed really begins to raise interest rates, what’s going to happen in 2016? Obviously, we’ll be in a recession. If the Fed raises rates now, we’ll be in a bear market in stocks…”

Highlights from The Schiff Report:

“[Based on the Friday release of non-farm payroll numbers], it seems everybody believes that a September rate hike is now a lock. That somehow this report has removed any remaining barriers between us and the September rate hike… We’ve been at zero for almost seven years. It’s been nine years since the Fed last hiked rates. I wonder if they still remember how to do it.

“For some reason, this report seems to have cleared the way. I don’t know why. There’s nothing special about this report. If the Fed has been looking for an improvement in the data, certainly the July non-farms payroll report isn’t an improvement at all. At best, it’s more of the same. Actually, it represents, I think, a weak report relative to what we’ve been getting. We’ve been getting more than 200,000 jobs just about every month this year. In July we got 215,000. What’s so great about that? It was just slightly ahead of the 212,000 that the consensus was, but there were people looking for a much stronger report than that… It represents a decline from the 231,000 jobs that were created in the prior month. It seems like we’re going in the wrong direction. If the data wasn’t good enough for the Fed to raise rates in the past, why is it good enough now, when it’s worse? Is there something else about this jobs report? …

“The mass exodus from the US labor market continues. Another 144,000 Americans marched off the field, out of the labor market. The number of Americans no longer working hit a new record high. That number now stands at 93,770,000. So if the Fed is data dependent, and particularly the data they say they are depending on is the labor market, there is no improvement in the July number that would validate a rate hike, if the condition was an improvement in the labor market…

“It’s also not there in the economy overall. We got the most recent numbers of GDP… The GDP for the second quarter were much lower than what the consensus was. They were looking for 3%, we got 2.3%. Yes, we did revise the first quarter up, but not nearly as much as everybody was expecting, including the Fed. So if you look at the entire first half, the economy grew by less than 1.5%. Again, less than half of what the Fed was looking for or expecting when the year began…

“If she does raise them, she’s already prepared the market for a tiny raise. Maybe 25 basis points. Maybe not even that much. They can raise rates 10 basis points, 15 basis points. And Janet Yellen has also said that if she does raise interest rates, she’s not going to raise them again for a long time. She’s going to be very cautious. She’s going to assess the situation. She’s going to make sure the economy can handle higher rates before she raises them again. That alone ought to raise an eyeball. We’re talking about raising rates from zero to some tiny amount above zero, yet the Fed is worried that if they do that, it might jeopardize the recovery. What kind of recovery would be jeopardized by one quarter of one percent raise in interest? Obviously, just a bubble…

“It’s interesting to look at how the markets reacted to the jobs data and now the certainty that rates are going up. The dollar actually sold off. It didn’t sell off dramatically, but it was lower across the board on the day and gold rose a little bit. Remember, higher interest rates are supposed to be bullish for the dollar. So why didn’t the dollar rise on a jobs report that everybody agrees now makes a rate hike a lock? There is an old trading adage – ‘You buy on the rumor, you sell on the fact.’ When you anticipate an event, you buy into that anticipation. When the event is realized, then you sell, you unwind your positions…

“What’s more interesting is the reaction in the stock market. The Dow Jones was down again. It closed well off the lows… That was the seventh consecutive day the Dow Jones has dropped. This is the longest losing streak in the Dow in about four years. I think we’re off just under 6% now from the high in May. The fact that the US market is still falling, shows me that maybe while the currency markets have factored in a rate hike, the equity markets have not…

“When they came out the last GDP numbers, they revised down the last 3 years. They took every year – the average went from 2.3% to just 2%. It was a significant reduction. So the Fed was just told the economy was much weaker than you thought. You didn’t raise rates when you thought the average growth rate was 2.3%, now you found out it was only 2.0%, but your’e still going to raise rates? All of this shows the Fed is raising rates despite the fact it committed to raising rates if the economy was strengthening… If the Fed is going to raise rates while the economy is weakening, it’s a whole different ball game…

“This year, 2015, is probably going to be the weakest year of the entire recovery. And that’s with interest rates at zero for the entirety of the year. If the Fed really begins to raise interest rates, what’s going to happen in 2016? Obviously, we’ll be in a recession. If the Fed raises rates now, we’ll be in a bear market in stocks…”

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

The Fed Is Between a Political Rock and an Economic Hard Place

Black Friday was a black and blue Friday as US stock markets saw their sharpest declines since April 2020. The selloff was spurred by a new COVID variant and fear of new lockdowns. The markets recovered on Monday, but the sudden stock dip was telling.

READ MORE →

The Pilgrims Did Socialism and Died Trying

When I was a kid, we used to say some things only “sound good on paper.” In other words, they seem like good plans, but there is no way they’re going to work in the real world. That’s socialism in a nutshell. The Pilgrims found this out the hard way during their first couple of […]

READ MORE →

Booming Retail Sales Don’t Necessarily Signal “Strong Economy”

Retail sales surged at a higher than expected rate in October, rising 1.7%. The mainstream reported this as fantastic news signaling a strong economy. American consumers are out there buying lots of stuff. The stock market rallied and gold fell. But the mainstream narrative isn’t giving you the full picture.

READ MORE →

Artificially Low Interest Rates? So what?

The Federal Reserve has held interest rates artificially low for decades. Even after pushing rates to zero in the wake of the 2008 financial crisis, “normalization” only managed to raise rates to 2.5% — hardly “normal.”  The central bank began cutting rates in 2019, even before the coronavirus pandemic. But what difference does it make? […]

READ MORE →

Peter Schiff: What’s Going on With the Price of Gold?

Gold has been rangebound of late, bouncing between $1,750 and $1,800 an ounce for several months. Given the inflationary environment, one would expect gold to be soaring. So, what’s going on with the yellow metal? And when will the price of gold go up? Peter Schiff tackled this question during a recent Q&A session on […]

READ MORE →

One thought on “2015 May Be Worst Recovery Year; Revise Your Rate Hike Expectations (Video)

  1. Bill says:

    Boy Peter you really know how to spoil the party. I don’t think the FED will raise rates in September. Most likely in December. However China with its move on the yan may have put a kink in things. The DOW will make new lows, but will rally and possibly make new highs by year’s end. Gold will close below $1,000 in the coming months. Enjoy the ride next year will be crazy.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Call Now