Will the Federal Reserve pivot? That’s the question on everybody’s mind.
But why does it matter so much?
According to the seasonally adjusted data, M2 increased by $23B in May. Except for the contraction last month (the first contraction in 12 years), it was the smallest monthly increase in M2 since the start of COVID.
As reported last week, Comex January turned out to be extremely strong in both gold and silver for a minor month. Most of that strength materialized after First Position. February was looking modest in gold and weak in silver, but the gold market is now showing outlier trends.
This analysis focuses on gold and silver delivery volume on the Comex. See the article What is the Comex for more detail.
M2 increased by $201 billion in December.
This represents a 0.94% MoM increase which annualizes to 11.9%. For the entire year of 2021, M2 grew by an incredible $2.5 trillion or 13.1%!
This is extremely rapid money supply growth! The Fed can taper their asset purchases, but shrinking the Money Supply is the only way to rein in inflation.
Earlier this month, Peter Schiff wondered out loud if the twin deficits of government budget and trade could spark an October surprise. The month isn’t over yet, but it certainly hasn’t been a good one for stock markets.
The Dow is down 3.8% in October. And it’s the best performing of the stock indexes. The S&P 500 is down about 4.7% on the month. The NASDAQ has dropped 7.4%. Dow Transports have plummeted 8.3%. And the Russell 2000 has suffered a 9.2% decline. Now, if you want some good news, look at gold. It’s up about 3% this month. But all in all, there is a lot of gloomy news on Wall Street.
All of this doom and gloom led Peter to ask an important question in his latest podcast. How many canaries have to die in the coal mine before the mainstream wakes up?
The mainstream is giddy about the “booming economy.” We have rising stock markets, continued job creation and solid GDP growth. But Ron Paul recently appeared on CNBC Futures Now and threw a big bucket of cold water on the mainstream narrative. He said we are barreling toward a recession.
The bulls are running down Wall Street, but are bears lurking just around the corner? The mainstream doesn’t think so, but Peter Schiff does.
The Dow Jones climbed nearly 400 points Thursday after the Chinese announced a willingness to resume trade talks with the United States. No agenda was set, but the mere prospect of progress injected a shot of optimism in the market. Walmart also helped drive the surge, rising 10% after it beat earnings expectations.
In his most recent podcast, Peter asked the obvious question: why did the slimmest hope that we could see some resolution in the trade war give the stock market such a big bounce? It’s not like the market tanked because of the trade spat. In fact, everybody expects America to win. It’s the Chinese market that has been killed because of the trade war. It didn’t rally at all based on the prospect of talks
Ron Paul talked about bubbles during his Liberty Report last week, noting our articles on the subprime auto bubble, along with housing bubble 2.0.
As Ron pointed out, it’s hard to keep up with all of the distortions in the marketplace thanks to a decade of Federal Reserve easy money.
How do you cover all the bubbles? The nature of what the Fed does by manipulating interest rates to lower than the market rate, everything has to be affected to some degree by a bubble and a distortion and a malinvestment, and excessive debt.”
We’ve written extensively about the stock market bubble blown up by artificially low interest rates and Federal Reserve quantitative easing. But stocks aren’t the only asset bubble out there. In fact, 2017 may go down as the year of the bubbles. And the new housing bubble is one that seems to be floating under the radar.
Financial manager James Stack has noticed it. He predicted the housing crash in 2005, and he told Bloomberg the housing market is flashing red again.
It is 2005 all over again in terms of the valuation extreme, the psychological excess and the denial. People don’t believe housing is in a bubble and don’t want to hear talk about prices being a little bit bubblish.”
Last Friday, all three major stock markets hit new record highs ignoring the storm clouds on the horizon. In his latest podcast, Peter Schiff said this reminds him of 1987.
The stock market is rising despite the fact that there are very, very negative factors that are building, that are hiding in plain sight, that everybody is ignoring.”
When it comes to the economy, most people aren’t worried about anything when there is everything to worry about.