The Federal Reserve held its first FOMC meeting of 2020. It was mostly met with yawns as the Fed held rates steady, and despite a somewhat dovish tone, indicated that it probably wouldn’t make any moves on interest rates this year. We’ve grown so used to low interest rates that it barely registers that the Fed is actually engaged in extreme monetary policy. Extreme has become the new normal. In this week’s Friday Gold Wrap podcast, host Mike Maharrey talks about it. He also touches on the Q4 GDP report and some interesting gold supply and demand trends.
Stock markets made new highs on Wednesday, but as Peter Schiff explained in his latest podcast, there are a lot of cracks under the surface. The markets are surging forward even as they overlook bad economic data and chilly political winds.
Here is a summary of some of the significant economic data/news that came out last week.
Third-quarter 2019 new orders for durable goods remain on track for a second annual decline. August 2019 Real New Orders for Durable Goods showed a monthly gain of 0.2% [1.0% ex-Commercial Aircraft], but an annual decline of 4.9% [down by 2.1% (-2.1%) ex-Commercial Aircraft].
Consumer debt is driving American economic growth.
Total outstanding consumer debt surged over $4.1 trillion in the second quarter of 2019, according to the latest data released by the Federal Reserve.
American indebtedness grew by 4.9 over the year, and the quarterly gain from Q1 to Q2 came in at $60 billion — the biggest second-quarter increase since Q2 2016. Over the last 12 months, American consumers have piled on an additional $208 billion of debt.
The Federal Reserve came through with its first interest rate cut in more than a decade this week. But with Jerome Powell trying desperately to convince everybody that this wasn’t the beginning of a long cutting cycle, the stock markets weren’t pleased. And neither was President Trump. So, he decided to put his own fingerprint on the markets, announcing new tariffs on Chinese products. In this week’s Friday Gold Wrap podcast, host Mike Maharrey breaks it all down and explains how it impacted the gold market.
We got the first Q2 GDP estimate on Friday. Economic growth slowed to 2.1%, but the number came in slightly better than economists had projected.
In his most recent podcast, Peter Schiff broke down the GDP report. As he put it, when you actually look beneath the numbers, the quarter was a disaster.
This was a horrible quarter for GDP.”
President Trump launched Tariff War 2.0 yesterday. And we haven’t even wrapped up Trade War 1 yet.
The president shocked markets when he announced a 5% tariff on all Mexican products in an effort to force Mexico to do more to stop the flow of illegal immigration into the US. In this episode of the Friday Gold Wrap, host Mike Maharrey gives you the details and talks about the impact of these new tariffs on the markets. He also discusses what the bond market is telling us about a looming recession, some interesting news out of Russia, and the latest goings-on in the silver market.
The Commerce Department released the first estimate of Q1 GDP growth on Friday. It came in higher than expected at 3.2%.
Somewhat surprisingly, the price of gold rose on the news and the dollar showed some weakness. The primary reason was presumably lower inflation. This means the Fed still has the excuse it needs to continue the Powell Pause.
There was also some data in the Commerce Department’s report that reveals shakiness in that growth number. In fact, Peter Schiff said he thinks this will likely be the strongest growth of the year.
The Dow Jones closed out Q1 2019 with its best quarterly gain since 1998, rising 10.3% through the first three months of the year. And the Dow Jones wasn’t alone in its bang-up first quarter. The S&P 500 rose 12.3%. The Russell 2000 was up 13.8%. And the Nasdaq led the entire pack with a 15.6% gain.
As Peter Schiff said in his latest podcast, the entire rally was a gift from the Federal Reserve.
Peter Schiff has been saying that despite the recent stock market rally and all of the optimism about an end to the trade war, a recession is a done deal. There is plenty of economic data to back up despite the recent economic growth. In his most recent podcast, Peter Schiff said that while the GDP number might look pretty good, the growth is unsustainable because it’s all built on debt.