JD and Joel discuss Peter’s take on the record-breaking highs in stocks, driven by chip company NVIDIA’s $277 billion Thursday rally. Is there a stock bubble driven by AI hype and low-interest rates? How might the Fed respond and what does this mean for gold?
Can America hope to climb past its mountain of $34 trillion of federal debt? With the staggering weight of unfunded liabilities in vital entitlement programs like Social Security and Medicare reaching $212 trillion, any strategy for repayment is met with formidable obstacles. Our guest contributor arrives at a sobering verdict: the magnitude of the debt renders the prospect of repayment virtually impossible.
The US can still take decisive action to rein in spending and prevent further exacerbation of its dire financial predicament.
Could the commercial real estate market be the next thing to break in this bubble economy?
The rampant money creation and zero percent interest rates during the COVID pandemic on top of three rounds of quantitative easing and more than a decade of artificially low interest rates in the wake of the 2008 financial crisis created all kinds of distortions and malinvestments in the economy and the financial system. It was inevitable that something would break when the Federal Reserve tried to raise interest rates in order to fight the price inflation it caused with its loose monetary policy.
The Federal Reserve is trying to walk a tightrope — in a hurricane.
After rate hikes resulted in the collapse of Silicon Valley Bank and Signature Bank, the Federal Reserve and the US Treasury stepped in with a bailout. With that hole in the dam seemingly plugged for the time being, the Fed pushed forward and raised interest rates by another 25 basis points at its March meeting.
As interest rates rise, the air continues to hiss out of the housing bubble.
Existing home sales tumbled to a two-year low in May. Sales fell to a seasonally adjusted 5.41 million units, according to the latest data from the National Association of Realtors. It was a 3.4% drop, bringing existing home sales to the lowest level since June 2020. May was the tenth consecutive month of year-over-year declines.
The Federal Reserve took a more aggressive swing at red-hot inflation at its June FOMC meeting, raising interest rates by 3/4%. It was the biggest hike since 1994. The question is will this be the last swing at inflation?
Last week, the Fed raised interest rates by 0.5%. It was the biggest rate increase since the year 2000. But it was hardly aggressive in light of the current bout of inflation. Not only that, Jerome Powell took a future 75 basis point hike off the table. In his podcast, Peter Schiff argued that no matter what the Fed does, it has already lost the inflation fight.
Pending home sales hit the lowest level in nearly five years in November, a sign that the US housing market will continue to get uglier in the near future.
Not too long ago, we reported that the air was starting to come out of housing bubble 2.0. As just one example, home sales in California hit the lowest level in a decade. And it’s not just California.
Now we’re seeing more signs of trouble. Pending home sales tanked in November, according to data released by the National Association of Realtors last week. The Pending Home Sales Index plunged 7.7% compared to November 2017, the biggest year-over-year percentage drop since June 2014.
Last month, we reported that the global yield curve inverted, signaling the possibility of a looming recession. While narrowing to levels not seen since right before the 2008 financial crisis, the yield curve has not inverted in the US. In his most recent podcast, Peter Schiff said he doesn’t think it’s going to happen. He said we may even see a steepening yield curve in the coming months. But this is not because there’s not going to be a recession.
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
