There is plenty of debate about tariffs right now. A lot of people oppose them because they support free trade. A lot of people support them because they believe they protect US industry. Others think tariffs are a great tool to force other countries – specifically China – to engage in fair trade. In today’s Friday Gold Wrap podcast, host Mike Maharrey argues that no matter what you think about tariff policy, you should pause and count the cost because tariffs are taking money out of your wallet. Mike also talks about the possibility of China using its “nuclear option” in the trade war and gives an overview of the news that drove the precious metals markets this week.
China sold off the highest level of US Treasurys in nearly 2-1/2 years in March. Meanwhile, there are renewed fears the Chinese could implement its “nuclear options” and sell off even more US debt in retaliation for US trade war tariffs.
China sold $20.45 billion in Treasuries in March. That was the biggest US debt dump by China since October 2016.
Consumer debt continues to climb and break records every month. But the pace of borrowing slowed in March, a possible red flag for the US economy.
Total consumer debt rose $10.3 billion in March, hitting a record-setting total of $4.05 trillion, according to the latest report by the Federal Reserve.
Through the first quarter of 2019, American indebtedness increased at a 4.25% annual rate. But the March increase came in at just only 3.1% and ranked as the smallest consumer debt increase in nine months.
There has been significant volatility in US stock markets so far this week. The Dow was down over 470 points Monday morning. Dip-buyers saved the day and the Dow ended up only down 66 points. But then the bottom fell out on Tuesday, with the Dow plunging 473 points.
Tweets by President Trump threatening more tariffs and raising questions about whether China and the US can work out a trade deal sparked this market volatility and the ensuing sell-off.
In his latest podcast, Peter Schiff raises an interesting question: was this by design?
The Federal Reserve has issued another warning about corporate debt.
But the Fed’s concerns seem a bit ironic considering its own easy-money policies have made all of this borrowing possible.
The Federal Reserve FOMC met this week. When it was all said and done, the Fed did nothing. We’re stuck in neutral.
As expected, there was no rate hike. Fed Chair Jerome Powell indicated that the central bank would likely maintain this neutral stance into the foreseeable future, staying patient, neither raising nor lowering rates. So, why in the world did markets react like the Fed just jacked up interest rates? On this episode of the Friday Gold Wrap, host Mike Maharrey talks about it. He also gives an overview of the most recent World Gold Council demand report.
The Federal Reserve Open Market Committee meeting wrapped up yesterday with Fed policy still in neutral.
As expected, the FOMC left interest rates unchanged and seemed to indicate it doesn’t plan to do anything at all in the near-term. Jerome Powell’s comments dampened expectations that the central bank might move to cut rates in the coming months.
The committee is comfortable with current policy stance. Don’t see a strong case for a rate move either way.”
Most took Powell’s comments to be less dovish than expected, but Peter Schiff said he thinks the Fed is a lot more dovish than it admits.
Month after month, the Trump administration runs multi-billion dollar deficits. The national debt has ballooned to over $22 trillion. According to the most recent Treasury Report, the US has a net worth of negative $21.5 trillion. And this understates the problem.
As Wolf Richter of WolfStreet puts it, the US government has “debt out the wazoo.”
Is this sustainable?
When the Federal Reserve artificially manipulates interest rates, it’s messing with our minds by distorting important signals that prices provide in a free market. As investment guru Jim Grant put it in a recent article in Barron’s, central bank interest rates are nothing but crude price controls.
Like all price controls, the Fed’s interest rate mechanizations create some winners and some losers. But in the long run, the distortions caused by the central bank’s interventionist monetary policy makes us all losers.
We got more signs that the economy is slowing down this week. And yet pundits and policymakers keep insisting everything is great.
In his latest podcast, Peter Schiff says he thinks people like Donald Trump and Larry Kudlow know deep down that things aren’t that great, but they want to keep kicking the can down the road for political reasons.
