Friday was an active day in the markets. The S&P 500, the Russell 2000 and the Nasdaq all hit record highs. The Dow Jones didn’t quite crack into record territory, but it was up over 100 points. Meanwhile, the dollar fell and gold was up more than $20.
In his latest podcast, Peter Schiff said he thinks the dovish speech by Federal Reserve chair Jerome Powell at Jackson Hole drove all of this. And it could have longer-term ramifications.
We are well into the third quarter of 2018. In our perpetual fast-forward world, analysts are already looking toward Q4. What will the last quarter of the year bring?
It’s virtually impossible to predict the short-term. Who knows what kind of political event, natural disaster or emerging trend will drive the markets over the next few months?
Of course, we can’t predict the future at all. We’re not fortune tellers or Old Testament prophets, but as Dan Kurz notes in his latest post at DK Analytics, it is a bit easier to project what will happen to the economy in the long run because we can clearly see the big-picture dynamics and fundamentals underlying it. As he put it, he’s less sure where America is headed in Q4 than ‘down the road’ in general. The whole thing (political, financial, economic) could fall apart at any time.”
We are now officially in the longest bull market in US stock market history. Yesterday took out the record set in the 1990s. As Peter Schiff pointed out in his most recent podcast, the old record run ended in 2000.
And we all know how badly it ended. It ended with a 50% collapse, an 80% collapse in the Nasdaq, and the Federal Reserve had to slash interest rates to 1% and inflate a housing bubble in order to prop the market back up.”
Peter said he believes this bull market will meet a similar if not worse fate.
Through the last several presidential administrations, the US has maintained a “strong dollar” policy. As Peter Schiff pointed out in his most recent podcast, it wasn’t so much that you could pinpoint the specific tenets of the policy. It was more about the rhetoric that came out of Washington D.C. Everybody talked about the strong dollar being in the national interest.
Having the belief that there was some kind of hidden strong dollar policy helped to create confidence in the dollar. Even periods where the dollar was declining, perhaps it would have declined even more had it not been for the belief that there was some kind of strong dollar policy.”
But times have changed. As Peter put it, “It should be pretty obvious that Donald Trump has a weak dollar policy.”
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.
After Pres Trump signed a bill raising the debt ceiling last fall, we warned that rising interest rates could crush the US federal budget under interest payments. Well, interest rates are going up and so is the cost of servicing the US government’s $21-plus trillion debt.
The dollar declined sharply, pushing gold up late last week as Pres. Trump criticized the Federal Reserve’s interest rate policy. Trump took aim at the Fed during an interview on CNBC, saying he’s “not thrilled” with the central bank’s push to raise rates.
Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time, I’m letting them do what they feel is best.”
Trump also blasted the European Central Bank and the Bank of China, accusing them of currency manipulation. Trump says the two banks are intentionally weakening their currency to disadvantage the US.
In his latest podcast, Peter Schiff said he thinks the president is saying all of this in order to have a place to put the blame when the economy tanks.
We’ve written a lot about government debt and warning signs in the Treasuries market. The US government needs to sell over a trillion dollars in bonds a year over the next few years to finance its skyrocketing deficit. Who exactly will buy all of these government bonds remains unclear and the impact on interest rates could send shockwaves through the entire US economy.
Equally troubling, but less often discussed, are the risks piling up in the corporate bond market.
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.
It looks like we’re heading toward a full-blown trade war.
As the war continues to escalate. Pres. Trump has levied more tariffs on Chinese imports in retaliation for China’s retaliation after the US announced its first round of tariffs. A lot of people seem to think this is bullish for the dollar. In fact, the greenback has surged in recent weeks. But in his latest podcast, Peter Schiff said this is a bunch of nonsense.
