Wednesday was another ugly day on Wall Street.
Stocks tanked, wiping out gains for the year in both the Dow Jones and S&P 500 Index. The Dow fell 608 points and the S&P 500 shed 3%. The Nasdaq plunged 329 points and lapsed into a correction territory. It was the largest daily decline on Wall Street since 2011.
In his most recent podcast, Peter Schiff asked a key question: will the Federal Reserve swoop in and change the nature of the game?
The stock market has been rocked over the last week but gold has rallied. In his most recent podcast, Peter called gold “the real standout in the market.”
The price of gold finally woke up — or traders work up and notice how cheap gold is.”
In the wake of the stock market plunge last week, Pre. Donald Trump said the market drop wasn’t because of his trade war. Trump said, “That wasn’t it. The problem I have is with the Fed. The Fed is going wild. They’re raising interest rates and it’s ridiculous.” He also said the Fed is “going loco.” In a Thursday interview, the president doubled down, saying “I’m paying interest at a high rate because of our Fed. And I’d like our Fed not to be so aggressive because I think they’re making a big mistake.”
Peter Schiff appeared on Fox Business Countdown to the Closing Bell along with National Alliances head of fixed income Andy Brenner to talk rate hikes, the stock market and where things might go next.
The Dow Jones fell 831 points Wednesday, a decline of more than 3%. Meanwhile, the S&P 500 charted its biggest daily decline since February and the Nasdaq Composite dropped 4.08 percent. This follows on the heels of a 200-point drop in the Dow last week after the 10-year US Treasury yield hit the highest level since 2011.
In a podcast last week, Peter Schiff said rising interest rates could serve as the pin that pricks the stock market bubble. In his most recent podcast, Peter said the stock market rout seems to confirm his feeling and warned a recession will follow.
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 Nasdaq had the biggest gain last month since the year 2000.
In his most recent podcast, Peter Schiff reminds us what happened right after that 2000 peak.
The Nasdaq – it declined approximately 80% from peak to trough. So, the fact that we haven’t had a month this strong since 2000 should give people pause.”
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 economy is strong!
Or so the mainstream financial talking heads tell use every day.
Meanwhile, one of the best predictors of a looming inflation is flashing red.
The yield curve between the two and 10-year Treasuries narrowed to around 34 basis points this week. That’s the lowest level since 2007 – right before the financial crisis. Even more troubling, the global yield curve has inverted for the first time since 2007.
The US economy is now technically in the second-longest recovery in history. If it continues another 14 months, it will eclipse the longest recovery, which took place in the 1990s.
As Peter Schiff pointed out in his latest podcast, the Federal Reserve pulled out all the stops in the 1990s to keep the recovery going. That set the stage for the dot-com crash and ultimately the Great Recession.
Now the Fed is doing it again.
In a podcast last week, Peter Schiff said rookie Federal Reserve chair Jerome Powell couldn’t be more wrong about the economy. He sees smooth sailing ahead. Peter sees a storm.
Former Reagan Office of Budget Management director David Stockman made a similar observation in a column last week.
What’s ahead is tumult, not smooth. That’s because the disconnect between a flat-lining main street economy and Wall Street’s bubble-ridden financial house of cards is blatantly unstable and unsustainable. Indeed, this fraught condition, which Powell and his Keynesian posse fail to see, will soon give rise to a thundering upheaval triggered by the Fed’s own action.”
