As if there weren’t enough headwinds for the economy already, the Washington Post reported the Trump administration was exploring the possibility of canceling some US debt obligations to China. President Trump denied it but floated the idea of tariffs on Chinese imports as punishments for that country’s handling of the coronavirus. Peter Schiff appeared on RT Boom Bust to talk about the economic saber-rattling and the possible impacts on the US stock market.
As the stock market reeled, the Federal Reserve cut rates by 50 basis points this week. It was the first time the Fed has cut rates between meetings since December 2008, when it made a similar move in response to the financial crisis. But that wasn’t enough for President Trump. Immediately after the announcement, the president took to Twitter calling for more cuts.
As the stock market was tanking last month, Peter Schiff said a recession is obviously coming. Now things have calmed down a little bit and everybody seems convinced October was just a bad month — a needed correction. But as Peter has been saying, there are some fundamentals everybody is ignoring that look really bad. The housing market, in particular, is showing signs of trouble. In fact, we don’t have a booming economy; we have a bubble.
In an article published on Seeking Alpha, Mad Genious Economics provides an in-depth breakdown of an economy rolling over, focusing specifically on housing and auto markets, the trade war and banking.
The Dow Jones pushed into record-high territory again late last week. As Peter Schiff pointed out in his latest podcast, Pres. Trump was out there pointing out the record run on Wall Street and claiming responsibility for this bull market. Just turn on Fox News and hardly a segment will go by that somebody isn’t reminding you about how great the economy is. Peter said it reminds him how people were talking up George W. Bush before the Great Recession.
In last Friday’s podcast, Peter Schiff talked about the potential impact of the trade war, arguing it could prick the US bubble economy. As a follow-up, in his latest podcast, Peter talked more about why a trade war could be worse for the US economy than most pundits seem to think, and he dug down to the root cause of the trade deficit.
The bottom line is slapping tariffs on Chinese imports isn’t going to solve the problem.
There was a lot of trade war talk at the end of last week. In fact, on Friday, some pundits said the trade war officially began. Last Thursday, President Trump said the US may ultimately impose tariffs on more than a half-trillion dollars’ worth of Chinese goods, and a round of tariffs went into effect. The United States began collecting tariffs on $34 billion in Chinese goods. China implemented additional tariffs on some import products from the United States immediately after US tariffs took effect, according to Chinese state media.
The stock markets shrugged it off. Both the NASDAQ and Dow were up over 100 points. In his latest podcast, Peter Schiff said the markets seemed to be saying, “Who cares about a trade war? Bring it on!”
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.
In his most recent podcast, Peter Schiff hit a number of subjects including oil prices, bond prices, Bitcoin, the dollar and tariffs. Peter said he thinks we’re seeing a lot of movement in a number of markets that are counter to the long-term trends. For instance, oil dropped late last week, but he expects it’s long-term trend to continue upward. The dollar has picked up strength, but the broader trend is toward a weaker dollar. And bond yields fell, but the overall trajectory for interest rates is up.