Bear vs. Bull: Peter Schiff Debates Louis Navellier (Video)
The stock market has rebounded nicely since those dark days of December leading many analysts to believe precipitous nosedive was nothing but a bull market correction. But Peter Schiff begs to differ. He’s been saying that the rally in stock since the Powell Pause is really a bear market correction. Furthermore, Peter says an upcoming recession is a done deal.
During the Orlando Money Show, Mark Skousen moderated a debate between Peter and Louis Navellier. The question was: were we witnessing a bull market correction or a bear market rally in the last three months?
Right off the bat, Peter asserted he is an “unqualified bear.” In fact, he believes US markets entered a “stealth” bear market in early 2018. Peter’s argument revolves around Fed monetary policy.
Then the Federal Reserve did exactly what I said they would do the minute the market either entered bear territory or got close enough to it to scare the Fed. I said from before the Fed raised interest rated for the first time that if they ever attempted to normalize interest rates, their attempt would fail — that they could never complete the journey because along the way the market would break and the Fed would have to cut off the rate hikes. And that’s exactly what they did.”
Peter said this Fed maneuvering would create a relief rally in the markets and that’s what we’re seeing now.
This rally is the correction. In bear markets, rises are the corrections — the opposite of a bull market. So, I think the Fed, by throwing the markets this lifeline, has created this bear market correction — this rally.”
Furthermore, Peter said when this bear market rally fades and we start seeing new lows, the Fed will be forced to cut rates and eventually relaunch quantitative easing. But this time around, it’s not going to work like it did in 2001 and 2008. It won’t be able to reinflate the bubbles.
I don’t think it’s going to be third time’s a charm. I think it’s going to be three strikes you’re out. I think when the Fed goes back to zero and goes back to quantitative easing, I think the bottom is going to drop out of the dollar, and that’s going to lead to a currency crisis and a sovereign debt crisis that’s going to be much worse than the financial crisis we had in ‘o8.”
Navellier focused more tightly on market dynamics and technical factors, and didn’t address the broader economic environment Peter focused on. He countered that with all of the foreign capital moving into America, interest rates are stable and we don’t really have to worry about them. That means we can focus on earning and earnings numbers look good. Furthermore, the stock market is shrinking due to all of the stock buybacks, which is bullish. Companies are borrowing at these low rates and buying their stock back.
Ultimately, he said the recent correction in Q4 was caused by widening spreads in ETFs.
Peter and Navellier hash out their positions through the course of the debate. Watch the whole thing and decide who you think won.
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