The Peter Schiff Show Podcast

* U.S. stocks ended the week with marginal gains * In fact, the Dow Jones was up only about 12 points on the week * The real action happened overseas * Foreign markets were strong, particularly emerging markets * They continue to smoke the performance of the U.S. stock market, confounding the experts * The experts thought making America Great Again would be great for U.S. stocks, but it would be a problem for emerging markets * And thus far, emerging markets have been the beneficiaries of the rally to a much greater degree than have domestic stocks * Although the action this week was not really in the stock markets but in the currency markets, in the gold markets * The dollar dropped by over 1% despite the fact that the Fed raised rates * In fact, this was one of the worst weeks for the dollar in about 4-6 months * Gold was up about $25; up 2% on the week * "Hey! I thought gold was supposed to fall, when the Fed hikes rates * Instead, the Fed hiked rates and the price of gold rose * Buy the rumor, sell the fact, gold sold off on the anticipation of this rate hike and it rallied on the realization of what the market had anticipated, so that is not really surprising * But if you go back to the very first rate hike * That really marked the bottom in gold; ever since the Fed started hiking rates * Gold has been rising * The decline in gold took place when people anticipate those rate hikes * By the time they realized the rate hikes, gold began to rise * I think what will really accelerate the prices of gold * Is the fact that rates are not going to nearly as much as the market anticipated * So what has been built into the gold prices for rate hikes is not going to materialize * The rumors were exaggerated * The fact is not going to bear out the rumor

* Today the Federal Reserve raised interest rates for the third time in 10 years * Of course, the tightening cycle began with the first rate hike in December of 2015 * Followed by the second rate hike in December of last year * And now, breaking from tradition, rather than waiting an entire year for the third hike * We got the hike in March * Of course the Fed had allowed market expectations to rise to 100% in anticipation of this rate hike * When the Fed raised rates for the first time they talked about raising rates for an awfully long time before they actually got around to doing it * Ironically, though, about 2 hours earlier than the rate hike announcement, the Atlanta Fed revised down again its projection for Q1 GDP  to .9 * Remember - at the beginning of February, not even 6 weeks ago, the Atlant Fed was at 3.4% for Q1 GDP * They're down to .9%!  That is a huge collapse in estimates for economic growth in the first quarter * And I'm sure it portends ill for subsequent quarters * And remember - Janet Yellen has always said that the Federal Reserve is not on a preset course * And that rate hikes that they are forecasting will only happen to the extent that their economic forecast pans out * That all of their rosy expectations of economic recovery has come true * Yet none of it has come true * If anything, you've had a collapse in growth estimates since the last time the Fed met, yet * The collapse in GDP forecast has done nothing to alter the Fed's path, because they've ignored all the data * And they raised interest rates yet again * That doesn't mean that interest rates are high, I mean they're still very low * Remember, we're still not at a range between .75% and 1% so the average of that range, the midpoint, is still below 1% * 1% was the emergency level that Alan Greenspan slashed rates to, after the dot com bubble bust and after the September 11 terrorist attack sent the U.S. economy into recession * At that point, in a recession, the lowest rates got was 1% * The Fed would have to hike rates again to get back up there

* Today the Federal Reserve raised interest rates for the third time in 10 years * Of course, the tightening cycle began with the first rate hike in December of 2015 * Followed by the second rate hike in December of last year * And now, breaking from tradition, rather than waiting an entire year for the third hike * We got the hike in March * Of course the Fed had allowed market expectations to rise to 100% in anticipation of this rate hike * When the Fed raised rates for the first time they talked about raising rates for an awfully long time before they actually got around to doing it * Ironically, though, about 2 hours earlier than the rate hike announcement, the Atlanta Fed revised down again its projection for Q1 GDP  to .9 * Remember - at the beginning of February, not even 6 weeks ago, the Atlant Fed was at 3.4% for Q1 GDP * They're down to .9%!  That is a huge collapse in estimates for economic growth in the first quarter * And I'm sure it portends ill for subsequent quarters * And remember - Janet Yellen has always said that the Federal Reserve is not on a preset course * And that rate hikes that they are forecasting will only happen to the extent that their economic forecast pans out * That all of their rosy expectations of economic recovery has come true * Yet none of it has come true * If anything, you've had a collapse in growth estimates since the last time the Fed met, yet * The collapse in GDP forecast has done nothing to alter the Fed's path, because they've ignored all the data * And they raised interest rates yet again * That doesn't mean that interest rates are high, I mean they're still very low * Remember, we're still not at a range between .75% and 1% so the average of that range, the midpoint, is still below 1% * 1% was the emergency level that Alan Greenspan slashed rates to, after the dot com bubble bust and after the September 11 terrorist attack sent the U.S. economy into recession * At that point, in a recession, the lowest rates got was 1% * The Fed would have to hike rates again to get back up there

* I guess you could say a good jobs report is all in the eye of the beholder * And when it comes to President Trump's eyes, he is now beholding an excellent jobs report * Whereas a candidate, similar reports were described by Trump as phony, a hoax * I have a lot more sympathy for Candidate Trump than I do for President Trump * Now President Trump is trying to pretend that the jobs numbers that he used to be so critical of * Are now reflecting what a great job he is doing as President * When there's really no difference between the metrics of this job report and the ones we got under Obama * With probably one exception * And that is in the number we got is better than expected, though not as good as some had hoped, given the very strong ADP number we got earlier * We got a surge in manufacturing jobs there was also a bump in construction jobs * But I am very suspicious of the manufacturing jobs * I know a lot of American manufacturers are really trying to curry favor with Donald Trump early in his Presidency * And this could all be some Trump-related window dressing * This is a long trend of hemorrhaging manufacturing jobs * And I don't think this one blip necessarily means that trend has changed * I wouldn't get too excited; it is a good thing to be creating goods-producing jobs, manufacturing jobs * I'm not criticizing that * But the question is, is it sustainable, is it real, or is it simply some smoke and mirrors * Orchestrated selectively to make Trump look better early on * So certain companies can get what they want from Trump when it comes to tax reform, or other issues where these companies may have a vested interest * Let me go over the actual February Non-Farm Payroll numbers: * The consensus was 200,000 jobs; 227,000 was the number created in January * Most of that was prior to Trump becoming President, though subsequent to his election * So we did 227,000 jobs in January and they actually revised that up to 238,000 jobs * We did 235,000 in February, so actually slightly less, at least based on the initial estimate of jobs created in the prior month * Unemployment rate did fall slightly from 4.8% to 4.7% and labor force participation inched up from 62.9% to 63% as more Americans re-enter the labor force * Average hourly earnings, though, which were expected to rise .3% only rose .2% * But they did revise the prior month from .1% .2% * So I guess that was about a push * .2% is not much of an increase in wages, especially when prices are rising 2-3 times as fast * Remember January CPI was up .6 - triple the rate that wages are up * The average work week remained the same at 34.4% * As I said, what was a little bit different, though was the complexion of the jobs * We did create jobs in manufacturing, for a change

* I guess you could say a good jobs report is all in the eye of the beholder * And when it comes to President Trump's eyes, he is now beholding an excellent jobs report * Whereas a candidate, similar reports were described by Trump as phony, a hoax * I have a lot more sympathy for Candidate Trump than I do for President Trump * Now President Trump is trying to pretend that the jobs numbers that he used to be so critical of * Are now reflecting what a great job he is doing as President * When there's really no difference between the metrics of this job report and the ones we got under Obama * With probably one exception * And that is in the number we got is better than expected, though not as good as some had hoped, given the very strong ADP number we got earlier * We got a surge in manufacturing jobs there was also a bump in construction jobs * But I am very suspicious of the manufacturing jobs * I know a lot of American manufacturers are really trying to curry favor with Donald Trump early in his Presidency * And this could all be some Trump-related window dressing * This is a long trend of hemorrhaging manufacturing jobs * And I don't think this one blip necessarily means that trend has changed * I wouldn't get too excited; it is a good thing to be creating goods-producing jobs, manufacturing jobs * I'm not criticizing that * But the question is, is it sustainable, is it real, or is it simply some smoke and mirrors * Orchestrated selectively to make Trump look better early on * So certain companies can get what they want from Trump when it comes to tax reform, or other issues where these companies may have a vested interest * Let me go over the actual February Non-Farm Payroll numbers: * The consensus was 200,000 jobs; 227,000 was the number created in January * Most of that was prior to Trump becoming President, though subsequent to his election * So we did 227,000 jobs in January and they actually revised that up to 238,000 jobs * We did 235,000 in February, so actually slightly less, at least based on the initial estimate of jobs created in the prior month * Unemployment rate did fall slightly from 4.8% to 4.7% and labor force participation inched up from 62.9% to 63% as more Americans re-enter the labor force * Average hourly earnings, though, which were expected to rise .3% only rose .2% * But they did revise the prior month from .1% .2% * So I guess that was about a push * .2% is not much of an increase in wages, especially when prices are rising 2-3 times as fast * Remember January CPI was up .6 - triple the rate that wages are up * The average work week remained the same at 34.4% * As I said, what was a little bit different, though was the complexion of the jobs * We did create jobs in manufacturing, for a change

* It looks like the Republicans on Capitol Hill, with the blessing of Donald Trump, are trying to repeal one big healthcare program and replace it with another big government entitlement * They're calling it TrumpCare * First they were calling it ObamaCare Lght, but now they're embracing the term, "TrumpCare" * Whatever it is, it is not going to work * It's just going to be another disaster wrapped up in a different package * But before I get into explaining this, I want to talk a little bit about the GDP numbers and the Atlanta Fed * In my last podcast, I mentioned that even though the Fed was getting closer to the point at which it was going to raise interest rates again * Even though it was talking tough on raising rates, the GDP estimates were collapsing * Well, they collapsed again today * Now the same Atlanta Fed that was at 1.8% for Q1 GDP is now at 1.3% as of today * When we began the month of February - * February 1st - they were looking for 3.4% GDP for the first quarter * If you go back and listen to my podcast, at the time I recorded it * I said, they're kidding. They've got to be crazy - there's no way we're going to get 3.4% * They're going to have to come down, and that's all they've done * And now we're at 1.3% and falling * Now maybe part of that is because we got the worst trade deficit today in 5 years * Although, I think the numbers were highly anticipated so I don't know why that would have come as a surprise * And we got Consumer Credit for December and it was a huge drop in the increase of credit card debt * Meaning that consumers took on a lot less credit card debt than Wall Street expected * Now that's a good thing * I don't like it when Americans go deeper into debt to buy stuff * You've got a bubble economy that's 7%, people buying stuff they can't afford

* It looks like the Republicans on Capitol Hill, with the blessing of Donald Trump, are trying to repeal one big healthcare program and replace it with another big government entitlement * They're calling it TrumpCare * First they were calling it ObamaCare Lght, but now they're embracing the term, "TrumpCare" * Whatever it is, it is not going to work * It's just going to be another disaster wrapped up in a different package * But before I get into explaining this, I want to talk a little bit about the GDP numbers and the Atlanta Fed * In my last podcast, I mentioned that even though the Fed was getting closer to the point at which it was going to raise interest rates again * Even though it was talking tough on raising rates, the GDP estimates were collapsing * Well, they collapsed again today * Now the same Atlanta Fed that was at 1.8% for Q1 GDP is now at 1.3% as of today * When we began the month of February - * February 1st - they were looking for 3.4% GDP for the first quarter * If you go back and listen to my podcast, at the time I recorded it * I said, they're kidding. They've got to be crazy - there's no way we're going to get 3.4% * They're going to have to come down, and that's all they've done * And now we're at 1.3% and falling * Now maybe part of that is because we got the worst trade deficit today in 5 years * Although, I think the numbers were highly anticipated so I don't know why that would have come as a surprise * And we got Consumer Credit for December and it was a huge drop in the increase of credit card debt * Meaning that consumers took on a lot less credit card debt than Wall Street expected * Now that's a good thing * I don't like it when Americans go deeper into debt to buy stuff * You've got a bubble economy that's 7%, people buying stuff they can't afford

* According to Goldman Sachs, the odds of a Fed rate hike coming up at the March meeting, which is less than 2 weeks away is now 95% * It was 90% before Yellen spoke, that was looking at the Fed Fund futures, in fact the probability of a rate hike had been rising all week based on speeches of a number of Fed officials * Everyone indicating that a rate hike was coming soon * Nobody actually said how soon * But they kept talking about why raising interest rates would be appropriate * Why they didn't want to wait too long * But of course they always reiterate that they want to proceed slowly * And of course, that they are data dependent * Meaning that in order to deliver these rate hikes that they claim would be appropriate * They will be slowly applied over some abstract period of time and * The economy has to evolve according to their expectations * Which probably is not going to happen * But nonetheless, when Janet Yellen spoke, this was the last opportunity that a Fed official had to kind of dial back those expectations * If Yellen didn't like the fact that the markets were 90% sure of a March rate hike * She had the opportunity to dial that back in her rhetoric * And she did not * She allowed the markets to continue to price in a rate hike in the March meeting * And that is why, now, the odds went from 90% to 95%, which is virtually a lock * Which means that barring any huge drop in the stock market between now and the March meeting * That hike's probably going to come * Because I think that the reason the Fed feels confident to raise rates is that the Dow is at 21,000! * Just like it felt confident to raise interest rates the first time in December of 2015 because the markets were giving a false signal that rate hikes were OK * And, of course after the rates were hiked, the market thought about it again, and it dumped * And then we had the worst January in the history of Janaries * And the Fed waited until the following December to raise rates again

* According to Goldman Sachs, the odds of a Fed rate hike coming up at the March meeting, which is less than 2 weeks away is now 95% * It was 90% before Yellen spoke, that was looking at the Fed Fund futures, in fact the probability of a rate hike had been rising all week based on speeches of a number of Fed officials * Everyone indicating that a rate hike was coming soon * Nobody actually said how soon * But they kept talking about why raising interest rates would be appropriate * Why they didn't want to wait too long * But of course they always reiterate that they want to proceed slowly * And of course, that they are data dependent * Meaning that in order to deliver these rate hikes that they claim would be appropriate * They will be slowly applied over some abstract period of time and * The economy has to evolve according to their expectations * Which probably is not going to happen * But nonetheless, when Janet Yellen spoke, this was the last opportunity that a Fed official had to kind of dial back those expectations * If Yellen didn't like the fact that the markets were 90% sure of a March rate hike * She had the opportunity to dial that back in her rhetoric * And she did not * She allowed the markets to continue to price in a rate hike in the March meeting * And that is why, now, the odds went from 90% to 95%, which is virtually a lock * Which means that barring any huge drop in the stock market between now and the March meeting * That hike's probably going to come * Because I think that the reason the Fed feels confident to raise rates is that the Dow is at 21,000! * Just like it felt confident to raise interest rates the first time in December of 2015 because the markets were giving a false signal that rate hikes were OK * And, of course after the rates were hiked, the market thought about it again, and it dumped * And then we had the worst January in the history of Janaries * And the Fed waited until the following December to raise rates again

* Last night, following tradition, President Trump delivered his first State of the Union Address * Although people are saying that it's not technically a true State of the Union Address * We'll have to wait another year for that; that he has been President for too short a period * So it's just an address before the Joint Session of Congress * But whatever you call it, apparently the president's address was well received * Even some of the President's critics are giving him credit, although not all of his critics are being so kind to the President * On the other hand, I was not impressed at all by what President Trump said * If his main goal was not to offend anybody * To get a positive reaction from the political classes, the media and Wall Street * Then I guess he gave a great address * But if you were looking for the President to actually indicate that true change is coming * That America might actually be great again * That President Trump might actually be a different type of President than his predecessors * You got no indication that that was going to be the case * In fact, Trump gave me every indication that his administration would be more of the same * Donald Trump wants to make America great again

* Last night, following tradition, President Trump delivered his first State of the Union Address * Although people are saying that it's not technically a true State of the Union Address * We'll have to wait another year for that; that he has been President for too short a period * So it's just an address before the Joint Session of Congress * But whatever you call it, apparently the president's address was well received * Even some of the President's critics are giving him credit, although not all of his critics are being so kind to the President * On the other hand, I was not impressed at all by what President Trump said * If his main goal was not to offend anybody * To get a positive reaction from the political classes, the media and Wall Street * Then I guess he gave a great address * But if you were looking for the President to actually indicate that true change is coming * That America might actually be great again * That President Trump might actually be a different type of President than his predecessors * You got no indication that that was going to be the case * In fact, Trump gave me every indication that his administration would be more of the same * Donald Trump wants to make America great again

* Yesterday it looked like the Dow's winning streak may have come to an end * We were up 10 days in a row, which was the biggest winning streak since 1987 * The Dow was down 50-60 points for the entire day * It opened down and it stayed down until the very last hour, it started to rally * In the last 15 minutes it managed to eke out a positive close * To extend the winning streak to 11 consecutive day * And of course, another record high for the DJIA * For those bitcoin fans out there, I know a lot of you have given me crap because the price of bitcoin has gone up and just this week it got back above 1200, getting close to the price of gold * Gold was up again this week, it got as high as $1260 * Remember on my last podcast I said we were building up a lot of resistance around $1240 * And I thought we would take it out and then we would see a little bit of a jump * That's exactly what we did * We closed at $1259.60 * An observation, though: gold stocks were down in general on Friday; they were also down on Thursday * In fact, they had a sell-off at the end of the day * I think the last 2% rise in the price of gold - we've had about a 4% drop in gold stocks * Gold stocks rose early on, and they did a very good job of forecasting this gold rally * So, the question is, are the gold stocks now accurately forecasting a sell-off, a profit-taking or a correction? * That's possible, and if that is the case, I think that is a great buying opportunity because I don't think the correction will be very long-lived, or that deep *  And I do expect much, much higher prices later in the year * But it's also possible that this skepticism on the part of gold traders * Obviously if gold traders have been selling gold stocks these last several days, they thought that the price of gold was topping out * So far, they've been wrong, because gold prices continue to rise despite the fact that gold has been falling for over a week * Maybe they're not wrong; maybe they are just early * Maybe they're just getting out early and a big gold drop is coming - we'll see * But it's also possible that this is just a healthy degree of skepticism * That gold is climbing this wall of worry and in fact gold stock traders are now so worried that they've been selling their gold stocks even as gold keeps rising

* Yesterday it looked like the Dow's winning streak may have come to an end * We were up 10 days in a row, which was the biggest winning streak since 1987 * The Dow was down 50-60 points for the entire day * It opened down and it stayed down until the very last hour, it started to rally * In the last 15 minutes it managed to eke out a positive close * To extend the winning streak to 11 consecutive day * And of course, another record high for the DJIA * For those bitcoin fans out there, I know a lot of you have given me crap because the price of bitcoin has gone up and just this week it got back above 1200, getting close to the price of gold * Gold was up again this week, it got as high as $1260 * Remember on my last podcast I said we were building up a lot of resistance around $1240 * And I thought we would take it out and then we would see a little bit of a jump * That's exactly what we did * We closed at $1259.60 * An observation, though: gold stocks were down in general on Friday; they were also down on Thursday * In fact, they had a sell-off at the end of the day * I think the last 2% rise in the price of gold - we've had about a 4% drop in gold stocks * Gold stocks rose early on, and they did a very good job of forecasting this gold rally * So, the question is, are the gold stocks now accurately forecasting a sell-off, a profit-taking or a correction? * That's possible, and if that is the case, I think that is a great buying opportunity because I don't think the correction will be very long-lived, or that deep *  And I do expect much, much higher prices later in the year * But it's also possible that this skepticism on the part of gold traders * Obviously if gold traders have been selling gold stocks these last several days, they thought that the price of gold was topping out * So far, they've been wrong, because gold prices continue to rise despite the fact that gold has been falling for over a week * Maybe they're not wrong; maybe they are just early * Maybe they're just getting out early and a big gold drop is coming - we'll see * But it's also possible that this is just a healthy degree of skepticism * That gold is climbing this wall of worry and in fact gold stock traders are now so worried that they've been selling their gold stocks even as gold keeps rising

* The Dow finished with yet another gain today * We closed at 20,775.60 * I've been told that this is the longest consecutive winning streak for the Dow Jones since 1987 * Of course, we all remember how that streak came to a crashing end in October with the 1987 stock market crash * We'll see if the market has better luck this time around * We got the FOMC minutes released earlier today * I think they were interpreted as being hawkish; remember, this is all on a relative scale, they're all doves now * It is simply degrees of dovishness, there are no actual hawks on the FOMC or on any central bank * The question is, "Who is more dovish and how dovish can you be?" * But there were some statements that caused the markets to think, "Hey, maybe a rate hike is coming." * Because I think the members said it would be appropriate to raise rates sometime soon * What is sometime soon? * Is that March, or is that April, May or June? * That's still soon, in the scheme of things * If you look at how slowly the Fed has been moving * Glacial speed, when it comes to raising rates * Soon can certainly be a few months from now * It doesn't necessarily mean that it is going to be March * They could have said March - "It might be appropriate to raise rates in March" * They didn't say March - they just said soon * Nobody really knows what soon is * They did comment that they thought the markets might interpret gradual rate increases as meaning only 1 or 2 rate hikes a year * And they were troubled by that, because maybe by saying that, by gradual, they mean 3 a year * Not 1 or 2 * I heard some people saying, * "Maybe the Fed is not going to go slowly." * Even if they do 3 - we're still talking very gradual rate hikes, especially if you put it in context of how low rates are right now and how high inflation is already * I keep hearing these comments from Fed officials * They're doing interviews and they're saying, "Yes, we're making progress; we're moving slowly toward our goal of 2% inflation." * 2% inflation!  They left that in the dust *  The last number we got in January showed a year over year increase of 2.5% * So why are they saying they're making progress toward getting to 2% when they've already zoomed past it * They're looking at it now in the rear view mirror

* The Dow finished with yet another gain today * We closed at 20,775.60 * I've been told that this is the longest consecutive winning streak for the Dow Jones since 1987 * Of course, we all remember how that streak came to a crashing end in October with the 1987 stock market crash * We'll see if the market has better luck this time around * We got the FOMC minutes released earlier today * I think they were interpreted as being hawkish; remember, this is all on a relative scale, they're all doves now * It is simply degrees of dovishness, there are no actual hawks on the FOMC or on any central bank * The question is, "Who is more dovish and how dovish can you be?" * But there were some statements that caused the markets to think, "Hey, maybe a rate hike is coming." * Because I think the members said it would be appropriate to raise rates sometime soon * What is sometime soon? * Is that March, or is that April, May or June? * That's still soon, in the scheme of things * If you look at how slowly the Fed has been moving * Glacial speed, when it comes to raising rates * Soon can certainly be a few months from now * It doesn't necessarily mean that it is going to be March * They could have said March - "It might be appropriate to raise rates in March" * They didn't say March - they just said soon * Nobody really knows what soon is * They did comment that they thought the markets might interpret gradual rate increases as meaning only 1 or 2 rate hikes a year * And they were troubled by that, because maybe by saying that, by gradual, they mean 3 a year * Not 1 or 2 * I heard some people saying, * "Maybe the Fed is not going to go slowly." * Even if they do 3 - we're still talking very gradual rate hikes, especially if you put it in context of how low rates are right now and how high inflation is already * I keep hearing these comments from Fed officials * They're doing interviews and they're saying, "Yes, we're making progress; we're moving slowly toward our goal of 2% inflation." * 2% inflation!  They left that in the dust *  The last number we got in January showed a year over year increase of 2.5% * So why are they saying they're making progress toward getting to 2% when they've already zoomed past it * They're looking at it now in the rear view mirror