Summary:  Today's big miss in the Nonfarm Payroll report indicates further proof for the Fed that the Q1 weak economic data was not transitory.  Coupled with disappointing Labor Force Participation declines and increasing Trade Deficit numbers, the Fed will have no good news to justify a rate hike. All this news does not bode well for the U.S. dollar index, which closed at a new low for the year today. The next crisis is the dollar. * Following yesterday's much stronger than expected May ADP Jobs report, the consensus was for 170,000 jobs and the actual number was 253,000 * The stage was set for another strong number for today's employment report * But we didn't get it * We got the official number from the U.S. government earlier this morning * The consensus was for 185,000 jobs created * We actually created, according to the government, just 138,00 jobs - a big miss * In addition to that, they took last month's initial 211,000 report and they lowered that down to just 174,000 * In fact they made revisions to the prior month as well * The official unemployment rate actually went down to 4.3% * I think that is a new low * Why did the unemployment rate drop? * For the same reason it has been dropping; lots of people left the labor force * Labor Force Participation once again dropped .02 to 62.7% * That matches the all time record low * We actually had more than 600,000 people leave the labor force in the month of May * A new all-time record high * In fact, breaking it down by part-time and full-time, all of the net new jobs added were part time jobs * We actually lost 367,000 full-time jobs during the month of May * That is the biggest decline in full-time employment in 3 years * Of course, as usual, the jobs that we do create were in leisure and hospitality, education healthcare, temporary services * We actually lost some information technology jobs, we lost jobs in the retail trade; small gains in the wholesale trade, a little better than normal in manufacturing and logging * But a still a tiny portion of the overall jobs in goods-producing segments of the economy * So we continue to create non-productive jobs which is another reason that the trade deficit continues to rise, and we'll get to that in a minute * Weekly hourly earnings up just .02%, matching expectations on the lower end * But they went back to last month's, originally reported as +.03% and they moved that down to +.2% * So earnings are not growing, full-time jobs are disappearing, and this economy is weakening * In fact, also yesterday, Challenger job cuts report announced layoffs surged in the month of May from 36,602 in April to 51,692 in May * This is the highest number of announced layoffs of any month of the year * That doesn't bode well for future job creation if all of a sudden we're getting a spike in layoffs * In addition to the bad jobs report, which of course is going to weigh on GDP in Q2 * We got the trade deficit for April, which is the first month of the second quarter * They were looking for a deficit of $46.1 billion * Instead, the deficit ballooned all the way up to $47.6 billion * From what was originally reported at $43.7 billion in March, revised that up to $45.3 billion * So this is going to take away not only from Q2 GDP but it's going to go back and take away from Q1 GDP * Remember, in my last podcast, I pointed out that the Federal Reserve, specifically, in their minutes said that before they raise rates again they want confirmation that the Q1 weak economic data was transitory * Meanwhile all of the data that has come out since those minutes were released actually proves the oppositePrivacy & Opt-Out: https://redcircle.com/privacy

Summary: Box office revenues for this holiday weekend were the weakest since 1999.  Why is that? Some say the movies were not very good, but I think it's more likely that this is just another piece of evidence that supports the fact that the consumer is in much worse shape than is generally perceived. * Hopefully everybody had a happy Memorial Day weekend; I spent my holiday weekend up in Vancouver at the International Metal Writers Conference * And when I came home, I came back to my home in Connecticut * This was the first year I spent the winter in Puerto Rico, from January 1 until just a few days ago * I bought a condo in Puerto Rico a few years ago, I moved my Euro Pacific Asset Management Company there from California at about that time, but I'd never moved there myself until this year * I like snow, it's pretty, but the next time I see snow it's because I'm skiing on it * I'm a snowbird now * But this time I'm not only flying out of bad weather, I'm flying out of high taxes * It's not just the high taxes in Connecticut; it's the high taxes in the U.S. * By the way, Connecticut is basically broke, if you read a lot of the articles now * The tax revenue is collapsing * I'm moving from a bankrupt state to a  bankrupt territory * Puerto Rico has already declared bankruptcy; Connecticut hasn't actually done that * Connecticut is admitting that they can't raise taxes on the rich anymore, because the rich are leaving * I moved down to Puerto Rico with my wife and two young children, and I love it * I live in a nice community, Dorado Beach; great neighborhood, many in the same situation as me * I read this article about box office - holiday weekends are usually a good time for Hollywood * Memorial weekend is a big weekend to kick off the summer movie season * The article I read stated that box office revenues for this holiday weekend were the weakest since 1999 * Why is that?Privacy & Opt-Out: https://redcircle.com/privacy

Summary: The Fed is now indicating it needs evidence that  the Q1 weak economic data is transitory and not a trend.  This is interesting for 2 reasons.  The Fed's narrative has always been to tout economic growth even in the face of flimsy or no supporting data.  Now the Fed is actually admitting there is weakness.  The other interesting thing is that, although the Fed continues to claim it is "data dependent", it has been ignoring the economic data ever since the first rate hike.  The market puts chances of a June rate hike at almost 100%.  Maybe that is because it believes the Fed will raise rates regardless of proof. * On Wednesday we got the release of the Federal Open Market Committee's minutes * As usual, the FOMC is indicating that as long as the economy continues to evolve according to their forecast, that it would be appropriate to remove additional accommodations soon * And, I guess the markets are assuming soon is in about 3 weeks when the Fed meets in June everybody anticipates that the Fed will hike rates again * Actually raising interest rates all the way back up to 1% - that would be the new floor on rates * That was the lowest that rates got during the Greenspan era that gave us the housing bubble and ensuing financial crisis * It's taken a long time even to get up to that insanely low level of interest rates * But everybody still assumes - I think the probability is near 100% - that the Fed is going to raise rates in June * But what I thought was interesting about those minutes, and nobody's talking about this * In the minutes, the Federal Reserve said that they are also looking for proof that the weak economic data from the first quarter was transitory * They're looking for proof in order to continue to raise rates * I'm thinking, if the Fed says they need proof that Q1 data was transitory, are they actually going to get that proof by the June meeting? * If they don't have the proof yet, are they going to have it by June? * Almost all the economic data that has come out recently, including this week, has been pretty bad * In fact, the data that we're getting confirms to me that rather than being transitory * The weakness in the first quarter is likely to continue * If it's transitory at all it is because we're transitioning into a recession * So if the Fed is looking for proof that the economic data was transitory, thus far they haven't gotten any * If they actually need the proof prior to raising rates, they maybe they are not going to raise rates in June * The market doesn't seem to even give that a possibility * Maybe it's because the Fed claims to be data dependent * Yet they've ignored data ever since the first rate hike * Now they are saying that the data they are depending on is data that is going to provide proof that the first quarter weakness is transitory * Maybe the markets aren't buying that, they're saying, "We think the Fed's going to raise rates regardless of whether or not there's any proof." * Even if there is no proof, they are going to pretend that there isPrivacy & Opt-Out: https://redcircle.com/privacy

Summary:  The dollar's decline really started with the Fed's too-little-too late rate hikes.  The rally of 2014 - 2015 was fueled by expectations of more aggressive Fed monetary policy that did not materialize. We've been trending sideways since then with the exception of an upward spike after the Trump victory.  Now, as much of the hype surrounding Trump's election is losing its momentum, support for the dollar is waning. This is not a case of "buy the rumor, sell the fact".  This is going to be a situation where the fact does not live up to the rumor. * The dollar continued its losing streak today.  The dollar index was down for the 8th time in 9 days * The 9 day decline is about 2-1/2 percent * The dollar index actually traded below 97 today for the first time since Donald Trump was elected President * So we have wiped out 100% of the ill-gotten dollar gains that were racked up in the wake of that victory * If you remember, when the dollar was rallying as a result of the trump victory, I said it was a sucker's rally and sure enough, that's exactly what it was *  The dollar's decline is only just getting started * I think the dollar would have begun its decline a while ago had Hillary Clinton been elected * But because of Trump's unexpected victory and the prospects of faster economic growth, * Trump-flation (as if inflation were even good for the dollar) but to the extent that it made the Fed raise interest rates * That's what created the rally and it was a great selling opportunity for people who understood what really was going on * But all we've done thus far is get rid of gains that never should have been racked up * The dollar hasn't really even begun its decline, but I think that decline is going to begin in earnest * In fact, my next target for the dollar index is going to be around 92, which is about 5% below current levels * But if we get below 92, that will be the dollar's lowest level since January 2015, so about a 2-1/2 year low, assuming we get there in the next couple of months, depending how long it takes to trade down * But what really gets interesting once the dollar index gets below 92 * If you look at a chart, there's nothing but air between 92 and 80 * Because the dollar index rose in 2014 * The dollar had a huge rally anticipating the Fed's tightening monetary policy * Tapering and all the talk about rate hikes * That was probably the best year for the dollar * And that momentum continued into 2015 * The dollar didn't lose its momentum until the Fed started hiking ratesPrivacy & Opt-Out: https://redcircle.com/privacy

Summary: Republicans face chaos around Trump's political difficulties, causing some to consider potential advantages of a President Pence.  Market volatility has not yet brought the DJIA below pre-Trump numbers while the dollar index slides and gold moves up. Meanwhile, household debt is higher than 2008 levels even as fewer Americans own homes. * It looks like I picked a very volatile week to go out to Las Vegas, although I didn't pick this week; the week picked me * I have two conferences that I am attending here: the Las Vegas Money Show and the SkyBridge Alternatives Conference  otherwise known as SALT * A lot is going on, certainly the political chaos in the United States, the Dow was down 365 points yesterday based on new revelations with respect to why Donald Trump may have fired FBI Director James Comey * Was he doing it because Comey refused to give up on his investigation of Trump's Russian ties? * Now you've got Congress members on both sides of the aisle questioning whether the allegations are true * Apparently Comey has some contemporaneous notes of conversations he had with Donald Trump * Donald Trump may have asked him to give up the investigation * Although from what I've heard President Trump said it would be nice if Comey gave up the investigation - was that some kind of idle threat? * Did that mean "You'd better do it, or you're fired." * I have no idea, but this obviously is creating concerns for the Trump Administration * The market, as far as I'm concerned, is really not down very much at all, given how much it had rallied based on nothing but the optimism surrounding expectations for all the good things that would happen as a result of a Trump Presidency * We were going to get tax reform, we were going to get regulations; we were going to have all this stimulus * Not only has none of these things materialized yet, even before the scandals broke, it was obvious that even if we got any of the promised legislation * Of course I've always said it would not even help the economy * But regardless, people actually think it it is going to, which created the big stock market rally * Even before this controversy it was obvious that the expected improvements were going to take a lot longer than people thought * Now this is going to delay Trump's agenda even more * Because now, rather than concentrating on tax reform or repealing ObamaCare, or stimulus, now they've got to deal with damage control to hold on to the Presidency and fend off these calls for impeachment * Now they've got to get a special prosecutor and all of this is going to add additional delays * Of course, a lot of momentum we had in Q1, in spite of weak GDP, you had all this confidence, all this enthusiasm on the part of Republicans and Trump voters * And it was all this confidence that was supposed to lead to extra economic growth * Businesses were going to have more confidence to invest and hire * And consumers were going to have more confidence to spend * Well certainly, what is happening now in the White House is going to shake some of that confidence * Some of the people who were so enthusiastic about Trump don't even know if Trump is going to be there anymore * And to the extent that is is there, he is politically damaged * Now he has to use a lot of his political capital just to secure his position rather than to advance his agenda * Whether or not that agenda would actually help the economy * Despite that, the drop in the stock market is not very large Privacy & Opt-Out: https://redcircle.com/privacy

Summary: The retail sector is in worse shape today than it was in 2008 during and immediately following the financial crisis. Retailing has been responsible for 10% of the jobs gained during this so-called recovery. Clearly part of the problem is the increase in minimum wage.  Why are retailers adding so many jobs when their business is declining? * A quick little announcement at the beginning of this podcast; I'm going to try to keep the length of these podcasts down to 20 minutes in the future * It seems we have quite a bit of audience falloff after about 17 minutes * We're also skipping our ads at the end in favor of more informative content about Euro Pacific Capital, SchiffGold, Goldmoney and Euro Pacific Bank. * So I am going to do these shorter podcasts more frequently * First of all, it's the RetailPocalypse, which I have been talking about on this podcast that, from my perspective - not just my perspective, * In reality, the retail sector is in worse shape today than it was in 2008 during and immediately foll0wing the financial crisis * We got a lot of bad news from the retailers this week * Including JCPenny and Nordstrom's - horrible sales from these companies * We had other retailers earlier in the week that came out with bad news * Kohl's Department Store, Dillards * Kohl's stock is at 36.5 as I record this * That stock's high was $75-$80 in the summer of 2015 * So it's down 60% or so * Dillard's is at a 52-week low today, at just under $47 * That was over $120 - more than a 50% decline * Macy's was down another 3% today - a new 52-week low * Macy's is at $23.60 -it was a $70 stock * These are huge markdowns for retail stocks * Look at Nordstrom's - down almost 11% today on the bad news * $41.20 - Nordstrom's was an $80 stock is one of the best performers * JCPenny is going to get the prize for the biggest decline overall * This stock's been falling for a long time * It closed today at $4.55 * A lot of people are very complacent - they say, "Oh, it's no big deal because it's all about e-commerce * Everybody is shopping online * Look at Amazon - Amazon stock hit a new 52-week high today * All time high, not just a 52-week high * Jeff Bezos is on the way to being the richest man in the worldPrivacy & Opt-Out: https://redcircle.com/privacy

Summary: Trump fantasy persists in the face of weakening economic data, health care and tax reform uncertainty. The reality is that the damage done to the economy will not right itself just because Trump has been elected and we are in for a wild ride whether or not President Trump decides to do the right thing for the American economy. * It didn't take long for the Atlanta Fed to already reduce its inflated Q2 GDP forecast * Remember, they initially came out with their first estimate of 4.3% growth in the second quarter * Following the dismal .7% that was initially released for Q1 * My guess is, still,  that they will continue lowering that estimate as more economic data comes in * Nonetheless, the Atlanta Fed boldly came out with 4.3% for Q2 * Already, earlier this week, they have reduced that estimate to 3.6% * That was their first downward revision; I think it is going to be the first of many * We did this exact same dance last quarter * Where the Atlanta Fed starts high and as more and more weaker data comes in they keep notching down the estimate * It's like a GDP forecasting limbo * The question is:"How low can the bar go?" * Remember, I mentioned on my last video blog that the New York Fed is already down to 1.8% for Q2, so the Atlanta Fed has a long way to go to catch up to the New York Fed's estimate * Friday will bring the next update to the GDP estimate * And that's when we will get the retail sales numbers * My guess is that we will continue the trend and those sales will be less than expected * We already got some news today that should weigh on Q2 GDP and that is Import/Export Prices for the month  of April * This is important because obviously what we pay for our imports and what we get for our exports will be a big determinate of the trade deficitPrivacy & Opt-Out: https://redcircle.com/privacy

SchiffReport recorded Saturday, May 6 * On Wednesday of this week, the Federal Reserve against a rate hike in May * But based on their official statement, the market assigned a much higher probability * To a rate hike coming in June * In fact, following Friday's slightly better-than-expected Non-Farm Payroll report, the probability of a June rate hike is not near 100% * In other words, the markets are certain that a quart-point hike is coming next month * If the Federal Reserve does raise its rates by a quarter point, that will bring the floor of the official rate finally up to 1% * The ceiling being 1.25%, so presumably the Fed will target a Fed funds rate somewhere between 1 - 1.25% * This is still an exceptionally low interest rate indicating extreme monetary accommodation * Remember, 1% is the absolute low that Alan Greenspan lowered interest rates to in the aftermath of the 2001 recession and the 9/11 terrorist attack * That artificially low interest rate really provided the air for the housing bubble that resulted in the 2008 Financial Crisis * So despite these rate hikes, the Fed monetary policy remains extremely accommodative, * Just not as accommodative as they were before * If you recall, the main reason I was certain that the Fed was not like to deliver these rate hikes * Is because I took the Fed at its word that it was data dependent * And I believed that the Fed would use weak data as an  opportunity or an excuse to not raise interest rates * I was wrong about that, because the Federal Reserve has ignored all of the weakening economic data and has raised rates anyway * It has raised them very slowly, but nonetheless, it has raised interest rates despite the fact that all the data they claim to depend on would not support that decision * I thought for 2 reasons the Fed would not want to hike rates * The first be to delay the onset of the next recession * After all, raising rates into a weakening economy it would accelerate the onset of that recession * I thought the Fed would always err on a delay * But apparently, that is not a concern for the Fed * One of the reasons this might be the case is because the Fed is concerned about having some ammunition to fight the next recession, rather than to postpone the onset * Meaning that they want to get interest rates further above zero before the recession officially begins so that once it is here, they have more room to cut rates * Another reason that the Fed has been more willing to raise rates has to do with the action in the U.S. stock market * I thought the Fed would be reluctant to raise rates for fear of how higher rates might impact the stock market * But it seems the stock market has found another prop * It is no longer relying on cheap money; it now also relying on hope and optimism surrounding the election of Donald Trump * And the idea that he is somehow going to "Make America Great Again" * With deregulation, tax cuts and all sorts of economic stimulusPrivacy & Opt-Out: https://redcircle.com/privacy

Summary:  Last quarter the Atlanta Fed's Q1 GDP  forecast was 3.4% in February. The most recent number was actually .7%.  After all the negative economic data that came out today suggesting that Q1 could be revised lower, the Atlanta Fed came out with their forecast for Q2 GDP at 4.3%.  How is this possible, with no economic data to support this projection? Either they believe their policies are still valid in the face of data on a downward trajectory, or they are simply acting as salesmen, promoting economic health regardless of the actual data. *  Today was Donald Trump's 100th day as President of the United States * The media is covering this event and looking back over the last 100 days * Trying to assess the effectiveness of Trump's presidency thus far * What has he accomplished, how much progress has he made; * I think the origin of assessing the first 100 days of a presidency goes back to Franklin Delano Roosevelt * Who of course became president during the Great Depression * I think the President accomplished a lot during his first 100 days * That's been the benchmark for which future presidents have been judged * It's not about which President did the most good for the country during the first 100 days * It's just, "Who did the most?" * Because, FDR did a lot, all of it harmed the economy * Not only did FDR's exacerbate and expand the depression, * His actions had repercussions for decades * We are suffering today from the mistakes that FDR made in his first 100 days * He accomplished a lot, but he accomplished a lot of mistakes * I would rather have a president do nothing for his first 100 days * If a President just played golf for 100 days and did nothing * Chances are he might be the best president we've ever had * Most Presidents do damage to the economy during their first 100 days * To the extent that they pass a law, chances are, the law just limited our freedom and reduced our standard of living * That's true for most politicians: doing nothing is better than doing something * Because doing something normally means doing harm * I wish politicians would take the Hippocratic Oath, "First do not harm" * If politicians took that oath, they could not do anything * To the extent that a President can undo the damage done by a previous President * Then, he would be doing a good thing * I recognize that some of the things that Trump is trying to do is to undo Obama's mistakesPrivacy & Opt-Out: https://redcircle.com/privacy

Summary: The Europeans released their inflation numbers today.  Year over year, inflation in the Eurozone are increasing at an average of 1.9%, which is Mario Draghi's objective.  This is a 4-year high in CPI increase.  How does Draghi justify more stimulus? In the U.S. growth is lower than forecast, while inflation is higher than forecast. That trend should be disturbing and it will continue. * Today we got the government's first estimate of GDP growth for the first quarter of 2017 * If you remember, the Atlanta Fed has been steadily reducing its estimate for first quarter growth since February 1 of this year when it was estimating 3.4% GDP growth * The last downward revision happened yesterday as a result of more weak economic data that came out yesterday * Particularly on inventories * The Atlanta Fed made its final revision to the estimate for Q1, at least the estimate that we got today * And they were down to .2%! * The consensus for Q1 had also come down; but not nearly as much as the Atlanta Fed * Going into this morning, the consensus estimate was 1.1% GDP growth which would be a sharp reduction from the 2.1% GDP growth that the government claims we had last year * And the range of forecasts went from a high of 1.7% to a low of .7% * Nobody was quite as low as the Atlanta Fed * We got the actual number this morning and it was .7% * This is just the first estimate * If you look at the economic data that has been coming out this year, the later the data comes, the worse it is * So if that trend continues over the next month, as the government continues to get additional data from which to determine GDP * There's a very good chance that they will revise this number down * And maybe the Atlanta Fed's .2% will end up being correct or too optimistic * I think there is still a good chance that by the time they get the final revision, which will not happen for a couple of months * We could end up with a negative number for Q1 very easily * I think the second quarter will be even weaker than the first quarter * If we end up with a negative number for the first quarter there's a good chance we'll get a negative number in the second quarter * Which means that by the time we get the negative number, if the second quarter is pretty much over, and it was also negative * Then we will actually be in a recessionPrivacy & Opt-Out: https://redcircle.com/privacy

Summary: President Trump actually delivered on his promise of the largest tax cut in American history, and he delivered it on time.  Trump may have presented a plan with built-in bargaining positions, or he might even intend to pass a tax bill that will "starve the beast". The interesting thing is that the President is applying this 15% tax rate to pass-through entities, such as LLC's, which will encourage most businesses to shift into a different business model to take advantage of the low tax rate. In other words, people currently at a 43.4% rate will pay 15%. This is going to cause two things to happen that will hurt the economy and a lot of people in the middle class: a big increase in consumer prices and inflation. Will Republicans vote against the biggest tax cut ever based on the fact that it adds to the debt? Ultimately, a resulting fiscal crisis might force Republicans to vote to cut spending. * Donald Trump was right. He actually lived up to expectations, in fact, he might have exceeded them * When it comes to the magnitude of the tax cut that he proposed - on schedule * On Wednesday, today, Donald Trump unveiled his idea for what could well be the biggest tax cut in American history * Ordinarily, I would be all in favor of the biggest tax cut in American history, if it were accompanied by the biggest spending cuts in American history * Government costs what it spends - you have to pay for government, one way or another * So if you're going to have big government and you're going to spend all kinds of money, the most efficient way to raise the money is through taxation * And of course the most efficient form of taxation would be a consumption tax, sales tax, tariffs * Not an income tax * An income tax is the worst way to raise revenue * An even worse way to raise revenue is by going into debt * Borrowing money and then printing money will cause prices to rise, eventually interest rates to rise * And ultimately will result in enormous tax hikes * To repay all the money that you borrowed * What Donald Trump is doing, is he is offering an enormous tax cut, but no spending cuts * And what they are saying is that the tax cuts will pay for themselves because there will be so much extra growth * That the government will make up for the difference based on more people working and more people having higher incomes and even though the tax rates are lower, the net payments will be higher * None of this is true * These tax cuts are so enormous that there is no way that the economic growth can make up the difference * Even if we get the higher economic growth * One of the bigger issues that people are not talking about is the impact of higher interest rates * Which will certainly be a result of much larger deficits and even faster economic growthPrivacy & Opt-Out: https://redcircle.com/privacy

Summary: Government spending creates the greatest drag on the U.S. economy.  Cutting taxes, even the "biggest tax cut ever" cannot stimulate the economy alone.  So if you're fed up with paying taxes, if you think you are over-taxed,  and you are, it's because the government is spending too much money. The only real way to get relief is to dramatically cut government spending.  No one want's to do that, however, because the people who benefit from government spending, vote, and none of the politicians are willing to lose their votes to ease the burden of everybody else. * On Friday, President Donald Trump said that he would be unveiling on Wednesday of next week, a massive tax cut * In fact, he actually went out on a limb and stated that it is going to be the biggest tax cut ever * Now, I'm really not sure why Donald Trump feels he has to keep promising something and then failing to deliver; that's been a problem * You don't want to over-promise and under-deliver * I understand as a candidate you want to do that; you want to promise anything to get elected * But somebody ought to tell Donald Trump that the election is over and he won * He's President, and he doesn't have to come out and just say things * What I think is that he should say nothing about tax reform until he actually releases a plan * That way he can over-deliver * Don't promise anything - "I'm working on it." - and don't put up a deadline for Wednesday * What if it doesn't happen? * What if there is no tax cut on Wednesday * What if it's not the biggest the biggest tax cut ever * Why make those promises? * Maybe his is going to release a massive tax cut on Wednesday and maybe it will be the biggest ever * I'm not going to take credit away from the President; I'm just saying, "Why not just wait until Wednesday?" * Just in case something goes wrong * Maybe this time there actually is a vote * But the problem, is if you cry wolf to often, then eventually no one's going to believe you * There's really no reason to go out and make the promise; just deliver the massive tax cut on Wednesday and everything will be fine * But I guess he can't resist jumping the gun * But the crazy part about this, first of all, how is it going to be the biggest tax cut ever? * It's hard to believe that, when we have the most debt ever * An enormous 20 trillion National Debt, that the President understands, * He pointed out how big the debt was when he campaigned * How can we afford the biggest tax cut ever unless we're also going to talk about the biggest government spending cut ever?Privacy & Opt-Out: https://redcircle.com/privacy

Summary: Goldman Sachs is no longer recommending a long trade on the dollar. The dollar was previously regarded as a conviction trade, first over speculation over Fed rate hikes and then over Trump exuberance with the expectation of tax cuts, infrastructure spending and other moves that would continue to inflate the dollar bubble.  The dollar was the most crowded trade out there.  I believe, however that as we get close enough to the next recession, that we are going to get another big Keynesian stimulus of increased government spending and tax cuts, which will send the budget deficit through the roof and that will send the dollar through the floor. * We've been having quite a bit of volatility in the U.S. stock market, with back-to-back triple-digit moves in opposite directions * Yesterday, the Dow was up well over 100 points, closer to 200 * But today the Dow Jones was down better than 100 points * Between the 2 days it was still positive, but we'll see what happens tomorrow * We did get some worse than expected new after the bell on IBM; I'm seeing the stock down close to 5% in after hours trading * That could set the tone for some weakness tomorrow * Goldman Sachs helped set a weak tone today; they came out with earnings earlier in the day and their stock was down close to 5% * What was more interesting about Goldman Sachs was not their missed earnings, * But the fact that they are now throwing in the towel on their long-term recommendations to buy the dollar * Of course, the dollar has been strong over the past few years * Although really since March of last year the dollar has gone sideways * It did make a marginal new high during the Trump mania, after the election * But only against a few currencies, not against all currencies * The dollar index today was down sharply; it closed at about 99.50 * The strongest currency today was the pound sterling; it was actually up about 3 full cents; a 2.25% move * The dollar was also down today against the euro, against the yen * It was up against some of the commodity currencies, which had been stronger during the year * It looks to me that the dollar has topped out, and it looks that way to Goldman Sachs * They are saying, "This is no longer our top recommendation, like a conviction trade" * Why? because everybody assumed that the dollar was going to go up * Because the Fed is hiking rates; we're getting all this economic stimulus, tax cuts, we're going to get infrastructure stimulus * Whatever the reason, everybody was certain the dollar was going to go up * Remember, I said it was the most crowded trade out therePrivacy & Opt-Out: https://redcircle.com/privacy

Summary: Donald Trump's promises on healthcare and smaller government appear to be fading behind news of increased military spending, infrastructure spending and compromises on health care and tax reform.  This scenario looks far more like Jimmy Carter than Ronald Regan. We continue to get bad economic data, telegraphing that the air is already leaking out of the economic bubbles created over the last 8 years. This bad news may encourage the Fed to walk back their current interest rate hike schedule, which would, if implemented, put a match to growing recessionary trends. *  It is Good Friday today and most of the world's markets are closed, including the U.S. stock market * I want to wish all my listeners happy Good Friday and Easter and to my Jewish listeners happy Passover *  But let me get to the economic data that came out this morning because some of the government offices are open today * I am starting with the Consumer Price Index, which is not bad from my perspective, but will be bad from Wall Street's perspective or the Fed's perspective * Although bad is good, in that it will give the Fed cover to not raise rates * Because the CPI actually dropped in March my 3 tenths of a percent * It was unexpected; it was supposed to be flat * And the Core number was supposed to be up .2 and it was down .1 * I think this is the weakest inflation number in a couple of years * Of course, year over year, we're still above the Fed's 2% target * Year over year, CPI headline up 2.4% and the core is up 2.0 * But the most recent number being down, may in fact give the Fed cover to walk back the market's expectations for 2 or 3 rate hikes coming later this year * But I think the more relevant information is the extremely weak number we got on retail sales * I was expecting a weak number * I mentioned that in my last podcast, and we got a weak number * But not only was it weak, but they revised the February number that was originally weak, much weaker * The expectation was for a flat month of March for retail sales * Versus the .1% gain that we eked out in February * Now, the government came back and said, "No, the February number was actually a drop of .3% * So instead of +.1% we dropped .3% * And in March, instead of being flat, we were down another .2% * So that means for the two months combined, we have a decline of .5% instead of an increase of .1%Privacy & Opt-Out: https://redcircle.com/privacy

Summary:  President Trump's campaign promises are falling by the wayside one by one.  First the backfire on the replacement for Obamacare, and then, just as talk of tax reform heats up, the administration seems to be gazing toward the Democrats for a bi-partisan solution to tax reform.  No good can come from bi-partisanship.  When the Republicans and the Democrats are working together, that's when you really have to watch your pocketbook.  That's when the most damage gets done. The stock market initially rallied on the jobs number, but sold off by the end of the day; normally, you get a print this low the dollar index would tank and gold would take off. That didn't happen because the night before Donald Trump decided to Make America Great Again by bombing Syria. * Well, I am back on dry land, I was away for a week doing a cruise with the Real Estate Guys Summit at Sea * One of the presenters was senior vice-president and chief economist of Fannie Mae Doug Duncan * I thought my presentation would be a big contrast to his, I thought he would present the usual government unrealistic estimates, but * I was very pleasantly surprised, as I listened to his presentation, I found I agreed with him * And after a private conversation with him after his presentation, we had a great discussion and we didn't desagree on anything! * He is very bearish on the housing market, very much against Fed policy * He's against the minimum wage * We had a long conversation and we really disagreed on nothing! * I was quite surprised to find a government insider who showed such economic insights * So it's just not Peter Schiff who sees these problems looming on the horizon * In the bond market, in the real estate market * The is a minority of government economists, just like I'm in the minority of Wall Street or investment economists * But it's good to know that there are some good people working within the government * But I wanted to get into topics of this podcast; a lot to talk about * Let's start with the Non-Farm Payroll report * The jobs report that came out on Friday is usually the most highly anticipated release of the month * Everybody was enthusiastic about this report * Earlier in the week we got the ADP number, the private sector number which is normally a precursor to the official government number * and that number was way ahead of estimates, so there was a lot of enthusiasm that we would have a beat for the official government March number * They were looking for 175,000 jobs which was going to be a reduction from the 235,000 jobs reported for the month of February * The actual number of jobs that were created was not 175,000 but 98,000 * Big miss on the headline number * In fact, they actually revised downward the previous month * So they took that down from 235,000 to 219,000 and now we got 98,000 versus 175 * And the private payrolls were even worse; they were looking for 170,000 and we only got 89,000Privacy & Opt-Out: https://redcircle.com/privacy

Summary: President Trump needs to lead, not oppose.  He is opposing the very forces who put him in office.  By aligning with the mainstream Republican Party, he vacates the opportunity to lead the economy successfully through the inevitable consequences of the Obama Administration's failed economic policies. Investors are jumping on the bandwagon of hype surrounding the Trump Presidency.  Abandoning safe havens and emerging markets, they are buying into the American stock market at high valuations, which is the equivalent of abandoning the lifeboat and swimming back onto the Titanic just because the band is playing. * As I suspected, we now have a bit of a civil war breaking out in the Republican Party * On the one side, you have the Freedom Caucus, and then you have everybody else, or the mainstream of the Republican Party * It seems like Donald Trump is the general of the mainstream * One of the battlefields is Twitter * Where you have President Trump calling out even specific Congressional members of the Freedom Caucus by name * And blaming them for the failure of the Republican agenda * Remember: we don't want the Republican agenda * Donald Trump ran on a platform of "Making America Great Again" * One of the reasons America is not great is because of the Republican agenda * Republicans have played a role in destroying this economy * It's not like the Republicans are all good and the Democrats are all bad * That's not the case * The difference, in terms of the economy, between Republicans and Democrats, is like the difference between Coke and Pepsi * They're all politicians! * Their business is perpetuating their own careers and their own power base * What do they need? They need votes and they need money * How do you get votes? Promise something for nothing. * Give out freebies.  Take advantage of the fact that the average voter is a moron, and they're just voting for free stuff from the government * Sometimes there is a difference between the way the Democrats and the Republicans wrap it up * Who said, "Let's wrap up Obamacare in a Republican bow."? * Republicans like to wrap up socialism in different packaging * That's how they get votes - they're afraid to engage the electorate on an intellectual level * Because they really don't have onePrivacy & Opt-Out: https://redcircle.com/privacy

* On Monday the market got its first opportunity to react to President Trump and the Republican Congress' failure to repeal and replace Obamacare * With something more palatable * And as a result, the market declined * At the lows, the Dow was down approximately 200 points * Although the "Buy the Dippers" came out, and by the end of the day, the Dow was UP about 150 points * But it was the 8th consecutive down day for the Dow * Which I think was a tie for the longest losing streak since 2011 * Had the Dow been down again today, it would have been the longest losing streak since sometime in the 1970's * So it wasn't that surprising that the Dow rallied * We were up about 150 points, so we more than wiped out yesterday's losses * On the other hand, the dollar sold off yesterday and actually traded with a 98 handle * For the first time since just after the election * Almost all of the Trump-related dollar rally has been eviscerated * The dollar rallied back today closing at 99.71 today * The pound was weak; the Scottish are getting ready to have another referendum * Whether or not they want to leave the U.K. * Remember, the Scots did not want to leave the EU * They narrowly rejected an independence referendum before and now that there is going to be another vote, the market is nervous * Maybe that helped push the dollar down, but we're below 100 on the dollar index right now * Gold got back up to $1260 yesterday; at one point it was up about $17 * I didn't see it hit $1261 * That was about the high for the year * Gold still closed today above $1250 * Silver was actually up again * Adding to yesterday's gain, we're now holding above $18 * So gold and silver going up; the dollar going down * We did get a rally in the bond market yesterday; gave back some of that today * I think today's rally was more of a technical bounce on the "Buy the dip" mentalityPrivacy & Opt-Out: https://redcircle.com/privacy

*  Earlier I talked about the Trump honeymoon, and  my belief that it wouldn't last long, in fact I thought it might have ended before the marriage began with the inauguration * It did carry on a bit after that, but it seems to me that the honeymoon is ending now * Today, the attempt to repeal and replace ObamaCare went down in flames * That's something I had predicted a while ago; I said that I doubted that they would be able to repeal Obamacare and it turns out that I was right * They didn't do it * In fact, President Trump threw a Hail Mary late in the negotiations by threatening the Republican holdouts: "Pass this bill or else." * He basically said, it's this or nothing - If you don't replace ObamaCare, you're stuck with the consequences * I think that was a bad gamble for the President to have made, in fact as soon as he issued that ultimatum * I thought that was going to be a problem because I didn't think the conservatives were going to buckle as a result of that threat * And they didn't * Now, not only has the bill been pulled, President Trump is in a very awkward position because he's already said * Take it or leave it * And Republicans left it * Now how does he come back to the negotiating table? * Now, if he comes back, he doesn't have a lot of credibility * I still think it would be better if he went back to the negotiation table * I think it was a bad tactic for Trump to say, "It's my way or the highway *  I think that if this bill doesn't succeed, they should try again * They should recognize the problems in the replacement bill and work harder to fix them * The problems is a lot of Republicans don't have the stomach for real reform  Privacy & Opt-Out: https://redcircle.com/privacy

* 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 rumorPrivacy & Opt-Out: https://redcircle.com/privacy

* 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 therePrivacy & Opt-Out: https://redcircle.com/privacy

* 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 changePrivacy & Opt-Out: https://redcircle.com/privacy

* 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 Privacy & Opt-Out: https://redcircle.com/privacy

* 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 againPrivacy & Opt-Out: https://redcircle.com/privacy

* 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 againPrivacy & Opt-Out: https://redcircle.com/privacy

* 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 risingPrivacy & Opt-Out: https://redcircle.com/privacy

* 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 mirrorPrivacy & Opt-Out: https://redcircle.com/privacy

* We had a very significant day in the currency and gold markets yesterday * We had some good follow through today that really buttresses the point that I want to make * We got some economic news that was released yesterday that would have been considered bullish for the dollar and bearish for gold * By most people, other than me, who trade currencies and who trade gold * But the fact that gold did not sell off or the dollar did not rally was very significant * The news was the CPI and Retail Sales * First of all, Retail Sales came out stronger than expected, they were looking for a gain of .1% and we got a gain of .4% * They actually revised the prior month's gain from +.6% to  +.1% * Now a lot of the gain in retail sales, though has to do with the fact that prices are higher * Retail sales are not adjusted for inflation * Prices are going up * Retail sales may be going up, particularly things like gasoline * It's not just the price of gas that's going up; everything is going up * The CPI came out at the same time as Retail Sales and that is the bigger number * We got a .6% rise in consumer prices * That's versus the expected .3% * Even the core - you take out food and energy - we were up .3% there versus an estimate of .2% * Year over year CPI 2.5% that's the official number * Obviously prices are going up a lot faster than that but according to the government they're going up at 2.5% * Even if you take out food and energy and just look at the core, year over year the change is 2.3% * Now remember the Fed is saying their target is 2% * When Janet Yellen testified this week she said that she's confident this week that we're going to hit her objective * Well, we've already surpassed her objectivePrivacy & Opt-Out: https://redcircle.com/privacy

* Today Janet Yellen was up on Capitol Hill, it was the first of her 2-day testimony * She was before the U.S. Senate today; tomorrow she will be testifying before the House of Representatives * She talks about monetary policy; we have a bunch of Senators and Congressmen who engage in political grandstanding * To me, a lot of the people asking Janet Yellen questions are really just trying to speak for sound bites for the media, trying to score brownie points for their constituents *  One senator had to make some comment about global warming - do you think global warming is one of the things the Fed considers when it sets monetary policy? * Elizabeth Warren is trying to get Janet Yellen to criticize the Trump administration's efforts to pull back Dodd-Frank * Because she believes it was the bank that caused the financial crisis * She doesn't lay any of the blame at the foot of Congress or the Federal Reserve or the artificially low interest rates * She thinks it was just Wall Street greed that blew up Wall Street and that the reason we haven't had another financial crisis was because of the great legislation Dodd-Frank * And that somehow, if any bit of that is rolled back,  it's going to unleash another wave of rampant Wall Street speculation and blow up the economy all over again * Probably one of the dumbest comments from one of the senators is why we need more minorities on the Federal Reserve * The senator commented to Janet Yellen that we needed more African Americans on the Fed because they represent a significant percentage of the population, of the work force, and they need some representation at the Fed * I'm thinking, "What is this guy talking about?" * Do you have to be black to conduct monetary policy on behalf of other blacks? * Does that mean that only whites can conduct monetary policy for whites? * What is black monetary policy?Privacy & Opt-Out: https://redcircle.com/privacy

* I will be in Orlando tomorrow for the Money Show * I will be there Wednesday and Thursday returning Friday * I have several speaking events, a couple of workshops * If you're in the Orlando area, come by, it's free to register online * You can pick up your badge on site * We'll have a booth in the exhibit all, you can come by and meet some EuroPac employees * We look forward to seeing clients and listeners * Last week I spoke about President Trump and his weak dollar policy * He thinks the dollar is too low, the euro is too low, the yen is too low, the Chinese yuan is too low *  Over the weekend Germany's finance minister came out and agreed with President Trump * He agrees that the euro is too low * We know that the Bundesbank does not approve of the easy money policies, the QE, the negative interest rates that Draghi and the ECB have force upon them * I believe that rising German opposition as well as rising inflation both in Germany and throughout the European union will ultimately force the ECB to abandon their monetary policy * Maybe even at the same time that the Federal Reserve is finally admitting that they're about to ease again * We got the jobs numbers on Friday, I did a video blog about it * To me, the numbers seem troubling for the Fed because even though we created better than 200,000 jobs the number of people who rejoined the workforce, who now want jobs jumped dramatically * So you have a lot of people looking for jobs; the jobs aren't there * So the unemployment rate is going to come up * There will be wage pressures, and that is going to push the Fed in an easing direction * In fact, we got some numbers that came out today on Consumer Credit * Credit card debt grew by the smallest amount since 2013, which is a good thing * We don't want consumers taking on credit, it's bad economically to borrow money to consume * I really made that point in my book, "How an Economy Grows and Why it Crashes" * If you haven't read it, pick up a copy at schiffbooks.com * The point is, it's good that consumers are taking on less debt * Of course, if you're a retailer, and you're depending on those indebted consumers to go deeper into debt to buy your stuff, that's a bad signPrivacy & Opt-Out: https://redcircle.com/privacy

* Yesterday we got the first jobs report of the year and the way Wall Street and the media seem to be spinning it: * "It was a good report!" * It was good news because the headline number beat expectations: * We created 227,000 jobs in January vs the 175,000 that had been expected * Of course it was an improvement on the 157,000 jobs which was a disappointing report in December * But once again, if you look beneath the headline number, you'll find that there are a lot more problems to this report than the media is reporting * First of all, as always, the lion's share of these jobs are lower-paying service sector jobs * They're in retail trade, leisure and hospitality * So we're not creating the types of jobs that will Make America Great Again * In fact, if you look at the higher paying jobs - manufacturing, mining logging * These jobs are barely adding workers, if not losing workers * But the bigger story here has to do with what's happening to labor force participation, wages and unemployment * The official U3 Unemployment rate went up from 4.7% to 4.8% * The more revealing U6 number, which I think paints a more accurate picture of the true state of the labor market * That went up from 9.2% to 9.4% * Even Donald Trump, when he was campaigning, said that that number was far more accurate than Obama's official numbers * Why did the unemployment rate go up so much, considering that we had 227,00 jobs created? *  The reason was that we had over 700,000 workers re-enter the labor force * This goes against the trend that has dominated the entirety of the Obama administration * Where we saw a mass exodus of workers leaving the labor force * In fact, the labor force participation rate went up in January from 62.7% to 62.9% * First of all, why did so many Americans decide to re-enter the labor force in January? * Maybe there are 2 possible explanations and maybe they're both accurate: * One might have to do with all the optimism surrounding the Donald Trump Presidency * Remember, Donald Trump campaigned that he was going to be the greatest jobs President * And it's possible that a lot of people believe that this is going to happen * So they are re-entering the labor force to land one of these great jobs that President Trump will be delivering * You have to enter the labor force in order to apply for one of these jobs * Another reason is that the people who have been "sitting out" of labor force participation * Maybe circumstances are finally catching up with them, maybe they're running out of money * Maybe the cost of living has risen to the point that they have to, by necessity, find a jobPrivacy & Opt-Out: https://redcircle.com/privacy

* The month of January came to an end, and it didn't play out the way most people believed it would * Remember when the year began, everybody was optimistic on the U.S. dollar * Remember I said that it was the most crowded trade * It was just like gold the year before * Everybody was convinced that now that Trump was President we were going to have all this fiscal stimulus * The Fed was going to be tightening rates more aggressively * The dollar had no place else to go but up; * Everybody started the year long the dollar * I just read that this was the worst January for the dollar in almost 30 years! * For all the fanfare and the hype about Dow 20,000 * The Dow was only up about .5% in the month of January * You would think that it was much higher than that * And of course, measured in any other currency, the Dow was down quite a bit * In fact, if you just look at our mutual funds * To just give you an example of what's going on overseas * First of all, our Gold Fund up 12% in the month of January * But my International Value Fund was up 6.5% in the month of January * That fund is the #1 fund on Morningstar so far in 2017 * It was also the #1 fund in its category of 400 or so for all of 2016 * And it's already the #1 fund for 2017 * But if you look at the returns that are being achieved internationally * Investing outside the dollar * Investing in gold stocks * That's where all the money is being made * It's not being made in the U.S. Stock Market * In other currencies, it's actually, it's only up in dollars * But it's down in terms of just about every other currency * So you wouldn't know that from listening to the pundits * Everybody is so excited about what's going on * Again this is probably how it all started when George Bush came in * People were still initially enthusiastic about what was going to happen * But the honeymoon didn't last longPrivacy & Opt-Out: https://redcircle.com/privacy

* Earlier this morning we got the first look at Q4 GDP * As I suggested on the last podcast, in fact as I have been saying all along * We did see a sharp decline from the Q3 3.5% GDP * The consensus was for a 2.2% estimate for growth in Q4 * And we came in at 1.9% * Quite a way below estimates and psychologically below the 2% number * Part of the reason was a big drop in exports * I talked about this last quarter * One of the reasons we got that 3.5% jump in Q3 GDP * Was the big surge in soybean exports, because of a drought overseas * Which created a temporary increase for U.S. beans * The rest of it was an inventory build, which I still think needs to be worked off * In fact, I think we're going to work off a lot of it in the first quarter of this year * That's the first estimate, and, who knows, they may downward revise it the next time they give us the numbers * If you now take the first 3 quarters of GDP growth, and use the first estimate for Q4 * For the entire year of 2016 GDP grew at just 1.6% * That is the lowest number since 2009, tied with 2011, at 1.6% also * If you remember 2011 GDP growth was so weak that they launched QE3 for 2012 * So they ended QE2, the economy started rolling over * And when they got that 1.6% GDP for the entire year * The Fed very quickly came out and launched QE3 the following year to goose the GDP back up *  What are they doing now?  Not only is the Fed not preparing to launch another round of QE * They are tightening monetary policy * They're saying, "We're going to raise interest rates 3 times, even though GDP is as low as it has been for the entire "recovery' * Even though the economy is decelerating, we are going to sedate it with rate hikesPrivacy & Opt-Out: https://redcircle.com/privacy

* Short and not-so-sweet.  Maybe that's how you would describe President Trump's inaugural speech * Which, I think was the briefest since Jimmy Carter * But now, Donald J. Trump is the 45th President of these United States * I did in general like his speech; I agree with much of what Donald Trump had to say * Talking about how bad things are in the U.S. economy * Yes, there were some people who benefited * People in Washington certainly benefited, certainly Washington has been booming, right? * Because they've been sucking all the wealth out of the rest of the country * So the bureaucrats and certain segments of the population have benefited * From central planning and central banking and the cheap money and the bubbles * But Donald Trump hit the nail on the head * When he talked about all the factories like tombstones littering the landscape * How our wealth has been sucked out * The Middle Class has been hollowed out and the country is hurting * All this is true, and I like the fact that he says we're going to take back the government for the people * Take it away from the elites, take it away from the bureaucrats and bring the power back to the people * All that is great. * The question is, What exactly does Donald Trump mean by that? * Does he mean, get the government off the people's backs? * Does he mean unshackle us from government * Get rid of all the regulations, get rid of all the taxes and government spending * Get rid of all the bubble blowing * Let's have sound money and higher interest rates * Let's have a real economy so that individual Americans can pull themselves up out of the ditch on their own? * That we can roll up our sleeves and work our way out of this gigantic hole that the government placed us in * And if it's going to be free enterprise, limited government and freedom? * Of that's what he means by "Taking back the government for the people" * Then, that's great * But what if he doesn't mean that? * What if he means a Trumpian "New Deal"? * What if he's talking about government proactively doing things to "help" the middle class * Like big spending on infrastructure, where the government employs the people directly * And creates jobs, like they did during the Great Depression?Privacy & Opt-Out: https://redcircle.com/privacy

* As I said on a prior podcast, this could be the first Presidential Honeymoon to end before the marriage officially begins * Donald Trump will not be sworn in until Friday * Yet the Honeymoon already appears to be over for the Trump Trade * The dollar continues to decline again today; gold continues to rise * Confounding the experts who, at the beginning of the year, predicted the opposite * Gold up again today about $14 it was up $4-5 yesterday, on the Martin Luther King holiday *  We're now at about $1217 for the price of gold * We're still below where we were the day Trump won * But this is the highest we've been in about 6 weeks, maybe more * It's certainly the highest for the year * Dollar down across the board; dollar index at the low for the year * Still up from Trump's victory but down quite a bit from the highs * Of course, other currencies, even though the dollar index is down 2% * You've got currencies like the Australian dollar up 4.5% * So that currency has pretty much recovered everything that it lost based on the Trump victory * Gold, although it hasn't recovered everything, it's still up almost 6% so far year to date * Silver's up better than 7% year to date * Gold stocks, look at the GDX, up 12% so far this year * That means that gold stocks by far is the top performing sector in 2017 * They were by far the top performing sector in 2016 * I actually think the out-performance in 2017 will be even greater than 2016 * The Dow, down again, at one point it was down close to 100 * Dow transports ended down over 100 * I think the Dow is basically flat on the year - slightly positive * The NASDAQ was down 35 points; S&P down as well * So U.S. stocks are barely moving * Foreign stocks - some of these emerging markets are up huge, especially priced in U.S. dollars * All the foreign markets, thus far in 2017 are beating the U.S. market * Again, that is not what all the experts were expecting from the Trump RallyPrivacy & Opt-Out: https://redcircle.com/privacy

* It's Friday the 13th and it is a Friday before a 3-day holiday weekend * Monday, of course is Martin Luther King Day * The stock market will be closed in observance of the holiday * Once again, I guess Friday the 13th was bad luck for those hoping for Dow 20,000 * In fact, the Dow finished the day Down, it was a slight decline for the Dow * But not so for gold; gold was up again * The Dollar was actually down again * In fact, this year is already shaping up to be a mirror image of what everybody expected when the year began * The Dow is up slightly, about a half a percent; the S&P is maybe up about 1-1/2 percent * But look at the dollar; the dollar index is down 1% * In terms of foreign currencies, the Dow is actually down * The dollar index is mostly the euro * If you take a look at some of the other currencies, the Canadian Dollar, for example, is up 2.5% so far in 2017 * The Australian dollar is up 4% * These are some pretty big moves early in the year * Remember, everybody was bullish on the dollar * That was the trade, it was so crowded, everybody was in it * Every strategist that I saw on financial news at the end of last year and early this year * Was long the dollar, short the Aussie, short Canada, short the euro, short the yen * Meanwhile, all these currencies are going up * I think they're going a lot higher and I think the shorts are going to lose a lot of money * Take a look at gold stocks * Gold stocks are up about 10% so far in 2017 only 2 weeks into the year * This is already a much stronger start for gold stocks than we had last year * And of course, last year was a great year for gold stocks despite the fact that they sold off toward the end of the year * Based on all the hype surrounding Donald Trump and all the great economic growth that we are going to get * And how the Fed is going to be raising rates even faster and the dollar was going to be even stronger * I knew all that was a bunch of nonsense * People still believe it, but the markets are already showing it to be a false paradigm * And most of the Wall Street strategists are going to once again miss out on these opportunities Privacy & Opt-Out: https://redcircle.com/privacy

* The NFIB Index of Small Business Optimism in the month of December, so this is post the election of Donald Trump * Shot up from 98.4 in November to 105.8 * This is the highest level in 12 years - since before Obama was President * And it's the biggest monthly jump in 37 years * You have to go all the way back to 1980, the election of Ronald Regan to find a moment in time where you saw this big an increase in optimism, in confidence among small business owners * Remember, it was Michelle Obama not too long ago * Saying, "This is horrible, there's no hope anymore in America!" * Well, small business owners haven't been this hopeful since I was in high school * Why are they so optimistic? * Well, first of all, it's more a testimony to how horrible things have been over the last 8 years * People are just hopeful that now there's going to be some relief, that Barack Obama is gone * Because the lat 8 years have been very, very difficult for small businesses * First of all, if you're running a small business, you can't take advantage of zero percent interest rates * You can't just show up at the discount window and borrow from the Fed * Also, you can't sell bonds into the bond market, like big corporations can * If you're a small business, and you need credit, you've got to go to a bank and get a loan * But the banks don't have any money - there's no savings - nobody's putting money into the bank * And no banker wants to carry a risky loan on his books * When he can just own U.S. Treasuries * The regulators are all over you, if you actually make a loan to a business * So businesses haven't gotten capital * Meanwhile the cost of doing business has gone up because there's been all sorts of regulations that have been added to the burden of business * Over the lat 8 yearsPrivacy & Opt-Out: https://redcircle.com/privacy

* Yesterday we got the final jobs report of the Obama era, * We got the December Non-Farm Payroll. * Now technically, when we get the January number, the first Friday of February, * Half of that would have been during the Obama presidency, * But because we won't get the official news until the Trump presidency, * I'm sure that Donald Trump is going to take the credit, or maybe have to deal with the blame, * Depending on how that number ends up being received, whether it beats the consensus or misses, * But this is really the final jobs number for Obama. * The number came out O.K. * It missed the consensus estimate, which was 175,000 jobs, * And the actual number, at least until they revise it next month was 156,000 * So that was below what was expected. * Now they did revise upward the prior month from 178,000 to 204,000 * And the month before that was revised down a bit * So I guess, when you take all the revisions, it was probably about a push on the number. * This report should have been seen as not so good, * Most of what I was reading was about how strong, not only this report was, * But the entire job-creation legacy of Barack Obama * This is what you get from the mainstream media * That peddles all the fake news * About what a great economy President Obama is handing off to Donald Trump; * That we have really low unemployment - * The official unemployment rate kicked up from 4.6, but still 4.7, * So, low unemployment, all these jobs being created, * Forgetting about the fact that once again, you're talking about low-paying, part-time jobs that have been created * In fact, the number of Americans not in the work force grows again; * It wasn't a big jump, but it was still a jump * To a new all-time record high. * So labor force participation has been eviscerated during the Obama years.Privacy & Opt-Out: https://redcircle.com/privacy

* This is another big week for economic data; it is a holiday-shortened week * On Friday we get the big Non-Farm Payroll report * If it's a good number, somehow Donald Trump will try to take credit for it, as he has for the rise in the stock market * But I think that the job numbers, while maybe not bad just yet, but I think we will have a lot of problems with the non-farm payroll numbers in 2017 as the air starts coming 0ut of the part-time job bubble while Trump is in office *  But we did get some economic news today, most importantly, the minutes from the last Federal Open Market Committee Meeting and * What do you know? The members of the FOMC are concerned that maybe, they're not optimistic enough when it comes to growth * Because of the stimulus packages that may be passed by Donald Trump, that they may be wrong, and that the economy could grow faster than they think * They also were worried that they might overshoot on the downside on unemployment * Unemployment could actually get even lower than what they thought * And therefore that ultra-low unemployment may put some upward pressure on inflation * Of course, this is all the Keynesian/Phillips Curve myth * That low levels of unemployment are what cause inflation * Ironically, it is the Federal Reserve that causes inflation and there is going to be * Consumer price increases that are the consequences of the inflation that the Fed has already created and that the Fed is going to create * In fact, if we do have a stimulus package that gets through Congress early in 2017 * That includes tax cuts and government spending increases which results in a larger deficit * The inflationary forces are not going to be the debt itself, but the Fed's willingness to accommodate those deficits with more aggressive monetary easing * In fact, the complexion of the FOMC is actually going to get more dovish next year as some of the so-called hawks, and of course, none of them are actually hawks, it's all degrees of dovishness * Some of the less dovish members will be leaving and will probably be replaced by members that are just as dovish as everybody else * So I think the Fed will be willing and able to accommodate these deficits * That is what is going to cause inflationPrivacy & Opt-Out: https://redcircle.com/privacy

* The Dow 20,000 party is going to have to wait until 2017 * Although I wouldn't necessarily buy a ticket for January * The selloff that started this week may resume in the first week of the new year * The dow rang out the old year with a 57-point loss to cap a losing week * Probably the first down week since the Trump victory * The Dow now at 19,762 - the close on the Dow for the year *  Most people think it's just a matter of time; we can easily rally early on in the new year * But again, there should be a lot more selling pressure in the new year * I mentioned this on the last podcast * A lot of people who had gains didn't want to take them in December because hopefully the taxes will be lower next year, so why pay higher taxes sooner, when you can pay lower taxes later? * We'll see what happens in early January * If we ring in the new year like we rang out the old,  it could be a long time before we get to celebrate Dow 20,000 * I'm sure eventually we will, even if we don't do it right away * Everything goes up when you're measuring in terms of U.S. dollars, so it is inevitable that the Dow will get to 20,000 * The question is, what will Dow 20,000 be worth in purchasing power - that's a whole different story * It's easy to go up in nominal terms, it's a whole different thing to go up in real terms * The Dow actually had a pretty good gain this year; it was up about 13-13 1/2 percent * Almost all those gains happening post-Trump * Although the problem for Donald Trump, is that he is claiming credit for this rally * What he should be doing is saying * "This is a bubble, I said it was a bubble when I was a candidate, it's still a bubble, now it's even bigger" * But he owns this bubble now; he has embraced it * Donald Trump has come out and said, "The market is going up because of me."Privacy & Opt-Out: https://redcircle.com/privacy

* The Dow 20,000 party is going to have to wait - at least for another day * The Dow was down a little bit today - 23 to 19,918 * The broader market was a bit weaker than the Dow * The markets continue to shrug off very weak economic news that came out throughout the day * We got bombarded with all sorts of negative pieces of news that ordinarily, maybe before the election of Donald Trump, would have weighed down the market * Certainly it would have weighed on the currency markets * The dollar would have been very weak and gold would have had a big rally * Instead, gold was down a little bit, and the dollar rose a little bit despite very weak economic data that I will get to * I want to start off by focusing on the stock market and the optimism which is really quite ridiculous and unfounded * Part of the reason for the rally, though, is a lack of selling * We have a lot of people mindlessly buying the markets, but you don't have a lot of selling * One of the reasons is that people would rather sell in January than in December * People are enthusiastic about Trump's presidency because he will cut taxes * If you have a gain in the stock market, why realize that gain now in the waning trading days of 2016 * If you sell now, not only do you have to get your check into the IRS by April of next year * But also, you've got to pay the current tax rate * If you wait until the firs week of January, you don't have to pay taxes until a year from this coming April * You have all that time to use the money and the tax rates may be a lot lower * So why sell now? A lot of people are being given that advice; don't sell now - wait until January * Who knows - this market could ring in the new year with a major sell-offPrivacy & Opt-Out: https://redcircle.com/privacy

* On Wednesday, the Federal Reserve did exactly what they did last year * They waited until the last possible meeting to nudge the Federal Funds rate by 1/4 of 1% * So now, after 2 years of tightening, the lower bound of the Fed's range has gone from zero to 1/2 of 1% * Now Janet Yellen said the Fed made this decision to lift rates because of its confidence in the U.S economy *  That is complete nonsense * If the Fed were confident in the U.S economy, rates would be much higher than a half of a percent * The Fed would have raised rates a long time ago and by much more than this * In fact, they could have lifted rates by more than 25 basis points on Wednesday * Yet, they had so little confidence in the economy that this is what they did * In fact, I believe that the only reason the Fed raised rates this December * Is the same reason they did so last December: they did it despite having no confidence in the economy * But they didn't want to send a message that they were that worried, so they raised interest rates by the smallest possible amount * And they also did it to try to preserve their credibility when it comes to talking about future interest rates * Think about one half of one percent * When Alan Greenspan slashed interest rates in the aftermath of the September 11 disaster and the bursting of the dot com bubble * When the stock market was plunging and the economy was in recession, he was so worried about the economy that he lowered rates down to 1% * Now Yellen is so confident in the economy, the highest she's willing to raise them is 1/2 of 1%? * This is half of where they were lowered in panic by Greenspan? * So the fact that rates are only 1/2%, what does that tell you about the true confidence that Janet Yellen and the rest of the Federal Reserve have in the U.S. Economy?Privacy & Opt-Out: https://redcircle.com/privacy

* It's been a while since my last podcast and I've gotten quite a few emails from people wondering what happened to me * I was out of the country for about a week, and I did manage to get one podcast off from my hotel room * But when I got back, I was backed up with work, and by the time I caught up, I came down with a case of laryngitis, which has still not completely gone away * I want to start off by talking about the stock market * The Dow hit a new record high today; inter-day we got to 19,824 - we closed at 19,796, getting closer and closer to the 20,000 level * NASDAQ, on the other hand was down to day * But one of the interesting things about this is that the rally is predicated on Donald Trump and all of the great things that are going to happen as a result of his election * And of course, the very people who are buying this Trump rally are the same people who are telling us what a disaster it would have been if Trump won * He won - but now they've reversed course * I'm sure if Hillary had won the market would be rallying now with a different spin - we dodged the bullet of Trump * The markets were looking for an excuse to rally, and there were a lot of shorts in the market, so now, we're rallying * But the interesting thing about this is, if you remember when Donald Trump was running for President * He kept talking about the "big, fat, ugly bubble" * He was talking about the stock market * Now, if you listen to Trump talk, he loves the stock market - he's taking credit for the gains in the stock market * He wants us to judge him based on when he was elected, not based on when he is inaugurated because he is trying to claim credit for the gains in the stock market * Wait a minute - if the stock market was a big, fat, ugly bubble before Trump was elected * And if now the stock market is much higher * Isn't it bigger, isn't it fatter, isn't it uglier now? * If that's the case, why doesn't Donald Trump still call it a bubble?Privacy & Opt-Out: https://redcircle.com/privacy

* The Trump fantasy rally continued today, of course the big irony here is that all of the stock traders who were so worried about a Donald Trump presidency * Now, he's Ronald Regan re-incarnated * They're partying like it's 1983 - when Regan first stepped in the market had a very difficult couple of years * We went through a recession before we got that Regan Rally - we're going to skip all that * It's amazing that people believe you can have reckless monetary policy for 8 years * You can have zero percent interest rates, you can have all this quantitative easing * You can have this gigantic bubble, and we can magically go from a bubble economy to a real economy * Without any pain inbetween * If that really were the case, the Fed would have tried to raise interest rates a long time ago * The fact that they've been stuck at zero is proof that they really can't go up * Now everybody seems to dismiss all these concerns simply because Donald Trump will be President * Even though this is the exact same guy who scared the bejesus  out of everybody right up until the moment that he was elected, and now, of course everything is going to be great * It's not going to be great - this fantasy is going to come crashing into a wall of reality * Meanwhile, the stock market rally did fizzle out today, the market was up most of the day * The Dow managed to eke out about a 2 point gain * Although the NASDAQ was down about 50 points * Most of the action was in other markets * Oil prices up about 10% on the day * Crude up just under $4/barrel - just below $49/barrel at close * The catalyst for the surge in oil prices was an agreement by OPEC to restrict output * Finally OPEC getting their act together - the Saudis, the Russians working together to reduce production and increase the price of oil * Of course, with the dollar continuing to strengthen, that means oil prices are rising even faster for everyone outside the U.S. * Bond market getting clobbered again today; higher oil prices not good for the bond market * We also got some stronger than expected economic data out today * A lot of it having to do with the euphoria surrounding the Trump win * We did get the ADP jobs number today the precursor the official number the Labor Department puts out on Friday * This one was better than expected by about 50-60,000 jobs * They revised downward the prior month by more than was expected * Because of the recent change in methodology, these numbers are not too reliablePrivacy & Opt-Out: https://redcircle.com/privacy

  * The Dow Jones is in record territory, closing above 19,000; they're already starting to talk Dow 20,000 now * The markets are euphoric * All the traders who were so convinced that President Trump would be a disaster for the stock market, now think it's a boom for the stock market * It shows you how fickle investors are, but also how quickly the narrative can flip * Personally, I don't think it has anything to do with the fundamentals * I think traders are trying to push the markets in a particular direction, and they're just grasping for reasons to justify it * Obviously, what they're talking about now is all this extra economic growth and inflation (supposedly inflation is a good thing) * This is going to result from the the massive fiscal stimulus that we're going to get from the Trump administration * Of course, everybody is ignoring the monetary drag that is already evident from the bloodbath in the bond market * And this is going to continue, in fact if you look at the trend lines * We've broken some trend lines now, which were down in yield and up in bond prices that have been in existence since 2007 * So we have done some serious technical damage to the bond market * The 10-year yield, right now, is at 2.357, which is still low * But it has moved up by 32% in the last 2 weeks * That is a huge percentage increase in long-term interest rates * First of all, this is already decimating the commercial real estate market, which is the bulk of Donald Trump's net worth * He's going to be running his business from the White House while he is running the country; he says that's perfectly legal * Clearly he doesn't want to see a continuation of the collapse in the commercial real estate market * But believe me, these cap rates are moving up rapidly  Privacy & Opt-Out: https://redcircle.com/privacy

* The stock market continues to ride the Trump wave to new highs, in fact the Russell 2000 hit an all-time record high today * The enthusiasm for stocks not being dampened by the carnage in the bond market * We now have the yield on the 10-year treasury up at around almost 2.3 * And the yield on the 30-year now, just below 3% - 2.99 * Yields are still low, but nowhere near as low as they were * And of course, nowhere near as low as they're headed * It's not just the fact that bond yields are rising, but the rapidity with which they're rising * And the technical damage that is being done * This again, as I said in an earlier podcast this could be the beginning of an explosive move up in interest rates * And right now, nobody seems to care, least of all Janet Yellen * She testified today - her supposedly hawkish testimony is one of the reasons that gold sold off today and the dollar rallied * Before she spoke, gold was positive on the day * She did say it would likely be appropriate to raise rates "soon" * And everybody interprets "soon" as, the next chance they get, which is less than a month from now * Although, if the Fed is really determined to raise interest rates in December * Why not just say it? * Why say it may be appropriate to raise them soon? * Just say, "It's appropriate to raise them in December" * They still want to leave themselves plenty of wiggle room * Even though the markets are saying it's a 95% probability * The Fed is still being very coy and data dependent * I think what's more important for the markets is the fact that Janet Yellen acknowledged * That if we get a fiscal stimulus - which she doesn't even think is needed - * She pointed out that we have a growing economy, everything is good, the unemployment rate is very low * And that stimulus now in the form of tax cuts or extra government spending could overheat the economy * And that she will have to adjust her monetary policy based on what Congress and President Trump ultimately decide to do * That's what's scaring the bond markets, because what Yellen is saying, is that * If Congress and  Trump want to step on the gas, she's going to have to tap on the breaks * To prevent this thing from overheating, meaning that with unemployment already so low * Any stimulus now, risks making inflation too high * Meaning that the Fed would have to act to rein it in * Even though she still suggests that the pace of rate hikes will be slow * She's implying that the pace will pick up if need be to offset the stimulus effects of tax cuts and spending increases * And that is what is rattling the credit markets * But what Janet Yellen or nobody else seems to understand is that any significant rise in long-term interest rates will crush this bubble economyPrivacy & Opt-Out: https://redcircle.com/privacy

* What a difference a day makes * Between Tuesday evening, when the markets first began to realize that Donald Trump was going to win the election and the predictions of collapsing stocks and soaring gold prices appear to be taking hold * Because at one point the Dow was down about 800 points and gold was up about $60 * All of a sudden, the sentiment started to shift and by the time the U.S. markets had opened for trading * Gold had lost its rally, the stock market had recovered its losses * And we began a huge rally, in fact, the Dow was up about 1,000 points this week * This was one of the biggest up weeks in the Dow since 2011 * Also the gold market ended up down, I think it was down about $70 on the week * Better than $100 below the high it hit on Tuesday night * Silver also down about $1 * Gold & silver stocks down closer to 20% * The opposite was going on in the bond market, it had its worst week since 2013 * It looks like a lot more carnage can come if we really start to break down; yields are still low * The yield on the 10-year is just above 2.1 and on the 30-year it's just above 2.9 * These are still low yields, but they're not nearly as low as they were * What's more important is the momentum in this move and how much higher interest rates could potentially go * As this bond bubble deflates * What is responsible for this change of heart? * Everybody was so convinced that the markets would tank if Trump was elected that we had a 300+ point rally on Monday, the day after the FBI decided that they weren't going to do anything about the Clinton email scandal * And the market rallied because people thought, "Oh, OK, this means that Hillary is a shoe-in." * And then Trump became President and the market rallied even more * And the opposite on gold; gold sold off when it looked like Hillary would win, and it had a big rally when it seemed that she wouldn't * After we got Trump, the metals went the other way * What is responsible for this change of heart? * Remember, I always said if didn't make sense that people thought Hillary was good for the stock market * What did Hillary mean for business? * More regulation, more government, higher taxes * What was Donald Trump promising? * He was promising tax cuts, tax reform, repatriation, regulatory reform, repeal Dodd-Frank, repeal Obamacare * So he's saying, we're going to take away the regulation, we're going to take away the taxes * That has got to be good for the economy, so why were people so excited about Hillary * When Trump was talking about a pro-growth, pro-business agenda?Privacy & Opt-Out: https://redcircle.com/privacy

* It is Wednesday, November 9, 2016, one day following one of the biggest political upsets in U.S. political history * As Donald Trump shocked everybody by defeating Hillary Clinton * Hillary Clinton was supposedly the most qualified person ever to seek the U.S. Presidency, and Donald Trump had no experience whatsoever * And the establishment had already sworn in Hillary Clinton; it was pretty much a foregone conclusion that she was going to win * I think she was almost a 10:1 favorite even on the day of the polls * Even the early exit polls were predicting a Clinton win * All the while, I felt in my gut that Donald Trump was going to win this election * Why did I think he had such a strong probability of winning? * I understood what almost no one in the mainstream media got, and that is the phony nature of the U.S. recovery * The entire time President Obama was congratulating himself for having gotten us out of the mess created by his predecessor, and bragging about the strength of the recovery * And labeling all critics as "fiction peddlers" * I understood that the "fiction that was peddled" was in fact, reality * And the real fiction peddler was the Commander in Chief * Not only President Obama, but the Federal Reserve - Janet Yellen and the rest of her cronies at the Fed * Constantly talking up the U.S. recovery and how the strengthening recovery would somehow result in higher interest rates * Of course, Wall Street had a vested interest in peddling that fiction * So everybody believed that the economy was strong, and therefore the voters would want to sign up for 4 more years * After all, if Obama was responsible for the recovery voters would want to continue that recovery under Clinton * They would not want to go back to the supposed failed policies of Bush that somehow would be adopted by Trump * I knew that the entire recovery was an illusion * And it simply existed in the minds of the people who fabricated itPrivacy & Opt-Out: https://redcircle.com/privacy

* It's not going to be a new record as far as the consecutive days of declines for the U.S stock market * The 9-day losing streak ended today in a huge pre-relief Clinton victory rally * The markets had been factoring in a higher probability of a Donald Trump victory ever since the FBI announced that they were re-opening the email investigation * Thanks to a treasure trove of 650,000 emails on Anthony Wiener's (a.k.a. Carlos Danger) laptop computer * Apparently they have now gone through all 650,000 emails in under a week and yesterday, on a Sunday afternoon Comey made the announcement that the FBI had completed their investigation of these additional emails and that nothing had changed with respect to the FBI's original recommendation * Which was, if you forget, that despite recklessness and carelessness on the part of Hillary Clinton to have set up this private server, and to have used it to send out classified emails * That they found no evidence of deliberate wrongdoing, that Sec. Clinton just made an "honest mistake". * That she had no idea that it was a bad idea to send classified emails out of a private server * I remember at the time, I said, if this is true, she's too incompetent to be President, if she's really that naive * If she really thinks that she doesn't have to handle classified data with any kind of care * Then she's not competent to be President * Either she is incompetent or she's dishonest * Of course there is plenty of evidence that Hillary Clinton lied about the fact that she did, in fact send classified information out of her private server * She claimed that she did not and then the FBI found them * Also, she engaged in a cover up, obstruction of justice * As soon as she knew that she was under investigation, she destroyed evidence that she was ordered to preservePrivacy & Opt-Out: https://redcircle.com/privacy