* Yesterday we finally got the release of the initial estimate for Q4 GDP * The Atlanta Fed had originally come out with an estimate of about 3.8 and had steadily reduced their estimate * They got down as low as 1.9 before ratcheting it up a couple of times and their estimate was at 2.1 when we got the official release * And the number came out at 2.9; not only much higher than Atlanta Fed's estimate, but much higher than the consensus forecast at 2.5 * I am very suspicious of this number * This is the strongest number in over 2 years and it comes out less than 2 weeks before the election * Of course one of Donald Trump's issues has been the weak GDP growth, which has averaged just 1% for the last 3 quarters * All of a sudden it's 2/9? * Does anybody really believe that suddenly the U.S. economy in the fall of 2016 was 3 times as strong as the last 3 quarters? * I dont' think so.  I don't believe that for a second * I do believe that after the election when we get the revisions we will get a downward revision to this number * But, even if this number were real; even if it holds up * If you average the last 4 quarters to get the entire year, looking back, you're just below 1.5% for the entire year, which is still extremely weak growth * Once you look beneath the surface of this 2.9, it's very easy to see how they rigged it, to use Donald Trump's expression * Not that it's some kind of a conspiracy * Look at these numbers - there was a 10% spike in exports - this the biggest gain in exports in 3 years * It's not in manufactured products that we're exporting, where you've got some high-paying jobs * It was primarily let by a one-time surge in soybean exportsPrivacy & Opt-Out: https://redcircle.com/privacy

* The odds of a  December rate hike continue to ratchet up above 70% * We had a parade of Fed officials, most recently again today coming out and talking about why a December rate hike is a good idea, probable, possible, appropriate * You name the adjective, some Federal Reserve president, governor is discussing it * The markets are ratcheting up their expecations * The dollar index continues to move higher, we hit about a 9-month high today * We got above 99; but we didn't close there, in fact the dollar index managed to close down a notch * Interestingly enough, gold had a pretty strong day today, we had about I think we're at $12.73 * Even to the extent the FOREX traders are worried about a December rate hike, the gold traders don't seem to care about how a rate hike might impact the price of gold * This says either the gold traders don't believe that a December rate hike is coming, or they've correctly concluded that even if the Fed does raise interest rates in December, it's no big deal * It's too little too late to be a negative for the gold market * The Fed is going to deliver far less than it promised when it comes to rate hikes * In fact the most interesting comment from a Fed official came last week from St. Louis Fed President James Bullard * He said that the Federal Reserve only needs to nudge interest rates up by 25 basis points * Right now, the official rate of Fed funds is between .25 and .50 * It used to be between 0 and 25 * I think where we actually are right now is 38 basis points * So if we moved up 25, at least these are the numbers Bullard is throwing out, we'd move up to 63 basis points for the Fed Funds Rate * Which is just barely above a half point * He says that's all we need to do is nudge it up to 63 basis points, and that's it - we're done * He said, "We need to do it in December, but then that's it, interest rates are going to stay really low for years." * He's talking 2 or 3 years or maybe even more of ultra low interest rates, despite whatever is happening in employment, and inflation * This is all we need * Nudging up by a quarter basis point and we're done * I was surprised, to be honest, that we didn't get more of a reaction to this admission by Bullard that the next hike, if it comes in December is the end of it * If that's it and then we're on hold for years * Sometime, during that period of time, we're going to find ourselves back in recession * Even if we're not in recession now * Even if this so-called recovery is in its twilight * Remember this is the 3rd longest recovery of the post-war era and it is the weakest recovery - ever * And, of course, it has the most stimulus * So despite having the most stimulus, it's the weakest * Clearly, it's going to run out of steam * So if the Fed does in fact raise rates ever so slightly in December and then say: * "That's it for now, we're just going to wait" * What's going to happen is, we'll be back in recession * If Hillary Clinton becomes the next president, and it's looking more and more likely that that nightmare will become a reality * If she is, she will try to stimulate the economy * Look what happened with George Bush * When George Bush was initially elected the first time, he inherited the bursting of the dot com bubblePrivacy & Opt-Out: https://redcircle.com/privacy

* The official probability of a December rate hike continues to diminish over the last several days * The markets had the rate hike at about a 70% probability; now we're down to about 60% * Personally, I think the odds are closer to zero, and over time, as we get closer and closer to that December meeting, the odds will steadily move down * Just like the Atlanta Fed keeps moving down its estimates for Q3 GDP; most recently down to 1.9% * I expect the Atlanta Fed to move lower again this week on more weak economic data * As the potential for a rate hike diminishes, gold's appeal improving, gold prices now back above $1260 today * We've had a couple of back to back strong days in the gold sector * Maybe the catalyst for the recent correction in the price of gold was the renewed expectation of a November and now December rate hike * As those expectations are realistically dialed back, you'll see more money moving into the metals * The dollar, though, continues to trade firm * It's not moving higher, but it's not really surrendering much of its gains * Maybe some of this has to do with weakness particularly in the pound * Why is the pound so weak? * The Bank of England was very forthright, they wasted no time in warning voters not to vote for Brexit as it would be a disaster for the British economy * Well, sure enough, the people voted for Brexit, and so now, it is a self-fulfilling prophecy * The central bankers in Britain had convinced themselves that the economy would require stimulus, and therefore announced an increase in their QE programPrivacy & Opt-Out: https://redcircle.com/privacy

* It's another week where the dollar remained relatively firmly bid; the dollar index closing just above 98 * Gold prices seem to have a lid on them; they closed down today about $7 * Gold's not really going down, but it's not really going up, either * What are going up are bond yields, long-term bond yields are rising today to about a 4-month high * 30-year Treasury yield to about 2.5% * The 10-year just below 1.8 * This despite the fact that the economic news, during the week, on balance, was generally weaker than expected * Obviously the numbers are worse because the Atlanta Fed reduced again their Q3 GDP estimate down to 1.9% * This is the first time it has been below 2 * It is not half of what it was just over a month ago, when they were at 3.8 * I still think their estimate is too high * I do think that Q3 is going to be a stronger quarter than Q4, which will probably be another 1% or below * The last 3 quarters averaged 1% * This is the weakest 3 consecutive quarters of this entire so-called recovery * Yet now the Fed is supposedly raising rates? * In fact, we got the JOLTS report on Wednesday, supposedly Janet Yellen's favorite indicator of the labor market * Not only did we have a slight downward revision to the prior month, but we had a 7.3% collapse in August * That was the biggest drop since December of last year * Everything about that report was weak * If this is Janet Yellen's favorite number, and if the Fed didn't raise rates in September because they wanted more data on the job market, and now they just got the JOLTS number, which was much worse than expected, * Why is every Fed governor talking about rate hikes in interviews? * Another one was out on CNBC, talking about how rate hikes would be appropriate * Yes! It would have been appropriate to raise them a long time ago * It would have been appropriate in June, in September, in March, in January, last year, 2 years ago, 3 years ago * It would have been appropriate a long time ago to raise rates - they didn't do it * You know what was inappropriate? Cutting them to zero * That was not appropriate - they did it anyway * The Fed is not about doing what's appropriatePrivacy & Opt-Out: https://redcircle.com/privacy

* The most highly anticipated presidential debate in history is over and to me, the anticipation was more like a highly-promoted professional boxing match * Right away, as soon as the debate was over, CNN comes out with its poll, showing Clinton badly beating Donald Trump * And I thought that, if this were like a prize fight, the ref's would have stopped the fight in the first 20 minutes * That's how badly Donald Trump beat Hillary Clinton in this debate * And then you see this poll coming out saying supposedly that Clinton clobbered Trump * What debate were these guys watching? * Like you see a fight and the decision goes totally against what you saw, and you think, "Aha, the fix is in". * I think for CNN, the fix was in * They badly wanted Hillary Clinton to win this debate, and so  I think Hillary was going to win this debate according to their poll, regardless * I think anybody who watched the debate objectively is going to conclude that Trump won * I was pretty critical of Donald Trump's performance in the first debate * And while, I didn't think this one was perfect, I think were a couple of things I would have liked for him to have said * But I am armchair quarterbacking this, from my living room; he's there, live * But I think he did as good a job as possible and I think he advance his standing * But before I even get into the debate, I want to talk about the elephant in the room, which was the 2005 Access Hollywood tape that everybody is talking about * In fact, it really let Hillary Clinton off the hook from issues that should have been addressed on her end * Regarding leaks from her Wall Street speeches, that Bernie Sanders kept demanding that she release, and, if she had, Bernie Sanders would be the Democratic nominee at this time, and we would have a very different debate *  I want to address this topic in a way that no one else is addressing it * I've mentioned my position on Facebook and I have noticed that I have lost some fans as a result of my candor * But I am going to elaborate on my defense of Donald Trump * I am not defending what he said * His words were indefensible, and I do not condone his crude language * I am putting this conversation into its proper context * This is being portrayed as a revealing hidden contempt for women and that he is abusive to women * No it doesn't * This is a private conversation that Donald Trump had in 2005 with a much younger guy, Billy Bush - about 33 at the time and Donald was 59 * He is having a private conversation, not knowing that his mic was live nor recording * He was doing a cameo for "Days of Our Lives", and this conversation was not meant for public consumption * More importantly, look at the scene that Donald Trump was there to shoot * This is a scene where the actress is throwing herself sexually at Donald Trump * She comes onto him in a major way * Trump is standing there, ignoring it * This is the scene Donald Trump is about to shootPrivacy & Opt-Out: https://redcircle.com/privacy

* This morning the government released the most important, the most highly-anticipated economic release of the month * At least that's what everybody who trades in just about any market believes * And that is the Non-Farm Payroll Report; the official scorecard on job creation and unemployment * This time it was for the month of September, the final month of Q3 * We're still waiting for the GDP estimate for Q3 * By the way the Atlanta Fed, which continues to do the interest rate limbo, lowered the bar again today on the Q3 GDP, which was 3.8% a month ago, when Janet Yellen talked about how the case for a rate hike had been strengthening * As of today, the Atlanta Fed is down to 2.1% * Politically, they are still trying to keep the estimate above 2%, although by the data, I expect it to be south of 2% * The important news today was the jobs number; * People were looking for a strong report, I think the consensus was around 170,000, but most people were talking 190 - 200,000, some people were looking for a number north of 200,000 * We got 156,000 jobs, which was below expectations, but a little better than the prior month * Originally reported at 151,000 but was revised up to 167,000 * So now, based on the revised number, it's actually worse than the prior month * Even though they revised the prior month up, they revised the month prior to that down, so the net effect of the revision was a decline * The unemployment rate, expected to hold steady at 4.9 actually ticked back up to 5% * Average hourly earnings, expected to rise by .3, following a small increase of .1 the prior month came in at .2 * Not quite the gain everybody thought * This is not a good report, and anybody who thought the Fed was going to hike rates in November, they clearly don't think it anymore * In fact, even WSJ reporter Jon Hilsenrath said that today's jobs report took a November interest rate hike off the table * I would suggest that a November rate hike was never on the table * To the extent it was there, it was only in the imaginations of people like Hilsenrath * Hilsenrath says now, if the Fed is going to move, it won't be until December, but it's not a sure thing * The fact is, the Fed is more likely not to raise rates in December * Once again, you need to know the rest of the story, as Paul Harvey used to say, when it comes to the jobs numbers * Because the headline doesn't really tell the story * You always have to look beneath the surface, which nobody wants to do, except for myself, and a few guys over at Zero Hedge * They always do a good job of pointing out what's really going on in the jobs market * Number one: The big news was the net creation of part-time-jobs * I've been saying this for a long time that the big story is that we are replacing full-time jobs with part-time jobs * Employers need more part-time workers than full-time workers because each one works fewer hours * We're always going to have net job creation when you are transforming the economy from full-time to part-time employment * That was clearly the case this last month * According to the Household Survey, we lost 5,000 full-time jobs in September and added 430,000 part-time jobs * I would venture to guess that pretty much all of the net increase from August to September, 150,000 or so jobs, is in part-time work * If you look at the large jump in employees holding down multiple jobs - the government reports that * There was a big jump in September in the number of Americans who have more than one job * So obviously what's happening is that people with one job are getting a second job and peop...Privacy & Opt-Out: https://redcircle.com/privacy

* This is my 200th  podcast and I looked back to the date of the first one and it was just over 2 years ago, September 2014 * I began this podcast shortly after I ended the Peter Schiff Radio Show * I hope everybody is enjoying these podcasts and if you like what you're listening to, help turn on other people to the same information * Statements early this morning by Richmond Fed President Jeffrey Lacker certainly sent tremors through the precious metals markets * Gold tumbled over $40/oz; closing $1268 and change * This is the first time we've actually been below $1300 in the last few months * Silver down just over a buck; 17.78 * It wasn't that long ago that we'd gotten above $20 * It was even worse for gold and silver mining stocks; this was the worse day of the year for those stocks * The markets closed right near the lows of the day * There was a big sell-off right after those statements came out and there was no reprieve * The dollar was stronger on the day, although not against the euro * There were some rumors that the European Central Bank may begin to taper its QE program * That held the euro steady against the dollar * The weak currencies were the yen and the pound which was "pounded" again to about a new 35-year low * On concerns that we might have a hard Brexit rather than a soft Brexit * This is more a matter of the yen and pound weakness today than dollar strength * The bond market was weaker on the day, closing near the lows * The Dow, though, only off about 85 points * If the markets really believe that a rate hike is coming, which is clearly what the metals traders seem to believe * I think the stock market should be even weaker * Although probably what's helping the stock market is the strength in the financials * Because as I have said before, people actually believe that higher interest rates are good for the financials * So the fear of higher rates actually lifted the financials, which helped support the market * But people who think the Fed is going to raise rates, and that higher rates are good for the financials * They're wrong twice, because the Fed's probably not going to raise rates and if they did, it would be horrible for financials * They might get lucky, though because they'd be wrong on the rate hike and would not then lose as much had the Fed actually raised rates * I want to go over the Lacker's statement that started all the turmoil: What did this guy say that caused everybody to jump to the conclusion that the Fed's about to hike rates? * The probability of a rate hike had been rising; it didn't just start today, but the probability did notch up a bit * They're now looking at a 60% chance of a December rate hike, but there's a 25% chance now of a November rate hike * The November meeting is one week before the election why would people think the Fed would take a chance on an adverse market reaction to a rate hike a week before the election? * Privacy & Opt-Out: https://redcircle.com/privacy

* It looks like the U.S. stock market is going to close out the 3rd quarter on a positive note * The catalyst for the rally today is the big rally in Deutsche Bank; shares are up better than 14% * They were in danger of going below $10 yesterday * There were nervous about maintaining accounts with Deutsche Bank * People were re-living memories of Lehman Brothers all over again * I think the Obama Administration was beginning to get concerned * The Dow was off about 200 points on the close yesterday * When worries about contagion spilling over from European banks into U.S. Banks * It wasn't good with these Wells Fargo Congressional hearings * I am going to chime in on that later in today's podcast * I think the Obama administration was getting nervous about precipitating another financial crisis before the election * I think they gave a nudge to the Department of Justice which had been talking about a $14 billion fine on Deutsche Bank * The rumors this morning are that they are nearing a settlement with Deutsche Bank for a much lower number; maybe around $5.5 billion * Which is below the amount that Deutsche Bank had set aside to settle this * So from $14 billion down to about $5.5 billion - this is causing a big rally in the shares of Deutsche Bank and in fact that is returning confidence to the entire sector * I don't think that this means that the European banks or the American banks, for that matter, are out of the woods * I still think there are a lot of problems in the financials, because as I said in a previous podcast,"They're damned if the Fed raises and they're damned if they don't" *  Negative rates are bad for the banks but rate hikes are also bad for the banks, based on their balance sheets * I think there are still a lot of problems percolating beneath the surface for the financials * As far as the Obama Administration is concerned, the key is to get everything through the next election without a crisis * So I think that having the Department of Justice settle with Deutsche Bank for a much smaller number... * You know that $14 billion fine was very close to what the Europeans were looking to fine Apple * But I think the Department of Justice is more concerned about elections than the symbolism regarding Apple's fine * So coming to an agreeable solution with Deutsche Bank that was lower than the markets had feared serves the Administration's purpose right now * So that's where the rally is coming from today and of course the traders like to paint the tape a little bit going into the end of the quarter * It's not just the markets that had a strong quarter - crude oil ended the day about $49 * We have some kind of agreement among OPEC nations for production cuts * And while that might be good for oil stocks, it's not going to be good for the U.S. consumer, who is already struggling * In fact we did get a mixed bag on economic numbers out today * The disappointing number was consumer spending, which for the month of August was flat; the anticipation was for an increase of .2% * Personal income did manage to meet expectations with a .2% increase * But that was about half the increase we got in the prior month * Spending went down from +.4 (which was upwardly revised from the original +.3) to flat * Higher energy prices, gas prices at the pump are simply going to eat into that consumer spending number * Privacy & Opt-Out: https://redcircle.com/privacy

* I'm going to use today's podcast to offer my take on last night's Presidential Debates * Which certainly did not live up to all of the hype and expectation * But the airwaves today are filled with opinion makers proclaiming that Trump won or Hillary won * And of course, all of the people who think Trump won, these are the Trump supporters, Republicans - their guy won * And Hillary supporters are proclaiming that Hillary won * I'm going to give you a different take because, clearly, (and if you don't know this by now, if the choice is between Hillary Clinton or Donald Trump, I would choose Trump) * Yet despite the fact that I support Trump over Hillary, I think Trump really blew an opportunity with this debate * I know in some cases there were some low expectations with respect to Trump, and did he exceed those low expectations, I don't know * I expected more from Donald Trump; I was disappointed * I think he should have mopped the floor with Hillary Clinton * She gave him many opportunities, she teed it up for him over and over again * And he didn't even take a swing * In many cases, not only did he not try to hit the ball, he whiffed * I wish he had paid me to help him with debate prep because I would have told him exactly how to handle Hillary Clinton * I'll start off by giving one simple example, where he could have made lemonade out of lemons, but chose to hand Hillary and issue which I'm sure she will use against him * This had to do with his comment in an interview over 10 years ago that pregnancy is inconvenient for employers - which of course, it is * And Hillary Clinton said: "Donald Trump, you said that pregnancy was an inconvenience for employers" * Instead of owning and embracing that comment, he backed away from it and denied having said it * One of the big issues is that Hillary is a liar * If Hillary is a liar, don't tell lies, yourself * Trump has to be honest to exploit Hillary's lack of honesty * And of course, Hillary can easily make a commercials - she's got tons of money to produce commercials and run them - * Saying that he never said that pregnancy was inconvenient for employers and juxtapose that with a clip showing him saying that pregnancy is inconvenient for employers * This didn't have to happen * Trump should have owned this * First of all, one of the things that people liked about Trump is that he is not politically correct - he speaks his mind * Why not continue to speak your mind?  Why pretend that pregnancy is not inconvenient for employers * Just because some woman might be offended * I give women more credit than that * I think most women realize that pregnancy is inconvenient for employers * Even female employers! This is not a male/female thing * If you are a woman employer with female employees and one of them gets pregnant, it is inconvenient for you, too * For big business, major corporations, maybe you have plenty of other people to pick up the slack * But where pregnancy is really inconvenient for employers is with small business * Now Hillary claims she cares about small business * OK, if you care about small business, can't you admit when things are inconvenient? * Privacy & Opt-Out: https://redcircle.com/privacy

* Aliens didn't invade the Earth, and the Federal Reserve didn't raise interest rates * If you remember, I was pegging the probability of each at roughly the same * True to form, the Federal Reserve did pretty much exactly what I thought they were going to do and not raise interest rates * Now I thought they might have tried to lower expectations for the probability in the markets of a December rate hike * Even though they didn't say that, that was the effect of their announcement * If you look at the dot plots, for example, the FOMC members were looking for rates to be lower for longer * Surely, if you look at the reaction to the market, the market does not appear to be worried about a rate hike coming in either November or December, even though the Fed still maintains the narrative that the possibility still exists * The Fed reiterated that the case for a rate hike had increased * But, they chose not to raise rates despite their narrative * Their reason was that they wanted to see more data * This is exactly what I said after Yellen's statement at Jackson Hole * The media interpreted her statement as a signal that a September rate hike was likely * What did I say? * I said the Fed didn't say anything about hiking * They were speaking about the case for a hike * I described it as a scale from, say 0 - 10 * If the case were a 3 and then it became a 4, the case had strengthened * But if the Fed needs 10, and we're only at 4, they're not going to hike * They never came clean about their scale, they simply said that the case for a hike had increased * That doesn't mean they were going to raise rates, and that's exactly what happened * It's interesting that in all of the prepared remarks and in the following press conference * Janet Yellen never once admitted that the economy is weakening * In fact, she continues to pretend that everything is great * Ironically, one of the questions in the Q&A had to do with Donald Trump's position that the Fed is not raising interest rates for political reasons * Which, of course is exactly why they're not raising them * If they raise interest rates, everything would collapse, and so would Hillary Clinton's election prospectsPrivacy & Opt-Out: https://redcircle.com/privacy

* This morning the Federal Open Market Committee began its 2-day meeting, where they're supposedly going to discuss raising interest rates for the second time * We're going to get the official announcement of their decision on Wednesday * Most likely there will be no surprise, that they won't raise interest rates * But it will be the statement at the press conference that follows; that's typically where you can get more market-moving insights * I said they're supposedly going to be discussing whether or not they are going to raise rates, but you would think that if they were going to raise rates, they'd know it before the meeting started * But I don't think they're going to discuss whether or not they're going to raise rates; I think they know they're not going to raise rates * What they're going to discuss is the bind they're in * It's like they're damned if they do and they're damned if they don't * On the one hand, market expectations went way up for a while, on a September rate hike * Based on Janet Yellen's Jackson Hole speech, where she said, "The case for a rate hike had strengthened." * Then later that day, another Fed official reiterated that there was nothing in Janet Yellen's speech that would rule out a rate hike in either September or December or both! * Based on that, market expectations ramped up * Of course, the Fed also claims to be data dependent, and the data over the past month has been lousy * Even though the Fed has not gone out of its way to recognize the bad data, probably for political reasons * The data has been bad, so the case for a rate hike has weakened, although Janet Yellen herself has not uttered those words * You've had some other Fed officials come out and pay lip service to that effect more recently because the market started to fall so the doves came flying to the rescue to save the market * But here's the conundrum: if they don't raise rates, which I think is the more likely option, then the Fed will have cried wolf again * If they do raise rates, it belies Janet Yellen's "Data Dependent" credo * In reality, they should be raising rates regardless of the data, because rates are too low * These low rate are creating a problem * It doesn't matter whether the economy is weak or strong, rates need to go up * In fact, I would argue that the economy is weak because rates are so low * Rates have to go up before we can have a real recovery * Of course, before we can have a real recovery, we have to prick this bubble and end the phony recovery * To have real economic growth, we're going to have to have a crash first * If we want the gain, we have to endure the pain * But nobody wants the pain so we never get any gain * If the Fed were to raise rates despite the data, it looks like they're not data dependent * If they don't raise rates without acknowledging that the data is weak * If they continue to pretend that the economy is fine, and continue to hint at future rate hikes * The Fed loses more credibility * That is what they are more likely to do: why would they take a chance on raising rates on Wednesday * Knowing A) How weak the data is, and  B) knowing that it is possible that the markets could tank as a result of that hike * That's the last thing they want, because, then what are they going to do? * How are they going to reverse the decline? Cut rates? * Clearly the Fed wants to punt again and delay the decision to December * This will mean that they barked again but they didn't bite * That's what they're talking about: "How do we thread this needle? How to we make the perfect statement that will still pretend the recovery is on track and still justify n...Privacy & Opt-Out: https://redcircle.com/privacy

* We got a lot of economic data released today, most of it bad, and most of it worse than expected * What I did not expect was that the market shrugged it off * Initially, there was a little reaction; gold jumped $3 but it never gained momentum and it rolled over to -$10 at the time of this recording * The dollar index, which had moved into negative territory immediately following the release, quickly recovered back to positive territory * It's still early in the day, as I'm recording, so this could change as some of this economic data has a chance to sink in * I noticed that the Atlanta Fed just reduced its Q3 GDP estimate from 3.3 to 3% * That' the second reduction in a row * This is the lowest estimate the Atlanta Fed has had in about 2 months, although it is still pretty high * Let's go over the data we got today: * Retail Sales was one of the more significant numbers; everybody looks to retail sales to judge the health of the consumer * Last month's number, relatively weak, it was flat, and they were looking for another flat month, but we were -.3% for August * It gets worse from there - less autos, they revised the prior month from -.3 to -.4 and in August they were looking for +.3, they got -.1 * Less autos and gasoline, we were down last month .1%; they were looking for +.4% and we're down another .1%Privacy & Opt-Out: https://redcircle.com/privacy

* Today was a day of damage control for the Federal Reserve * It almost seems like whenever they discuss the possibility of a rate hike, they're really launching a trial balloon * They want to gauge the possibility of a rate hike and then if the market kind of shrugs it off, or blesses the rate hike the way it did last year nearing December, if the market seems it's OK with a rate hike, then maybe they'd consider actually implementing one * But before they do it, they want to test the waters, they want to see how the market reacts to that possibility * Clearly, the near 400-point decline in the Dow on Friday showed that the market really wasn't very friendly to the possibility of a rate hike * Let alone the certainty of one * Just the mere possibility, however remote, really spooked the market * Today the Federal Reserve had a chance to dial it back * They had 3 Fed presidents speaking today, and not one of them talked about the possibility of a rate hike * Starting with an 8am talk this morning by Atlanta Fed President and CEO Dennis Lockhart * Now Dennis was specifically asked about a rate hike, and whether he thought the Fed would move in September or December * He specifically refused to comment * He said, "Financial markets seem to be very sensitive to the remarks of Fed speakers at the moment" * And so in light of market sensitivity, he refused to answer the question * Why not answer it? Don't you want to prepare the markets for a possible rate hike? * Well they don't want to say what they want to do, because they don't like the way the market is reacting * You'd better believe that if the markets reacted favorably to a rate hike, they would have stayed on script * Because of the the sell-off on Friday, and where futures opened before Lockhart's speech, the Dow was set to open up down 100 points or more * But once he spoke, all of a sudden, people were thinking, "Hey wait a minute, he didn't say anything about a possibility of a rate hike and he's worried about the markets' sensitivity * The only thing he said that could have been interpreted as a rate hike comment was when he mentioned the data over the past few weeks "warrants serious discussion of a policy rate increase" * The data over the past few weeks has all been bad * All he said is, it warrants discussion of a policy rate increase, but he didn't say that we should be in favor of an increase, or against an increase * He just said the data over the past few weeks warrants discussion * To me, what that means is, we should discuss not raising rates because all the data we've gotten recently is weak * It was the data we got a couple of months ago that supposedly let Janet Yellen conclude that the case for rate hike had strengthened * But really, what Lockhart is saying is, "We need to have a serious discussion about a rate increase." * Not that we have to discuss raising interest rates, but maybe we should discuss not raising interest rates because based on the data from just the past few weeks, one would argue against an increase * If he had said, "We need to discuss an increase", he wouldn't have predicated it with, "the data over the last few weeks" * That data, in and of itself, is not friendly to an increase * If he was in favor of a rate increase, he would not qualify it the data over the past few weeks * Also, just suggesting a discussion about a policy rate increase is not the same as actually increasing the interest rate * A discussion to increase rates could lead to no rate hike * Well, I assume they've been having discussions about raising rates for the last several years * What else do they discuss over there? Privacy & Opt-Out: https://redcircle.com/privacy

* We had widespread selling in the markets today; it was real carnage across the board * Everything went down except the U.S. dollar * The Dow Jones was down 394  points - about 2% * That wasn't bad compared to what happened in other indices and other sectors * In fact, when it comes to the Dow Jones averages, the utilities were the weakest, they were down 3.7% * The NASDAQ was down 2-1/2%; the composite down 133 points * Various sectors were hit very hard; particularly the interest rate sensitive sectors; * Home builders got crushed * Emerging markets got obliterated * Gold stocks were down big - almost 6% on the day * That's on basically a .6% decline in the price of gold; gold was down only about $10 * Silver dropped about 50 cents * What's going on? It has just been 2 days when I did the last podcast * Gold was soaring, the dollar was tanking, the markets were going up * Why? * The economic data we got for August confirms that we have the weakest economy, maybe in 6 years * If you remember, what caused the markets to be concerned was the Janet Yellen/Jackson Hole statement that the case for a rate hike had strengthened based on the economic data that came out in June and July * Based on the data released since she made that speech, this is data about August, that case has now weakened considerably * The August data shows that the data that we got in June or July that might have been positive was a one-off event * Now we're back in weakening mode, and so, if the Fed really were really data dependent, according to Janet Yellen * Now the data is awful * So why would they hike rates? That's exactly what happened * The markets started to take those rate hikes off the table * I never thought they were on the table, but there were many people who bought into it * When they saw this horrible data, and they knew the Fed was data dependent, the markets reacted * Now, in the last couple of days, particularly today, people are now questioning whether or not the Fed is actually data dependent, and they're thinking they're going to raise interest rates, even if the data is bad * Now what would make them jump to such a conclusion? * We had several Fed officials, both yesterday and today, who continued to talk about the possibility of rate hikes and nobody has acknowledged the recently-released weakening economic data * I have said many times they don't want to acknowledged that data * That plays into Donald Trump's campaign * They'd be peddling fiction! * They don't want to talk about a weakening economy, so they have to ignore the data * But the fact that they are ignoring the data while continuing to talk about the possibility of rate hikes * That's got everybody scared * All these guys say is that there is a possibility of a rate hike * A possibility is not a probability * It's certainly not a certainty * But the markets are acting as if the Fed is about to raise rates, and that's why everybody is so scared * It's not just the Fed; yesterday in Draghi's press conference was asked about his plans when the QE program ends (it is scheduled to end Q1 of 2017) * He basically said he doesn't have any plans to do more QEPrivacy & Opt-Out: https://redcircle.com/privacy

* Last week on Thursday we got that much weaker than expected ISM Manufacturing number, which didn't get a lot of attention because it came out a day before the jobs number which cast a pretty big shadow on all the economic data * The number came in very weak, as I pointed out, it was 49.4, which is contraction mode * Anything below 50 in the ISM numbers indicates a contraction and a recession * But of course, no one cares about manufacturing because it is such a small part of the U.S. economy, which in and of itself, is a major problem * The fact that it is such a small part of the economy should be very concerning, because without manufacturing you really can't have a service sector * The way the U.S. gets away with it is to just import with everyone else manufactures and we run enormous trade deficits, which is an unsustainable model * It's a great gravy train while the ride lasts, but when the rest of the world figures out that we can never pay our debts, then the gravy train comes to an end * The trade deficit represents an artificially high standard of living, but in the long run it's unsustainable because our creditors will not let us get away with this forever * I want to get to the ISM Non-Manufacturing number which came out yesterday; this represents the service sector of the economy * They were looking for 55, which was not a great number; last month we got 55.5, so there was some optimism around that number * They were looking for 55 even and, instead, the number came in at 51.4 * The lowest number in better than 6 years * And if you look beneath the surface and all the various components; new orders, back logs, hiring - horrible numbers consistent with recession * The complete opposite of what everybody was looking for, and when you combine this with the 49.4 we got from manufacturing that is a very bleak picture * The fact that we are at 6+ lows in the service sector does not bode well for the future * The trajectory is down, and how much longer is it going to be before the ISM Non-Manufacturing breaches the 50 mark? * Just when they start talking about these rate hikes - everything before this number came out questioned a September or a December rate hike - foregone conclusion * We had the same discussion in September a year ago * They punted and raised rates in December - will they do it again? * Given the bad news to date, there is really no way the Fed is going to raise rates in September * But just when the Fed officials are talking up a rate hike, everything changes with some bad news * The Fed never admits the data is bad they just don't raise rates and you've got to figure it out for yourself * When the ISM Non-Manufacturing number came out, gold took off * It continued to rise throughout the day and closed up better than $20 * Gold got back above $1350 after having just tested the $1300 level * Silver had a big up day; it went back above the $20 mark * We had a strong move up in the gold stocks again following Thursday and Friday's strong move in gold stocks * The markets were very surprised, and when this number came out, all of a sudden all the bets were changing * The odds for a September rate hike were way down * But not that much for December, because people are just assuming they can't go in September because we got this bad news, but, of course, by December, we may get some good news * The reality is that by then, there will be even more bad news * The Fed is not going to be raising rates; they are just talking about it, politically * In fact, John C. Williams, President and CEO, Federal Reserve Bank of San Francisco late last night ignored the bad financial news entirely in his statement,Privacy & Opt-Out: https://redcircle.com/privacy

*  On Friday we got the Non-Farm Payroll report and, of course, this jobs report is the most important ever * Because it was going to determine whether the Federal Reserve would raise interest rates at its September meeting * Of course, I didn't think the Fed would raise interest rates in September regardless of what this jobs number was * It's just that so many people were convinced that it was going to happen just because several Fed officials said it was possiblePrivacy & Opt-Out: https://redcircle.com/privacy

* The price of gold continues to retreat * Gold was down about $12 today; it closed around $1310 * The dollar index up again as more and more people begin to contemplate the possibility of a rate hike in either September or December * Or maybe even both, because the odds of a rate hike, either in September or December have now increased to about even money * If you go back to June, the odds were practically zero * What has changed in the last couple of months? * The only thing that has really happened is that you've had various Fed officials going out of their way to mention that a rate hike is still possible * Why would they do that? * Obviously, a rate hike is possible * Usually they are asked the question and they mention the possibility * If the Fed had no intention of raising interest rates, I doubt they would admit it at this juncture * They want people to believe that a rate hike is possible because if you admit that it's not possible, * That opens a can of worms that the Fed isn't interested in opening just yet Privacy & Opt-Out: https://redcircle.com/privacy

* Earlier today Janet Yellen delivered her much-anticipated and way over-hyped speech at the annual Jackson Hole Symposium * It wasn't as irrelevant as I thought it was going to be, but the actual relevant part of the speech was lost on just about everybody * Instead they keep focusing on whether or not the Fed is going to raise rates by another .25 in September or December or maybe both * In reality, whether they do or do not is irrelevant, given the nature of where we are and where the U.S. economy actually is * For a small person, Janet Yellen certainly casts a large shadow over the financial markets * Everybody was on pins and needles, all the traders were there with their fingers on the buttons waiting to react to anything that Yellen said * I mentioned on an earlier podcast that there had already been a sell-off  on gold stocks a couple of days ago on the anticipation of Yellen's hawkish comments * The rest of the market seemed to ignore the possibility that Yellen would be a hawk * Before I discuss what she said, I want to examine whether anyone on the committee could be considered a hawk * A hawk is predatory; is to be feared, reflecting a tough central banker who believes in sound money * On the other hand, a dove is cute and fluff; doesn't really hurt anybody * A dove wants cheap money - keep interests low so as not to harm anybody - nothing to fear * When it comes to hawks with respect to the Federal Reserve, the bird is extinct * They are all doves and the only difference is the degree of dovishness * The hawks are gone and are probably never coming back * Yellen was not a hawk, and neither was Stan FischerPrivacy & Opt-Out: https://redcircle.com/privacy

* The price of gold fell about $12/oz today; silver prices were down another .28 * Both metals have been falling since recent new yearly highs * Gold, though is not very much below the highs * The real carnage has been in the mining stocks, particularly today; today was one of the biggest down days I've seen all year * The GDX index was down just over 7% * Some of the mining stocks were down 10% or more on a very small move in the price of gold and silver * In fact, we've wiped out the last 2 months of gains in the mining stocks * What is the catalyst for this? * Early this morning, around 8:30 - 9:00 New York time before the U.S. Stock Market opened * No news - gold was up 1 or 2 bucks... * All of a sudden a huge sell order hits and gold drops about 7 or 8 bucks on no news * Somebody decided to dump a lot of gold on the market, at one time and didn't really care what the execution price was * Considering how large the sell order was, it didn't really knock the market down very much * But the gold stock market was a different story * It kind of made me think that the rationale for getting gold to drop was the impact it might have on the gold stocks themselves * My guess is that a lot of people who were running with stops, that's when you have an order to sell below the market to try to protect your profits * My guess is that they hit a lot of stops today in a lot of these mining stocks and maybe, some of the bigger players were able to buy more gold stocks based on the shake-out that was created * By a relatively modest drop in the price of gold * Meanwhile, the dollar didn't rise very much today; the downtrend still seems to be firmly in place * What everybody seems to be focusing on is the Fed * People are worried about what Janet Yellen might say on Friday * The Fed's Jackson Hole Conference gets underway tomorrow and Janet Yellen speaks on Friday * I guess the thoughts are: "Maybe she will say something hawkish." * Maybe she'll say the U.S economy is strengthening and the Fed is getting closer to meeting its objectives * And that a rate hike is possible in the near future * So what? That's what she always says. * Now she's not going to come out and say, "We're raising rates for sure. We're moving rates in September." * The only thing she could say is that a rate hike is still possible * That is no different than anything that she has said in the past * So people being nervous about a possible unprecedented hawkish statement makes no sense * Even in Janet were to say she is raising rates in September and she followed through a rate hike * So what? * It's not going to hurt gold and it's not going to help the dollar * Expected rate hikes were already baked into the dramatic rise of the dollar in 2014-2015 * Gold declined from a high of almost $1900 to a low of $1050 because it was discounting all the rate hikes that are never going to materialize * Even if we get one or two more, that is nothing compared to market expectations * Even if we get a couple of small rate hikes, even if we get to .75 or even 1% * That is still not enough to hurt gold or help the dollar * When are people going to figure out it doesn't matter what the Fed doesPrivacy & Opt-Out: https://redcircle.com/privacy

* The dollar was broadly weaker today with the dollar index closing down .85 to 94.78 * At that time gold was up about $18; sliver up about .25 * Then all of a sudden New York Fed Chairman William Dudley in an interview on Fox Business basically said that a September rate hike was still possible * Look, a September alien invasion is still possible, but I'm not going to waste my time preparing for it * What's amazing to me is how all of the villagers still come running every time a Fed official cries "Wolf!" * Haven't they noticed that they've cried, "Wolf!" over and over again and there's never a wolf? * I think that Dudley purposely came out and mentioned a September rate increase just to keep the markets in check; to preserve the false narrative that there is actually a recovery, instead of a bubble * All of a sudden, gold sold off, it went from +$18 to +$2 or $3 * Silver went negative; it lost its entire rally in a matter of minutes * I think Dudley was trying to undo the damage done overnight by Dudley's counterpart at the San Francisco Fed, John Williams' well-thought out paper * Williams wrote in his piece that he believes we're in a "new era".  He doesn't understand that the new era that we're in is collateral damage from central bank monetary policy * They think this is a random occurrence that needs a new government prescription * John Williams is proposing, based on this "new normal" the neutral interest rate is so low, it's almost impossible for the central banks to get there, absent negative interest rates * What Williams is proposing, is more inflation * What he is arguing is that we should scrap this 2% inflation target and that we need a higher number *  I've been saying for years that this is going to happen * It's just like the unemployment rate, where they said, "We'll raise interest rates if it gets below 6.5% and then we let it go below 5% * We kept moving that goal post * I said the same thing was going to happen to inflation * In fact it is happening.  If you look at the CPI numbers that just came out today, we continue to be above the 2% level on the core; we've been there for many months in a row * Now they're already starting to say, "Hey wait a minute, 2% isn't high enough * We need more inflation because we need lower rates, and the only way to get there is to have higher inflation * This is what I have been expecting * If you read William's piece, he says one of the ways we should get there is for the Fed to target nominal GDP * In other words, not GDP after you adjust for inflation * I've argued that the deflator is under the actual inflation number, therefore overestimating GDP growth * The Fed is saying, "Who cares about the GDP deflator? * All we care about is the nominal number * We don't care if the growth is real or inflationary, we just want nominal GDP numbers to go up" * What good is that? * No one benefits from phony GDP growth that is simply a by-product of inflation * The whole point is that we want the economy to actually, grow, not for just prices to go up * But what the Williams is saying is no, all we care about is prices going up * It's all about style over substance * That's why we're stuck in this malaise * Additionally, what Williams was also arguing for was more fiscal stimulus * He was saying that we're at the end of our rope with interest rates at practically at zero * We need the government to provide more stimulus in the form of deficit spending * We've already got about a $20 trillion national debt * If deficit spending were stimulative, why haven't we gotten a huge stimulus from that $20 trillion of debt? Privacy & Opt-Out: https://redcircle.com/privacy

* Today we got the official numbers for Q2 Non-Farm Productivity and the consensus was that it would increase for the first time in 3 quarters; the prior 2 quarters we saw a decline in productivity * So analysts were looking for a .5 increase in the second quarter * Instead, we got a decline of .5 * More importantly, this is the first 3-quarter consecutive decline in productivity since 1979 * That was the Carter years - stagflation, the misery index, sky-high inflation, sky-high interest rates * That was the last time we had a 3-quarter drop in productivity and President Obama is bragging about how great the recovery is and Hillary Clinton promises more of this * If you look at the actual size of the decline over those 3 quarters, it's the biggest drop in productivity since 1993 * If you look at the year-over-year decline, this is the biggest decline in productivity in 3 years * Productivity is extremely important * Politicians are all talking about higher wages - "We need higher wages!" * You can't get higher wages without higher productivity. * That is where higher wages come from * Now, a lot of politicians want to substitute government decrees - they want to mandate higher wages * Like minimum wage - we're going to force employers to pay this minimum wage * All that does, is raise the bar; it makes it harder for unskilled workers to get a job in the first place * Now employers are forced to pay a wage that may be well above the productivity that they can deliver * In that case, they can't get the job * Mimimum Wage doesn't just raise wages, it raises the bar * Another popular way that politicians try to mandate higher compensation is by mandating benefits such as health care, sick leave, paid vacation days, or overtime * The idea is that you're getting something for nothing - I voted for this guy and he delivered * That's not how it works * When an employer hires somebody, they look at the overall cost of employing that person, relative to the productivity required for the job * If I am mandated to provide certain benefits, the costs associated with them are also mandated * If you force the employer to provide benefits at a certain cost, how is he going to pay for it? * What happens is, the compensation becomes a mix of wages and benefits * Maybe the worker doesn't perfer that, maybe the worker just wants the higher wage * The worker can't have it because the government took that decision away by mandating that a portion of the pay include benefits, whether the worker wants them or not * The politicians hope the voters fall for the idea that they got something for nothing * That's government for you.  They always want you to think you're getting something for nothing * But the something for nothing costs a lot more than you think because the nothing is not nothing * In this case, wages go down so the benefits can go up * Everybody would be better off if the government stayed out and let each worker negotiate independently with the employer for a compensation package that is most valuable to that worker * But productivity is really the holy grail of higher wages * If we really want higher wages we need to raise productivity and that's not happening * If productivity is going down, wages are going down * If you want wages to go up, you have to have higher productivity * How do you get that?  Less government, lower taxes, higher interest rates so we get more savings and more investment and less of all this speculation and paper-shuffling that we have in this bubble economy * I want to talk also on this podcast about Donald Trump's economic speech yesterday Privacy & Opt-Out: https://redcircle.com/privacy

* What a difference a week makes, or maybe and economic report * The two big reports that everybody seems to focus on are the GDP numbers and the jobs numbers * It seems that the weaker the economy is, as measured by GDP, the more jobs, somehow, the economy seems to create * We got the jobs report for July and just a week earlier we got Q2 GDP * As I spoke about on the last podcast, that number was basically half of what Wall Street had been anticipating - less than half * They were looking for 2.4 or 2.6 and we got 1.2 * Even worse, we went back and revised down the prior 2 quarters to below 1% * That very weak number caused people to talk about the fact that the Fed can't raise rates, the economy is weaker than we thought, are we slipping back into recession?... * Now fast forward a week, and we get a Non-Farm Payroll report that is higher than anticipated and now all of a sudden people are starting to talk about September rate hikes again * Obviously, withe the stock market on Friday rising to a new record high, I doubt the equity traders actually believe that Friday's jobs report is going to produce a rate hike * Yet it doesn't stop all the financial journalists writing about how this confirms that the recovery is on track, and the Fed can raise rates * This jobs report doesn't confirm anythingPrivacy & Opt-Out: https://redcircle.com/privacy

* The carnage in global stock and bond markets continues; it really got started last night in Japan * The JGB (Japanese Government Bonds) dropped for the 3rd consecutive day * The biggest 3-day drop in bond prices in Japan in over 3 years, so yields surging, along with the Japanese yen * Of course, this is not supposed to be happening because they're doing more stimulus and they've got negative interest rates, yet the Japanese yen is appreciating anyway * The Reserve Bank of Australia also came out last night and cut interest rates to 1.5% * That is an all-time record low * Why did they do that? Is it because there's not enough economic growth in Australia? * Are they trying to revive a slumping property market * They've got a bubble in the real estate market - there's no valid reason for cutting interest rates from already low levels * The actual reason that the Reserve Bank of Australia gave for the rate cut was that inflation was not high enough * It's about 1%, the way they measure it, and their goal is to have it between 2 and 3% * In other words, the cost of living is going up by 1% a year and the Reserve Bank of Australia says, "That's horrible! We need to make sure that things get at least 2-3% more expensive this year and we're going to slash interest rates to make sure that happens." * Of course, when you do that, you have all sorts of risks, and what is the payoff? * Why is the cost of living going up 2-3% better than it going up 1%? * What's wrong with the cost of living not going up at all? * How about if it actually went down?  What if people could actually buy the things they need for less money? * What's horrible about the standard of living actually going up? * Of course, the real risk is, what if inflation goes from 1% (at least the way they measure it) to 4 or 5%? * Was it worth it? Now you have an inflation problem on your hands * If you've got 1% and you want 2% - You're close enough! * Obviously this has got nothing to do with inflation, they're simply trying to stop the rise in the Australian dollar * But the Australian dollar went up anyway! * They're trying to keep it down because they have this Keynesian world view that a weak currency is good and a strong currency is bad * But we've got to an inflection point where the central banks are losing this battle * The yen is rising despite the efforts to suppress it * The Aussie dollar went up, despite efforts to suppress it * The problem is, the U.S. economy is a disaster * We got the terrible GDP numbers, and we got a lot of other bad economic news today * We've got a lot more bad news coming out later in the week * We might get a horrific report on non-farm payrolls * We got that surprise good number last month, but who knows? We might revise that down and come up with another disappointing number on Friday * But the Fed, instead of acknowledging this, are still talking about rate hikes * In fact a Fed official just yesterday said the market should not rule out the possibility of a rate hike in September * First of all, if the economy comes roaring back (no chance that's going to happen) * Even if it comes back, they didn't say they WOULD raise interest rates, they said they might * Which also means they might not * It doesn't matter what happens to the economy, they can't raise rates * The economy is not getting better * We are either in recession or on the cusp of one * And the data continues to prove that, but the Fed continues to talk as if they're thinking about raising rates * That is part of the problem, because if the market doesn't believe that the Fed is coming to the rescue...Privacy & Opt-Out: https://redcircle.com/privacy

*  Today the Federal Reserve concluded its 2-day FOMC meeting and it announced - surprise, surprise - that interest rates are not going up * But of course the statement was much more important than their actions because these days, it doesn't matter what the Fed does; all that matters is what they say they're going to do, or more accurately, what they will pretend to do * It really doesn't matter what they say, they're not going to do anything * I explained that on my last podcast; I explained it again on CNBC Futures Now * People obviously still don't get it and I continue to use the analogy of Teddy Roosevelt's "Speak softly and carry a big stick." but if you have no stick, which is the situation with the Fed, then you have to speak loudly, and if you speak loudly enough, nobody will notice that you have no stick at all * That's what the Fed did today when they did not raise rates, but released their somewhat hawkish statement, saying that the near-term risks to the economic outlook have diminished * What does that mean? * We think the economy looks better, and therefore a rate hike might be appropriate * The Fed said that the job market had strengthened, which it did for one month - we had one strong month, but it is a low bar * But that is only superficial - when you look beneath the surface, it is worse * According to the Fed, the job market strengthened and the economy is expanding at a moderate rate * If we have an strengthening job market and the economy is expanding moderately, why are interest rates still practically zero? * The Fed mentioned that household spending is growing, but again the bar is set pretty low * The continued to say that they believe the economy is evolving in a way that will warrant gradual rate hikes * By gradual they mean, "No more rate hikes." * They raised rates once in January and they haven't raised them since * I think the tightening cycle ended when they raised rates, and began when they started to talk about tapering * We are now in an easing cycle * Despite some general better-than-expected economic data, we got some very weak news this morning * We got the number for June Durable Goods and they were looking for a decline of 1.3% * We got triple that decline: 4% decline and in fact they took the may number down from -2.2% to -2.8% * Year over year we're down 6.4% - that's a huge decline * The biggest decline in 2 years * If you look at the core capital goods, down again 3.7% * This is a massive streak - we've now seen the year-over-year core number down 18 months in a row * The longest losing streak in history when the U.S. economy was not in recession * I believe that this streak will continue and ultimately it will be longest losing streak ever - including recessions * Which would mean that year-over-year core durable goods would have been weaker during this "recovery" than in any prior recession on record * What does that tell you about the character about the so-called recovery, if is produces data that is even worse than during an official recession?Privacy & Opt-Out: https://redcircle.com/privacy

* It's official. The unthinkable, according to the status quo earlier in the campaign, Donald Trump is the Republican Nominee * Although many wrote him off as a candidate, I never did; I always said he was being underestimated * I believed his message would resonate given how horrible the economy actually is and what is really happening beneath the headlines * Everybody was proclaiming recovery and that we're on the right track and I knew that that wasn't the case * I knew there would be a lot of dissatisfaction among the electorate on both sides of the aisle * Even after Donald Trump locked up the Republican nomination, everybody was still writing him off * The idea was, "He's going to lose in a landslide" * Republican establishment said, "Abandon ship!", distancing themselves from Trump to maintain the House and the Senate, writing off the White House * Maybe run against Hillary in 4 years * That was the general consensus * Again, I kept saying the the media and the political establishment on both sides were underestimating Donald Trump and the potential appeal of a Trump presidency * I think that the speech he gave at the convention really proves that point * I thought his speech was brilliant. * When I say brilliant, I don't necessarily agree with everything he said; I clearly don't * I'm talking about the political perspective * Was this an effective speech to set the tone of the campaign? * In that respect, I think he hit the ball out of the park * The most clever thing about his speech is he didn't go after the Republicans * He went after the Democrats * He went after their base; their core constituency * He is bringing the fight to their turf * He went for the women, he went for the minorities * Not just African Americans and Latinos, but the LGBTQ and the blue collar workers * Donald Trump did not go after the entrepreneur * He didn't promise to get government off your back and free up the businessman from red tape * That's a typical Republican acceptance speech * He said, "I'm going to be the champion of the little guy." * The downtrodden, the forgotten voter * "I'm your guy! The system has been rigged against you and because I have been part of the problem, I'm the only one who can deliver the solution" * I think this is a very powerful strategy * Because the Democrats have been taking their constituency for granted * What Donald Trump says is, "Why are you blindly supporting the Democratic nominee?" * What have they done for you? Nothing. * He will bring up the shocking statistics that have been getting worse under 7 years of Barack Obama * The horrible unemployment in the African American community * The inner city crime * The government dependency.  The despair. * Why are African Americans handing their votes to a Democrat? * The Democrats have let them down and failed them * Donald Trump will say, "I won't do that.  Trust me." * "I will deliver on the broken promises of generations of Democrats." * What about women? * Instead of denying the gender gap, he just accepted it.Privacy & Opt-Out: https://redcircle.com/privacy

* I was in Las Vegas for the Freedom Fest and following that I went to Vancouver for a one-day gold conference * One of the things I wanted to discuss was some discussion about me on the www.kitco.com website and I think it was prompted by my itnterview with kitco, which you can see on my YouTube Channel * Whenever there is a discussion about me an argument develops between those who want to believe I never get anything right and those with believe I get a lot of things right * I thought one part of the discussion was quite amusing * Of course, I never claim to be infallible; when you make a lot of projections they don't all turn out to be right * Nobody is 100% right on anything that they say * The key is, are you right more often than you are wrong * And when you're wrong, do you change your mind, when the facts change, which is something that I do * But people will always go back and focus on a quote from years ago and say, "Look here's a quote from Peter Schiff saying interest rates would go up, and Look! now they're down" * I did not expect the bond bubble to get this big * Who thought we'd have half of the sovereign debt trading for negative yields? * Very few people envisioned that, but it happened * For the last several years I have said nothing about higher interest rates * I do believe that when the bond bubble bursts rates will spike up * But I don't know when that is going to happen * If you've made enough forecasts, one can always find things that have not panned out * But these people overlook the overwhelming number of forecasts I've gotten right * One of the forecasts people used to make fun of me about was a forecast I made on a show called, "Southland Today" * I put that up on the internet years ago, it's a 2002 interview and if you watch that clip, you'll recognize that a lot of the things I said in that interview were used to form the introduction to the old, "Wall Street Unspun" the precursor to the Peter Schiff Show * The intro for that show included many quotes that were lifted from the "Southland Today" interview * During that interview, I said I thought the Dow would go down to 4000 * Of course a lot happened between 2002 and now * What did happen is that after I did that interview the market fell precipitously; the Dow did drop another 25-30% * The NASDAQ maybe even more * What happened between that interview and the market falling is that Alan Greenspan slashed interest rates down to 1%, and at the time of the interview I did not know he was going to do that * I thought Alan Greenspan would be smarter than that * If Alan Greenspan had not slashed interest rates, my forecast would have been correct * Once Greenspan lowered interest rates, of course, I changed my forecast and became bullish on the market when it was still quite a bit lower * 6yyj6e69Privacy & Opt-Out: https://redcircle.com/privacy

* I'm sitting with Josh Crumb, the co-founder of a company that was originally called BitGold but following the acquisition of James Turk's GoldMoney they rebranded their company as GoldMoney * I agree with that decision because I think GoldMoney is more descriptive of what they are really doing with gold, than is BitGold * But the reason we're sitting here today is because I was so impressed with their company after having lengthy conversations with the other co-founder, Roy Sebag, that I really agreed with Roy and I thought that the best thing for us to do was to join forces and to combine both companies to the mutual benefit of both investors and, more importantly customers of both my company SchiffGold, and GoldMoney * So we've agreed on a merger and we've formed a joint venture between the two companies * What I wanted to announce today is what this new joint venture means for current customers of my company, SchiffGold * One of the things customers might be thinking is: "Does this mean that my experience is going to change?" * GoldMoney (BitGold) is much more of an internet-based program where people are not interacting with live representatives * The answer to that question is no. * Nothing is going to change regarding the our customers' relationships with SchiffGold * In fact, what we're hoping to achieve is to bring some of that personal service to the current GoldMoney customersPrivacy & Opt-Out: https://redcircle.com/privacy

* Today we got the Non-Farm Payroll report for the month of June * Remember the last 2 reports were quite weak and everybody was hoping for a rebound in June to prove that April and May were a fluke and not a new trend * In fact the Fed talked about that in their last FOMC meeting minutes * The consensus was for 180,000 jobs to be created and the range went from a low of 130,000 to as high as 235,000 * The consensus average of that range was 180,000 * The actual number came in at 287,000, over 100,000 jobs above the consensus * Now we did revise down the really bad number from May, and made it even worse * Initially that number was 38,000 jobs and now we know it was just 11,000 jobs * So about 70% of the jobs disappeared * I have a good feeling that the reason June's number is so high is that it's just wrong, and we'll see what kind of revision we get to it next month * Remember, a good chunk of these numbers are jobs that the government assumes were created without evidence, based on the birth-death model * I would suggest that far fewer businesses are actually being formed than the government believes * In fact, its possible that more business are shutting down than are hiring * Given the economy and the minimum wage, those business that are starting up are hiring fewer people than start-up historically hire * I think these guesstimates are wildly optimistic and skewing all the numbers * Unemployment rate, which was 4.7 last month and expected to notch up to 4.8, instead notched up higher to 4.9 * Private payrolls which were expected to rise by $170,000 jumped by $265,000 * But last month they revised a $25,000 gain to a $6,000 loss * Why did unemployment move up? Because the labor force participation rate notched up from 62.6 to 62.7 * Obviously not all the people who re-joined the labor force could find jobs * Average hourly earnings were expected to rise by .2% * Again they disappointed; they rose by just .1% * Overall, a mixed picture, but the headline number, the 287,000 vs 180,000 consensus * That's normally the number the market trades off * And that is exactly what happened - as soon as the report came out we had a big jump in the dollar index and we had a big selloff in Gold * Gold started out largely unchanged, went down about $22 on the news * Silver sold off, it was down about 40-50 cents * That was the knee-jerk reaction: strong dollar, weak gold, weak silver * Why? * A strong jobs number means the Fed is more likely to raise rates, right? * Rate hike is coming, good for the dollar, bad for gold * But what did I say on Wednesday's podcast? * I said that it didn't matter what the jobs number was * That gold was not going to go down, and if it was a weak number, I expected a big rally in gold * But I also said that a strong number would not hurt gold * Earlier in the year, a strong number would crush gold * I said that what's going on, and based on the latest FOMC minutes, I don't care what the jobs number is * The Fed is not going to raise rates * Jobs have nothing to do with it, Jobs are the excuse * The Fed can't raise rates now because of the fragility in the banking system, all the things that were revealed by Brexit * The market is sensing that and that's why within the first hour gold reversed all of its losses and finished the day up about $5.60 at $1365.40 * The highest close of the year on a day when we had a huge beat in the Non-Farm Payrolls * Silver had an even more impressive reversal; it rallied over $1 * Stocks really broke out; the GDX was up over 30% today to close at $30.54 * Not quite the highest close of the year Privacy & Opt-Out: https://redcircle.com/privacy

* Gold and silver prices continue to march higher * Gold was up another $7 today; it closed at $1363.20 - that is the high for the year * Silver was up .15 at $20.06 * Silver is now going up relative to the price of gold which is very for the precious metals complex * Gold stocks are on fire; the XAU index, a gold stock index was up 3.27% today * It's now up better than 135% on the year and well over 150% from the lows on the third week in January * But do you think that any major players on Wall Street have recommended gold stocks? * Do any of the big hedge funds have positions in gold? * No! They are clueless * What is happening, as I have said before, is that there is a picture, that's kind of blurry, but it's coming into focus, still not clear, but it's a game changer * The perception is that we had this great recovery and that the Fed was going to be able to unwind its balance sheet, normalize interest rates and everything was going to be great * So the whole investment world was preparing for higher rates, a stronger dollar and a stronger U.S. economy * But what is the actual picture? * The actual picture is an economic recovery that is over, if it ever even happened, * The Fed is finished tightening and they're about to start a new easing campaign * We're not done with QE; we're just getting started - QE3 is closer to the beginning than the end * Rather than shrinking the balance sheet, it's about to explode * This picture is getting clearer and now you see the markets re-pricing * Gold is going up every day * Gold stocks are going up * The banks are getting crushed * The European banks hit new lows again today * FOMC minutes came out for June and what did the minutes reveal? * The members were concerned about weakening employment number and they wanted more data before raising rates * They wanted to make sure the weakening numbers were an aberration rather than a new trend * Who didn't see that coming? * Also they wanted to see what happened with the Brexit vote * We knew about the Brexit vote all year - why did the Fed ever pretend that they would raise rates in June? * Because they wanted the market to believe that a rate hike was possible because it validates the phony recovery * So now the instead of raising rates, they spoke about raising them and they are going to cut rates by just talking about reducing them * They can do a lot by adjusting their rhetoric before they actually cut rates * They are already cutting by backtracking their rhetoric, because that's all they've got * Teddy Roosevelt said, "Walk softly but carry a big stick." * The Fed has to speak loudly because it has no stickPrivacy & Opt-Out: https://redcircle.com/privacy

* I wish everybody a happy July 4th weekend; U.S. markets will be closed * It's unfortunate that we can't really celebrate all the traditions that we're supposed to be honoring were lost generations ago * The values our founding fathers risked their lives for have all been lost * I wanted to comment on what is going on in the markets particularly today * Today was the capper on the week * You had silver prices up about a dollar an ounce * Gold closed up about $19, so gold closed above $1340 * Maybe by the time the market opens on Tuesday silver will be over $20/ounce * Who knows, maybe gold will be over $1400? * This is a powerful rally - gold finished at three year highs today * GDX was up about 5% on the day * The stock market didn't do that much today, but the real story, other than the gold market is in the bond market * U.S. Treasury yield plunging again - these are the lowest yields ever * Certainly below the crash lows * The yield on the 10-year treasury is below 1.5% * The yield on the 10-year treasury is 2.24% * So yields are plunging, bond prices are surging * What is going on? * The answer is money printing; Quantitative Easing * The most recent catalyst being the Brexit vote, which scared the hell out of everybody because of the collapse, particularly of the European banks * Now the central bankers are rushing to the rescue all around the worldPrivacy & Opt-Out: https://redcircle.com/privacy

* It was Turnaround Tuesday in the global financial markets as stocks are recovering from 2 days of carnage following the surprise Brexit vote in the U.K. * The Dow was up almost 270 points today, NASDAQ up about 97 * But really the markets got beaten up the last couple days * The smallest bounce was from the banks, which have been beaten up the most * So they had the biggest drop and the smallest bounce * Which really shows you how weak that sector is * It couldn't even manage much of a dead cat bounce * In fact, the carnage in, particularly the European banks is much bigger than it was during the financial crisis of '08 * This really shows you how much more levered up the banking system must be, thanks to all these years of QE and negative interest rates * And of course, how much farther behind can the American banks be from their European cousins? * U.S bank stocks, too, were hitting 52-week lows yesterday * I still think there's a lot of carnage coming * Some banks may be in a position where they are going to have to raise equity, which means they'll have to sell stock * Clearly the market is not going to like that * But again, everybody is blaming this on all the uncertainty surrounding Brexit * To me, if we had a healthy financial system, if the markets were sound, and prices were based on fundamentals * Would it really make that much of a difference if the UK were in the EU or not? * What is being revealed here is the fragility of the whole system that is being propped up artificially by the banks * By cheap money, low interest rates - everybody is speculating * And everybody is assuming that the powers that be, whether it is the politicians, the governments or the central banks have everything under control * It's a big put out there and nothing can go wrong * And then when something does go wrong, then people get nervous * The wake up and say, "Wait a minute! Maybe it's not as safe as we thought!"Privacy & Opt-Out: https://redcircle.com/privacy

* The British actually voted to leave the EU and it wasn't even that close * I think by midnight last night EDT it was obvious that Leave was going to beat Remain * I think it ended up 52% voting to Brexit and 48% voting to remain * Of course, the markets were taken by surprise, in fact, we had a rally in to the close on Thursday as everybody was so confident that the polls would be right, and the online casinos would be right and that it was pretty much a sure thing that the British would vote to remain * All of the experts, the economists and the political elites around the world, including President Obama had lectured the British as to why the smart thing is to stay in the EU and how dangerous it would be, economic Armageddon - if they voted to leave * Of course this may have been reverse psychology * Especially when you've been sold a bill of goods over and over again, with cost of living rising and standard of living going down * The may be reaching for straws in the same manner as the Americans are voting for Donald Trump or Bernie Sanders * The straw that they had was Brexit * I think the markets are overreacting to the implications of the U.K. leaving the EU * After all, think of all the countries that aren't in the EU * Why aren't we all members? * Why doesn't the U.S. join? * They can't even get Switzerland to join the EU and it's located smack in the middle of Europe * One of the reasons why Switzerland is so prosperous is that it had the good sense not to join the EU * I think the markets believed their own hype * For so long, we've been talking about how awful it would be if the British actually voted to leave that when they did so, it was a self-fulfilling prophecy * Everybody is in this for a quick trade * A lot of traders are all levered up and do the minute this thing happened everybody hit the same sell button * This is just about traders having to reverse their bets * Look at what happened in the flight to safety - the dollar was way up against the pound * The pound really got "pounded" - it had its biggest down day in history * It was pounded even harder relative to gold - the price of gold in terms of the British pound rose above 1000 pounds per ounce last night * Gold was the strongest monetary asset of the day, but #2 was the yen * At one point I saw the yen was up 5% against the dollar, which meant it was up about 15% against the pound * Now why is everybody buying the yen, why are they buying the dollar? * People say it's a safe haven - not really. * Does anyone think that the Japanese economy is a bastion of safety? * Why would anybody worried about Europe buy the dollar? * Think about the irony of this: people are so worried about Britain leaving the EU that they're selling the pound to buy the Swiss franc - a country that never entered the Eurozone * It's not about safety.  It's about risk-on and risk-off * What is risk-on? That is when you buy risky assets like stocks * How does the leveraged speculative community fund a risk-on trade? they go to the funding currencies where you can borrow cheaply * The most popular funding currency is the Japanese yen because they pay you to borrow in yen * So it's real cheap, you can lever up, and to a lesser extent the dollar is a funding currency - we've had very low interest rates, especially relative to our rate of inflationPrivacy & Opt-Out: https://redcircle.com/privacy

* I'm on vacation this week but I did take a little time out to little time out to listen to Janet Yellen's semi-annual "Humphrey-Hawkins" testimony - she testified first before the Senate, that was yesterday and today she was before the house * It used to be a lot more interesting with Ron Paul was on the house banking committee and you could see Ron Paul asking questions to Ben Bernanke * I really would like to hear Rand Paul questioning Janet Yellen but unfortunately, we don't have that opportunity * Also, the big news, we are on the eve of the Brexit vote in the U.K.; it's going to be on Thursday * Polls of investor sentiment show the remain camp is firmly in the lead * Betting certainly shows that more money is on the remain, but more people are betting on leave * Probably, though the remain camp will carry the day; the forces of big government are very hard to overcome * Nowhere is big government better exemplified than in the case of the Federal Reserve, which is the combination of big government and central banking * Janet Yellen's testimony, I thought, was relatively boring, but I'm going to go over some of the more important tidbits * Yellen keeps referring to the recovery that appears to be on track and the rate hike is just around the corner * All this is nonsense - if the Fed were going to raise rates, they would have already done so * One senator or congressman asked Yellen about the box the Fed might be in because the rates are still so low, what tools does Yellen have to fight off the next recession * Yellen confidently replied that we have all the tools we've always had, which is true * They still have those tools; the problem is that these tools have never worked * They can't cut rates, much, they can print all the money they want, they can do QE4, it can be bigger than QE3, and  it probably will be * Even though Janet Yellen, in response to a direct question about negative interest rates, said that she didn't think the Fed would go there, well we'll see * When push comes to shove they may be more willing to go there than they are right now because they still want to pretend that the recovery is on track, so why even bring up negative rates when you're talking about raising rates * So I think once the conversation turns then negative rates may be a more serious consideration * One of the congressmen asked about Puerto Rico and Janet Yellen said, "No, there's nothing we can do, Puerto Rico is on it's own." * I wish the Fed would have had the same attitude about the mortgage market * The Federal Reserve has no problem buying up toxic mortgages but they wouldn't touch Puerto Rican sovereign debt with ta 10-foot pole * Which leads you to believe how risky that debt much be * I wish the Fed would do the same thing to the U.S. government - force the U.S. government to make those tough choices * In fact, there was a House member, today, who talked to Janet Yellen about the independent central banks and Janet Yellen bluffed, that if interest rates, and that was a problem for Congress, that Congress would have to deal with the problem * I don't believe her for a second * I believe on of the reasons, specifically that Janet Yellen doesn't want to raise rates is that she knows that will complicate the budget situation in Washington because the Federal Government can't afford to pay higher interest rates * If the Federal Reserve already bailed out the government by doing QE and buying all these bonds, why are they going to change course? * I don't believe for a second Janet Yellen's tough talk about how independent the Federal Reserve is and how if the situation warranted it, they would raise interest rates and Congress would have to deal with the consequences Privacy & Opt-Out: https://redcircle.com/privacy

* Gold closed the week at the highest weekly close since January of 2015 * Not quite above the $1300 benchmark - I think we closed about $1298 - up about $20 on the day * Intra-day yesterday, gold was well above $1300 * Until there was news that a British Member of Parliament was shot and that somehow revised hope for the "stay" vote in the Brexit referendum * As if the price of gold is going up based on the outcome of that vote * As far as I'm concerned next week's vote is a non-event for the gold market * The conventional wisdom seems to believe that if Britain leaves, all hell is going to break loose in Europe * I guess all this chaos is supposed to be bullish for gold * If Britain votes to stay, the euro will go up and that might be bullish for gold, because a weak dollar is generally bullish for gold * I think gold will go up regardless of the British vote * The price of gold is not going up because of what's happening in Europe * It's going up because of what's happening in the United States *  More specifically at the Federal Reserve * The Federal Reserve concluded its June meeting on Wednesday and Janet Yellen - surprise! did not raise interest rates * If you remember, a few months ago, some minutes leaked to the public caused the public to think the Fed would raise rates in June for sure - maybe July, but probably June * And gold tanked and the dollar rallied and I said, "I don't think so." * There's nothing in these minutes that say the Fed is going to do anything * It's the same old Open Mouth Operation * If you read between the lines, they didn't commit to anything * But she cried wolf and everybody came running, and * Not only did the Fed not raise in June but they backtracked on their intentions to raise rates in the future * They toned down their so-called dot plots for this year and next year * Now, instead of announcing the first rate hike of the year, they actually pushed back expectations * There were a lot of articles about the Fed losing credibility, the Fed surrendering * This is what I have been forecasting * None of this is a surprise to faithful listeners to this podcast * Those who have been listening to the talking heads on the major media outlets expect the Fed to raise rates because they actually believe that the Fed's policies have worked and that we have a recovery * They have not figured out that this is a bubble * They never figure it out until after the bubble has burst * If you go back and read the transcript of Janet Yellen's press conference, she's still talking about  a July rate hike * If she had been honest, she would have said,"Why would we raise rates in July? We didn't raise them in June, what is going to change in a month? * But she is still on script:  she said, "I guess it's not impossible that we could raise rates in July" * So that's what it's come to: * It's come to, "We're probably going to raise rates in June or July" and now we're at, "I guess it's not impossible" * There a lot of things that are not impossible. It's not impossible that aliens are going to invade the Earth in JulyPrivacy & Opt-Out: https://redcircle.com/privacy

* This is the week of the June FOMC meeting, although it's really going to be a dud * For a while there was speculation that the Fed was going to pull the trigger and increase interest rates for the second in almost 10 years - for the first time this year * I don't know if anybody expects the Fed to raise rates on Wednesday - it's a 2 day meeting, it gets started tomorrow and we get the announcement on Wednesday afternoon * Brexit was one of the things they were concerned about * Now the polls are showing that a British exit of the EU is becoming more and more likely and that was one of the things supposedly the Fed was concerned about * I think all that is an excuse - they're really concerned about the U.S. bubble economy and domestic problems * But they don't want to acknowledge that so they want to rationalize their decisions with problems abroad * That vote is looking like it may go the wrong way as far as the powers that be are concerned * I've already mentioned on this podcast that if I were in Britain, I would vote to go * It's not because I'm anti free trade, I'm for free trade - it's just that the EU is no longer about free trade * That was its initial pretext and it might have been a good idea, but no idea that involves more government can ever be good * The problem with government is that it grows and grows and grows * Like the camel getting its nose under the tent * That's what happening in the EU and the British are finally saying we've had enough * It's too bad the British don't have enough with their own big government, but they don't want big government imposed from Brussels * Whatever benefits member nations got in the beginning from freer trade, they've lost from regulations, taxation and micro-management coming out of the EU * As I said before, the only reason there was a need for the EU is because governments impose too many tariffs and regulation and theoretically the solution was to let some other entity circumvent all the other government regulation * And they made the deal with the devil and it didn't work out * But the same thing is true in the United States * The original American colonies all made a deal - we came together, abandoned the Articles of Confederation we went for a less weak central government and we passed the Constitution of the United States * But the problem is, the Federal government is not abiding by its constitutional restraints on its powers * The Federal government is not acting the way the framers envisioned, it has usurped powers that were not granted to it in the Constitution, so the Federal government is no longer a benefit to the United States, just like the EU is not longer a benefit to Europe * The difference is, the EU disintegrated a lot quicker * The U.S. government lasted for a much longer period of time, and was a positive factor for the colonies * But the EU quickly degenerated * Every time you can remove a layer of government, you restore more freedom and prosperity * So I wish the British luck with their revolution * So this is just one more cloud on the horizon providing a reason for the Fed not to raise rates this week * A more important reason is the stock market * Once again on the decline, the NASDAQ is down a little over 2% over the last 2 days * The Dow Jones is down about 1.5% - down a little more than 130 points today * Meanwhile gold continues to rise * The last 2 days it was up about $15 - nothing huge, but it is making progress toward the $1300 level * It was up about $10 today - we closed around $1284 * I don't know if the Orlando terrorist event had anything to do with the weakness in the market today - probably not * But psychologically,Privacy & Opt-Out: https://redcircle.com/privacy

* Janet Yellen spoke yesterday and this was the first time she spoke following the release of the much weaker than expected Non-Farm Payroll report that we got on Friday * Not only was the month of May much weaker than expected but they revised down the prior month which was already weaker than expected and now it is even more weak * This is the first time the Fed had a chance to react, remember Janet Yellen and all her cohorts at the Fed had been talking about how the economy is getting better and how we're getting ready for a summer rate hike * Everybody was thinking, "Will they move in June or will they wait until July? * Of course, I was saying all along that I doubted that they would move in either month * They did make it clear, if you read the FOMC minutes that it was contingent on the labor market improving * I had already pointed out that based on the most recent jobs report the labor market was already not improving, it was getting worse, and now we know it is even worse than the Fed would have understood * By the time the minutes were released we had had all this bad news * While people were jumping to the conclusion that the Fed was about to hike rates, even though the labor market had weakened since they expressed those sentiments and the Fed specifically said that the rate hike was contingent on improvements in the labor market, and we were getting the reverse * I never understood why so many people were so convinced that a rate hike this summer was a fait accomplit * But now all the people who were so convinced have caved in and no longer expect a rate hike in June or July, but they're talking September!  Why? * Well Janet Yellen spoke yesterday and she's still talking about rate hikes * She still said she thinks the economy is improving and at some point rate hikes will be appropriate * Well of course!  That qualifies as a "Duh!" Obviously if the economy was improving, rate hikes would be appropriate, in fact they're appropriate right now * They're appropriate even if the economy is not improving, because interest rates are much too low * I believe one of the reasons the economy is so weak is because interest rates are so low * Now I understand that if we raise interest rates we're going to burst this bubble * If we raise interest rates, the stock market will come down, the real estate market will come down and that's going to be a big problem for a lot of people, in particular the banks * And I know that when interest rates go up, all the people who borrowed so much money when they were so low, including the U.S. government, will be in a lot of trouble * The Federal Reserve itself is going to be in a lot of trouble because it has an enormous portfolio, a balance sheet of long term bonds that will collapse in value when it raises rates * I am not a Pollyanna, thinking if we raise interest rates everything is great - no, it is a disaster * But it is a bigger disaster if we don't raise interest rates and keep waiting because we don't want to deal with the consequencesPrivacy & Opt-Out: https://redcircle.com/privacy

* It was a few weeks ago, following the release of the FOMC meetings, in which the various governors appeared quite hawkish in their tone * They were talking about the resurgent U.S. economy, the strengthening labor market and that they thought it would be appropriate to raise interest rates in June * As a result of that, the markets reacted, the dollar had a big rise, gold dropped * Gold had risen to almost $1300 when everybody thought the Fed wasn't going to raise rates * Now as soon as the Fed changed the conversation, and they put rate hikes back on the table, gold touched below $1200 * The dollar index got as high as 96 earlier this week * But the catalyst for the rally of the dollar and the decline in gold was the Fed, and the anticipation of rate hikes coming this month * In fact, in the days and weeks that followed the release of the unexpectedly hawkish FOMC minutes various Fed officials were out giving speeches * Every one of them talked about how it was going to be appropriate to raise rates, how we are bouncing back from the unexpected Q1 weakness, and that now the Fed is finally going to resume normalizing rates * The first time they raised rates was December last year; of course they talked about it all year before they finally went up by a quarter point * If they went up by another quarter point in June of this year, it's still, it's still a pace much slower than Greenspan used * He was moving up a quarter every time they met * This would be a quarter every 6 months * Even if the Fed were going to raise rates in June, that would have been the only hike of the year * I didn't even believe that they were going to do it in Juneof * If you listen to one of my recent podcasts at the beginning of the June rate hike talk, I was saying, * "How can they talk about a June rate hike? They haven't seen the May jobs report, which will come out in the first week of June, and if that jobs report is weak, they're not going to raise rates * And even if they did raise rates, it's too little too late * It's not going to be good for the dollar, it's not going to hurt gold because the FOREX markets and the metal exchange markets have priced in far more rate hikes than the Fed could possibly deliver * In fact if they did raise rates, that would be the end of the cycle and by the end of the year they would be cutting rates * The market is anticipating a normalization * And if you remember, too, it wasn't just that the Fed was going to raise rates, they were going to shrink the balance sheet * Janet Yellen was saying she was going to get the balance sheet back down to where it started * I was saying she was lying back then * The balance sheet has not shrunk at all * That is because the proceeds of every maturing bond have been reinvested * Every nickel earned in interest has been reinvested also * So the Fed hasn't even started to unwind the balance sheet, and they've barely raised interest rates * But I did say that if we got a weak jobs report, that would clearly take rate hikes off the table * I believe they were never on the table and that's exactly what we got June 3 * The Labor Department dropped a bombshell on the markets * A relative weak report of 170,000 was expected due to the Verizon strike * The actual number of jobs created in May was 38,000 * That is the lowest number in 6 years * But it gets worse: they revised last month's number, which was also weaker than expected, from 200,000 to 123,000 * The expectation was that this number would be revised up * They even revised down the month before by another 10,000 * You've got 123,000 jobs in April and just 38,000 jobs in May Privacy & Opt-Out: https://redcircle.com/privacy

* Well the tone and tenor of the discourse of the various market pundits and Wall Street economists seems to be that this recovery is on track * I guess there were some doubts about the recovery until the Federal Reserve laid all those doubts to rest based on the confidence with which they discussed the likelihood that the Fed would raise interest rates in June or July * The confidence persists despite the drumbeat of consistently weaker than expected numbers * Once in a while, we're getting better than expected numbers, but the beats are in the minority * Sometimes we get a number that superficially appears better than the forecast, but as soon as you actually delve beneath a very thin surface, you see a lot of negative details that don't make the headlines * People overlook a lot of information beneath the surface that is actually quite bad * But before I get into the economic data, I want to talk a little about Janet Yellen * On Friday she gave a monetary policy speech at the Radcliffe Institute for Advanced Studies at Harvard * Yellen studied economics at prestigious institutions, herself * Economics is Janet Yellen's passion; she's dedicated to economics * For someone who has dedicated herself to one subject, it's amazing how little she actually knows, despite going to our nation's best universities * It might be that the upper echelon universities are so deeply wedded to Keynesianism that a student might get a better economics education at a community college * One of the things that Janet Yellen said during her speech was that she she believes in capitalism, but that the government needs to protect the economy because capital is prone to "breakdowns" that cause mass unemployment and that we need government, or central banks to save capitalism from itself * Capitalism is not prone to breakdowns, nor is it prone to mass unemployment - in fact it's just the opposite * Capitalism is stable; it has a cyclical nature much less pronounced absent the Fed * Huge breakdowns and mass unemployment are always the result of government interferencePrivacy & Opt-Out: https://redcircle.com/privacy

* It really is amazing how short memories are on Wall Street * This seems exactly like December when everybody was convinced that a rate hike wouldn't matter because the economy was improving and the market can handle higher rates * And the stock market rallied right up until the Fed actually raised rates, and then it rallied a little bit, and then it rolled over and we had the worst decline to begin a year in the history of the stock market * Well flash forward to the Fed now saying that they are going to raise rates in June - or at least everybody believing that the Fed is going to raise rates in June and all of a sudden we are having this huge stock market * We had a huge up day yesterday on the idea that the economy is improving and the Fed is going to raise rates * The market is going up on the assumption that the economy can handle higher rates based on the economic data, which is another reason why the Fed might feel comfortable raising rates because the market is not selling off * So the market is giving the Fed the go-ahead to notch rates up another .25 * That was exactly the attitude prior to the last rate hike * The Fed make the mistake of raising rates in spite of weak data * As a matter of fact, if you go back to the minutes of the FOMC meeting, which is what ignited this whole Fed rate hike narrative, the Fed said it all depends on the data * If the economy continues to improve, if the labor market continues to improve, then we'll hike rates * But the reality is that the data tells the opposite story * Ever since the last Fed meeting, the economic data, on balance, has been weaker than expected - not stronger than expected * Including all the data that has come out this week * But,  hey - nobody cares - because the Fed says everything is great, so we can ignore the data because if they think the economy is great, it must be great * Forget about the fact that they have a horrible track record - the economy must be great! Privacy & Opt-Out: https://redcircle.com/privacy

* I wanted to record a short podcast today just to discuss the FOMC (Federal Open Market Committee) minutes that were released at 2:00pm this afternoon ET, which reflect the views of the Fed when they had their April meeting, some 6 weeks ago, when the Fed decided not to raise rates * As a result of the release of these minutes, everybody has now jumped to the conclusion that a June rate hike is not only on the table, but basically a done deal * I heard people talking about it on CNBC, "The Fed had to do this to show they are on a path to normalization - they said they would have a gradual pace, so they had no excuse but to do this." * Do what?  They haven't actually raised rates, they've just talked about it * Let me read you the statement they made about rates: Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee's 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June. * They didn't say they would do it, they said it would LIKELY be appropriate * Likely doesn't mean definitely, and appropriate doesn't mean they're going to do it * Because even if they determine that it is appropriate it doesn't mean they will do it * Before you even get to the likely and appropriate part of the statement, 2 things have to happen, or 3 things if you want to count inflation, but inflation has already happened * The economy has to pick up in Q2 - It doesn't look likely that that's going to happen - it is possible that we could get a second quarter stronger than the horrible Q1 but is 1 - 1.5% economic growth in Q2 picking up? It will still average out to a weak first half of the year * But the Fed also wants to see that labor conditions continue to strengthenPrivacy & Opt-Out: https://redcircle.com/privacy

* Another volatile day in the stock market sees the major averages deep in the red * The Dow was down just over 1%; down 180 points, 17,529 * The NASDAQ actually got walloped a little more; down just shy of 60 points, 1.25% * I think the catalyst for today's declines was a couple of Fed officials talking about how June is a live meeting - live from the perspective of, "We might raise interest rates" * I don't think it's live at all, I think it's dead, and if it were alive, the stock market decline would kill it * If Wall Street actually believes that the Fed is serious about raising rates in June, the market would be tanking * In fact, if more people believed it, the market would be down more than 180 points today * As we got closer and closer to the date that the Fed was theoretically going to raise rates, the market would be so low, that any talk of a rate hike would be dead, because the Fed would be dealing with tighter financial conditions * The Fed doesn't want to tighten monetary policy with financial conditions are tightening on their own * It's interesting, too, that you hear people asking, "Why does the Fed have a June rate hike on the table"? I keep hearing about the economy strengthening * The economy is not strengthening! That's just the point, the economy is weakening * Yes we did get a little data in the last few days that was better than expected, buy we also got data that was worse than expected * Most of the financial data that has come out since the last time the Fed hiked rates has been bad * If the Fed is talking about raising rates, it's not because the economy is getting stronger, it is despite the fact that the economy is getting weaker * What is getting stronger is inflation * The problem is, even though inflation is above the Fed's so-called 2% target, I don't think this raises the probability of a rate hike * If anything, the increase in prices will slow down the economy even more * We actually got some official inflation data today, we got the April CPI * The consensus was for a move +.3, following the prior month's +.1 * We got a bigger jump than was expected - we got +.4 * The year-over-year headline number - not the core number - is now 1.1 * So the year-over-year is below 2% but if you annualize that .4 for the next 11 months that would be a 6% annualized rate of CPI-based inflation * I read articles about the jump in the CPI and the jist was that this is good news, because the Fed is making progress on its policy goal of price stability - * If you think about how ridiculous that comment is: * We had a big spike in consumer prices, which if you annualize the rate of increase that's 6% increase in prices and that's progress on price stability? * If anything, the Fed is moving away from price stability *  If you're going for price stability, the less prices go up the more stable it is * I don't know how much more "stability" people can stand - * If prices get any more "stable" than this, we're going to have runaway inflation * This is not about price stability - this is about generating inflation on purpose because there is no alternative for the Fed * In recent times, a hotter than expected inflation number, causes the currency goes up * And when inflation is lower than expected, the currency goes down * Now, you might think that's counter-intuitive, and actually it is * Why would higher inflation be good for a currency?  After all, inflation measures how quickly a currency loses purchasing power * So why would a currency that is losing purchasing power more quickly be more valuable? * In today's world, low inflation is bad for your currency and high inflation is good for your currency Privacy & Opt-Out: https://redcircle.com/privacy

* The markets continue, really, to ignore all of the overwhelming bad news * Bad news on the economy, bad news on the corporate earnings front, retail sales - you name it, the news is bad * But the markets seem to shrug it off * All the markets - the equity markets, the foreign exchange markets, bond markets, the gold and silver markets * Sure, there is usually a knee-jerk reaction - you get some bad news, the gold spikes up, the dollar dumps, but then it recovers what it lost and gold surrenders its gains and we continue to stay the course, because to me the bad news isn't sinking in * Yes, the stock market has been trending down, particularly the NASDAQ * But it really hasn't rolled over * Yes we had the big drop yesterday, the Dow was down about 200 points, but it was up 200 points the day before * So over two days, we didn't go anywhere, despite the fact that we continue to get bad news * I'll start with some of the bad news that came out today and then work back * I think the worse news of the day was the weekly unemployment claims which is now finally started to move higherPrivacy & Opt-Out: https://redcircle.com/privacy

* Today I really want to talk more about Donald Trump, in particular, the firestorm that I think I lit with respect to Trump comments with respect to defaulting on the National Debt * Now I really believe that I am the first guy to have picked up on that because, when he originally talked about that on CNBC, and Becky Quick said, "Wait a minute, are you talking about compromising  our credit rating?" * That's when Donald Trump said, "No, no, no, I'm not talking about defaulting I'm talking about refinancing and Becky Quick let it go, she accepted the explanation, and nobody else on CNBC at the time said anything * Later that day, I was contacted by CNBC - I had already agreed to do Futures Now on CNBC.com in reaction to the article I had written at the end of last week on Donald Trump and I said, "Hey, wait a minute, why don't we also talk about his comments today about defaulting on the debt * And the producer said, "What are you talking about?" * I described his comments and said, go get the clip and we'll talk about it on the program * She had no idea that Trump had said anything like that and nobody was talking about it, but I had tweeted about it in real time as soon as I heard Trump say that, as he was still in the studio talking * I heard nothing about it until after my CNBC interview took place and then there were articles about it - even the New York Times wrote a big article about it * In fact, so much was written about it that Donald Trump had to officially respond to the idea that he said he wanted to default on the debt * Which of course he never actually did - he never actually said it, but it's clear to me that that is exactly what he meant - he wasn't just implying it, that's what he was thinking * But Donald Trump is not a career politician, so he's not always thinking about the political ramifications of just speaking off the cuff, and talking honestly, which is what he was doing * All of a sudden, when he put his presidential candidate hat back on, when Becky Quick called him out and all of a sudden he had to process what he let slip, then he back tracked * I think he would have died right there, had it not been for me * Of course Donald Trump doesn't want to be the candidate advocating default * Even though we can't possibly repay this debt, I guess there are some truths that even Donald Trump is afraid to utter when you're running for President, so he immediately started to back track * But I wanted to talk about why his explanation makes no sense at all and it shows that I was 100% right about what he was thinking, and all he's doing now is spin, he doesn't want to deal with the genie that he just let out of the bottle * I think the press, in general will probably accept his explanation, because they don't really know very much, but let's go into it * First of all, he said, "Of course we're not going to default on the debt - why would we default? We print the money! * Now, when he was talking about the debt, he wasn't talking about printing money, not at all * In fact, if anything, he acknowledged that printing money would be a problem, because he said, "We have to keep interest rates low but if inflation picks up we have a real problem * Privacy & Opt-Out: https://redcircle.com/privacy

* Today we got the government's Non-Farm Payroll report, otherwise known as the Jobs Report, for the month of April and pretty much all the mainstream Wall Street guys were looking for another strong report * In fact, earlier in the week Goldman Sachs was out saying that the 200,000 consensus estimate was too low! * The optimism was unfazed by the much weaker than expected ADP report I spoke about on my last podcast on Wednesday, which came in much lighter than expected * So, people didn't care, they said, "That's a one-off event, we're still looking for a good number, and we got a weak report * Instead of 200,000 jobs we only got 160,000 jobs * And they actually revised down the last couple of months * But let's get into some of the details, because it gets worse, the further beneath the surface you look * The unemployment rate held steady at 5%; they were expecting it to notch down to 4.9% - that did not happen * Private payrolls also much lighter than expected; they were looking for 195,000; they got 171,000 and they revised down last month's from 195K to 184K * They did get the .3% increase in average hourly earnings, but they forgot to point out that they revised month's .3% increase down to .2% so you can chalk that one up as a miss, despite the fact that nobody was talking about it * The bigger miss was in the Labor Force Participation Rate * Last month it was 63%, which was a move up, but in April it came back down to 62.8% * 562,000 people left the labor force during the month of April * A massive exodus led by young people * A breakdown in the Household Survey for ages 20-24 reported 155,000 job losses in April * For ages 25 - 54 -  284,000 jobs losses * For ages over the age of 55 - this is the highest it has ever been * Janet Yellen still wants to pretend that the reason the Labor Force Participation Rate is declining is because the Baby Boom is retiring - how much longer is she going to get away with that lie? * The Baby Boom is too broke to retire * The people leaving the workforce are young people in their 20's and 30's * A breakdown of job gains by sector shows the biggest sector is professional business and temporary services - 56,000 gains * Healthcare and education was high, and leisure and hospitality came in third * Manufacturing barely gained any jobs after a huge loss the prior month * Wholesale trade barely gained any * Construction, after a big jump last month - only 1,000 jobs * Retail trade lost 3,000 jobs * Mining and logging continues to lose jobs * On a good note, government actually lost jobs * That's a good thing - we don't need so many people working for government - they're not productive * Rick Santelli made a very good point today on CNBC, talking about all the jobs created at the TSA * We're not better off with those jobs - they decrease our productivity * As I mentioned on my last podcast, we've now had 2 consecutive quarters of losses in productivity * Despite this bad jobs report, the market shrugged it off * The stock market rallied because bad news is good news - the odds of a Fed rate hike are now the lowest they've ever been * If you look at the Foreign Exchange markets, the dollar was broadly higher today * It was up big against the Australian dollar because the Reserve Bank of Australia lowered their inflation forecast * They lowered it from 2-3% to 1-2% * You would think that's good news, because it means the cost of living will rise only 1-2% * Back in the day, news of low inflation sent a currency higher, because it was not losing purchasing power * The news sent the Australian dollar tumbling because the market now expects the Australian Reserve will have to c...Privacy & Opt-Out: https://redcircle.com/privacy

* And then there was one; Donald Trump is now the presumptive Republican Presidential nominee for 2016 * I remember when this Republican Primary started and the field was very wide * They had to split the debates up between the main event and the under card because there were so many candidates * Nobody in the mainstream really gave Donald Trump a shot * Even though I wasn't supporting, Trump - I was supporting Rand Paul and more recently Ted Cruz as the candidates who were ideologically closest to me * I always thought that Donald Trump was a very serious candidate and thought that he had the best odds of winning and that's what happened * I always recognized the appeal of his message * I know the economy is much worse than is generally perceived and, for the typical American, living in a rotten economy, Trump seems to be the candidate that is going to appeal to them * He's not talking about cutting social security or taking away government benefits, he's trying to be all things to all people * It's a populist message - Everybody's going to win, just elect me and I'm going to make all your problems go away * How am I going to make them go away? Because I'm different * I'm not your typical politician, I'm a billionaire businessman who knows what I'm doing and everybody in government are incompetent fools * He's right about that part - everybody in government is incompetent * But that does not mean that Trump is a panacea to immediately make these problems go away * But you know what? Why not take a shot at it? * I knew that his message is powerful and would resonate * Everybody is writing him off, saying he will lose to Hillary Clinton * I don't believe so * I think the media is still underestimating Donald Trump, despite the fact that they completely surprised them by winning the Republican nomination * He might surprise them again by winning the General Election and being our next President * Because, if you are anti-establishment, why would you vote for Hillary Clinton, even if you are a Democrat * Why do you think Bernie Sanders continues to get so much support? * He beat Hillary again in Indiana yesterday * But of course Hillary has such a massive lead, thanks to all these super delegates, it doesn't even matter how many primaries he wins - he can win all the primaries from now until the election and Hillary is still going to be the nominee * Unless Bernie Sanders can flip the super delegates * Maybe if she gets indicted between now and the convention, well maybe that will do the trick * But Hillary Clinton couldn't win in Indiana because there weren't enough minorities there * When you just look your basic Democratic American, they're overwhelmingly going for Bernie Sanders * The reason they're doing that is for the same reason that Republicans are going for Donald Trump * I said many times I think Donald Trump will be able to tailor his message specifically to appeal to the Bernie Sanders Democrats * He's not going to get all of the Bernie Sanders Democrats - the far left Socialists * But there are a lot of people who are voting for Bernie Sanders because they can't stand Hillary Clinton * Trump has a good shot at getting those people, in fact I think Donald Trump can do better with the Democrats than Ronald Regan * And it was those Regan Democrats that really put Ronald Regan in the White House * Many people are too young to remember, but when Ronald Regan first got the nomination, the media said, well that's it, he's going to lose in a landslide * Nobody thought he could beat Jimmy Carter, an incumbent President and Ronald Regan was so far to the right, he was even more to the right than Barry Goldwater,Privacy & Opt-Out: https://redcircle.com/privacy

* Gold finally traded about $1300 this morning; it was the first time since January of 2015 that the price of gold traded above $1300 * But by the time the U.S. Stock market opened, the price of gold started to sell off, and it couldn't hold $1300, in fact, it ended negative on the day - we closed about $1291 * When gold failed to hold $1300, there was a lot of selling in gold stocks; in fact gold stocks were way up in the pre-market, up from 2-7% * Some of them opened with new 52-week highs, but then the selling commenced and gold stocks went down, silver stocks went down - GDX ended down about 1.7% on the day - not a very big move * There will be some people out there who will say, "It's a reversal" * We didn't hold $1200 either, the first time we got above it, but the next time we went to $1200, we got to $1260 * I think something similar might happen with $1300 * If I were a bear, I would cover, I'd be buying back * I think it would be smart to buy the dip * Especially when you look at the weakness in the U.S. dollar with continued today, in fact the dollar index traded down to about 92.50 * This is the first time since January of 2015 that the dollar index has been below 93 * The euro is above 115, that, too, is the first time since January of 2015 * But the dollar is weak across the board, and it's going to continue to get weak especially if we keep getting the weak data points like the data that came out todayPrivacy & Opt-Out: https://redcircle.com/privacy

* Friday April 29, 2016 was the final trading day for the month of April and I think this will turn out to be a pivotal month for the month of April and I will talk more about that later in this report * I wanted start by talking about the Federal Reserve's decision on Wednesday not to raise interest rates * Few people really believed they would, but earlier in the year it was widely believed that by April the Fed would have raised interest rates at least one more time, given the fact that they began the tightening cycle in December with the first .25 rate hike * What's more important than the failure to raise rates again was what they wrote in their statement with respect to the idea that future rate hikes are forthcoming * The Fed is still clinging to the false narrative that this recovery that is basically already ended is on track, and that they will be raising interest rates at some point later in the year maybe 2 or 3 more times; they just decided not to do it in April * The only acknowledgement that the Fed made with respect to the economy was that growth was slowing * That is a dramatic understatement to say that growth has slowed * If you go back to December, when the Fed confidently announced their first rate hike, they were forecasting that the economy would grow by about 3% in the first quarter of 2016 * Yesterday we got the government's first estimate for Q1 growth rate and it came in at just .5% * You can hardly refer to that as a slowdown, when pretty much all of the growth that the Federal Reserve believed was going to materialize evaporated * I don't know how they can simply say growth is slowing - growth is non-existent * As a matter of fact, the New York, Fed, which recently began issuing its own GDP Now Forecast, are now forecasting that Q2 will be just .8% * Averaging the two quarters out, you barely have any economic growth * I think the New York Fed is still overly optimistic * I think the Q1 report of .5% will be negative after final revisions * I also believe Q2 is going to be worse than Q1 * Even if Q1 .5% holds, that represents the third consecutive quarter where GDP has declined * In fact 2015 Q4 was 1.4%, so .5% is less than half of the most recent quarter * I think that trend is going to continue * There are still a lot of people who believe we'll get a rebound in Q2, because we got a Q2 rebound in the prior 2 years. * But the New York Fed is already throwing cold water on the idea that there is going to be a rebound * What nobody is talking about is that the main reason for the Q2 rebound in the previous 2 years was because we had unseasonably cold winters * We just had the warmest winter in 120 years, so we're not going to bounce back from anything * In fact, I believe the winter was so warm, that we probably pulled forward some of the economic activity that might otherwise have happened in Q2, so I think Q2 is going to suffer * Additionally, we had big builds in inventories in the prior 2 second quarters - that's not going to happen this quarter * Our trade deficits are even bigger now than they used to be Privacy & Opt-Out: https://redcircle.com/privacy

* Earlier today the Federal Reserve Open Market Committee, (FOMC) began their 2-day meeting * It concludes tomorrow and at 2:00 they will announce their decision on interest rates * Nobody is anxiously awaiting that announcement * Although there were plenty of fools a few months ago who actually believed the Federal Reserve would be raising interest rates, in fact they thought they were going to raise them in March and then, when they didn't there were a lot of people who still thought they might do it in April * But some of these fools still believe the Fed is going to hike rates later in the year - maybe June * Maybe June, September and December * There are still people, like Goldman Sachs, who are looking for 3 rate hikes this year * I was on a panel months ago with Jim Rickards, whom I have a lot of respect for, and back then he argued with me, because he believed the Fed would raise rates 2 if not 3 times in 2016 * I said the Fed would not raise rates at all * Today I posted an interview that he gave on Bloomberg - now Jim Rickards says Janet Yellen has gone super-dove and she is not going to raise rates * The reason Jim Rickards disagreed with me on the panel a couple of months ago is that, although he agrees with my thoughts on the economy, is that he thought the Fed would not recognize that the economy is very weak, rather that it believes the economy is still recovering * He thought the Fed would raise rates anyway, which would cause a recession, cause the Fed to abort the increases, go back to zero and to QE4 * I said, I think we are going to skip all the rate hikes and go directly to rate cuts and QE4 * And now I think Jim has joined me in that perspective * The question is: Will the Federal Reserve actually admit that the economy is that weak, or just not raise rates, which is tantamount to an admission of weakness * We are going to get the first official look at Q1 GDP on Thursday * There's a good chance that we will print a negative number * And even if we don't print a negative number, it will be a single digit number less than 1 * And by the time they revise it the following month to incorporate all the bad news that comes after Thursday, I think they will revise it negative * Which means we're in a recession * If Q1 is negative, and I don't believe we will get a bounce-back in Q2 * I think Q1 is the high water mark and it's down hill from here * I think Q2 will be weaker regardless of how weak Q1 is, because we borrowed growth from Q2 because we had the warmest winter in 120 years * Companies are now winding down their bloated inventories that they built up the last couple of years * And because the trade deficits are getting bigger and not smaller * So we have a lot weighing down GDP in Q2 in an already weak economy * By the way, the Atlanta Fed revised up their Q1 GDP number from .3 to .4 * Why did they do that?  This is the second time the Atlanta Fed has upwardly revised their estimate, despite the fact that the economic data has gotten worse since their last estimate * If the data gets worse, why would you revise your forecast up? * To me something's going on, maybe it's the boys at the New York Fed putting pressure on Atlanta to be more optimistic, but we'll see, because we will get the first official numbers on Thursday * Let me go over some of the economic data that has come out just since my last podcast * On Friday last week, we got the PMI Flash Index for April - not a Q1 number * One of the first numbers for Q2 and it ain't pretty - the consensus was for an improvement * March was 51.4, and 52 was expected - we got 50.8 - much weaker than the Atlanta Fed thought * New Home Sales missed; they were looking for 522,000,Privacy & Opt-Out: https://redcircle.com/privacy