* This is another week of bad economic data that most people have ignored * The stock market was up this week; the Dow closed up 1.8% on the year * I don't know if the Dow was rising in spite the bad news or because of it * The bad news means the economy is weak and corporate earnings are not there, and there are high multiples * But of course, if the economy is weak, that takes the Fed out of the rate hiking game and I think puts it into the rate cutting - QE4 game * So the market is caught between the opposing forces of cheap money and falling earnings on the back of a weak economy * Gold was actually down on the week; it started off the week strong, then Thursday it got hit pretty good and today it recouped some of its losses * But the standout was silver *  Silver was up almost 6% on the week; this is a new high * Silver closed at the highest close of the year * In fact, silver was strong with gold on Monday and Tuesday and when gold sold off on Wednesday and Thursday, silver really held up * That's a good sign for both gold and silver * I was on CNBC.com this week and I meant to say something about silver * They're not even talking about silver in the mainstream media so they're missing an even bigger move * They're acknowledging that gold's going up but they're not even looking at silver * I mentioned on an earlier podcast that a number of people are shorting silver and buying gold because they saw the breakout to new highs on the gold/silver ratio and they wanted to jump on that trad * I thought that was the wrong thing to do * To me, seeing new highs in that ratio in favor of silver made me want to buy silver, since it's as cheap as it's been relative to gold * If you like gold, just buy it; don't short silver because you could turn a winning trade into a losing trade   Privacy & Opt-Out: https://redcircle.com/privacy

* The dollar index traded below 94 for a good part of the day, but it did manage to close up at 94 even, down just .20 * Gold was up another $19 * Silver really shined brightly today, up .54, just below $16/oz. * Mining stocks, of course, were on fire; GDX was up just under 6% on the day, GDXJ up just under 7% * This followed a spectacular day for the mining stocks on Friday * In fact, even though gold itself was down a couple of bucks, we had a huge up day in the gold stocks * Between  Friday and today, I think this is the biggest two back-to-back gains for gold stocks all year * The catalyst was the Atlanta Fed Q1 GDP estimate downgrade all the way down to .1 * If you remember, from listening to my podcasts, the very first time the Atlanta Fed came out with its upward revision, with a lot of fanfare, to 2.7%, I said that that was all political and that they would have to walk that back all quarter long, and now they have eliminated the entire estimated gain * A fair estimate might have been -.1, but President Obama is still saying we have the strongest advanced economy in the world * I don't know what his definition of "strong" or "advanced" is, but we might have one of the weakest of the advanced economies * It's just that nobody wants to accept that fact yet * Here's where it really gets interesting: CNBC was very dismissive of the weak economic numbers * They are characterizing the weak Q1 as similar to previous years' weak Q1, where the weather pushed back some economic activity to Q2, causing rebounds * They said the same thing is going to happen this year.  No it's not. * This year is different from last year * First, let's talk about inventories: February and January Wholesale Trade Inventories have been revised down from +.3 to -.2 * Last year, companies were still building up inventories, believing in the recovery narrative, boosting GDP * The inventory unwind that I have been talking about for the last year is just beginning * It started in Q1 of this year, and this inventory sell-down is going to subtract from GDP * Here's another factor: the weather * The weather for the last two first quarters was very cold, pushing economic activity to Q2, helping Q2 to rebound * That's not what happened this year.  The first quarter of this year was the warmest in over 120 years * So obviously there was no economic activity pushed forward due to weather, if anything, the weather might have pulled some activity from Q2 to Q1 * As weak as Q1 was, it might have been weaker if cold weather had suspended some economic activity * The third difference is the trade deficit, which is rapidly growing this year * I think the growing trade deficit will continue to put a drag on Q2 GDP * The inventory liquidation will continue to be a drag on Q2 GDP * What that means is had the government properly seasonally adjusted Q1 for the unusually warm weather, I think Q1 GDP would be a lot lower * Q1 will be a contraction, and we are going to fall from there * If that is true, then we are in a recession * I think this recession will be longer in duration that the preceding one * The question is: What is the government going to do about it? * There was a meeting today between President Obama, Joe Biden and Janet Yellen * They have to figure out how to throw the economy a lifeline without admitting that it is drowning * The first thing the Fed can do is signal that they are not going to raise rates - change their forward guidance * By just not raising the rates, the specter of a hike remains * The question is what story will they use in order to not damage Obama's recovery narrative and Hillary Clinton's campaign? Privacy & Opt-Out: https://redcircle.com/privacy

* Today is the Wisconsin Primary but Donald Trump has been getting a lot of flack in the media over the last couple of days about his comments about the U.S. economy, particularly in the financial media because Donald Trump has now predicted a "very massive recession" in the U.S. * He didn't just say a recession, he's predicting a massive recession * Most of the pundits on television don't see any recession at all - not even a mild one * So here you have Donald Trump saying, not only is the recession going to be massive, it's going to be very massive * The media is all over Trump: "What is he talking about? The economy is in great shape! He's peddling all kinds of fiction! We have this massive economic growth!" * the President television today taking credit for this great economy with all these years of jobs * Of course what the President doesn't admit to, is, it's not job creation - it's job destruction * We're destroying full time jobs, the by-product of that destruction is that we create a bunch of part-time jobs that people don't really want but that's all they can get * Yet the President is taking credit for that * It's like setting a fire and taking credit for putting it out * That's what the Federal Reserve did with the 2008 Financial Crisis * Let's look at some of the economic news that came out over the past couple of days that resulted in the Atlanta Fed reducing its Q1 GDP estimate - yet again - to .4 * In last Friday's podcast I said that I thought they would be revising it down, and based on the numbers that just came out, they did * One if the reasons the Atlanta Fed cited for the revision was yesterday's release of February Factory Orders * They were expected to be down 1.6; instead it came out as -1.7, which was not that big a miss unless you consider the previous downward revision, which means it dropped from a lower level * That took something out of the GDP numbers as did the very bad auto sales that I did mention in Friday's podcast * Apparently the worse-than-expected trade deficit that came out today didn't even factor into their thinking, and I don't know why, because we were expecting $46.2 billion and instead we got $47.1 billion * That's a pretty big miss, and they took January's estimate which was originally $45.7 billion and raised that to $46.2 billion * We are still expecting the March number which will be factored into Q1 GDP, so I think the Atlanta Fed is still not low enough * Remember, too, one of the things that's helping the Q1 GDP is that most of the country had an unseasonably warm winter, because bad weather is factored into the estimate * Privacy & Opt-Out: https://redcircle.com/privacy

* Well, it's April Fool's Day today and there certainly were a lot of fools out on Wall Street buying all the nonsense about the better than expected Non-Farm Payroll numbers * Many of those fools were also fooled into thinking that these supposedly good jobs numbers puts a June rate hike back on the table * In fact, these April Fools were out in force in March when several Fed officials were talking about the possibility of April being a live meeting, and they bought it; Janet Yellen potentially set them straight a few days ago, but then again they hear some numbers that they think are better than expected, and they think, "Aha! The Fed is about to raise rates." * When are they going to wake up and realize that none of these numbers matter - it doesn't matter what they are, better than expected, worse than expected, the Fed can't raise rates * If the Fed could raise rates, they would have already done it. * Yes, they did raise rates in December, they didn't want to raise rates, they did it anyway, and look what happened * Maybe you can think of that rate hike as a trial balloon, but it was the Hindenburg of trial balloons, it blew up, and there's no way the Fed wants to launch another one * The first quarter came to an end yesterday and the U.S. stock market actually managed to gain * It was up about 1%, but the year started off as the worse year in the history of the stock market * Back in February, U.S. stocks had the weakest beginning of the year in the history of the stock market - going all the way through the great depression * That happened because the Fed raised rates * Do you think they want to take that chance again? * Why did the market recover?  Because people then believed that the Fed was not going to be raising rates, in fact, the weakness in the market is one of the reasons they believe that * So the market going down helped the Fed to change its tune, enabling the market to go back up * Now they're not going to take another chance to have to save it again * Next time it goes down, it keeps on falling * Beneath the surface, there was a lot of carnage in the market - there were a lot of stocks that got taken out and shot * Some big hedge funds had horrible results in the first quarter * Hedge funds were on the wrong side of so many macro trades this quarter * For example, the U.S. dollar had its worse quarter in over 5 years * You remember, that was one of the most crowded trades out there at the end of last year * Everybody with a hedge fund was long the dollar and short the euro, short the yen, short the aussie, short the Canadian, you name it they were short * Some of these guys were short the Chinese yuan - the yuan had a pretty good quarter - the strongest quarter in 2 years * Everybody who was long the dollar and short another currency got killed in the first quarter * The only people who lost more money than the ones shorting were the people shorting goldPrivacy & Opt-Out: https://redcircle.com/privacy

* All the talk last week in the financial media was the fact that several Federal Reserve officials had given speeches somehow putting April back on the table as a live FOMC meeting, where the Fed might raise rates * In fact, even earlier this week, even yesterday, an official from the Federal Reserve Bank of San Francisco commented that the Fed should continue with rate hikes because the economy is strong and the data is on target * I did not buy those comments for one second - my last podcast was titled, "Fed Bankers Bark But Won't Bite", and my commentary was titled, "Two Down and Two to Go" meaning that the Fed had already dispensed with two of the 4 rate hikes telegraphed for 2016 and they would take the other 2 rate hikes away * So, as everybody else was anticipating rate hikes, I was saying, not only are they not going to raise them in April, they are not going to raise them at all in 2016 * What happened today? Janet Yellen gave a speech to the Economic Club of New York, one of the most dovish speeches, if not the most dovish she has ever given * As a result of the speech, the price of gold was up about $20 on the day; we closed above $1240 * In fact a couple of days ago, we had gotten nearly down to $1200 * That shows you the strength of this bull market in gold, despite the talk of a rate hike in April, and despite the rally in the dollar, gold held its position above $1200 * To me, that's very bullish, the question when will all the bears throw in the towel? * Goldman Sachs is still looking for gold to hit $1000 - $900 * They're still looking for a strong dollar and a bunch of rate hikes * Although Goldman Sachs is not as bearish on gold as Harry Dent * Harry Dent called for $700 gold when I debated him on Friday's Alex Jones show * That was a good debate, and you can check it out on my YouTube channel * The dollar was down across the board today * The dollar index barely held on to the 95 handle, it closed at 95.15, off not quite a full percentage point on the day * Aussie dollar very strong on the day, up 1.4% * New Zealand dollar was the big winner on the day; that currency was up a full 2 percentage points on the day against the U.S. dollar * The Dow Jones liked the dovish news coming from the Fed; up just under 100 points * One of the reasons it wasn't up more is because of the financials in the Dow weighing it down * The NASDAQ was up 79.8 - that's a 1.7% increase * The NASDAQ was standing still compared to the gold stocks - the GDX up 5.77% * The GDXJ, the juniors, were up even more - about 6.3% today * That's where the action was and I think it will continue to be, based on Janet Yellen's Dovish remarks * I still don't think the conventional wisdom appreciates the extent of these dovish remarks * Let me go over her remarks; she started with a pretty upbeat assessment on the economy * She said the labor market is looking good, consumer spending is looking good, the housing recovery continues - she went over all these positives * She did list some minor negatives: Manufacturing and Net Exports, but she blamed all that on the strong dollar * She did also mention that capital spending and business investment was lackluster, noting in particular weakness in layoffs in the energy sector * But overall she was still upbeat on the economy * In fact, she admitted that the Fed's assessment of economic growth, inflation, and unemployment were exactly the same on December 2015, when they raised rates, and in the March meeting,Privacy & Opt-Out: https://redcircle.com/privacy

* The markets are closed on Good Friday, the markets are closed, but I did want to take time to record this podcast * Some people were wondering why I didn't do a podcast on Wednesday, the day we had a big drop in the price of gold * Believe me, I love doing podcasts, when the price of gold goes down, because I know a lot of people who are interested in gold want to know what my thoughts are on a day that it happens to go down * As it turns out, I did have an interview on CNBC Fast Money, and my comments are available on that interview, posted on my YouTube channel * Gold was down about $30 on that day and declined further yesterday * Silver was down as well * Gold is still holding above $1200 and gold is still positive on the year, not so for the U.S. Stock Market, which slipped back into negative territory this week * Not only was gold weaker but the dollar was considerably stronger, and commodities in general, like crude oil, copper - also went down * So what was the catalyst? * You might say maybe it was because gold failed to rally on the news of the terrorist attack in Belgium * News of this kind often triggers a knee-jerk reaction to buy gold, but the rally really wasn't that big, and when a market doesn't rally on good news, it generally means it is over bought, or  it's ready to go down * To me, however, that was a non-event, as far as gold is concerned * I don't buy gold because of geopolitical instability - that has nothing to do with my strategy * The real reason to buy gold has to do with inflation, and the central banks creating it, artificially low interest rates, negative interest rates and Quantitative Easing * It has nothing to do with terrorism, except to the extent that terrorist attacks lead to more government spending that is not supported by taxes which means more money printing, more inflation and bigger deficits * In the long run, it is good for gold, but in the short run, it is just a bunch of noise, but traders can certainly jump on these events as a reason to buy or sell and read things into a lack of movement, assuming there is a fundamental reason in the gold market, when there's not * The more significant factors that hurt gold were comments by several Federal Reserve officials, to the extent that April is now considered a "live" meeting, meaning that they still might raise interest rates * These comments are coming less than 2 weeks after the official March meeting, where the Fed could have raised interest rates, but didn't * Not only did they not raise interest rates, they went out of their way to diminish the markets' expectations of future rate hikes * So that after the March meeting, people who thought the Fed was going to raise rates 3 more times, revised expectations to at most 2, but a lot of people are starting to expect no interest rate hikes at all * It was a very dovish press conference following the release of their statement * So now, a week later some of the same guys on the FOMC saying, "We might raise rates in April" * If you're thinking about raising rates in April, why were you so dovish last week? * And if you are going to raise them in April, why not raise them in March * None of this makes any sense, especially looking at the economic released since the Fed decided not to raise rates in March, and in general, it's been weaker expected * So if the Fed is being given weaker than expected economic news, after they said they wouldn't raise rates, why would they now be raising the spectre of a rate hike coming up next month * Is this some kind of trial balloon? * I think the Fed is losing even more credibility when they're so schizophrenic: t...Privacy & Opt-Out: https://redcircle.com/privacy

* Before I get into the economic news of the past couple of days, the big event today was the terrorist attacks in Belgium and I want to offer my condolences to the people of Belgium and also on behalf of my listeners from the U.S. and all over the world * This will probably work to the benefit of Donald Trump, who didn't waste much time in capitalizing on the event * We do have a couple of primaries today, Arizona and Utah * In Arizona, Trump is well in the lead - it's a winner take all state and today's news will probably solidify Trump's lead there * The wild card will be the Utah primary where Donald Trump is in last place. Mitt Romney didn't endorse Cruz, but said a vote for Cruz is a vote against Trump.  If Cruz gets less than 50% of the votes, however, the delegates would be divided proportionately. * Not much action in the market - Gold spiked up on the news of the Brussels attacks, and closed up just under $5 * Silver was up earlier this morning, but there's a lot of support building in the silver market * I had noticed that there were some traders shorting silver and buying gold * When gold gets this expensive relative to silver, I wouldn't want to bet that that trend continues * I would say, if you like gold, just buy gold, don's short silver, because you could turn a winning trade into a losing trade * The big action in the currency markets was in the British Pound * The Aussie and the Canadian dollar continue to rise against the U.S. dollar * European currencies were a little bit weaker, but the main weakness was in the British pound * One would think, wouldn't the euro be hurt more than the pound, by the terrorist attack? * Traders believe that the attacks will increase the refugee problem, which is at the core of Great Britain's possible exit from the European Union, and the pound is falling on that speculation * Most of the economic data that came out yesterday and today was weaker than expected * They were expecting a bounce in the Chicago Fed National Activities Index and instead of a +.25, we got a -.29 * They did increase the positive number from +.28 to +.41, so the February decline is actually more dramatic * Bigger miss that came out was in Existing Home Sales; it was a 7.1% drop * That's the biggest drop in 6 years, and the 3rd consecutive month of declines * The problem they're pointing to is high prices * Imagine what would happen if the Federal Reserve were to raise interest rates 2 more times * If the Fed were to raise interest rates, what does that do to mortgage rates? They go up also * When home sales are falling sharply because they're unaffordable even with record low mortgage rates, what happens to affordability when mortgage rates go up? * How does the Fed increase interest rates when they are already not low enough to sustain the market, even at rock bottom? * They're also pointing to lack of inventory as a culprit, but there are no buyers at these prices * The only thing keeping these overpriced homes affordable is the artificially low interest rates, courtesy of the Fed, and the government, through Fannie Mae, Freddie Mac and the FHA *  Another problem is the lack of viable jobs in this economy * Also this morning we got the PMI Manufacturing Index - expected to improve on last month's 51, dangerously close to the borderline between expansion and contraction * We did improve but only to 49.5, a full one point below expectations * The one outlier of the week, was the Richmond Manufacturing Index - last month, February, was -4 and the consensus expectation was 0 for this month * We ended up getting +22 - this was the biggest beat ever and the highest number going back to 2012 * The number is so high it looks suspicious to me - i...Privacy & Opt-Out: https://redcircle.com/privacy

* Happy St. Patrick's Day everybody and to those of you who have been waiting since yesterday for this podcast, you won't be disappointed * Yesterday I did an interview with Liz Claman at Fox Business News and I did respond to the Fed's decision.  That video is up on my YouTube Channel. *  The Fed did not raise interest rates, which didn't surprise a lot of people, but what did surprise a lot of people was the the Fed indicated, based on their Dot Plot, the consensus is that the Fed now sees two rate hikes coming in 2016 * If you recall, at the end of last year and earlier this year, the Fed was still projecting 4 rate hikes in 2016 * What I said from the very beginning is, "No chance." * In fact I still thought it was more likely that we'd get a rate cut * Now it's two down and two to go, because now the Fed is only pretending that they will raise rates twice this year instead of pretending that they're going to raise rates 4 times * What's really interesting now is how the Fed is starting to lose credibility that it never should have had * Steve Liesman asked Janet Yellen a good question: He said, what about your credibility - you said you would raise rates 4 times and now it's 2 times, and you said you were data dependent and unemployment is below 5%, creating 200,000+ jobs per year and the core CPI is up 2.3% * He said, if you're not raising rates now, under what circumstances will you raise rates? * Janet Yellen didn't really answer the question, but I thought she was thinking, "Don't you understand, we never intended to raise rates." * I pointed this out from the beginning: The Federal Reserve never said that they would raise rates 4 times. They said, based on our economic forecasts, this is what we think is going to happen - BUT if we're wrong, it's not going to happen * Janet Yellen said to Steve Liesman, "Look, these dots don't mean anything - this is what we're thinking at a moment in time, but it's not a promise." * For some reason, everybody assumes that if the Fed thinks the economy is going to get better it will get better, in fact, if anything, since the Fed's track record is so horrific, if the Fed thinks the economy is going to get better, it's probably going to get worse, and so they are not going to raise interest rates the way they're pretending * One of the reasons the Fed is pretending that the economy is good is because that's the official line of the Obama Administration: "The economy is good, and if you say it's not good, you're peddling fiction." * Yellen probably wanted to say to Liesman,"Steve, we're not raising rates because the economy is lousy." * The fact that they don't raise rates is the proof that they know that the economy is lousy, but they don't want to say it, so Janet Yellen is saying "Read between the lines" * When I'm listening to all the coverage about the fact that the Fed didn't raise rates, the reports say,"Janet Yellen chickens out", "Janet Yellen gets cold feet" * That's not the point.  Her feet were always cold. The Fed never intended to raise rates. * If they were planning to do it they would have done it * This is all part of the extend and pretend charade * In fact, in my Fox Business News interview with Liz Claman, I was debating Andy Brenner who holds that the Fed will raise rates 2 or 3 times this year * I said, "If the Fed was going to raise rates, they should have raised them yesterday." * Brenner responded that the market wasn't prepared for it * I said the Fed is not supposed to be market dependent, it is supposed to be data dependent * The market may never be prepared to raise rates - look at what happened the last time, the market got off to the worse start in the history of the market Privacy & Opt-Out: https://redcircle.com/privacy

* We have some key primary elections coming up tomorrow and I want to take an opportunity to do a podcast on Donald Trump and the Trump phenomenon * A lot of people are under the impression that I am endorsing Donald Trump because I have said some positive things about him and his campaign * But I want to make it clear that I am not doing that * I am not convinced that he is going to be a good President, although it's possible that he could * I think there's no chance that Hillary Clinton would be a good President, that's clear * Donald Trump is a wild card * I do have a lot of problems with much of what Donald Trump says * What is more telling is that he has so much support because he is tapping into a vein in the Republican Party, in fact, outside the Republican Party because he is getting Independents and Democrats to cross over and vote in Republican primaries because some people find his message so appealing * The country is in much worse shape than the media or the Federal Reserve or Congress are leading people to believe * Everybody keeps talking about the recovery, especially President Obama, but the people who are showing up for Trump at these rallies know there is no recovery * In fact, the economy is in even worse shape than even Donald Trump recognizes, but at least he is talking about the enormity of the problems * He's right - America isn't great. There are a lot of people who are in denial * They say we don't have to make America great again, because it's still great * No, it's not * Based on any measure, the U.S. economy is far from its greatest * Donald Trump recognizes that American has lost her greatness and he wants to restore it * Voters want to make America great again and they believe Donald Trump can do it * Donald Trump probably believes he can do it and that is part of the problem, because he can't make America great again * Only free market capitalism can make America great again and I'm not sure Donald Trump understands this * He believes America is in trouble because we're run by a bunch of idiots, by incompetent people who are in charge of the country - and he's right about that * They are incompetent, but just changing the politicians, having more competent leaders is not going to make America great again * If we have big government, it doesn't matter whether Donald Trump is in charge or the current crop of politicians * There is no way to make big government work * Smarter people at the helm won't steer this massive ship any straighter * Donald Trump believes that because he's successful in business and he's built a high net worth that he can run the U.S. government and make it profitable for American citizens * He thinks he can get in there and get rid of the waste, fraud and abuse and we're going to negotiate better trade deals and this is going to bring our jobs back, and America will be great again * None of that is true * We don't need better negotiators.  We don't need trade deals. We just need free trade * The problem with trade deals is that they're not free - they're managed * There are all sorts of nonsense in these agreements * The fact that the U.S. has these huge trade deficits, and the fact that we're losing all our high-paying manufacturing jobs is not because we got outsmarted by the Chinese in negotiations * Our trade deficits are a symptom of the problem - they are not the cause of the problem * The reason we have deficits with everybody is not because we have bad trade deals * It is because we have too much government * Even if Donald Trump is the leader of that government, he's not going to make it work any better * What he needs to do is to talk about how he is going to dismantle governme...Privacy & Opt-Out: https://redcircle.com/privacy

* Mario Draghi at the ECB fired his big bazooka today; people had anticipated that that would be the case * In fact, it seems like he fired a bigger blast than people were expecting, he announced that he would reduce negative interest rates further * They moved from -.3 to -.4 and he announced an expansion of their quantitative easing program from €60 billion per month to €80 billion, which means that their program is not larger than the Fed's; remember we were doing $85 billion a month before we tapered it down * So what the ECB is doing is closer to $90 billion * The problem for the market is that even though he fired a bigger blast than the markets had anticipated, after he fired it, he put that bazooka back in his holster * What I mean by that, is at the end of his press conference, Draghi mention that he thought that this would probably be the last cut, that -40 is as low as the ECB is going to go * Now maybe the market was just looking for an excuse to reverse, but the Euro, which had initially dropped sharply, about 1.5% down on the day, following the initial announcement, reversed and ended up falling about 2%, so it was a 3.5% reversal, and from what I've read, this is the biggest reversal, ever in the euro, from down to up * In fact the dollar index went through 4 handles, at its highs this morning, the dollar index was at 98.5 and at its lows it was trading at around 95 * Many people think this is a failure for the ECB; they want a weaker euro, because they want more inflation * I think the ECB is going to get more inflation, whether the euro weakens or strengthens against the dollar, because it's still going to weaken in real purchasing power * Just as I mentioned in yesterday's podcast, referring to the Reserve Bank of New Zealand, Mario Draghi is saying that he doesn't have enough inflation, and interestingly enough, Draghi is going to get more inflation, and more than he's bargaining for * He mentioned in his press conference that these things take time, because it will take time for inflation for develop because first we need the recovery to regain traction, as if inflation is a by-product of economic growth - it's not. * It's a by-product of all the money printing * It's just that right now, a lot of that money printing is in the financial assets * But all this QE and negative interest rates are not going to get economic growth * Now maybe the Eurozone economy will grow, but it's not because of QE, it's despite QE * In fact, there would be more growth, if the ECB wasn't doing this, what they are doing is counter productive * But ultimately they will succeed in getting more inflation, in fact they will get more than they bargained for * I predict that prices in the Eurozone will not only hit the 2% target, it will exceed it, and that will mean the ECB is going to have to quickly withdraw that stimulus, they will have to raise rates much faster than they thought and much higher than they thought, but at least they'll do it * We can't. that's the big difference.  Europe can afford higher rates, America cannot * Europe is going to have the Bundesbank pressuring the ECB fight that inflation; there will be no such pressure on the Fed from the United States * Normally, too, when the ECB eases, gold goes down and that was the knee-jerk reaction, as soon as the announcement came out, the price of gold dropped about $15, but it reversed very quickly and it ended up finishing up $19 * We're talking about a $35 intra day reversal, in fact, the low was below $1240, but ever since the price of gold closed above $1250, it has never closed below $1250 * This is the highest close of the year, it's the first time I've see gold close above $1270 * Gold stocks closed at their highs of the year,Privacy & Opt-Out: https://redcircle.com/privacy

* So far it's been a pretty light week but what little economic data that has been released is bad, and all of it evidences the recession that nobody wants to acknowledge * Let's start with the Consumer Credit numbers that came out on Monday.  Not only was the number extremely weak, but the revisions to the prior month were even weaker * The initial report for the growth in consumer credit in December was $21.3 billion * Now I don't think growth in consumer credit is good; I think it undermines long-term living standards * The last thing you want to do is borrow money to consume, one of the points I really hammered home in my book, "How an Economy Grows and Why it Crashes" * If you haven't bought that book, you should get a copy * Be sure to pick the collector's edition because, in addition to being a really beautiful book, it has two entirely new chapters.  If you already have the original one, buy the collector's edition and give the original away to a friend. * Consumers should not borrow to consume.  They should save to consume. * Businesses should use our savings to invest in capital equipment to grow the economy * When you consume savings, you undermine long-term economic growth and therefore future consumption is diminished * The problem is we're living in a bubble, and in order to sustain this bubble economy, consumers have to keep spending * In this economy, however in order to keep spending they have to keep borrowing because they're certainly not earning, and they don't have any savings *  This has to blow up eventually but right now, it's all about keeping the music going * Consumer credit was revised down from the originally reported $21.3 billion to just $6.4 billion of growth * They were looking for January to grow by $16.5 billion, and of course, this also includes student loans, as well as credit cards * Instead, we got an increase of just $10.5 billion * Consumer credit growth imploded in December and January * If there's all this job creation why aren't these newly-employed people spending money? * This shows you the jobs are going to people who already have part-time jobs, and need to supplement hours and wages * Also, we got the Small Business Optimism Index, which last month was 93.9, and there was an expectation that it would increase to 94.2, that small businesses would be a little more optimistic, yet it dropped a full point to 92.9 - the lowest level in 2 years * If that is the case, why are they hiring people? * The type of hiring that is going on is hiring part time workers to replace full-time workers * Which brings me to the data that came out today: Wholesale Trade * Inventories were expected to drop, but they increased by .3% * And the inventory for December was revised from -.1 to unchanged * The reason inventories spiked is because sales collapsed * The inventory to sales ratio just hit a new high, at 1.35 * This is a 7-year high. The last time the inventory to sales ratio was this high was in April of 2009.  We were still knee-deep in the Great Recession * If this recovery even exists, why isn't the merchandise being bought? * At some point this year, the lone remaining bright spot in this horrible economic landscape - the number of jobs being created - will turn down * We got more disappointing corporate earnings news this week * The reason the stock market is moving slightly up is because of the sentiment that the Fed will not raise rates in the near future * It's not just the stock market - Oil is above $38/barrel * Also some of the industrial metals have had huge spikes * And of course, the dollar is going down against other currencies * The Australian dollar hit an 8- month high Privacy & Opt-Out: https://redcircle.com/privacy

* The media, the Federal Reserve and President Obama continue to ignore the overwhelming evidence out this week, in fact every week for the past couple of months that the U.S. economy has already slipped back into recession * The last revision to Q4 GDP showed the economy grew by 1% for the quarter, but remember, the government never acknowledges a recession  until it's practically over * The Great Recession started in December of 2007 but it wasn't until the fall of 2008 that the government finally went back and revised the numbers down to show when the recession actually began * Halfway through the recession, the Federal Reserve and Wall Street didn't even have recession in their forecast despite the fact that we had been in one for more than 6 months * What everybody is focusing on are the jobs numbers * We got another non-farm payroll report yesterday and, again, low unemployment, 4.9% and more than 200,000 jobs created * President Obama, as he peddles his fiction of economic recovery, focuses on the fact that the unemployment rate is  low, and we're creating all these jobs, proving that his policies are working * He's trying to take credit for a recovery that doesn't exist.  Let's look behind the numbers of yesterday's better than expected jobs report * First of all the headline number: how many jobs were created? The consensus was 190,000 and we got 242,000 - a big beat * Not only that, last month's number up to 172,000 * The unemployment rate held steady at 4.9%, still below the psychologically important 5% * Here is a detail that President Obama didn't mention at all: average hourly earnings were expected to rise .2% and that followed the big jump last month of .5% * If you remember, on my video blog last month I said that was a one-off event * That increase was the result of all the minimum wage hikes that kicked in in January * I said that number would reverse by February and that's exactly what happened * Instead of getting an increase of .2%, we got a drop of .1% * That is the first time that's happened since December of 2014 * It is very rare to get a decline in average hourly wages, because prices keep rising * In the last 10 years this has only happened 6 times * In addition to the drop in earnings, hours worked actually declined from an average of 34.6 hrs to 34.4 hrs * When you take into account that Americans earned less per hour and worked fewer hours you get a total drop in weekly earnings of .7% * That is the biggest drop in weekly earnings as far back as they've been keeping records * Is this something that President Obama wants to accept responsibility for? * Here's some more information that we're not getting: * I've said for a long time that the reason so many jobs are being created is because we are transitioning from full-time employment to part-time employment * That is where all the jobs are coming from * According to the household survey, 88% of the jobs created in February were part time jobs * That means only 12% of that big 240,000 number were full time jobs! * If you look further beneath the surface at the type of jobs, you'll see that 80% of those jobs were in low-paying service sector jobs, many of them being minimum wage * We actually lost 17,000 manufacturing jobs * We lost mining jobs * We lost logging jobs * We lost high-income jobs that provide benefits to American workers, and we replaced them with low-paying part-time jobs without benefits * That is why you have so many people showing up for Bernie Sanders or Donald Trump Rallies * They are hearing about a recovery, but they are living in a recession * Let me get to some of the numbers that nobody paid attention to: Privacy & Opt-Out: https://redcircle.com/privacy

* The Dow finished the last trading day in February, with a 123-point decline, in fact the Dow Jones closed at the low of the day; the NASDAQ was down 32.5 points * Gold reversed the declined from Friday, it was up $16.5 today it's up another $2.50 as I record this, we're now back above $1240 * The reason gold declined on Friday was that the rate hike was apparently back on the table because of some stronger than expected Q4 GDP numbers and also the consumer income and spending numbers were hotter than expected * If you remember, I thought Q4 GDP would be revised down from .7%, in fact the consensus was for a downward revision to .4%; as it turned out, the government moved it up to +1% * The reason for the adjustment was that inventories were not draw down as much as was originally thought, so I suppose that will happen in 2016 Q1 * In fact, the Atlanta GDP has already walked down their estimate for Q1 a bit, since that number came out. * I don't think it really matters with the government says Q4 GDP was, because before the year is over they will revise that quarter negative because they will have to admit that the recession began last quarter * They always declare a recession after the fact by going back and revising down the data * We got the January trade deficit in merchandise that actually came out bigger than expected;  $62.2 billion vs $61 billion - that's a lot of red ink for merchandise trade in one month * What also spooked the gold market was the income and spending numbers - hotter than anticipated - personal income up .5 vs .4 expected, spending also up .5 vs .3 expected * The core CPE numbers, the inflation numbers were hotter also; instead of being unchanged, were up .1 * Year over year, we were up 1.7 on the core and 1.3 overall * The idea was that these numbers indicated that the rate hikes are back on the table * I don't think so; especially when you look at the horrible numbers that came out today * First is the Chicago PMI for February. Last month was 55.6, they were looking for 52.9; we got 47.6 * If you look at some of the sub-components, including employment, this was the weakest Chicago PMI since the great recession of 2009 * Privacy & Opt-Out: https://redcircle.com/privacy

* The rally in the U.S. stock market continues, the Dow closing up more than 212 right at the high of the day * It's not just the Dow Jones that is rising, and by the way, this is the highest the Dow Jones has closed since early January, so it's better than a one month high * Oil prices closed above $33/barrel for West Texas, again that's the highest level since early January * The dollar is weak across the board, in fact the Canadian dollar hit a 3-month high today against the U.S. dollar - this currency has really been beaten up until recently * Gold, higher again today, up about 4 or 5 bucks, it closed above $1232 * What is behind the rally? I think it is the deluge of bad economic news that keeps raining down on this market * I believe more and more people are beginning to realize that the Fed is not only not going to be raising interest rates in 2016, but they will cut them, and do another round of economic stimulus and that's is what is saving the market * The question is, with the Fed actually validate those expectations? * Even Jim Cramer of CNBC can see there's a recession * I just put up an article on my Facebook page yesterday, Cramer is saying the Fed is blind and can't see the recession * Maybe Cramer has been listening to my podcasts... * Do you remember the famous interview with Jim Cramer and Erin Burnett that went viral and he went on a rant about the Fed, "They know nothing!" * You've got Cramer calling out the Fed for not appreciating the weakness in the economy and calling on them to do something * I think they are going to do something, they're not just going to turn a deaf ear to the economy * But the Fed is still officially sticking to the party line * Today I wanted to talk about the CNBC interview with Jim Bullard * First, he told Matt Belvedere he was concerned that "inflation expectations" were too low * Of all the things you're going to worry about as a central banker, you're going to worry about the fact that people don't expect enough inflation? * Historically that would be a victory - that's what you want as a central banker * You want to stamp out the fear of inflation * What Bullard wants is more fear - he wants people to expect even higher inflation than they currently experience * Why would he want that? * Supposedly the lack of belief that inflation is going to be higher is somehow holding back the economy * Bullard believes inflation is going to be higher; why is he upset that the public doesn't believe it, too? Why? * How does the expectation of higher inflation help an economy? * The only thing that's good about inflation is if you're a debtor; if you borrowed money, inflation will help ease the pain of that debt * You would figure the last thing the Fed would want is for people to expect higher inflation, because what would happen to bond holders? * Bond holders would not want to hold bonds at low rates; they would demand higher interest on those bonds, which would crush the government because they don't have the money * It would also crush the Fed, because the Fed's balance sheet is loaded up with long-term government bonds that yi...Privacy & Opt-Out: https://redcircle.com/privacy

* We had some wild swing in the market today, particularly the stock market and the gold market * At one point this morning, the Dow Jones was down about 270 points * It finished the day up 53 points * There wasn't any real news that caused the market to go up; people were buying the dip * The oil market also turned around; it was down a buck and change and managed to close up .20-.30 * Gold was the mirror image; gold was up at one point to $27-$28, back above $1250 * Then when the stock market rallied back the gold market sold off * It managed to closed with a small $3 gain or so * Gold stocks closed the day mixed, most still positive on the day * The reason why the stock market falling is positive for gold is the effect that a falling stock market is going to have on the Fed, and its decisions on future interest rate hikes * Even if the stock market is not going down, the Fed will still reverse on rates because of the economy * The economy is back in recession, whether the Fed wants to acknowledge the fact or not * We had another Fed official, Richmond Fed President Jeffrey Lacker, actually came out saying he sees no signs that a recession is imminent * He sees no reason why the Fed should not go forward with the planned rate hikes for 2016 * Maybe rose-colored glasses are standard issue over at the Fed * There is ample evidence that there is a recession * However, if someone of Lacker's stature would come out and say, "Look, we're going into a recesssion, but rates are really low and the Fed has to raise them anyway, and this is going to be difficult." That would be honest. * But the Fed is saying they are going to raise rates because the economy is in great shape * To do otherwise is to admit that the Fed's monetary policy failed * The Fed is playing a very dangerous game * Not only do they risk making the economy worse, they risk their credibility * Here is some economic news that came out today, after Lacker's speech * At 9:45 am we got the February PMI Flash  Services Index * Last month, the number was 53.7 and this number was expected to repeat for February * The February number came out at 49.8! This shows that the recession is not contained to manufacturing * This reminds me of what they said about sub-prime: "Don't worry about it, the recession is contained to sub-prime." - That was nonsense and it is nonsense now * The problems in the economy are not contained to manufacturing, and today's numbers prove it * The service sector contracted in February * The last time this happened was in October of 2013. That was during the government shut-down, so a lot of government services were not available * That's an outlier - if you take that out, the last time we had a service sector PMI below 50 was during the great recession * So again, another indicator flashing recession * It's amazing to me that the Atlanta Fed still hasn't walked down their 2.6% forecast for Q1 GDP *  We've gotten so much bad news since the good news that prompted that forecast yet they've done nothing to downwardly revise their estimate * The FOMC might have said, "Hey, Atlanta, get with the program! We're talking up the economy - stop coming up with these negative forecasts." * On Friday, we're going to get the revised Q4 GDP numbers, which was originally reported as +.7 * I think it will be revised down, in fact the consensus is a revision down to .4 * So we're getting closer and closer to zero * The numbers we're getting for the first quarter could be worse, despite the Federal Reserve's rosy scenario * Also we got New Home Sales, which was a disaster; they were looking for 520,000 and we got 494,000 - that was a big,Privacy & Opt-Out: https://redcircle.com/privacy

* It looks like Jamie Dimon's bottom turned out to be the trap door I thought it was, with the Dow Jones today down almost 190 points * The market was let lower by the financials, JP Morgan itself down better than 4% * Remember it was Jami Dimon having the confidence to put a year's salary into company stock that sparked this rally, but it seems to be losing steam and rolling over * Because we're not going to get a lasting bottom until the Fed makes that bottom *  It's not going to be a Jamie Dimon bottom, it has to be a Janet Yellen bottom; and as much as I have no interest in seeing Janet Yellen's bottom, that's exactly what we're going to have to do to get a real low in this market * Every single decline that the market has experienced since 2009, the bottom has been set by the Fed * It's been the Fed forming that bottom by coming to the rescue with rate cuts, QE programs, Operation Twist, hinting about more QE, and so far, the Fed has done none of that * The Fed is still sticking to its narrative that rate hikes are coming * Yes, nobody believes they're coming anytime soon, but that is still the official forecast * Meanwhile, the markets can't even deal with rates as is * The gold market will be the mirror image of the stock market; gold was up about $16 today * It reversed a near $20 decline yesterday, but it consolidating its huge move above $1200 * So we are not getting the pullback that Dennis Gartman and Jim Cramer are hoping for to get on board * I think if people want to get on board this train, this is the stop. * If you like gold, just buy it and be happy that you're getting it for $1225 - yes, you could have bought it below $1100 in December, but $1225 is still cheap * The most interesting about yesterday's drop in gold - the gold stocks didn't really decline * Most of the gold stocks finished positive on the day * Gold stocks added to their gains today, and many are sitting on their highest close of the year, and several are at 52-week highs * Other than the gold stocks, the 52-week high list is pretty short * The 52-week low list looks like a rap sheet * Something happened on Friday that made some people believe that help from the Fed is not forthcoming * Which may be part of the reason why the markets are declining * The release of the CPI number caught a lot of people by surprise: January consumer prices, forecast to drop by .1% * The real number was the core rate, which excludes food and energy was up .3, month over month - the biggest jump since August 2011 * The increase in the core price year-over-year was 2.2%, the biggest increase since June of 2012 * Remember, the Fed says our target is 2%, well, we got 2.2! * We're there! We can raise rates! That's what's so scary * I wrote a commentary that is posted on this website, "The Fed’s Nightmare Scenario", and I got that title after reading an article in which an economist who, observing that the CPI was 2.2% announced that this is a"dream come true" for the Fed * He cited inflation as the primary barrier to the Fed's rate increase goals * The Fed's "mandate" of 2% inflation is finally met * First, the Fed doesn't have a mandate of 2% inflation. They made that up. * The Fed's real mandate is price stability, which doesn't require a definition, because everybody knows what the word "stable" means * The Federal Reserve decided to interpret that mandate to mean an increase of 2% * The late U.S. Supreme Court Justice Antonin Scalia was one of the few justices who believed in the "bizarre concept" of original intent Privacy & Opt-Out: https://redcircle.com/privacy

* What a difference two days make! Two days ago I recorded my podcast, "Goldman Sachs Sacks Gold", and that was because Goldman Sachs' comments about shorting gold were partially responsible for the severity of the drop in gold over the holiday weekend * Today, gold is fighting back, at one gold was up better than $30, although as I record this the price has pulled back a bit, still above $1230 - up about $22 on the day * Gold stocks, the GDX index I mentioned in my last podcast, was up 6% on the day, the biggest move up of the year * That index has recovered everything it lost on Tuesday * GDX would have been up a lot more, except that Newmont Mining came out with lower than expected earnings for the 4th quarter; so that stock was only up about 1% after dropping  7% in the first hour of trading * Several gold stocks made new 52-week highs today and several others are at the highest point of this calendar year * A very strong day for gold and gold stocks just a couple of days after Goldman Sachs recommended selling the metal short * People would have been much better off shorting Goldman Sachs * One of the other catalysts for the rise in the price of gold may well have been the comments made overnight by Jim Bullard, president of the Federal Reserve Bank of St. Louis * After I read his comments, I expected the price of gold to rally right away, but it didn't begin until later this morning * Bullard was one of the real Hawks on the Fed, he wanted to raise rates much earlier, citing concern about a stock market bubble * Talk about closing the barn door after the horses have left!  They have left the stables, the property, they're barely on the planet! * His comments last night about why the Fed should slow down the rate hikes are ironic, because his reason is the volatility in the stock market * Let me get this straight: He wants to raise rates because we don't want a stock market bubble; * They raise rates, the bubble is deflating and he wants to stop the rate cuts * You can't have it both ways. * Do you want to use monetary policy to prop up the stock market or not? * Bullard has not turned dove, do who's left? The FOMC minutes came out Wednesday and they showed that only a couple of governors did not show concern over the weakness in the stock market * What really should get the Fed governors nervous is the economy * Today we got the Leading Economic Indicators and last month they were down, in fast the original estimate for December was-.2 - instead, it was revised to -.3 * January is now -.2, so that is the second consecutive month of declining Leading Economic Indicators * That has not happened since August and September of 2011 * Here's the interesting part: QE2 ended in June of that year, so 2 months after the end of QE2, the economic indicators flashed recession * What did the Fed do? In September of 2011, the second month of the back-to-back declines in LEI, the Fed launched Operation Twist * That's what happening now, they just raised interest rates, we got back-to-back declines in LEI, what's the Fed going to do? They are going to come back and save the market * We got more bad economic news today; the Philly Fed, this is the 6th consecutive monthly decline * January was down 3.5%; February was down 2.8% * They were expecting -2.5%, so we got a bigger decline than expected * We got weak news on the housing market; housing starts dropping to a 3-month low, much lower than the 1.175M - instead we got 1.099M * Permits were also light; they were looking for 1.334M and we got 1.202M on starts * I think we are just getting started when it comes to the fallout in the housing market Privacy & Opt-Out: https://redcircle.com/privacy

* The big story of the day was the pullback in the price of gold * Gold was above $1260 last week; it pulled back a little bit on Friday, but the real damage happened overnight on Monday, while we were celebrating Presidents' Day * At one point gold was down almost $50; trading even below $1190 * When we opened up for trading in New York, gold was back above $1210.; it tried to rally, but really couldn't, in fact the only time gold rallied today is when the Dow sold off to +50 from +150 * The stock market and the gold market are the mirror image of each other right now * Ultimately, I do believe that stocks, gold stocks and gold will be going in the same direction because they will all respond positively to the Fed admitting that it will not raise interest rates, and in fact cut them and will launch QE4 * Now, gold is the safe haven from weak stocks, but the best environment is when the Fed steps up to save stocks, and that's when the gold trade is going to catch a bid * But when the market closed on the highs of the day, up over 200 points, that means gold closed on the low of the day * GLD, the ETF for gold, for today's decline, we were down $35.90 * In the spot market, we closed right about $1200 even * A good point: look at the gold stocks, GDX, that index was down 8.65% * In all the big gold up days, we never had a comparable up day for gold stocks * On gold's best day, the biggest day since 2008, gold stocks were just up about 5% * Yet on the down side, a -3% move in gold produces a -9% move in gold stocks * Why is all the movement on the down side? * One, there's still more fear than greed in the gold market * This is a good sign - a bull market climbing a wall of worry * This is just a resumption of a long-term secular market that began in 1999-2000 * Goldman Sachs rhetoric may in part be responsible for the sharp selloff * I mention on last week's podcast that Goldman was recommending a sell on gold, that it was going back down to $1000 * On Monday, while the market was having a holiday, Goldman Sachs was out with their PR again, not only telling people to sell gold, but to short gold * Why would Goldman Sachs be telling people to short gold? *  Why would they bother with a 20% short when there are so many stocks being killed right now that would be much better to short * Gold will never be worthless, what if it goes up? Why risk losing all that money? * The risk/reward isn't there * Goldman says they don't think there will be a recession and the Fed's going to keep raising rates * They admit there is a small chance of a recession this year: what's going to happen to gold if we go into recession? * What happens if you have shorted gold, hoping to capture just 20%? * The only thing that would make sense to me is that Goldman Sachs wants the price of gold to go down because they're probably already short - that's whyPrivacy & Opt-Out: https://redcircle.com/privacy

* Big day in gold today; gold broke over $1200 for the first time in almost over a year, in fact we hit a new 1-year high * I saw gold trading above 1260 at one point in the morning, that was up better than $60 on the ounce; It closed up 49.10, I believe at $124.90 * Remember, I was on CNBC "Futures Now" earlier in the week and gold was around $1180-$1190 and they were trying to press me on where I thought it would go, and I said, it's going to go higher, I'm bullish in the short term, the medium and the long term * But I'll tell you one thing: when gold brakes through $1200, it's going to move to $1300 very quickly and people are going to be surprised * It's just been one day and we're halfway there * Gold stocks still reflect a lot of skepticism on this rally; Gold stocks were up about 7% on the day * Gold stocks have a long way to go to catch up * I mentioned on the last podcast, Dennis Gartman, who got bullish on gold, told people not to buy, he said wait for a pull back * Well the people who are waiting f or a pull back are still waiting and they missed this entire $50 move * The stock market was the mirror image of the gold market today; at one point, with less than an hour to go, the Dow was down 400 points again, the NASDAQ was maybe down about 60 * Then all of a sudden there was a rumor floated that the United Arab Emirates was considering meeting with other OPEC nations about a production cut and all of a sudden the market rallied * The NASDAQ actually rallied positive; the Dow got to  about -170 and then they rolled over on the close, Dow down 254, NASDAQ down 16.76 - horrible close * Of course the weakest stocks on the day continue to be the financials getting decimated to new lows * Goldman Sachs down about 4.5%,  Morgan Stanley down 4.5%, Bank of America down 6.8% - many of these companies making new 52-week lows * But outside the financials, the debacle du jour, in the stock market is Boeing, which is a Dow component, was down 7% on the day, near a 3-year low; the lowest I saw inter-day was -12% * The news is that the SEC will investigate their accounting practices - that can't be good * Also they reported that they are going to be laying off workers in an effort to contain their costs * It's not just about bad oil loans, that's part of the story, that's just the tip of a huge iceberg * In fact, the market rallied because of the rumor of OPEC is making moves to support oil prices * We hear people saying that what the stock market needs is higher oil prices.  No we don't! * Higher oil prices will help oil stocks, but they're not going to help the overall market market because some guy writes an algorithm that runs a program that says, "Buy stocks when oil goes up" * Steve Liesman said on CNBC recently that he never would have believed the market would be so dependent on oil prices * A lot of people make that mistake, assuming that oil is driving the stock market but the same factors are dominating both:  fear of higher interest rates and weakness in the U.S. economy * But eventually, I think oil prices will go up, and the stock market will continue to go down * Many people are hopeful that Janet Yellen's second trip to Capitol Hill, this time talking to the Senate, might save the market; apparently that was not the case * Janet Yellen, this time, in the Q&A was closer to admitting that negative rates are coming * She actually said they would consider doing it if the economy needed it * All the discussion is going straight to negative rates and skipping over zero interest rates and QE * There was no discussion about reversing December's .25 rate hike * If Janet Yellen is thinking about negative rates, she has ready considered zero rates and QE Privacy & Opt-Out: https://redcircle.com/privacy

* Janet Yellen was up on the Hill today for the first of her two-day testimony before Congress * Remember I said the only way that Janet Yellen could stop the market from falling is to admit that the Fed will alter its 4-rate-hike trajectory for 2016, and she didn't do that * As a result, the stock market failed to sustain its early morning gains; the Dow was up better than 100 points - closed near the low of the day down 99.64 * The NASDAQ, which was up not quite 100 points earlier in the day closed on the low of the day, up only about 14 points on the day * It was the opposite for gold; gold was actually down this morning before Yellen spoke, down around 1180-ish on the lows; we closed up $8 on the high of the day - $1197 - knocking on the door of $1200 * The gold stocks were clobbered this morning and they closed positive; the gold index was up about 2-2-1/2% - it was down 4% earlier when gold was down but by the stock market opened gold wasn't down $8 anymore, it was down about $2 or $3, yet gold stocks were clobbered * Maybe it's still the overhang from Goldman Sachs coming out yesterday and predicting that gold would fall below $1000/oz in 2016 * That probably means that Goldman Sachs is short a bunch of gold and they want to cover, or they just need to buy and they're trying to convince the muppets who actually pay attention to what they say, to sell their gold to them * Janet Yellen continued with the narrative that everything is O.K. - the economy is fine, the recovery is on track, yes, she acknowledged some headwinds: growth was a little bit slower at the end of last year, but no big deal * There are some problems overseas that they're monitoring , there are some financial tightening: overseas markets are weak, domestic markets are weak, yes the Fed is paying attention to all that * But so far, from their perspective, everything is on track, the recovery is moving along, the labor market is strong, despite the fact that there is no improvement in labor force participation, there's no improvement in the part-time workers who want full-time work, there's no real wage growth other than the bump from the minimum wage hike * But despite all that, Janet Yellen still maintains that everything looks good, that we will overcome these headwinds - this is her most likely scenario * She did acknowledge that monetary policy is not fixed, that the trajectory is not set in stone, that the Fed will monitor incoming data, and if the data evolves in a manner they don't expect, then yes, they might not raise interest rates as much as they believe they're going to raise them * As far as the Fed is concerned, based on the data they have now, their most likely scenario is that everything is fine, which means the market is going to keep falling * It's almost ironic that Yellen would say, "The markets are weak, and if they stay weak then we might have to adjust our monetary policy" - that means the markets are going to stay weak! * The only way to stop the markets from falling is for the markets to know that rates aren't going up * I think it's more than just the absence of rate hikes: this market needs more QE * The Fed dialed back the dosage and the market requires it now, or it will start going down * I was watching a great interview with Jim Grant today on CNBC and he was saying all the things I am saying: he says we're already in a recession; he's confident that it began at the end of last year and he thinks the Fed is going to go back to zero and do more QE, and that they might go negative * Janet Yellen was asked about negative rates in her testimony, apparently the Fed had considered it back in 2010 and they rejected it and she was asked if negative interest rates are even legal * Yellen said to her knowledge there is nothing legally preventing the Fed from going ...Privacy & Opt-Out: https://redcircle.com/privacy

* It was another volatile day in the U.S. stock market, with the Dow swinging from positive to negative to positive to finally closing negative, but well off the lows and the highs of the day * The NASDAQ was only down about 15; the Dow down about 12 points * The real action was in the currency markets: the dollar got clobbered today, a new 4-month low in the euro, 2-year low in the yen, the Swiss franc was probably the strongest currency on the day * The dollar index actually traded in the 95 handle before recovering slightly back up above 967 * Gold, several times flirted with $1200 again, couldn't quite make it there; the highest I saw it was $1198, it didn't touch $1200 * The gold stocks got hammered - they were down about 4% today, I guess the fact that gold could not break through to $1200 caused people to sell gold stocks, even though there was very little selling in gold itself * What I want to discuss on today's podcast is my appearance on CNBC's web program, "Futures Now" * My appearance was promoted on television, although this appearance was actually on CNBC.com * They like to have me on, because I am good for their ratings online * The YouTube video of my appearance is posted on my Facebook page * Go back and look at my last several appearances on Futures Now with Scott Nations, who constantly wants to remind everybody how wrong I am about everything * They have to admit that I was right about several things * When I was on their show the day after the rate hike and also several times before the rate hike * I said I did not think the Fed could raise rates because it would push the economy into recession, cause a bear market in stocks - basically prick the bubble * I did not think the Fed would be willing to put themselves in the difficult position of having to reverse the rate cut and lose credibility * Up until December, I was right.  But even I had started to admit that the Fed might do such a thing by the time they actually did it * Look at what's happened.  It's been a blood bath since they've raised rates * Look at what's happening in the financials - they've lost half their value * Look at gold: I said if the Fed raised rates, Gold would go up- it went up from $1050/oz. the day after they raised rates to $1200 * I said if the Fed raised rates, the dollar would go down and now it's at a 4-month low - Gold's at a 7-month high * Dollar going down, gold going up, stocks getting crushed that's exactly what I said * You'd think they would at least acknowledge that I got something right * But then, you'd be wrong * Host Jackie DeAngelis' introduced me by saying, "Peter Schiff claims he got everything right!" * They are implying that they disagree that I was right about the consequences of the rate hike * In the article on the interview, they misquoted me by saying that I claimed to get everything right. * I did refer back to my published quotes, which clearly state that I thought the market and the dollar would tank and gold would go up if the Fed actually raised rates. * Scott Nations said, "I don't know if Peter Schiff got anything right" * All the forecasts on "Futures Now" I made the day after the Fed raised rates were correct and Scott Nations got everything wrong * The very first thing the host said to me on my interview was that I was wrong, in that I said it was impossible for the Fed to raise rates * I did not say that.  I said it would be impossible for the Fed to raise rates without causing the stock market to go down,Privacy & Opt-Out: https://redcircle.com/privacy

* As I mentioned in my video blog I recorded on Friday,  the jobs data that came out on Friday was just not weak enough for the market * So the markets' carnage continues, because everybody still believes the Federal Reserve may in fact be raising interest rates - the only question is, will it be in March, will it be in June, the markets don't know and so they continue to be under pressure * At one point today, the Dow Jones was down nearly 400 points * The NASDAQ was down about another 150 intra-day * We had one of these last hour rallies, just to keep hope alive so the Dow closed down just 177 points, the NASDAQ down 79 * At the lows today, we were within 1% of a bear market, in the NASDAQ, so technically Wall Street can pretend they are not in a bear market, maybe for a few more days * The same thing is going to happen with the recession - everybody is saying there is no recession, but eventually they will have to admit it * I was reading an article by an economist from one of the bigger banks, who said, there will be some more downside, maybe the NASDAQ will go down to  about 3900 * But, he said, "Don't worry, it's not going to be as bad as 2000 or 2008 because the economy is in good shape and the odds of a recession are very slim." * What would make him think the odds of a recession are slim? All the data is horrible. * Manufacturing is already in a recession; the service sector is contracting rapidly * It has been seven years since the last recession so we're overdue… * The Fed is tightening, raising interest rates, as a matter of fact they've been tightening for 2 years if you understand that the "Taper Talk" was the beginning of the tightening * Plus, we're in a bear market * We often hear, "The market has predicted 10 of the last 5 recessions" * OK, well, the Fed has predicted zero of the last 5 recessions * They always say there's not going to be a recession right before there's a recession, in fact, they have a history of saying there won't be a recession when we're already in a recession * What led the carnage in the stock market was the sell-off in European banks and it was brutal, in fact these big banks are lower than their lows in the depth of the Financial Crisis * The big one is Deutsche Bank had to come out today and re assure everybody that they did not have a solvency problem * All the U.S. stocks hit 52-week lows: Morgan Stanley hit a 52-week low, Goldman Sachs down 4-1/2% - 52-week low, Bank of America down 5-1/4% -  52-week low * These stocks will continue to suffer until the Fed cries Uncle, or Aunt * The ECB can't do it, the Bank of Japan can't do it - negative rates are actually making it worse for the European banks * There is no more stimulus coming from Europe because the stimulus is causing a bigger problem than it is supposed to cure * I've said this many times: bankers in Europe were worried about, "Lowflation" as they see weak oil prices, so now they want to stimulate * But whenever they stimulate, they cause the dollar to strengthen and the stronger dollar further suppresses the commodity prices, threatening more "Lowflation" * The Bank of Japan can't do anything, in fact the yen was up again today a new 52-week high for the Japanese yen, so even though Japan has gone negative the yen is rising not just to a 52-week high, this is the highest it has been since October of 2014 * In Europe they are making the situation worse by easing * Who's left? Janet Yellen will speak to Congress Wednesday and Thursday this week and maybe she'll throw the market a lifesaver this time instead of an anchor * This is exactly what I have been saying would happen - the Fed would prick its own bubble with just a tiny .25 hole and the air has come gushing out Privacy & Opt-Out: https://redcircle.com/privacy

* It really was a brutal week on Wall Street, led by the tech-heavy NASDAQ, which is down about 5-1/2% on the week; 3% of that alone came today, now down about 17% from its high * Not officially in a bear market yet, but getting there * The vast majority of NASDAQ stocks are in bear markets, in fact, many of those stocks are down 40 or 50% or more - a number of those stocks down 40 or 50% today alone * The Russell 2000 is already in a bear market; it's down 24% * Dow Transports also down 25%, and transports were actually up this week * The S&P and the Dow are only down about 12% - in correction but not quite a bear market, but remember, all bear markets begin as corrections, and I think this is just the early stage of a bear market * You can contrast that with what's going on with gold; gold was up 5% on the week.  It added $18 today alone to close above 1170, in fact the price of gold has risen by $120/ounce since the Federal Reserve raised interest rates in December * The dollar also had a bad week, despite rising somewhat today on the jobs numbers, the dollar index had its worst weekly decline since 2009 * So now, the opposite of what everybody expected has happened * Everybody thought the stock market would go up, because the rate hike was proof that the economy was stronger; instead the stock market has tanked, in fact the beginning of January was Wall Street's  worst start to the year in history * In contrast, the expectation was that rising interest rates would help the dollar; instead the dollar has actually declined * Higher interest rates were expected to be bearish for gold; instead it was the catalyst for a huge rally in the price of gold * The weaker than expected jobs report was assumed to be the reason for today's stock market carnage, because we only created 151,000 non-farm payroll jobs and the Street was looking for 188,000 jobs * The reality is not that the report was weak, it is that it was not weak enough * The only thing that could have saved this market would have been a horrible jobs report - a jobs report so bad that an interest rate hike would be clearly off the table * Instead, this jobs report could indicate that the Fed is more likely to raise rates as a result of the numbers * That is why the market went down * No one wants to admit that the only thing holding up this market is the Fed, so they pretend that the market is disappointed by the weakness of the report * Jobs have nothing to do with it - this market has always been about one thing - the Fed and cheap money * Now it hangs on weather the Fed will raise rates again * I believe the next thing the Fed is going to do is to cut interest rates * I think they might even go negative and they going to launch QE4 * The markets have not figured this out yet * Even the Atlanta Fed, whose first estimate of Q1 GDP at just 1.2% (I think this is an over-estimation; I think the Q4 .7% will be downwardly revised) saw this apparently strong jobs report they increased their Q1 GDP estimate by a full percentage point to 2.2% * If the Atlanta Fed thought the jobs report was so strong, why are the reporters assigning blame to the jobs report for the sell-off * If you look beneath the headline number of the miss, on the number of non-farm payrolls, you'll find out what the markets were so worried about: * 1) The official unemployment rate moved down to 4.9% - that's the first time we've had a 4 handle on the unemployment rate since Obama has been President * In fact, he did not waste much time calling a press conference proclaiming the success of his administration and declaring that the U.S. economy is the strongest in the world; quite ironic because I thin we are already in recession Privacy & Opt-Out: https://redcircle.com/privacy

* So far the month of February is just 4 trading days old, and already the U.S. dollar index is down just over 3 percent * We closed January at 99.6 and we closed at 96.5 * Gold, going the other way, now up about $13 today, closing above $1,155; the price of gold is up almost 3.5% in the first 4 days of February * That shows you that most of the move in gold is the result of the dollar going down * This move is just getting started * The markets are just beginning to price in the fact that the Fed is not going to raise rates in March * They are pricing 3, rather than 4 rate hikes this year, and that's the only thing that is not driving the markets * A more realistic look what the Fed is likely to do is to not raise rates, but cut them below zero * Despite that we're seing all this momentum in the dollar and in gold * Gold stocks are just soaring, many of these names have been up 5-10% each day in February * None of this is attracting the attention of Wall Street * A guest on CNBC today alluded to short covering as the reason for gold going up * He commented on how lousy the fundamentals are for these stocks * The fundamentals have never been lousy * They have appeared lousy because there was so much belief that the dollar would continue to rise because the U.S. is having a genuine recovery and the Fed will continue to raise rates * The media and Wall Street are still very biased; I was on CNBC Asia last night debating an American guest who touted the strength of the economy based on the strong jobs market, how household balance sheets are better than ever and real incomes are rising * The only reason homeowners have better balance sheets is because they no longer have a house; home ownership is at a 50 year low * While gas prices are lower, rents, healthcare and most other costs are going up * It was an example of how the public ignores all the bad economic news and assumes that the economy is great * Another writer for CNBC.com attributes gold's rise to low inflation * He actually said that my explanation about the economy slowing with inflation did not make sense, because in his mind, high inflation is a result of a strong economy * This is exactly backwards. Strong, productive economies keep prices low * Weak economies that lack production end up having higher prices, and those weak economies produce budget deficits and the central banks have to print money, causing inflation * The actual definition of inflation is an expansion of the money supply; higher prices are a result of the fact that the currency then buys less * The government wants people to be confused about inflation and where it comes from because they are the source of the problem * By blurring the meaning of inflation, it is easier to shift the blame for economic problems on everything else but monetary policy * CNBC highlighted my call on gold, but omitted all the correct calls I have made, especially 3 recent market predictions: * One: if the Fed raises rates, the stock market is going to tank * Why did I say that the market was going to tank? The conventional wisdom that if the Fed is raising rates, the economy must be stronger - I said if the Fed raises rates it will be doing it into a weak economy. In fact, it probably happened in a recession * Two: I said that there is no historical precedence for this monetary policy because we have been at zero interest rates for 7 years, so the effect of higher rates on the economy appears to have more effect because they have been talking about tightening for years * I also said that if the Fed raised rates, gold prices would rise; it was unanimous that gold would collapse.  Gold is up more than $100 since the initial knee-jerk sellofPrivacy & Opt-Out: https://redcircle.com/privacy

* It was another tough day in the stock market today; the Dow Jones finished down 295 points, NASDAQ fared even worse, down 103 points, that's about 2.25% * These 100-point moves are coming quite often now; in the NASDAQ, the transports were hardest hit once again down 204 points - that's almost 3% * When I saw this carnage, I wondered if North Korea had tested another nuclear bomb - early in January the market was down about 250 points and they blamed it on the North Korean bomb test * The markets have been moving about that much every single day! What are the odds that the Korean test had anything to do with the market drop that day? * Everybody wants to find a way to rationalize a weak market, but look, nothing happened today * The financials got clobbered - Goldman Sachs is down 5% on the day, getting ready to break through $150; it was a $200 stock not too long ago * There's a lot of air beneath this chart - is that all oil related? * You might as well blame today's selloff on the fact that Ted Cruz won the Iowa Caucus * The reality is the market is going down because it's a bear market * The market's going down because the U.S. economy is in a recession * There's nothing the Fed can do without loosing credibility or acknowledge that the economy is much weaker that it thought * Going back prior to the rate hike, one of the reasons I constantly said I did not expect the Fed to raise rates is because I knew if they did, they would be in a very bad position * I said, what's going to happen if the Fed raises rates and the stock market starts to decline, how are they going to stop it?  They cant. * Since QE1 in 2009, every time the stock market has faltered the Fed has either launched another round of QE or hinted that it was considering another round * That's what saved the market * That how "Buy the Dips" worked - you had the Bernanke put or the Yellen put * If that put expired with that rate hike in December, then how was the Fed going to stop the carnage? * It can't hint about another round of quantitative easing while it's raising rates * Most people believe that the Fed will not raise rates 4 times this year, maybe only once or twice * But if the market is already collapsing based on the first rate hike, how much lower will it fall if the Fed puts a couple more nails in the coffin? * The only the Fed can save this market is to come out and: * a) Take future rate hikes off the table and * b) Lower rates * They are trying to get the ECB and the Bank of Japan to help, and that hasn't worked - each rally has reversed * The Fed will have to get in on this: sending the ECB and the Bank of Japan in will not do it.  This is a woman's job, and it's going to be Janet Yellen is the only one who can stop the market from falling * We're going to get the jobs number this week - with a first look at it with the ADP number tomorrow but we get the big Non-Farm Payroll number on Friday * The only thing that can really save this market is a horrific jobs number is really bad, then Janet Yellen can talk about not raising rates based on the jobs numbers, so she doesn't have to claim it is based on the stock market * If we get another on of these good jobs numbers, of course it's only good superficially, it's not really good, it's just a high number, then this market's going to tank * Because the Fed is back in the predicament of not cutting rates because they don't want to admit that the jobs numbers are bogus * I happen to be in the supermarket with my 13-year old son and he noticed a help wanted sign on the door, saying, "Part Time Positions Available - Multiple Departments" * They don't want any more full time people - that is the secret to the "strength" in our econo...Privacy & Opt-Out: https://redcircle.com/privacy

* First it was the ECB, and then it was the Bank of Japan, cutting interest rates overnight to -.1% * That is the first time in this 20-year experiment of cheap money - I think they've been at zero, but they've never gone negative until just now * One of the most ironic aspects of the move is that Kuroda, just 8 days ago told the Japanese Parliament that the Bank of Japan was not seriously considering negative interest rates, yet in a span of a week, they went from not considering it, to actually doing it! * In fact, what Kuroda said is that, not only have they moved rates to negative, they may make them even more negative in the future, so no who knows how much more negative they will go * He also hinted that they might expand their asset purchase program, their own Quantitative Easing * That was enough to send global stock market rising, in fact, here in the U.S. the Dow Jones finished up almost 400 points - 396 points - the NASDAQ was up better than 100 points * Obviously this is still a big down month, but not the worse January ever * As I said from the beginning, 2 out of 3 ain't bad, but it won't work * The Fed is going to have to join the rate-cutting party * Right now the Fed is the lone hold-out among central banks and that is still helping the dollar * The dollar was very strong today against the yen and also against the euro - the dollar index now almost back up to 100 * The QE currencies got clobbered * The economic data in the U.S. is not good. We got the first estimate of Q4 GDP * When the year began, everybody was looking for Q4 to be around 2 - 2.5% * As all the horrible economic news poured in throughout the quarter, expectations gradually reduced so that by yesterday, the consensus for Q4 was just .9% * We managed to come in below that at .7% * I have been saying that by the time we get the final revision of this GDP number, we could be below zero.  It doesn't take much to take an initial estimate of .7 to below zero and we still have more data on Q4 coming out, that will bear on this, and I think the data will be bad news * The only way the government could manufacture a GDP of .7 was to pretend that the inflation rate was just .8, and of course, the Fed supposedly have this 2% target and they need to raise rates to get to 2% * That means nominal GDP is only going up 1.5%, which means if the inflation rate is actually higher than 1.5%, then we are in a contraction * In fact, I've pointed this out many times before, if we had an honest look at inflation in the GDP, I think it would reveal that the economy has been in recession for almost the entire recovery, which makes more sense to me, because this recovery feels a lot like a recession * It's not like any other recovery we've ever experienced, and maybe that's because it's not a recovery - it's a recession * I think the recession is going to get a whole lot worse, because of what's going on * The way the media has been spinning this all day, even though they have reported that the GDP is .7, they are reporting that for the entire year, GDP grew by 2.4% for 2015. * Just Google it yourself: any article on the U.S. economy and GDP states that the economy grew by 2.4% in 2015 * That's not true! The actual growth rate is 1.8% * If the economy grew by 1.8%, why is the media spinning the story at 2.4%? * Here's what's going on: if you just measure the increase in GDP from December 31, 2014 through December 31 2015, the increase is 1.8%.  That is how to measure the GDP.  It grew 1.8%. * The government doesn't want to admit that because 1.8% is a pretty low number, the lowest it's been in 3 years, and why would the Fed wait for the lowest annual growth rate in 3 years to finally raise rates, in fact why did they wait for a quarter when it was...Privacy & Opt-Out: https://redcircle.com/privacy

* As I said in my last podcast, when the the Federal Reserve issued its press release yesterday at 2:00pm, Janet Yellen did not give the markets they were hoping for; in a way, it was almost as if she threw them an anchor instead, because the Dow Jones ended up falling about 200 points as a result of the disappointing statement * The statement was dovish, but it wasn't dovish enough, and even though the Dow recovered about half those gains, I think the market is still on the defensive, given the fact that Janet Yellen still did not veer from the projected rate hike path, even though the Fed went out of its way to say that the tightening would be very gradual and that rates would still be low for a long time * And the Fed will continue reinvesting all all the maturing bonds, so the balance sheet will not shrink at all * They will continue to reinvest interest and principal payments, meaning the balance sheet will continue to grow, so it's still QE, just a slimmed down version * But I do expect full-blown QE4 to come before the November election * I do believe that this is the first step in a reversal of policy because Janet Yellen did acknowledge that economic growth slowed last year * In fact, it slowed more at the end of the year, as we will see when we get the first look at the Q4 GDP tomorrow; I think the economic slow-down is continuing in 2016 * The Fed also said that they were monitoring the financial and global markets and will take in consideration the effects that these might have on economic growth, inflation and employment * Obviously, the effects on economic growth are going to be negative - it's the reverse wealth effect * The Fed puts a lot of stock in the wealth effect, but it's a two-edge sword * The Fed statement also mentioned that they are still targeting 2% inflation but that they're not quite there, and expressed concern that they might not meet that goal * To me, acknowledging the economy is slowing, going out of their way to mention that they are monitoring the global economy is an easing from their rhetoric * The Fed is going to have to do a lot more than that subtle suggestion * I think it is enough to turn the dollar; it has been weakening across the board today * Oil prices have moved up a bit * Gold stocks have actually done a little bit better than gold - gold and silver were both hit today: gold was down about $10/11, silver was down about .30 * There was a huge sell order that came in early in the morning and just knocked the markets down in about a minute, which has been typical * It looked like the metal was poised to continue to move higher * We'll see what happens tomorrow when we get the GDP * But one of the reasons it looked like today should have been a big day for gold was the economic news that came out early this morning on December Durable Goods * They were looking for a +.2 increase, following a 0% gain in November * Instead, first they revised the November's number to -.5 and then, instead of improving, we dropped 5.1 - Huge decline! * You have to go back to the '08 financial crisis to find a Durable Goods that bad * It gets worse when you look at the details * Strip out transportation: they were looking for zero, instead we got -1.2 * On top of that, they took last month's -.1 and made it -.5 * The worst one is Core Capital Goods: last month was down .4 and we got -4.3 * Year-over-year Capital Goods is down 7.5% * So, given this number and the Fed's statement yesterday, I expected gold to build on its momentum, but for that big sell order that happened early in the morning * The gold stocks held up today, despite the big drop in gold * I expect a rally tomorrow if we get a weak GDP number, and now a lot of people are looking for a weak...Privacy & Opt-Out: https://redcircle.com/privacy

* The Mario Draghi "No-Limits"-inspired rally from Thursday and Friday of last week ended on Monday with the Dow Jones down just over 200 points; the NASDAQ was down about 75 points, so an even bigger percentage drop * But today the market reversed; the Dow actually recouped 100% of what it lost, it rose 282 points by the close * A lot of volatility in the oil markets; down yesterday and up above $30/barrel today * The bigger action today was in gold, up another $12 or so, the highest price for gold since the first week in November, last year * Gold stocks had a big up day today, but they still have to rise about 8% to get back to where they were when gold was the price it is today * Some of the battered down currencies in the commodities space had a good rally; the Canadian dollar and the Aussie dollar * I think what the markets are preparing for is some type of statement from the Fed tomorrow; they began their 2-day meeting today and they will release a statement - there's no press conference * People are looking for the Federal Reserve to acknowledge some type of change in the economy and therefore soften their stance on their 2016 rate increase projection * The last time we heard from Janet Yellen, the Fed was on track for 4 rate hikes in 2016, and since then, no one has said anything to contradict that, despite what has happened in the U.S. and global markets * Perhaps this recent market rally will give Janet Yellen a reason not to show her hand * Of course, if she disappoints the markets and continues to pretend everything is great, this market's going down hard and all the gains will be surrendered * Maybe she'll try to walk a middle ground by acknowledging the problems in China and in the oil market and say that the Fed is monitoring the situation in case there us unexpected spillover to the U.S. economy which is still otherwise in great shape * She may save face by suggesting that if these outside influences somehow wash up on our shores, and they effect employment and inflation, maybe it will adjust its policy *  I'm not sure if that will be enough for the market; if the market sells off, the Fed is going to have to come back and quickly release more dovish rhetoric * I read an article on Monday's Wall Street Journal and I posted it on my Facebook pageand it really was the equivalent of, This Time It's Different * The headline was, "Recession Signals are Flashing Red" - they've been flashing red for a long time and the WSJ has been ignoring it * The article says that, despite all the bad economic events and data that in the past have led to recession, that this time it's different * The article tells us why we don't have to worry this time, while acknowledging the bad data and events, they say we can rest easy because we have this really strong labor market, and in prior recessions the labor market wasn't as strong * Therefore, since the labor is so strong, we can ignore all the other signals that seem to be flashing recession * I have said many times on this podcast, there is no strong labor market; it exists only in the eyes of statisticians who simply look at a rate of 5% and ignore how we got there * They want to ignore the millions of people who have left the weak labor market and millions more who have settled for part time jobs * So the weak labor market is consistent with all the other data that the WSJ is acknowledging, but tells us to ignore * If we counted all the people outside of the labor market who are discouraged as unemployed, and we also counted all the underemployed people, and the unemployment rate was over 10%, then the WSJ would have to say, "Well, it's a recession!" * How can a recession wait for the government to decide how it ...Privacy & Opt-Out: https://redcircle.com/privacy

* The U.S. stock market ended the week with a 2-day rally, in fact the Dow Jones closed better than 200 points today, to about 1690 *  NASDAQ, even stronger, up 119, closing at almost back up to 4600 * The rally actually began early yesterday morning, and not just in stocks * Oil had a huge rally, in fact, today alone, crude was up $2.72 back above $30, at $32.25 * What sparked the rally was comments made by Mario Draghi at an ECB press conference that followed their official statement that they were leaving interest rates unchanged - they are already negative * Right about that time, the Dow futures were already down 100 points and it wasn't looking good for the open of the U.S. stock market * But then, in Draghi's press conference, he said there was no limit to what the ECB is prepared to do to generate more inflation in Europe * He strongly hinted that in the next meeting in March, they may announce additional stimulus * He saw the weakness in the markets and decided to take one for the Fed, because ultimately it's the Federal Reserve who has to come out with the "Whatever it takes" comment" to shore up the markets * I don't think the ECB is going to be enough, even if Japan joins the party, it won't be a real party until the Federal Reserve shows up * This was enough to cause a small, short-covering rally * What's interesting, though, about the Draghi comments, is that he specifically addressed the problems of low oil prices and low food prices * Do you think the population of Europe worries that food is too inexpensive? * Is it really so important that gas is more expensive in Europe? * None of these are real concerns, and the proof is, if they really wanted the prices to be higher, they could just adjust the Value Added Tax to increase prices to exactly 2% * Why print all this money, hoping that the result is higher gas prices? * The truth is, the price of gas and food in Europe is not the problem - Mario Draghi knows its not the problem * He wants to create inflation to prop up the equity markets * But the press takes Draghi at his word, that inflation is the problem * Stock prices are the prices they are worried about being too low * They also want more inflation to mitigate the effect of government-mandated higher wages * So the one motivating factor behind Draghi's comments was not food or gas prices * Obviously lower food and gas prices help the European economy * All the markets went up on the hint that the ECB is going to further stimulate the economy * That proves that the only reason the stock market has rallied is because the central banks - it's not about the fundamentals * The Fed will have to capitulate and acknowledge that more stimulus is coming * The press is focusing on the idea that the Fed will slow down its initial goal of 4 rate hikes in 2016 * But that's not enough * If the Fed tightens more slowly, and the ECB and Japan are easing, then the story is still about the tighter U.S. monetary policy vs Europe and Japan, which will continue to create the global problem of a high U.S. dollar * We aren't going to get drunk on Europe's liquor - we need our own bartender pouring the drinks * Is it enough to get a short-covering rally? Sure. * Nothing goes down in a straight line * We don't know that Draghi will actually deliver stimulus in March. What if the price of oil goes up above $40/barrel before then? * Mario Draghi went out of his way to praise Janet Yellen, agreeing with the Fed's December rate hike decision * Ironically, the U.S. economy is doing better than Europe, but the U.S. economic data is getting worse, and in Europe it is improving * By the time all the revisions are done,Privacy & Opt-Out: https://redcircle.com/privacy

* The bear market in global stocks continues, and I believe we're in a bear market in the U.S. * Technically the major averages are not quite down 20%, although some of the averages are * Transports were down 30% from their highs * The Russell 2000 was down more than 25% * Many individual sectors are way down into bear market territory, as are some individual stocks * IBM hit a new 6-year low; and, of course, IBM is the poster boy for share buy-backs * Imagine how much shareholder money has been flushed down the toilet buying back stock at over $200/sh and now we're looking at 12o and falling * But remember: all bear markets begin as corrections * The bear market of 2001, when the S&P was cut in half, and the NASDAQ fell by 80%, started as a correction * The same thing in 2008 - they were calling that a correction, too, until they realized that it was a bear market * In fact, the main thing I am hearing today is the comeback - the Dow had a huge comeback because it was down more than 560 points at the low and it closed down at just 249 * The NASDAQ was down more than 160 and it closed down only 5 * Had we closed at the lows of the day maybe we would be closer to a short-term bottom * This is another short-covering inter-day rally creating a slippery slope of hope for the market to continue to slide down * Today, we have hit the most 52-week lows in any month since September of 2008 * Earlier in the day, we were showing the biggest monthly point drop in the history of the stock market * It's not just the worst January, it's the worst month of any year, ever * The market has got to be telling us that not only are we in a bear market, but we are in a recession * The market is forward-looking: it is telling us that we are in a recession * The bond market is priced as if we are in a recession * Maybe that is because we are in a recession * All the economic data indicates a severe recession * The market is behaving as though something bad is happening - we haven't seen action like this since 2008, yet people are dismissing all of this evidence * If it walks like a recession, quacks like a recession, smells like a recession, it is a recession * There are now more people acknowledging that the Fed should not continue raising rates in the near future - an article in the Guardian says:"Janet Yellen and Fed left with face full of egg after interest rate rise blunder" accuses the Fed of raising rates too early * The problem isn't that they raised rates early, it is that they raised them too late * Actually the real problem is that they never should have lowered rates to zero in the first place * I said this from the beginning: They sealed their fate as soon as they dropped rates to zero - no matter when they raised rates it would be a disaster, and the longer they waited it would be a disaster * What is ridiculous is that the Fed wants us to believe that they can raise rates, after leaving them at zero for so long, and that we could sometime just be fine * The narrative that Ben Bernanke, Janet Yellen and the Obama administration have been selling is that they saved the economy * The economy is in much worse shape now than it was 7 years ago * Instead the Fed's poisonous cure made us sicker than ever - That is what I wrote in "Crash Proof" * When I forecasted the bursting of the real estate bubble and the Great Recession and financial crisis, I said the economy could withstand that * What would kill it was the Fed's cure, they came up with the exact remedy I was afraid they would and it is having this exact effect Privacy & Opt-Out: https://redcircle.com/privacy

*  The Dow  Jones ended another down week on a down note, dropping 390 points * The NASDAQ was down 126 points *  This is the worst January in the history of the stock market the Dow is off about 13% from its highs, the NASDAQ about 15%, firmly in correction territory * We are probably in a bear market right now, because ultimately these indexes will be down 20% * Some indexes are already firmly in the bear camp; the transportation average is down about 27.5%; the Russel 2000 is down aboutr 23% * Many sectors are in a bear market - the auto market, retailers, financials * Home builders not quite in bear market territory yet but they are at 4-year lows * Beneath the sectors there are many individual stocks that are down 30 - 80% - GoPro now down 82% from last year as a highly touted IPO * Yesterday we had about a 200 point rally because the Fed's Dudley, who saved the market in October of 2014 by hinting of QE4 causing the market to take off * This time, Bullard came out and did say something dovish, but not dovish enough, and did not want to say  there was something wrong with the economy, so he simply stated that oil prices were too low and inflation might not rise quickly enough, so the Fed should hike more slowly * Today, another Fed governor came out, William Dudley and contradicted Bullard, strongly optimistic, saying the market is going to grow above trend in 2016 and he said that some of the negative economic data that has come out recently (which may qualify as the understatement of the decade) should be ignored, in the context of a strong labor market * In other words, no matter what other negative data is out there, in the markets or in the economy, as long as we're still creating 200,000-300,000 mostly low-paying, part time jobs monthly, everything is fine * If everything is fine, and there are so many people with jobs, why are retail sales plunging?  Why are corporate earnings plunging? * Assuming all these jobs really exist, they won't for long because if sales and earnings are collapsing, what are companies going to do with their work force? * Walmart announced today they are closing about 150 stores in the U.S., laying off about 10,000 people * I have saying for a while I expected retailers to announce significant layoffs, but I think it is going to be across the board * Everything that was built on the Fed's bubble is imploding; all the phony wealth that was the result of QE is disappearing rapidly * It's amazing that the Federal Reserve believes in the wealth effect on the way up, but somehow it is oblivious to it on the way down * I think it is going to work even stronger in reverse; the amount of spending from cut backs will produce a reverse effect even larger than the one they tried to create with QE and zero percent interest rates * How could Bullard, in the face of all this negative economic data say that since the Fed raised rates, his outlook on the economy has not diminished at all? * It's so ridiculous that he must not believe it - he is trying to pretend that everything is good * The whole rate hike was about instilling confidence * Based on the data, they should not have hiked rates * Now, as the markets are imploding and the data is getting worse, Dudley is out there saying everything is great * How much longer can he get away with saying that? * Pretty soon, he is not going to have that much credibility * That's what is going on with the Fed, in fact JP Morgan today pushed back their estimate for the first rate hike in 2016 from March to June * That's how is started last year; everybody was looking for a rate hike, in March, then June then September, then they finally got it in December and now people are already dialing back estimates of the next rate hike Privacy & Opt-Out: https://redcircle.com/privacy

* Last night I watched President Obama deliver the State of the Union Speech and probably the only good thing about the speech is that it was his last one * It will probably go down in history as the most clueless State of the Union Address ever * All he talked about was how great the economy is - how he created all these jobs * He even had the chutzpah to take credit for reducing the budget deficit! * President Obama will have doubled the national debt during his presidency * He added more debt than every president from George Washington to George Bush, combined, yet he's taking credit for reducing the deficit * At least when George Bush gave his final State of the Union Address he acknowledged problems brewing in the economy * He acknowledged concerns being addressed by the American people and validated them * He talked about the stimulus plan he had, which I did not agree with, but at least he knew the economy was in some trouble * Although he acknowledged that economic growth was slowing and that housing was down, he didn't come close to preparing Americans for what was about to unfold by the middle of the year * In fact, when the President delivered that State of the Union Address, the economy was already in recession, although the government had not acknowledged it yet * He had no idea how precarious the state of the economy was, we were on the precipice of  a big cliff and he was still optimistic, long term, but cautious given the slowdown in the economy and he wanted to come up with some kind of stimulus to mitigate the slowdown * He did not foresee or warn about the severity of the problem, but at least he acknowledged some problem * In contrast, rather than at least acknowledging weakness in the economy, President Obama claims victory over the Great Recession, that he restored economic health and vitality * The few problems in the economy are beyond his control because the economy is changing * What we do need is more government money for education, to train people for this new economy, we need a higher minimum wage, we need higher taxes on the rich, but other than that everything is great * President Obama's State of the Union Address is on the order of magnitude more clueless that George W. Bush's last SOTU on the eve of the Great Recession * We are now on the eve of a collapse even greater, yet President Obama is saying everything is awesome * What President Obama did is to lecture the American people as to why they have nothing to be concerned about - basically saying that anyone who says that the economy is in decline is peddling fiction. * Obviously the people who don't recognize the decline in our economy are in denial, or have a political agenda * What the President said is, "If you think the economy is headed in the wrong direction, if you think America is in decline, you're wrong, it's just that the economy is changing * Remember, you voted for me and I promised change * It's changing because it's getting worse, that's the change * President Obama points to technology as the problem in the economy - a transition that only makes you feel like you're falling behind even though you're not * The technological revolution did not begin with the election of President Obama * It has been no more transformative, even less so, than the industrial revolution * Machines put a lot more people out of work than computers but we saw an expanding labor force, but women left the labor force, because their husbands started making more money * Real wages were rising * The industrial revolution took place in a free market economy * The technological revolution is taking place in a government controlled economy * The reason so many people are suffering is not because so many techno...Privacy & Opt-Out: https://redcircle.com/privacy

* Hi everybody, this is Peter Schiff and I am recording this on Friday, January 8, and Wall Street just finished the worst opening week to a new year in the history of the stock market * The Dow Jones was down another 1% on Friday to finish the week better than 1,000 points - it was a 6% decline on the week * Now there have been weeks that have been down more than 6% in the history of the stock market, in fact we had one about 4 years ago, but we've never had a week this bad in the first week of January * Now, the financial media is coming up with all sorts of excuses to blame this big decline on * On Monday, they were blaming the sell-off on the rumors that North Korea tested a hydrogen bomb * But for most of the week, they were blaming the sell-off of the U.S. stock market on the sell-off in China, despite the fact that China rallied on Friday and we sold off * The Chinese market was down about 10% on the week, despite the Friday rally * The U.S. stock market is not falling because of the Chinese stock market. The Chinese stock market and the U.S. stock market are falling for the same reason * It's not that one is causing the other, they're both going down and the reason they're falling is because the Federal Reserve raised interest rates in December and they are threatening to raise them at least 4 more times, according to the most recent minutes. * The belief that the Fed is going to keep raising rates is putting pressure on the Chinese currency, the Yuan, to decline along with a lot of other currencies that have already fallen substantially against the dollar, on the anticipation of higher interest rates * It's the weakness in the Chinese currency that is pulling down the Chinese market, but it's all because of the Fed - but that's the same reason we're going down * If you remember, all year I was saying that I didn't think the Fed was going to raise rates at all in 2015, and the reasons were: * I thought thee economy would not be able to handle it - the Fed always claimed that they were data dependent and I thought they were hiding behind that, but I though they could use the weak data, which had been coming all year, as cover for not raising rates - in fact, that was their cover until they backed themselves into a corner because they had promised to raise rates by the end of the year and a refusal to raise rates would be an admission that the economy was weaker than forecasted * I also said I didn't think the market could handle a rate hike.  It had stopped rising based on the absence of QE, but if the Fed actually increased rates, the air would come out of the bubble a lot faster * So with the economy going down and the stock market going down, I thought the next thing they would do is reduce rates back to zero and launch QE4 and would look like complete fools * So by not raising rates, they would look like a lesser fool by acknowledging that the economy needed additional stimulus * We may already be in a recession * The Atlanta Fed has already downgraded their forecast for 2015 Q4 to just .8% * I think by the time we get the first estimate on the 29th the month, we could actually have a negative number for the fourth quarter * If you look at all the data that's coming in, and I'll get to that in a minute, we can easily have a negative first quarter of 2016, and we're in recession * If the economy is in recession, and we are in or close to a bear market in stocks, and without the Fed, there's nothing to stop this market from falling, the Fed will have to come to the rescue of both the economy and the market with QE * But if you remember, a lot of analysts were very sanguine about the market's ability to handle a rate hike, but here we are, the Fed raised rates just a few weeks ago, and the Dow has dropped better than 1,Privacy & Opt-Out: https://redcircle.com/privacy

* Well the Dow Jones got clobbered again today, down 252 points at the close * The NASDAQ down about 55 * The transports continue to get clobbered down another 146 points, decisively in bear market territory * CNBC blamed the entire decline on jitters over North Korea's hydrogen bomb test * I admit that this prospect is not good, but I don't believe that announcement was the reason for the decline * The real problem is the Fed removing the monetary herion from the addicts on Wall Street and this is the withdrawal * Former President and CEO of the Federal Reserve Bank of Dallas, spoke on CNBC yesterday and he admitted that the Fed "engineered a stock market rally" * They wanted all this phony wealth to cause us to make irrational decisions * That's what happened during the dot com bubble and to a greater extent during the housing bubble * Here you have it from the words of a former Fed president, a voting member who voted for QE 1 & 2 who is saying that the Fed did this to create a "wealth effect" * He even said, don't be surprised if the market goes down 20% - it's still overvalued - he admits the Fed was propping it up * Obviously if the Fed removes the props the market will go down * After Simon Hobbs asked Fisher if he is going to apologize, he said," Don't blame me, I voted against QE3!" * He is throwing his colleagues, including Janet Yellen, under the bus * Now that he is no longer at the Fed, he refers to it as a "giant weapon that is out of ammunition" * The Fed still has ammo: cut rates (in this case, even to negative) and QE4, their big bazooka * There's plenty of ammo left and it will be fired a lot sooner than people think * Korea is an excuse, but Richard Fisher is letting the cat out of the bag, but no one in the media is picking up on this * Also in the markets today, while stocks were going down, gold was going up - gold hit a 2-month high today * As fast as it is going up in dollars, it is going up even faster in other currencies, like the Canadian dollar, which hit a 9-year low, the Australian dollar * The yen was up - the dollar/yen is breaking down - to me that is a very scary proposition for the markets to see this strength in the Japanese yen * Oil prices continued to drop, down another $2 today - we're trading below $34 * Gold stocks were up - you'd think they would be up a lot more because mining costs are plunging and revenue is going up, but Wall Street is oblivious to the bargains that exist in the mining stocks * We got a lot of economic news today and most of it was, as is typically the case, bad * Yesterday vehicle sales were at a 6-month low * Last year was a record for auto sales, but December was a 6-month low despite all the Christmas giveaways * Meanwhile the inventory to sales ratio continues to rise - a new high since the 2008-2009 great recession * Also GM got clobbered today, down about 4% - already down 9% for the year and down more than 20% from its 52-wk high - that is a bear market * This is telling me that the auto bubble has popped * There are going to be a lot of layoffs in the auto sector - good, high-paying jobs * I have said that starting in January 2016 we would start to see layoffs because the numbers have been horrible * Sure enough, Macy's today announced a restructuring, laying off thousands of workers because of disappointing sales throughout the year * We will see a huge blow-up in the securitized market for auto loans * They layoffs are coming - the low unemployment number is the rear view mirror * Looking at the actual economy in the windshield is a disaster for jobs * This is deja vu - in 2008 the subprime market had already exploded - the housing market problems should have bee...Privacy & Opt-Out: https://redcircle.com/privacy

* The U.S. stock market opened the first trading day of 2016 with a bang, but not the type of bang the bulls were hoping for * The Dow was down 276 points-it was down as much as 450 points in the last hour of trading * In fact,we opened down 300 and change and we hung around the down 350 - 400, in fact down 276, at the close was about the best level of the day * The NASDAQ closed down around 104 *  The Dow Jones transports continues to get crushed - the weakest index on the day, down 156 points * We're now down more than 20% from last year's high, officially in bear market territory in the Dow Jones transportation - and don't blame this on weak oil prices because transports benefit from weak oil prices * This is all about weakness in the economy * A lot of the carnage was blamed on China because China was down 7% overnight, the worst first day of the year in the history of Chinese stocks * Supposedly the catalyst was a weaker than expected PMI in China - I don't believe for a second that the market was down 7% based on that report * First, there were two PMI's released, and one was slightly better than estimates and the one that was slightly below came in at 48.2 vs. expectation of 49 * I think the Chinese market would have gone down regardless of the PMI numbers * The irony of it is that our own recently-released Chicago PMI on New Year's Eve and our number was way worse than the Chinese number * We were expecting 50, an improvement from 48.7 - instead we went down to 42.9 * Bad economic news in China creates a terrible response, but bad economic news in the U.S. and no one even cares! * Why, because the Fed tells us everything is awesome and we can ignore all the evidence that the economy is far from awesome * Singapore reported a 5.7% increase in GDP for its 4th quarter, yet that number is being discounted * Yet no one wants to believe the good news from foreign governments, and no one believes bad news from the U.S. because the Fed's narrative is still out there * We got more bad economic news today: We got another PMI manufacturing number expected to be 52.8, it came in at 51.2 * Even worse was the December ISM number - last month was 48.6 - it was expected to improve to 49.2-  instead, it dropped to 48.2 * That's a bigger miss than China, yet no one here cared * Also, construction spending was a huge miss: the consensus was for a gain of .7; instead we lost .4 * It gets worse, because last month the gain was expected to be a full point * The numbers that came out today were so bad that the Atlanta Fed, who recently revised down its Q4 GDP forecast from 1.9 to 1.3 a week or so ago and today they went down to .7 * In my last podcast, I said that soon the Atlanta Fed is going to take their Q4 GDP estimate below 1 and that is just what they did * We have a lot more bad economic data that is going to come out between now and the end of the month when we get the first estimate of Q4 GDP and there's a pretty good chance that it will be negative, which is halfway to a recession * With a negative GDP in the 4th quarter, we have a better than 50/50 chance of having another negative GDP in the first quarter and that would put us officially in a recession * Just in time for the Fed to raise interest rates again - Not! * More people are coming to the same conclusion I have for a long time now, that the Fed had backed themselves into a corner and felt they had to raise rates regardless of the fact that the data didn't meet their criteria * I knew that if the Fed raised interest rates that they would regret it because they would have to reverse their direction based on the weak economy combined with a weak market *  Interestingly, there has only been one year ending in "5",Privacy & Opt-Out: https://redcircle.com/privacy

* Let me begin my final podcast of 2015 by wishing all of my listeners a Happy New Year * It certainly wasn't a happy New Year's Eve Day on Wall Street * Normally the last day of the year is a positive one; you normally have a Santa Clause rally and it continues on to New Year's Eve * That wasn't the case today.  The Dow Jones finished its first down year since 2008 - down 178 points * The S&P also negative on the year, the NASDAQ managed to gain about 5% or so * I'm hearing a lot of people blaming the weakness on oil prices * The transports were the weakest index of the year, I think they were down about 17% and this index stood to gain the most from low oil prices * So clearly, if transports are the weakest index, the overall weakness can't be solely because of oil prices * It has to be another reason, and I think it has to be the economy * Oil is being affected by weakness in the economy * Another interesting observation about today's selloff - the market not only closed on the lows, but made its lows on the close * We've been seeing this volatility - all of this selling into the close says that something big is going on here * You get more professionals selling when you sell market on close, and I think this is what is going on here * People are bracing for a very weak 2016 * The Fed had interest rates for all of 2015 - it didn't raise rates until the waning weeks of the year * Imagine how the Dow will contend with the threat of rising interest rates as 2016 continues * But the other problem for 2016 is the economy and we got more evidence of an extremely weak economy * I mentioned before the the Atlanta Fed GDP Now has Q4 GDP estimate down to 1.3 * Based on the numbers we got today, they are going to ratcheting those estimates down again * First, we got the weekly unemployment numbers, which have been low for a long time - We got the biggest unemployment claims numbers in one week in 10 months * The 4-week moving average is also the highest it has been in 5 months * Remember, when Yellen raised interest rates, the basis for the decision was supposed to be the strength in the labor market * No sooner did the Fed raise rates based on the labor market, but now the labor market is rolling over. * Unemployment is a lagging indicator * What is more indicative of what is coming, is the Chicago PMI number which came out a little later in the morning, which was abysmal * One of the worst economic reports of the entire year * Last month, we got 48.7, which was below expectation * They were looking for a December bounceback to 50 * Instead, the index crashed down to 42.9 * This is the lowest number since 2009 * Order backlogs has been down for 11 months in a row, and this is the worst performance since 1951 * The only time we've been at this level is during a recession * It is possible that we are in a recession * It is possible that they will originally report Q4 GDP as positive and then go back later in the year and revise the data to show we were in a recession * That's what they did with the Great Recession * Another reason I believe the economy is weaker than the numbers suggest is because the inflation rate is being under-reported * If the inflation rate is higher than the GDP deflator, then obviously we are in a contraction during most of this recovery * I am looking at what is happening in the economy not in what the government says about the economy * As bad as the numbers  were, it did not promote any reaction in the the markets * My guess is that if we had had a big drop in unemployment claims or a really good PMI number the dollar would have spiked up and gold would have sold off,Privacy & Opt-Out: https://redcircle.com/privacy

* Recording this podcast on Monday afternoon; the stock market closed about an hour ago, and the stock market was up over 100 points today, but the more dramatic days happened on Thrusday and Friday * Despite the initial euphoric increase in the stock market that greeted the Fed's highly anticipated quarter-point rate hike on Wednesday the market tanked on Thursday and Friday, down over 600 points * The most significant part of the sell-offs is that on both days the markets closed on the lows for the day * The Fed is getting dangerously close to losing what remains of its credibility * The Credibility Bubble might be the first to deflate in this recession * The Fed has been saying that the economy would be strong enough for a rate hike by the end of the year, so if they did not raise rates in December it would have been an admission that they were wrong * The Fed raised rates even though the economic data showed that, based on their own criteria, they should not have done it * More and more people are questioning whether the Fed has made a policy mistake * Look at the data that came out since the rate hike: * On Friday we got the PMI Flash Services Index came out at 53.7 - last month it was 56.5 * The Kansas City Fed Manufacturing - last month was +1 and December was -8 * Today we got the Chicago Fed National Activity, expected to be +.15 for November, instead it came out at -.3 and they revised down the prior month to -.17 * With all the horrible economic data, horrible retail sales, horrible corporate earnings it is obvious that the U.S. economy is heading toward recession * As the economy slows and the Fed is forced to admit it was wrong, there goes it's credibility * This coming collapse is the culmination of decades of bad monetary policy * Where we really went off the rails was in the Greenspan era, which sent us off on this trajectory of loose money * Yellen admitted in her recent press conference that they will still roll over all the maturing bonds and re-investing all the interest on those bonds so the Fed's balance sheet will continue to grow * The bubble economy will blow up in her face, though, because the market will not be able to withstand a sustained correction and it will require unprecedented quantitative easing that will result in failure * I wanted to discuss on this podcast an Sunday eening article on CNBC, "The Peter Meter"  that really took me to task on my gold predictions * They did not look at any of my many accurate predictions; they focused on the ones that haven't worked out * They singled me out for criticism on an 2012 interview I did with them when gold was at $1,700 and I said it could go to $5,000.  I never put a time horizon on my prediction, but this was labled as one of the worst * Back in 2005 I did an interview with Mark Haynes when gold was still below 500 and it more than tripled from that price * You can see articles I wrote recommending gold back in 2003 when gold was even below 500. * It is true that I did not see the near 40% correction in the price of gold because I thought the market would see past the bubbles * CNBC claims my prediction to be among the least prescient ever made * Twice in the last 15 years the U.S. stock market lost more than half its value * Anybody who was on CNBC in 1999 and recommended the stock market, which was about every guest, made a worse prediction than that * Every guest on CNBC in 2007 and 2008 and recommended the stock market made a worse prediction * What about all the dot com stocks that went to zero? * Obviously, CNBC is singling my gold prediction out above these other significantly less prescient predictions * If you look at all the predictions on CNBC over the years,Privacy & Opt-Out: https://redcircle.com/privacy

*  Yesterday, the Federal Reserve finally met market expectations and increased interest rates to .25% * Actually, the official rate was 0 - .25 and now, the official rate is .25 to .5 * The actual rate was always in the middle between zero and .25 * Assuming the Fed tries to keep the rate closer to .25 than .5, the actual increase in rates could be less than 25 basis points * The initial reaction to this rate hike is to proclaim the end of the era of "cheap money" * .25% is still cheap money.  Alan Greenspan never went below 1%. * Some people are saying "Peter Schiff was wrong" because the Fed did raise rates * Actually, in a recent podcast I noted that the Fed changed their narrative away from "data dependent" to an expression of faith in the economy, opening the door to a symbolic rate hike unsupported by data * I was alone throughout the year believing that the Fed would not raise rates prior to this change in narrative * The Fed was afraid that to not raise rates this year, it would be a vote of "no confidence" in the economy * Ultimately, the Fed felt that even though the data didn't justify it, they had to raise rates because of psychological damage to the markets * If the economy were really sound, we would not need Janet Yellen to express confidence in the economy - a strong economy creates its own confidence. * We don't need propaganda in the form of a symbolic rate hike * The Fed did not even have the last recession in their forecast until we were well into the recession, so who cares about the Fed's level of confidence? * In an earlier podcast, I referred to Ben Bernanke's comment that he felt he was a representative of the administration * Janet Yellen is creating a sense of confidence in the economy for the same reason * The Fed is now pretending that we will have more rate hikes in the future, forecasting 4 more hikes during 2016 * I believe the economy is not strong enough to accommodate these rate hikes and neither does Janet Yellen * The ultimate irony is the data that came out the morning of the rate hike * Industrial Production: they were forecasting a drop of .2, which is still bad, instead, we got a drop of .6 * The PMI Manufacturing Index was the lowest in many years, 51.3 down from 52.6 * More bad news: The Philadelphia Fed last month showed an increase of 1.9, so 1.2 was forcasted - instead we dropped 5.9 * These numbers show an economy that is decelerating * If you look at a chart, these numbers are about to crash even lower * These numbers are flashing recession, recession, recession * If you're a Keynsenian, the prescription for the condition this economy has would be stimulus, not an interest rates * The air was coming out of this bubble anyway, all the Fed did was increase the hole for the air to come out * The market was up just before the hike, which was interpreted as a green light to raise rates. I said in an earlier podcast that that would be a mistake, because the market would then tank, and that is what happened today * Transports have been the weakest of all, despite oil prices * We continue to see weakness in the high-yield bond market as the air is coming out of that bubble * It is probable that the stock market is going to get a lot worse between now and the time the Fed is supposed to hike rates again * But the problem for the Fed now, is if the market starts to tank now, they can't do anything until the jobs numbers begin to show weakness * Janet Yellen actually referred to this move as "ahead of the curve", meaning that if she waited any longer, she would overshoot on her objectives: * One was unemployment.  How can that get too low? Especially with so many people out of the labor market,Privacy & Opt-Out: https://redcircle.com/privacy

* The U.S. stock market finished up its worst week since August, when everybody though a rate hike was just around the corner * Substantial triple-digit losses across the board * The Dow Jones closed down 309 points - almost 4% * Similar percentage decline for the S&P 500 * The NASDAQ dropped 111 points, over 4% decline for the week * The media is blaming this decline on oil prices, and yes, oil prices are weighing on some stocks * Some stocks benefit from lower oil prices - case in point: transportation * Dow Transport was weaker than any other index - down more than the markets on a percentage basis * The truth is that oil prices and stock prices are going down for the same reason * The reason is a slower growing global economy, including the U.S. economy, and the fact that the Fed is threatening to slow it down further with an interest rate hike * Some of biggest losers are not even in the stock market, but in the bond market * The high-yield bond market is getting obliterated * A chunk of the high yield market is energy companies * Two things are hurting them: the fear of rising interest rates and the slowing of the U.S. economy * We are heading for a recession, if we are not already in one * This does not bode well for the high-yield bond market, because in a recession these companies will have more trouble servicing their debt * The Fed's monetary policy of zero percent interest rates forced a lot of Americans into these high-yield bonds - people are hungry for yield * A lot of risky companies who did not have access to credit, were able to borrow all sorts of money because of this hunger for yield * This is the same thing that happened in the sub-prime market * Customers all over the world needed yield, and the mortgage market was where they got it * There was so much demand for mortgage debt on Wall Street it was easy for non-credit-worthy customers to get a loan * The same thing is happening in this high-yield market. Carl Icahn was on CNBC on Friday morning, referring to the present situation as a "power keg" * It is a powder keg that the Federal Reserve created and in theory they will light the match if they raise interest rates next week * In fact in my last podcast I mentioned that for the first time, the Fed might actually raise rates, and I received quite a few comments asking me if I was ready to admit that I was wrong * The Fed is trying to change the nature of a rate hike - alter the narrative away from normalization to a one-and-done scenario * Markets anticipate future events and they price them in, so the beginning of the tightening - "liftoff" I felt markets would look toward the eventual destination and start pricing that in. * None of the markets can handle that * So the Fed assured the markets that liftoff didn't matter because the first hike will be small and the trajectory will be very low * That's why I called it a trial balloon.  The Fed wanted to see how the markets would respond to a tiny, symbolic rate hike just to prove we can do it, and then a long period of time, before another one, if there is another one * Initially it looked as if the markets was buying the idea, but remember I kept saying there is time, and the markets could decline - in fact that is already happening * Maybe the Fed's trial balloon is not going to go over very well * We had a "Black Monday" in August prior the potential September rate hike * We have another Black Monday coming up - the technicals on the market look awful * We could have a huge decline on Monday, and you'd better believe the stock market is going to be high on the Fed's agenda * When the Fed called off the rate hike last time and we got a huge bounce in the stock marketPrivacy & Opt-Out: https://redcircle.com/privacy

* We are just about a week away from the Federal Reserve's first rate increase in about 10 years * Everybody believes the stage is set for liftoff based on the most recent better than expected Non-Farms Payroll report * The idea is that the only thing preventing the Fed from liftoff would have been a horrific jobs number * In fact the markets estimated 190,000 jobs added and we got 211,000 * We did beat estimates, and in fact they revised last month's number up to 298,000 * The unemployment rate held steady at 5% * This was not a strong report, any way you look at it * The labor force participation rate: 62.5% is just one-tenth of a percent from the lowest level since the mid-1970's * That is still going in the wrong direction * We had the biggest surge in involuntary part-time workers - 300,000 new workers really wanted full time employment - the biggest jump in more than 3 years * Janet Yellen has consistently stated until recently that before moving up interest rates she wanted to see improvement in the job market, specifically in participation and full-time vs part-time jobs * Thus far that has not happened * So why does everybody believe that the Fed is about to raise interest rates regardless of its stated criteria? * I believed that the Fed had no intention of raising rates and I believe they did not, except one thing has changed: they have backed themselves into a corner * They have floated some trial balloons as a litmus test * One change of rhetoric occurred during Yellen's press conference last week as she switched from waiting for the data to improve to confidence that it will improve some time in the next year * Another change is the idea that a rate hike would trigger a series of hikes with the goal of normalizing interest rates * That's why they were calling it liftoff * Now, since the markets tanked after September did not deliver a liftoff, the Fed Chair has changed her tune - liftoff does not matter, the trajectory does * She may be saying, don't worry, if we raise rates, there won't be another one any time soon, meaning it would be the end of the tightening cycle * The beginning of tightening during the taper, and if we get a rate hike it will end that process * If this is just a trivial rate hike, why raise rates at all, considering the fact that the data is still bad? * Manufacturing is already in a recession * The ISM number that came out last week hit a 6-year low and even the service sector ISM missed estimates * Retail sales and consumer confidence have been disappointing, indicating the end of this weak recovery which is actually a bubble * The Fed now feels their credibility is on the line - it is a symbolic gesture to show confidence in the economy * If they were truly confident, they would not assure everybody that the rate hikes are not likely to continue * In 2016 we will be in a recession unless the Fed does something to delay its onset, and it may be too late for them to put out the fire they have already lit * Why does Janet Yellen not say she believes the economy is still weak? * A window into Yellen's perception is an interview that Ben Bernanke gave on Freakonomics yesterday.  It's entertaining, but it doesn't tell you anything new about Ben Bernanke * The most important revelation occurred about halfway through the interview when the interviewer played some clips of Bernanke on television in 2005-2006. * During those clips, Bernanke was talking about the great shape the economy was in, minimizing the housing and mortgage market troubles * The interviewer asked how he felt listening to himself now,Privacy & Opt-Out: https://redcircle.com/privacy

* Mario Draghi of the ECB sent shockwaves through the foreign exchange and currency markets today * He didn't deliver the stimulus traders expected * The big question is, will Janet Yellen surprise the market by failing to raise rates? * The ECB did slightly lower interest rates, and extended QE if it will be needed * Draghi's goal is inflation * He equates 2% inflation to "price stability", when prices in Europe are stable now * The big divergence that everybody is trading on a tightening in the U.S. at the same time Europe continues to ease * The reality is more likely to be the reverse * If anything, the European recovery is just getting started, and the U.S. recession is just getting started * As a result of Draghi's decision to hold off on stimulus, the euro was up more than 3% on the day * The dollar was weak across the board * The stock market, including the DAX, fell accordingly * Both U.S. stocks and bonds experienced a selloff * Cheap money has been fueling rallies all over the world and when the ECB did not deliver it triggered a selloff in the U.S. assets * The Dow rallied over 2000 points off its September low based on rate hike expectations that did not materialize * We also got a key reversal in gold * Overnight it made a new low, but closed substantially above that level * The euro is still weak, it is just not as weak as the market expected * The best environment for gold when the weakest currency is the dollar * I wanted to address Janet Yellen's testimony today responding to questions * Yesterday, Yellen referred to Q4 GDP forecast consensus as 2-1/2% * She did not even realize that on that same day the Atlanta Fed reduced their forecast down to 1.4% * I think the real shocker will be that the Europea Q4 GDP will realize greater growth than the U.S. * Yellen was asked about Citibank's recent projection that the U.S. will experience a recession in 2016 * Obviously, she can't agree with the projection, as this runs contrary to the Fed's rhetoric * Asked as a followup, what tools the Fed would use in the event we did experience a recession in 2016, Yellen responded that the Fed would all the tools it has always had * She said, if we did raise rates, then we would lower them * Plus, she said it could use the asset purchase program (QE) that "has worked so well in the past * If QE worked so well in the past, we would not experience a recession in 2016 * You can't call QE a success until rates are normalized and the balance sheet shrinks back down to pre-crash levels * If the Fed finds that it has to launch QE4 in 2016 because it failed to reach "escape velocity" * How many QE's does the Fed have to initiate before it admits that it doesn't work, and is actually impossible to end without a great deal of pain? * This loss of credibility in the Fed will precipitate a dollar crisis * Anther thing that was ignored by Janet Yellen and the press was the six-year low in the ISM number * The market is focusing on the service sector, yet the most important jobs are the goods producing jobs * Lat month, we got a higher than expected jump in the non-manufacturing number:59.1 * This month we wend all the way down to 55.9, which is dangerously close to contraction * If we get the service and the manufacturing sectors both in contraction, that will be a total recession, supporting Citibank's 65% probability forecast may look optimistic * Since 2016 is an election year, a recession will not bode well for the Democrats' economic success narrativePrivacy & Opt-Out: https://redcircle.com/privacy

* The price of gold was down another $15 today, a 6-year low * Selling began early this morning following a better than expected jobs report from ADP * This is private payrolls released a couple of days before the official government Non-Farm Payroll number, coming out on Friday * Last month's ADP report was 182,000 jobs, which was below expectations * But the government reported better than expected jobs numbers * Today's number was not significant enough to have triggered a sell-off in gold within seconds of the release of the news * So far, ADP has missed 8 of the 12 expectations this year * By the way, hedge funds are the most short they've ever been in gold * We'll see what happens between now and the end of the year if we get a lot of hedge funds that want to book those profits * Paper profits may be difficult to realize if everyone needs to take them at the same time *  In the physical world, demand for gold continues to hit records * 98-99% of the gold market is people selling gold they don't actually have to people who don't actually want it * It's interesting to me the difference between the market reaction to positive economic news versus negative news * The November PMI number, although slightly better than expected it is still a 2-year low * Where the news went from bad to horrific was when we got the November ISM number. Manufacturing is considered insignificant now because it is a smaller part of our economy, but the last time it was almost as low as this, the Fed immediately launched QE3. * Now with ISM number nearly as weak as it was when we launched QE1, the Fed is hinting at a rate hike, which is absurd if you believe that the Fed is data dependent. * If the Fed does raise rates in December it proves conclusively that they were never data dependent and that they were using it as a delay tactic *  Had the Fed raised rates years ago, it would have pushed the economy into recession that much sooner, but they've now waited so long, that the economy is already going back into a recession on its own * If the Fed now raises rates even slightly, we will go into recession that much more quickly, causing credibility loss. * Also, yesterday we got motor vehicle sales numbers, and we did 18.2 million, beating the expected number of 18.1 million; however this is the second or third month in a row that domestic sales have declined * This is all a product of the auto bubble. Contrary to comparisons to the housing bubble, where people bought homes for investments, the bubble exists in automobile financing * Also contributing to the weakness in gold, were Janet Yellen's recent statements containing the strongest indications yet that interest rates may raise in December * She did, however, go out of her way to insist that the Fed has not made a decision, based on data coming in prior to the December meeting * Yellen admits to improvements in the labor market, but acknowledges that there is underemployment and low labor force participation * She did say, however, that she is confident that over the next 1-2 years, the economy will show real improvement in full employment and labor force participation * She also believes that the economy is indicating enough momentum that inflation will also reach or exceed the 2% benchmark * Paradoxically, economic data over the last 6 months show no such momentum * If the manufacturing sector is already in recession, as data indicates, what makes Yellen believe that the service sector, which has shown modest growth, can sustain any growth? * The only problem Yellen does address is overseas markets * Ironically the worst thing that can happen to the U.S. economy is for markets to have more confidence in overseas economies,Privacy & Opt-Out: https://redcircle.com/privacy

* I am recording this podcast on Cyber Monday * Cyber Monday first got its name because e-commerce wanted its own version of Black Friday * It's losing some significance, given it is losing some of its competitiveness because of the strong online sales during Black Friday * Online sales were up about 20% over last year, but the brick and mortar retail sales were down about 10% * The retailers' inventories were positioned for a big increase * I think this holiday sales season will be weaker than expected, just as last year was * I think we may see more returns on the online sales this year * When the after Christmas sales start, we'll see more aggressive pricing in the brick and mortar stores, getting rid of excess inventory * What is the Fed going to do with weak Black Friday sales data? * We got more data out this morning, the Chicago PMI, horrible number * Last month we got a bounce up to 56.2 * It turned out to be a dead cat bounce - November's number was expected at 54 and delivered 48.7 * We are back in contraction mode * If the Fed does raise interest rates in December, it will prove that it was not data dependent, and that the Fed's credibility was the primary reason for the hike * This Friday, the Non-Farm Payroll number will be the last number before the Fed's December meeting, making it once again, the most important jobs number ever * Former Fed Governor Lawrence Lindsey recently pointed out on CNBC that the Fed has created another bubble * He stated that asset price inflation is going to end badly * In response, Joe Kernan questioned the assumption that the asset bubble will end badly * Historically, all bubbles end badly * I also wanted to comment on a WSJ article today predicting that the Fed would continue to raise interest rates, while the ECB would continue to ease rates into negative territory, and that U.S. interest rates would be 2.75% by early 2018 * How can they know that this will happen? * If this is the case, it also assumes that there will not be a recession between now and 2018 * This would make it the longest recovery in history, while also requiring the most stimulus * The WSJ article also assumes that the European economy will remain in recession for two years * The article's logic is that the dollar is going to go up and the euro is going to go down * Which brings me to gold * Gold was down about $15; however gold stocks did not make a new low - up about 2% today * This is a positive technical divergence * The gold stock price may be anticipating a dovish December Fed meeting * The ECB and Japan is talking up inflation, which is bullish for gold * The problem is that if the ECB is more dovish than the Fed, it depresses gold prices in dollars * The dollar is still losing its value * All fiat currencies are being debased * In the U.S. economy, M2 is growing at 6% a year * Even if you believe the government's GDP numbers, it is growing at 2% a year * So the money supply is growing three times the GDP * That is as inflationary a monetary policy as we've ever had * We have money supply growth, negative interest rates and no ceiling on the national debt * This is an extremely bullish environment for gold, but the market is simply looking at the price of the dollar vs. the euro * At some point the dollar is going to be weaker than the euro * This looks a lot like the 1960's when the price of gold was constant because of artificial intervention * There was a lot of demand for physical gold at that time * Eventually when the artificial constraints were removed, the price of gold skyrocketed * There are some artificial influencers on the price of gold right...Privacy & Opt-Out: https://redcircle.com/privacy

* Tomorrow is Thanksgiving Day, one day before Black Friday * The one day of the year where Americans make their annual pilgrimmage there they stampede to the nearest mall to buy stuff they really don'[t need and can't afford * It's almost like a black and blue weekend * I believe that this will be a pretty weak holiday weekend; by the time we get the sales numbers next week, it's going to be pretty dismal * The news that brought the euro down this morning was rhetoric coming from Mario Draghi , head of the ECB * He's talking about expanding the QE program to a 2-tiered system * Why is Draghi so determined to talk down the euro and talk up inflation? * He is in pursuit of Keynesian economics' holy grail - inflation * If only we can succeed in getting prices to go up faster then we would have economic growth and prosperity * Believing that a rising cost of living is the secret sauce of economic growth * If you search the internet, you see that no one is critical of this * If rising prices are so important, why not just raise the VAT? * You could obtain the exact amount of inflation desired if the real goal is to rais prices * But that's not really the goal, because they would just raise the VAT * The real goal is to wipe out government debt and to mitigate the effects of wage hikes imposed by the government * Academia and the press all give them a pass on the idea that rising prices create prosperity * The truth is the reverse: prosperity comes from reducing costs * As things get cheaper, more people can afford them - I use the example of cell phones * Now even poor people can afford a cell phone * Falling prices lift standards of living and falling prices result from a productive economy * Inflation results from government interference and it doesn't make things better * Let's go over the economic data this week * It's been a mixed bag * On Monday we did get the manufacturing PMI number, expected to come in at 54.5 which would have been an improvement * Instead, we got 52.6, the lowest number in 2 years * I've been talking about this for a long time on this podcast - the manufacturing recession is already here * The mainstream media dismisses this because manufacturing is so small it doesn't really matter * That statement says so much * A downturn in manufacturing will preclude a downturn in the service sector * We also got existing home sales that came out on Monday - they were below estimates * There's plenty of evidence that the housing market has already rolled over, and if the Fed were to raise interest rates, it would push it even further down that hill. * The big number that came out yesterday was the revision to Q3 GDP * Initially the government reported that the GDP was up 1.5% * Everybody expected an upward revision and that's exactly what we got - a revision to 2.1 * The problem was, the number was due to a big build in inventory * I have been talking about this for months on this podcast; we have huge amounts of unsold inventory * Businesses have been more optimistic than they should have been based on the Fed's recovery rhetoric * This mistake shows up as a positive in the GDP * The other big factor is that the government assumes that inflation is just 1.3% * I don't believe that for a second * Health insurance alone is costing the average American's cost of living more than 2% * Today the Atlanta Fed just reduced their Q4 GDP estimate from 2.3% down to 1.8% * What the third quarter giveth, the fourth quarter taketh away * Buried in that GDP report are some other bad numbers * There was a 4.7% decline in corporate profits for the quarter - the biggest decli...Privacy & Opt-Out: https://redcircle.com/privacy

* Friday the 13 was an unlucky day on Wall Street * The Dow was down over 200 points - the second back to back decline of over 1% since August * What was happening in August? Everybody was convinced the Fed was going to raise rates in September * Now, everybody is just as convinced that the Fed will raise rates in December * Once again, as I predicted a week ago, the market sold off * We are down over 650 points on the week * Nasdaq is down today even more - 1-1/2% * The carnage was once again led by the retailers * Bad earnings out of Macy's Nordstrom's Walmart and others set the scene for new share price lows * I have been warning about this all year, based on inventory numbers * All the evidence is flashing recession * The Fed has been saying that they are data dependent - open your eyes and look at the data! * This data is consistent with the beginning of a recession * Yes, unemployment is low, but unemployment is always low when recessions begin * I think the Fed knows they are not going to raise rates * The Fed minutes are coming out next week and we'll get an insight into the deliberation between the members * All Janet Yellen said was that an interest rate hike was a "live possibility" - The market did the rest. * They took the word "possibility" and assumed that it was a probability * Let's look at the economic data that came in today: * First, October Producer Prices - they were looking for a rise of .2, because last month, they actually fell by .5 * We didn't get .2; we got -.4 * As of last month, year over year producer prices have declined 1.1% * Now they are down 1.6% on the year * This is going the opposite direction of the Fed's goal of 2% inflation * The worst number was retail sales: * They were looking for a rise of .3, which is still not a big rise - but we got an increase of just .1 * To add insult to injury, they had adjusted last month's forecast to zero * Also x auto, they were looking for a gain of .4 and instead got a gain of .2 * These numbers will subtract from Q3 and Q4 GDP * We also got September inventory numbers: * The consensus was a rise of .1, but instead we rose .3 * This rise was not a result of an increase of sales, it is because sales are not keeping up with inventories * The inventory to sales ratio rose to 1.48 fro 1.47 * The last time we had this number was during the financial crisis * I have been pointing out that these inventory numbers have been padding the GDP for the last several quarters * This has been ignored on Wall Street * This means future GDP will plunge as companies need to liquidate inventories and not replenish them * Not only that, they will be liquidating their workforce * The heavy layoffs may not happen this year - more likely they will come in January and February * The odds are that the Fed is not going to raise rates in December and the odds against a rate hike as the market continues to sink, with more and more bad economic news * This bad news about retail sales was unexpected by the market as evidenced by the sharp drop in share prices * Is the Fed going to raise rates just as the economy is turning down? Not a chance. * If they do, imagine how much worse the economy will be * The question is: When is the Fed going to come clean and admit that they are not going to raise rates and will their excuse be and will the markets buy it?Privacy & Opt-Out: https://redcircle.com/privacy

* When I recorded my last video blog, I mentioned how positively the market reacted to jobs report, which could signal the Fed to raise rates * I said there might be a delayed reaction and, in fact it did * Four days into this trading week we are down more than 450 points * Also, I did an interview on CNBC.com where I said I felt the retail markets would have a a tough time this Christmas * That was translated into headlines that I stated that consumers would have a horrible Christmas, which was not my point * So far, my prediction about the retail space is bearing out, bad earnings reports from Macy's Walmart, Men's Wearhouse, and its subsidiary, Joseph A. Bank, Nordstrom and Neiman Marcus * The data that the Fed depends on is getting worse and worse * If the Fed raises rates in December, it will prove that they have not been data dependent, they were delaying * Copper a six-month low today, oil prices are down, gold hit a new low inter-day but rallied back and the dollar finished broadly lower for the day * Based on these market prices, the Fed will have another excuse to delay rate hikes, again * What will stop the stock market from falling? The only thing that will stop it is if the Fed takes a rate hike off the table * I recently wrote a commentary where I reference the shadow rate * Tightening actually began about 18 months ago when the Fed started tapering * The Fed's monetary policy is not just about rates, it is also about easing and foreward guidance * When the Fed began tapering they were tightening * When they began talking about raising rates that was the equivalent of tightening, because the markets braced for the hikes * That's why the economy is rolling over, that's why the stock market is rolling over * Given how weak this recovery has been and the enormity of the stimulus required, if the Fed removes all stimulus it will result in a worse than normal reaction in this over-valued stock market compared to previous tightening cycles * More evidence of the weakening economy is the number of millennials still living with their parents is at a record high * I posted a Bloomberg article on my Facebook page about the number of young women living at home is the highest in 70b years * Bloomberg prefaces the article by stating that this is not a sign of a weak economy, but clearly it is * This also affects housing: * Couples are delaying buying "starter homes" which delays or prevents them from saving up for a down payment on their dream house * I also wanted to discuss the Fox Business Republican Debate * I believe Rand Paul was actually the winner of that debate * Paul stood out, and made some good points, which allowed him to move forward in the polls * Paul is drawing a contrast, as he made the point that the real threat to the U.S. is not a military threat from the outside, but the self-inflicted threat of a weak economy * Our debt is a bigger enemy than ISIS * Paul also avoided jumping on the immigration bandwagon. Immigration is not the problem. If we turn off the welfare magnet, then the only people who come to America will be the people who want to work * The country would benefit from that, because it will keep labor costs down and boost productivity * The anti-immigrant voice of the Republican party will be vilified as racist in the general electionPrivacy & Opt-Out: https://redcircle.com/privacy

* Friday, November 6, 2015 * Earlier today the government released the Non-Farm Payroll Report for the month of October * I was told that this was the most import Non-Farm Payroll report ever * They were looking for 190,000 jobs and we created 271,000 jobs * Everybody now has jumped to the conclusion that a December rate hike is a lock * There is nothing in this jobs report that indicates that * The reason everybody believes that the Fed is like to raise rates is because Janet Yellen testified before Congress earlier in the week * This is what the Fed Chair said about interest rates: * If we get further improvements in the labor market and we make progress at achieving the Fed's inflation goal of 2% in the medium term * How much improvement and what kind? We don't know, because thus far, no improvements have been enough to prompt a rate hike * Yellen said that if we got those improvements, then a rate hike in December would be a "live possibility" * This does not mean it will actually happen - it means it is possible * She did not even use the word probable * I don't think the Fed is going to raise rates in December * We have one more "most important" jobs report between now and December and this month's numbers may be revised down, as others have * From my perspective, if the Fed does not know that they will raise rates by now, they will not decide on the spur of the moment after a jobs report * Even with positive economic news, the Fed still does not have to raise rates; they can come up with another excuse, real or unreal * What happens if the stock market declines after a rate hike? what would the Fed do then? * "Extend and Pretend" is working like a charm for the Fed now * Getting back to today's job's report: * This is the strongest month of the year following the two weakest months of the year * Both of those months arrived with expectations of upward revisions, and they did not happen * The three month average is 187,000 jobs * The last three months have been slower than any prior three month period this year * Last year, the 3-month average was about 250,000+ jobs * So the job market is much slower this year than it was last year when the Fed was looking for "more improvements" before raising rates * The unemployment rate did decline, but so far no positive data on unemployment rates have prompted the Fed to raise rates * The Labor Force Participation Rate stayed at 62.4% which matches the low of this so-called recovery * So we are not seeing more people entering the labor force * This is not a sudden accelleration in the pace of job growth * Let's look at the quality of the jobs: * Most of the jobs, about 200,000 of the 271,000 jobs added are low-paying service sector jobs * In second place, at 45,000, is temporary help * Third place, at 44,000, is retail trade * The fourth largest category is leisure and hospitality * Manufacturing, mining, logging, transportation sectors lost jobs * Where it really gets bad is in the demographics: * All job gains went to people 55 and older * People under the age of 55 lost 35,000 jobs * If you look at the gender, men from 25 - 54 lost 119,000 jobs * What would explain this? * Older people can no longer afford to be retired, and are supplementing their retirement incomes * Some of the older people are taking better jobs because they are more experienced * Why are more women getting jobs? * Women who were previously homemakers also need to supplement their incomes * When you look at the demographic numbers, it is further proof that the Fed's explanation of the labor force participation rate is wrong Privacy & Opt-Out: https://redcircle.com/privacy

* Here we go again; Janet Yellen was on Capitol Hill testifying about the banking system * Forget about all her comments about how solvent the banking industry is - of course it's not * The banking system is more vulnerable and more highly leveraged than before the bailout * I am focusing on what she did or did not say about the Fed's intentions to raise rates in December and how the markets reacted * Headlines following the testimony were about the probability that the Fed will raise rates in December * The December meeting will be a live meeting with a rate hike on the table * The official probability of a December rate hike rose from 50% to 60% * When the Fed did not raise rates in October they removed language referencing concerns about international markets * This was interpreted as a more hawkish stance on the part of the Fed * The global economy was used as an excuse, but the Fed had no intention of raising rates in October * In December when it doesn't raise rates, it'll use another excuse * The markets wants to believe that the Fed will rates, and as soon as Yellen's comments were released, the dollar soared and gold tanked * Let's look at what Janet Yellen actually said: first I am going to go to a Reuters story, Fed's Yellen sees possible December rate rise * That's all it takes, just the mention of a possibility makes everybody jump to the conclusion it is going to happen * Here's Yellen's quote directly from the artice: * "What the committee has been expecting is that the economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2 percent target over the medium term," * "If the incoming information supports that expectation then our statement indicates that December would be a live possibility." * She is saying, if we get the improved data we're expecting * The labor market has been weakening and the last two jobs numbers have been quite weak * Yellen says it is possible if we get improvements we expect we will raise rates * Anything is possible... it is more probable that she is not going to raise rates in December * She actually says it's a long shot * She's been saying this all year and it has not meant anything * Reuters omitted from the article that Yellen followed up the above statement by reiterating that at this point, the Fed still has not made up its mind * Another story from CNBC:Janet Yellen: December rate hike a 'live possibility' * Here's a Yellen quote from this article: * "Now no decision has been made on that and, what it will depend on, is the [Federal Open Market Committee's] assessment at the time. That assessment will be informed by all of the data that we collect between now and then," * This implies that they intend to collect data from now until the December meeting and make their decision on that data * If the Fed does not know now, how different can the data be? * If nothing is going to change, why not make a decision? * Yellen's monetary policy is to pretend to raise rates and then not do it * If you actually listen to what she is saying, it is far more probable that she won't raise rates, because thus far, we have not seen an improvement in the data she is tracking * Even if the Fed sees improvements, they still might not raise rates * Here's the one thing that Yellen is not doing: she does nothing to alter the false perception that a rate hike is likely Privacy & Opt-Out: https://redcircle.com/privacy