- 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, the dollar to go down and gold to go up. I thought the Fed would have been too smart to risk their credibility on such a move. I was wrong about the fact that the Fed was too smart to risk their own credibility by hastening recession
- So they did raise rates, and everything that I said would happen has happened
- That’s what I got right.
- By a week or two before the meeting, I had actually acknowledged that they probably would raise rates, but I still believed that disaster would be right around the corner if they did
- If you remember on this podcast I said that the reason the Fed was raising rates is because they thought the market was blessing the hike, with a rally in December
- I said if the Fed believes that the market was giving them the green light, I said that’s a bad bet, because the market won’t like the rate hike
- Even though the consensus was that the rate hike would not be a problem, I said it was going to be a problem
- But then they came out and said they planned to do 4 more rate hikes, which exacerbated the problem
- My comments accurately described in advance the consequences of raising rates, and the Fed did not share that view. It looks like I was right.
- If the Fed could have seen today’s Wall Street Journal when they were raising rates in December, there is no way they would have done it
- They worried about the impact enough to wait until December, but they were afraid to look foolish by not following through on their promise to raise rates by December
- They opted for looking foolish later when they had to back down, which is generally what they do
- I also thought the Fed would do QE4 before raising rates, for the same reason
- But I also said if they did raise rates, then they would still do QE4, but they would first have to cut rates
- I said that I thought the Fed was bluffing; that they were pretending that they could raise them, to convince the market that doing so would not have adverse effects on the economy
- But if they did raise rates and prick they bubble, then the market would collapse and they would have to reduce rates and do QE4
- Scott Nations claims I am wrong because the Fed has not done QE4 – How can they do QE4, with raised rates?
- Had the Fed not raised rates, we still would have gone into a recession later, but the Fed would be able to look prescient and come in with stimulus to save the market
- Scott Nations is nit picking my quotes to promote his idea that my forecasts were wrong
- Nations claims there is no connection between the rate hike and what happened in the market
- So according to him, the Fed raised rates in December and then we have the worst start of a year in stock market history and it’s pure coincidence
- The consensus on CNBC was that a rate hike would not hurt the market, and I was alone in saying that it would be a disaster
- The markets that were discounting a rate hike were the gold market, going down and the dollar going up, but the stock market was not going down at all over worries about a rate hike, rationalizing that for several reasons, the hike would be positive, which is why the market rallied the day of the hike
- I picked apart each one of those reasons in my previous podcasts. The Fed’s symbolic expression of confidence in the strength of the economy was not enough to mask underlying weakness. I illustrated the weakness each time new numbers came out that consistently painted a very bad picture of the economy.
- I said, just wait, give it a little time and the market will go down.
- Nations is using that time frame to conclude that the rate hike had nothing to do with the market’s spectacularly bad January
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