Fed must capitulate or bear will be brutal says Schiff.

[HawktimusPrime]

http://finance.yahoo.com/news/fed-must-capitulate-bear-brutal-131037478.html

With the S&P 500 near 52-week lows this year, investors are searching for clues on where equities could head. And while many assign blame on the collapse in oil and economic uncertainty in China, one of the Federal Reserve 's fiercest critics is pointing the finger at one person: Janet Yellen.

"Unless the Fed totally capitulates, this bear market is going to be brutal," Peter Schiff , head of Euro Pacific Capital, told CNBC's " Futures Now" on Tuesday. A bear market is loosely defined by a 20 percent drop from a recent high. The S&P 500 (INDEX: .SPX) is down 13 percent from its May high.

"What we need to stop this bear market, is full-on quantitative easing from the Fed. Every time the market has corrected, since 2008, it's always been the Fed that's made the bottom," said Schiff. "The Fed has always saved the market either by cutting rates, launching QE or threatening to launch another round of QE. So, they're going to have to give the drug addicts on Wall Street what they want."

 

[DrVenkman]

Then the bear will be brutal. The Fed should not step in. The Fed and multiple other central banks around the world have created this deflationary down-cycle. Propping up liquidity over the last 8 yrs has allowed for the commodity rally and now the emperor has no clothes. Capital is flying back out of risky assets as global economy slows down.

How will banks in the US or Europe make money with the yield curve flattening and the 10yr yield racing to 1%. They wont. The yield on the German Bund is .24%.

Be ready for the continuation of the recession we are in and stocks will go much lower.

Also- someone wake us up when we got a positive inflection point in US GDP.

 

[bhawk24bob]

I am confident that the Fed, its Presidents, and most importantly its economists know more about what the Fed needs to do than Peter Schiff

 

[Sooner-Be-Dead]

Then the bear will be brutal. The Fed should not step in. The Fed and multiple other central banks around the world have created this deflationary down-cycle. Propping up liquidity over the last 8 yrs has allowed for the commodity rally and now the emperor has no clothes. Capital is flying back out of risky assets as global economy slows down.

How will banks in the US or Europe make money with the yield curve flattening and the 10yr yield racing to 1%. They wont. The yield on the German Bund is .24%.

Be ready for the continuation of the recession we are in and stocks will go much lower.

Also- someone wake us up when we got a positive inflection point in US GDP.

So all the quantitative easing has created deflation? Sounds like you know your Econ.

 

[theVoicefromtheTomb]

This Euro Pacific Capital?

http://www.europacificfunds.com/value_fund.html

 

[DrVenkman]

So all the quantitative easing has created deflation? Sounds like you know your Econ.

Where is there inflation in the world? Show me even one example right now.

QE led to massive debt raising over more than a decade because the world was awash with cheap capital. There was little to no econ growth. No with even less econ growth and no QE, deflation is the only thing left. See Japan.

Even when oil was 100$ most of the US infrastructure was cash flow negative. Now at 28$ the industry - and many countries that counted on inflated oil and metals- can not function.

Stay away from threads you know nothing about.

http://www.zerohedge.com/news/2015-08-15/approaching-global-deflationary-crisis

 

[St. Louis Hawk]

Be ready for the continuation of the recession we are in and stocks will go much lower.

We're in a recession? Did they recently change the definition of the term?

 

[unIowa]

I am confident that the Fed, its Presidents, and most importantly its economists know more about what the Fed needs to do than Peter Schiff

Really???

 

[Sooner-Be-Dead]

You must be inventing a brand new Econ school of thought. That monetary easing creates deflation. They may write about you in textbooks alongside Keynes and Adam Smith.

 

[Huey Grey]

So all the quantitative easing has created deflation? Sounds like you know your Econ.

Good catch. Not sure how pumping more money into the system deflates the value of it?

 

[unIowa]

So all the quantitative easing has created deflation? Sounds like you know your Econ.

It hasn't caused deflation but it isn't going to be able to hold it off either. Cheaper debt isn't going to ramp things up substantially either, at least from the consumer side...they are already all borrowed up.

Cheap money is only helping our govt better service its debt at this point.

Until money the money build up at the top makes its way down to the middle/lower class inflation will not be a problem.

If we want to stay away from inflation then Americans all across the country are going to need a significant pay raise, because lowering their debt servicing costs is only playing around the edges at this point. Get real and sustainable money in the pockets of the lower and middle class and we can return to normal growth.

 

[Sooner-Be-Dead]

It hasn't caused deflation but it isn't going to be able to hold it off either. Cheaper debt isn't going to ramp things up substantially either, at least from the consumer side...they are already all borrowed up.

Cheap money is only helping our govt better service its debt at this point.

Until money the money build up at the top makes its way down to the middle/lower class inflation will not be a problem.

Right, it may not stave off deflation (see Japan) but it certainly isn't the cause of it.

 

[unIowa]

Right, it may not stave off deflation (see Japan) but it certainly isn't the cause of it.

I agree, I'm just saying cheap money and even temporary govt stimulus isn't going to fix it at this point, the underlying problem has become systemic. The cause being a decades worth of stagnate/shrinking wages of the middle and lower class and them not getting to participate in any much of a wealth effect with the run up on equities.

THIS is why candidates like Bernie and Donald are doing so well people AND they should be doing well. DC politicians have driven our middle class into the ditch, they do not deserve our support any more.

 

[dgordo]

This Euro Pacific Capital?

http://www.europacificfunds.com/value_fund.html

yes, he really knows his stuff huh?

 

[DrVenkman]

We're in a recession? Did they recently change the definition of the term?

Yes they have. Just like the govt changed how we measure employment.
US is in a recession. By the time the media and Yellin talk about it you will realize it is about 6 mos too late.

 

[theVoicefromtheTomb]

Not exactly the Oracle of Omaha is he?

 

[DrVenkman]

Good catch. Not sure how pumping more money into the system deflates the value of it?

Not a good catch. It has created bubbles of unsustainable debt. There is more debt on US balance sheets than at any time in 2007-8-or 9. With the economy slowing it only is going to cause more and more defaults. First it will be energy companies- the smaller ones- then larger companies like Conoco and Marathon, will have their investment grade debt downgraded to junk. then the banks will have to raise $$Billions more in reserves.

Keep telling yourself it is all fine and the economy is ok because of QE. It isn't.

And whatever the textbook reference was, step out into the real world.

 

[DrVenkman]

Not exactly the Oracle of Omaha is he?

Thanks for mentioning Warren- you should read this.

http://davidstockmanscontracorner.com/the-warren-buffet-economy-why-its-days-are-numbered-part-1/

 

[archmage2002]

Where is there inflation in the world? Show me even one example right now.

QE led to massive debt raising over more than a decade because the world was awash with cheap capital. There was little to no econ growth. No with even less econ growth and no QE, deflation is the only thing left. See Japan.

Even when oil was 100$ most of the US infrastructure was cash flow negative. Now at 28$ the industry - and many countries that counted on inflated oil and metals- can not function.

Stay away from threads you know nothing about.

http://www.zerohedge.com/news/2015-08-15/approaching-global-deflationary-crisis

That's an interesting link. #3 really hits home to me, #1, #2 and #4 all are very interesting points. Life on Earth is a zero-sum game.. the only way to get out of that is to open up a new frontier, Outer Space. Unfortunately that is still very far away and I don't think it will happen because I think the 'trigger' is in the process of being pulled.

The 'Trigger' is war, specifically World War 3. Casus belli is going to be the global deflation, some nations eventually will try taking over another nation to get out of the deflation cycle. When that happens it will spread and eventually (as long as a nation doesn't use nukes) the war will 'reset' the global economy, just like it did for World War 2.

 

[Sooner-Be-Dead]

Not a good catch. It has created bubbles of unsustainable debt. There is more debt on US balance sheets than at any time in 2007-8-or 9. With the economy slowing it only is going to cause more and more defaults. First it will be energy companies- the smaller ones- then larger companies like Conoco and Marathon, will have their investment grade debt downgraded to junk. then the banks will have to raise $$Billions more in reserves.

Keep telling yourself it is all fine and the economy is ok because of QE. It isn't.

And whatever the textbook reference was, step out into the real world.

So using your economic theory, the Fed should reduce the money supply to boost the economy?

 

[unIowa]

So using your economic theory, the Fed should reduce the money supply to boost the economy?

I think he is saying, at this point, the fed is helpless in the matter. Maybe I am wrong.

 

[Sooner-Be-Dead]

I think he is saying, at this point, the fed is helpless in the matter. Maybe I am wrong.

Well sure. He wants to point fingers and not use logic.

 

[DrVenkman]

Well sure. He wants to point fingers and not use logic.

QE hasn't worked. If that is pointing fingers than ok. Yes I would raise rates. the market is going to hate it but it will tighten the system up and cause a flush. the system needs to flush the excesses. Are you suggesting that the FED should now reverse course and lower rates and do another round of QE ? That will only make things worse at this point and will not stimulate anything- most importantly the debt load that is out there both at a federal and corporate level.

QE is being utilized in CHina right now- how is that going? Their demand and economy is slowing mightily. Japan has been using QE for over 20yrs and has had anemic growth. The impact that oil deflation is having is bringing this debt structure to light right now and it will not stop in the energy sector. Industrials, transports and banks are all suffering.

 

[bhawk24bob]

Really???

Yes, it takes a special kind of stupid to call out the most qualified people in the world on a topic in which they have the best available data in he world at their fingertips

 

[HawktimusPrime]

I am confident that the Fed, its Presidents, and most importantly its economists know more about what the Fed needs to do than Peter Schiff

You're overconfident in that fact. Or at least you are misleading in your thoughts here. First off, the Fed has always done what's best for the Fed, it's Wall Street connections, etc. It's not an organization that was created to care fhe people. It was created as a power vacuum and it has done an admirable job.

 

[HawktimusPrime]

Well sure. He wants to point fingers and not use logic.

What logic Yellow? Tell us about this logic.

 

[HawktimusPrime]

So all the quantitative easing has created deflation? Sounds like you know your Econ.

The QE has done nothing but prop up the market and hand more wealth to the elites. It gave money to the big banks to buy up assets, and to 'pity' buy stocks. If it's so f'n good, then why hasn't it actually fixed the economy? How come a slight raise in rates causes such chaos?(rates of 2% are normal rates by the way, we're at .25%) How come the promise of more stimulus(QE) is the only thing that helped stop the drop in ALL world markets.

Explain that to us.

 

[HawktimusPrime]

Yes, it takes a special kind of stupid to call out the most qualified people in the world on a topic in which they have the best available data in he world at their fingertips

Qualified yes, out for the good of you and me no. You hold WAY too much faith in an organization that operates outside of government entirely too often.

You clearly have no idea how the Fed works. Educate yourself and come back to this conversation.

 

[Sooner-Be-Dead]

QE hasn't worked. If that is pointing fingers than ok. Yes I would raise rates. the market is going to hate it but it will tighten the system up and cause a flush. the system needs to flush the excesses. Are you suggesting that the FED should now reverse course and lower rates and do another round of QE ? That will only make things worse at this point and will not stimulate anything- most importantly the debt load that is out there both at a federal and corporate level.

QE is being utilized in CHina right now- how is that going? Their demand and economy is slowing mightily. Japan has been using QE for over 20yrs and has had anemic growth. The impact that oil deflation is having is bringing this debt structure to light right now and it will not stop in the energy sector. Industrials, transports and banks are all suffering.

That's like saying the Panthers tried real hard and lost so you shouldn't try.

We might well enter a recession after 7 years of economic expansion. Recessions happen. If you're dolt enough to think we've been in a recession for 8 years that's due to your politics, not economics.

 

[HawktimusPrime]

That's like saying the Panthers tried real hard and lost so you shouldn't try.

We might well enter a recession after 7 years of economic expansion. Recessions happen. If you're dolt enough to think we've been in a recession for 8 years that's due to your politics, not economics.

Economic expansion? We haven't even got back to where we were before 2007, and even then that was a bubble economy. What do you call a global economy that relies on negative interest rates in order to even continue going on?

 

[bhawk24bob]

You're overconfident in that fact. Or at least you are misleading in your thoughts here. First off, the Fed has always done what's best for the Fed, it's Wall Street connections, etc. It's not an organization that was created to care fhe people. It was created as a power vacuum and it has done an admirable job.

Which one of the 12 independent Feds are you referring to in your false statement?

 

[theVoicefromtheTomb]

Very interesting article. Couple of points.

Warren Buffet and others like him have seen the value of their holdings increase over time because they take on risk. That he would make a super return relative to the average worker should not be surprising. But Warren was just a side bar to Stockman's argument. The point Stockman would like to make is that the market is inflated relative to GDP. He graphs market cap plus debt of firms relative to GDP.
Problems with his analysis. He appears to use US GDP. It's an interconnected world and where US stock prices would have been based on expectations about futures US earnings that is no longer the case. Here is a similar chart that says something different. I know you mistrust the fed so take it with a grain of salt.

https://research.stlouisfed.org/fred2/series/DDDM011WA156NWDB#

And that doesn't change the point that if you had invested with Peter Schiff and his funds you would have lost 1/3 of the value of your invest since the inception of his fund. Hardly a recommendation for an investment advisor.

 

[bhawk24bob]

Qualified yes, out for the good of you and me no. You hold WAY too much faith in an organization that operates outside of government entirely too often.

You clearly have no idea how the Fed works. Educate yourself and come back to this conversation.

View embedded media

Can you enlighten us about what really happens inside the 12 reserve banks or Board, how they function, how decisions are made, etc? You seem educated on the topic.

 

[hawklandish]

I am confident that the Fed, its Presidents, and most importantly its economists know more about what the Fed needs to do than Peter Schiff

Your confidence is misplaced, especially with regard to this Fed Chief. She is a card carrying idiot.

 

[hawklandish]

Yes, it takes a special kind of stupid to call out the most qualified people in the world on a topic in which they have the best available data in he world at their fingertips

That same logic would have applied to the folks on Wall Street prior to the meltdown. How did that work out?

 

[bhawk24bob]

That same logic would have applied to the folks on Wall Street prior to the meltdown. How did that work out?

Are you making the argument that the big Wall Street banks have good data upon which they rely?

 

[HawktimusPrime]

Can you enlighten us about what really happens inside the 12 reserve banks or Board, how they function, how decisions are made, etc? You seem educated on the topic.

No I can't, and no one outside the banks can. That's the point buddy.

 

[DrVenkman]

Very interesting article. Couple of points.

Warren Buffet and others like him have seen the value of their holdings increase over time because they take on risk. That he would make a super return relative to the average worker should not be surprising. But Warren was just a side bar to Stockman's argument. The point Stockman would like to make is that the market is inflated relative to GDP. He graphs market cap plus debt of firms relative to GDP.
Problems with his analysis. He appears to use US GDP. It's an interconnected world and where US stock prices would have been based on expectations about futures US earnings that is no longer the case. Here is a similar chart that says something different. I know you mistrust the fed so take it with a grain of salt.

https://research.stlouisfed.org/fred2/series/DDDM011WA156NWDB#

And that doesn't change the point that if you had invested with Peter Schiff and his funds you would have lost 1/3 of the value of your invest since the inception of his fund. Hardly a recommendation for an investment advisor.

GDP is going to suffer unless we get more people working and at a more productive rate. Yes the system needs wage growth. Both of these metrics are going to be VERY difficult to achieve when almost no industries can raise price right now. Also. Think of how many key industries are currently downsizing. Banks, trucking, retail -across the board thanks to Amzn and e-tailing, all of energy, the Chen industry. It goes on and on. Right now deflation is a killer.

 

[soybean]

I think he is saying, at this point, the fed is helpless in the matter. Maybe I am wrong.

I think that is what he is saying too...and if he isn't, he should be.

 

[soybean]

GDP is going to suffer unless we get more people working and at a more productive rate. Yes the system needs wage growth. Both of these metrics are going to be VERY difficult to achieve when almost no industries can raise price right now. Also. Think of how many key industries are currently downsizing. Banks, trucking, retail -across the board thanks to Amzn and e-tailing, all of energy, the Chen industry. It goes on and on. Right now deflation is a killer.

Plus, keep in mind all of the older retirees that thought they were doing the right thing by saving up cash and expecting to somewhat live off of their savings earnings. Lets say you saved up $250K in cash and planned on earning at least 5% or about a thousand bucks a month. But instead you are earning 1% if you are lucky and getting just $200 a month instead...so they are forced to gradually draw down their cash in order to make end meet. Lots of elderly in that position today.