January 29, 2023

The financial markets Are Worried About the Wrong Given Mistake

“the reality is we’re already in recession, and we don’t have a strong economy. “

Stocks have got struggled in recent days due to some better-than-expected financial data and more hawkish speak from Fed officials.

This has revived fears that the Government Reserve could make a mistake and raise rates too high and maintain them there too long, sparking a recession. In his podcasting, Peter Schiff said the financial markets are worried about the wrong mistake.

Peter mentioned he thinks there is still a chance that St . Chip will show up with a Santa claus Clause rally in shares.

“ I don’t expect this rally to have too much behind it, meaning I may look for much in the way of benefit. But I do think there’s a great chance we’re going to do one more short squeeze before the following leg lower, which I think will happen in January, otherwise even before the end of Dec. So , to the extent that individuals get the Santa Claus rally, you don’t want to buy it. Actually you don’t even want to buy in anticipation of the rally, since it may not even happen, and you are be left with coal in your stockings. ”

Peter said the market reaction to  Jerome Powell’s recent speech   got him thinking about the chance of a Santa Claus rally. The markets ignored Powell’s hawkish talk about interest rates going higher and staying there lengthier and focused totally at the prospect of a smaller price hike in December. But in the previous few days, several Fed members have repeated Powell’s messaging about having to go higher for longer.

Also, there was some better-than-expected economic news.   The ISM services index came in higher than expected   along with  factory orders in October . It was something of a one-two impact. As soon as the data came out, the S& P Futures marketed off sharply. Gold furthermore charted a big drop.

The market perception is that this stronger-than-expected economic information will prevent the Fed through recognizing that the inflation danger has subsided. That will result in the Fed making a mistake and raising rates excessive and leaving them way too high for too long, causing an unnecessary recession.

All of this is scaring the stock market. But the reality is we’re already in economic downturn, and we don’t have a strong economic climate. ”

Peter said of course we will occasionally get data which is stronger than expected. But  most of the data continues to be weaker than expected . And a lot of the strong data — for instance, the non-farm payroll report — is only superficially strong. When you dig beneath the surface,   you find a different story .

Do accept the numbers in face value. Dig just a little deeper and look at can be actually happening. Because if you are doing that with the jobs figures as I’ve been doing with this podcast, the jobs marketplace isn’t strong. The work opportunities market is weak. ”

Philip emphasized that the risk everybody is worried about is the wrong risk.

It’s not that the Fed will raise rates too much. It’s actual that they’re not going to raise them enough. It’s that they’re going to pivot too quickly. It’s not that the Fed is going to mistakenly believe that the economy is solid and then overestimate how high inflation will be. It’s the weakened economy that’s going to cause pumpiing to be higher. Because because the economy weakens, production can decline, but money printing can expand. In fact , at some point, the Fed will pivot in response to a much weaker economy than it expected, and that’s when the dollar is really going to tank, and that’s when consumer costs are really going to take off. ”

Peter said the inflation that we’re experiencing now can kick into a much higher equipment during the next economic downturn.

Everybody simply assumes that when the economy weakens, so too will inflation. No . The weakening economic climate is going to strengthen inflation mainly because inflation is the expansion from the money supply. And the less strong the economy gets, the more the Fed is going to broaden the money supply to try to induce it. And as the come back of quantitative easing the mass exodus out of the ALL OF US dollar from foreign main banks and private slots, then the falling dollar will push consumer prices up dramatically. ”

The weakening dollar will also cause the  trade deficit to broaden , putting downward pressure on GDP, and creating a self-perpetuating spiral of pumpiing and economic weakness.


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