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Peter Schiff: Due to the Feds Antics, the Market is Very Dangerous Now

Friday, January 8, 2016 3:12
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In the video below, Peter Schiff give his assessment of what to think of the rocky start to the beginning of the year for stocks. He begins by saying that the U.S. in headed for a long overdue recession, and points towards already declining earnings, combined with way overpriced stocks. In a rather snotty way, Peter almost can’t help but say that he warned this exact scenario was going to happen IF the Fed raised rates, and they did.

Peter (and myself) said all last year that there was not a snowball’s chance in hell that rates would go up in 2015, and for that matter, that they probably wouldn’t go up until WELL into 2016, if at all in 2016.

Why? Because absolutely NOTHING suggests this economy is remotely healthy, let alone in recovery. Remember, it was Janet Yellen herself who said, “Rates Could Stay at Zero Forever,“ so it would have made sense to leave them alone. 

Prior to the December meeting, Janet Yellen said, the Fed was only going to raise rates “when the data warranted a rate hike,” but with all the talk, and with all the speculation leading up to the December meeting, people were clearly of the mindset that rates would be going up, so, in spite of all her talk about only raising rates when the data supported a hike, Yellen raised rates based on numbers that were SUBSTANTIALLY worse than they were back in September, when she thought raising rates was a TERRIBLE idea. 

The big news the actual day of the hike, was that manufacturing was down, just like it was expected to be, but it was down more than 3x what was expected, and obviously the first number was still lower than it was in September, when Yellen said raising rates was a terrible idea. So, how does a number 3x worse than it was in September all of a sudden mean it’s time for rates to go up?

The whole idea was idiocy, and demonstrated that the rate hike was a typical slight of hand gesture from someone who considers herself “part of the Obama administration.” The Fed isn’t supposed to be political, but come on… this is the Obama administration. Yellen (and many others) somehow thought that by raising rates, it would make people believe the economy was doing better, and that would somehow “will” the economy to good health. Give me a break! 

The simple truth, is that back in December, by her own doing, Janet Yellen backed herself into a corner, and she was screwed no matter what she chose to do. To use her words, Yellen said that raising interest rates would “show confidence” in the economy. Apparently someone forgot to tell her that a strong economy doesn’t need a .25% token rate hike to show confidence. A strong economy creates its own confidence. H-E-L-L-O!!!

As I’ve said before, none of that should come as a shock from the same person who in 2008, when the world was on fire, halfway through 2008, Janet Yellen still wasn’t even forecasting a recession yet… THAT’S how far off she was.

When Janet Yellen made the idiotic decision to raise rates, even though the objective criteria for raising rates that SHE herself set had not been met, she sealed her fate.

Peter predicted IF the Fed was so stupid as to raise rates when nothing supported doing so, then the Fed would lose ALL credibility when at the next meeting it would not only be forced to lower them back to zero, but have to start up the printing presses for QE4. Then again, from YEllen’s perspective if she hadn’t raised rates, people would have seen right though the NONSENSE about how we have been in a recovery, and they would have seen that as “proof” the economy was weak (which it is). Had she not raised rates in December, people would have realized right then that she’d been lying the whole time about the economy recovering. 

Janet Yellen succeeded in doing one thing: Rather than looking a fool who’s been lying to the country in December, she looks like a fool who’s been lying to the country in January… and she’s taking YOUR 401k with her. 

Below, Michael Snyder talks about the correlation between what is going on with China’s markets, and what is going on with ours domestically. There’s no denying the two economies are linked, but not to the degree the press would have you believe.

The primary reason behind the U.S.’s rough start, is because like a bunch of heroine addicts, the cheap money has been our drug, and you are seeing what happens when the drug is made harder to get.

The U.S. is in BAD shape, but only a tiny fraction of our condition is a result of China. Obama’s monetary policy has completely totally screwed this country, but don’t expect to hear that in the mainstream news.



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On Wednesday, Michael Snyder wrote:

Did you see what just happened in China?  For the second time in four days, a massive stock market crash has caused an emergency shutdown of the markets in China.  On both Monday and Thursday, trading was suspended for 15 minutes when the CSI 300 fell 5 percent, and on both days the total decline very rapidly escalated to 7 percent once trading was reopened.  Once a 7 percent drop happens, trading is automatically suspended for the rest of the day.  I guess that is one way to keep the stock market from crashing – you just don’t let anyone trade.  And of course the panic in China is causing other markets to go haywire as well.  As I write this, the Nikkei is down 324 points and Hong Kong is down 572 points.

The amazing thing is that trading was only open in China for about 15 total minutes tonight.  Here is how CNBC described what just happened…

China’s stocks were suspended from all trade on Thursday after the CSI300 tumbled more than 7 percent in early trade, triggering the market’s circuit breaker for a second time this week.

That drop-kicked stock markets across Asia, which were already wallowing after a weaker open amid concerns over China’s economic slowdown and its depreciating currency as well as falling oil prices.

On the mainland, the Shanghai Composite tumbled 7.32 percent by at the time of the halt, while the Shenzhen Composite plummeted 8.34 percent. The CSI300, the benchmark index against which China’s new circuit breakers are set, plunged 7.21 percent. If that index rises or falls 5 percent, the market halts all trade for 15 minutes. If it moves 7 percent, trading will be suspended for the rest of the day. In total Thursday, China shares only traded around 15 minutes.

How will European and U.S. markets respond to the chaos in Asia when they open?

That is a very good question.  I think that everybody will be watching.

Already, the Dow Jones Industrial Average is down about 500 points for the year.  The financial crisis that began in the second half of 2015 is now accelerating as we enter 2016, and nobody is quite sure what is going to happen next.

One key to watch is what happens with the S&P 500.

2000 is kind of like a giant line in the sand on the S&P 500.  On Wednesday we saw the market hover around that psychologically-important number, and there is a whole lot of resistance right there.  If we break solidly through 2000 and start plunging toward 1900, that is going to break things wide open.

The primary reason for the stock market crash in China on Thursday was another stunning devaluation of the yuan.  This explanation from Zero Hedge is very helpful…

Following the collapse of offshore Yuan to 5 year lows and decompression to record spreads to onshore Yuan, The PBOC has stepped in and dramatically devalued the Yuan fix by 0.5% to 6.5646. This is the biggest devaluation since the August collapse. Offshore Yuan has erased what modest bounce gains it achieved intraday and is heading significantly lower once again. Dow futures are down 100 points on the news.

PBOC fixes Yuan at its weakest since March 2011… with the biggest devaluation since August


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A massive devaluation of the yuan was also one of the primary reasons for the market turmoil that we saw back in August.  The Chinese are playing games with their currency, and this is causing havoc in the global marketplace.

Meanwhile, we have received some other very troubling news about the global economy over the past few days…

-The price of oil continues to collapse.  As I write this, the price of U.S. oil is down to $33.26 a barrel.  Those that follow my writing regularly already know that this is a really bad sign for the global economy.

-The Baltic Dry Index just hit another brand new all-time record low.  Global trade is absolutely imploding, and this is having a devastating impact on China and other major exporting nations.

-U.S. manufacturing is contracting at the fastest pace that we have seen since the last recession.  This is precisely what we would expect to see during the early stages of a new crisis.

-U.S. manufacturing imports are also contracting at the fastest pace that we have seen since the last recession.  It appears that “the almighty U.S. consumer” is not going to save the global economy after all.

In 2015, trillions of dollars of stock market wealth was wiped out globally.  Now this new global financial crisis is picking up speed, and many of the “experts” seem absolutely stunned by what is happening.

But most of my readers are not surprised.  That is because I have been breaking down the signs that have been warning us of this new crisis in excruciating detail for months.  The financial carnage that we have witnessed around the globe this week is simply a logical progression of what has already been happening.

To be honest, though, even I have been stunned by what has happened in China this week.  I can’t say that I expected an emergency shutdown of the Chinese markets two times within the first four trading days of the year.

Panic and fear are beginning to grip the global marketplace, and once that starts to happen events become very difficult to predict.

Let us hope that things settle down soon, but I wouldn’t count on it.

As I have said before, 2016 is the year when everything changes, and we are going to see things take place over the next 12 months that are going to shock the world.

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Jim Willie: Armageddon Coming to U.S. With Trillions Exposed In Derivatives

Jim Willie, The Fed’s Week of Reckoning, and an Isolated United States

Jim Willie: After Banks Fail, Government Seizes IRA’s, 401k’s, and Pensions

Jim Willie, the Crumbling Global Economy, and the Dollar Crisis

Jim Willie: What Do the Oil Black Market, NATO, and ISIS Have in Common?

Jim Willie; One on One -Taking Questions On the Most Pressing Matters of the Day

Jim Willie: The Fed, Yellen, US Dollar, and Negative Interest Are a Joke!

Jim Willie Explains U.S. Nuclear Threats to China & Russia Over Challenging the Dollar 

Jim Willie: What Will It Mean If the Yuan Gets Reserve-Currency Status?

Jim Willie and 20 Reasons Why Quitting Prepping After September Was Wrong

Jim Willie: The Mid East Carnage Left by the American Wrecking Ball

Jim Willie: The Fractured Bond Market and the Economic Collapse



Peter Schiff: 2015 Was The Worst Year Since 2008 and Stocks Still Dropping

Peter Schiff: Janet Yellen Strayed From Her Own Plan and Went Nuts!

Peter Schiff: Higher Spending During Holidays Does Not Fix Screwed Economy

Peter Schiff and “If The Economy Is Fine, Why Are So Many Large Retailers Imploding?”

Peter Schiff: Take a Good Look at the “New” American Dream!

Peter Schiff: Did the Fed’s Luck Run Out On Friday the 13th?

Peter Schiff and “The 4 Harbingers Of Stock Market Doom”

Peter Schiff and Reagan Advisor: Complete Economic Collapse Immediately Ahead

Peter Schiff: Warning! Economic Storm Clouds Ready to Rain

Peter Schiff: Death of the US Dollar Is Imminent; Fed Out of Options

Peter Schiff: 11 Trillion In Global Stock Losses and Awful Jobs Report

Peter Schiff: “The Fed Admits Rates Could Stay at Zero Forever”

Peter Schiff with Mr. “I Have No Fear Of an Economic or Stock Market Collapse”

Peter Schiff Explains Why Financial Bubbles Are Ready to Pop

Peter Schiff: Everybody Is Preparing for Wrong Outcome in US Economy

2 Day Crash That Was Larger Than Any 1 Day Market Crash In U.S. History 

Peter Schiff On China’s Currency Devaluation and the Federal Reserve Board

Peter Schiff: Greece Was a Sideshow. Americans Need to Worry About Starving

Peter Schiff: China and Switzerland is Killing U.S. Dollar

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