The Art of the Fake Trade Deal – Ep. 527

The Peter Schiff Show Podcast

Peter Schiff

Business News, News, Investing, Business, Politics

4.6 • 5.9K Ratings

🗓️ 16 January 2020

⏱️ 62 minutes

🔗️ Recording | iTunes | RSS

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Summary

Dow Jones closed above 29,000 today for the first time ever. Part of the impotence of this rally has been anticipation of the trade deal with China, but the majority of the rally is due to the policies of the Fed as it quietly returns to quantitative easing. The so-called good news of the trade deal is in the past and traders who were buying the rumors may start selling off on the facts. Especially since the facts of the trade deal didn’t even live up to the rumors.

The trade deal is a big fat disappointment that didn’t live up to Trump’s hype. It’s not even a real deal; it’s written as a bunch of suggestions that either party can back-out of at any time. The deal is a double-win for China. It supposedly commits China to buying more food and energy from the U.S., but China ends up getting the commodities they need with an easy way to unload their U.S. treasuries before they collapse. The Fed will have to buy more treasuries and print more money, to keep interest rates from going up.

Gold market stronger now after the trade deal signed. Gold’s technicals haven’t looked like this since 2000 when the dot com bubble burst and gold’s bear market ended. Americans don’t see the gold bull market that foreigners do because gold has made a new high in every currency except the U.S. dollar and is outperforming foreign stock markets, but not the U.S. stock market.

Fed released a weak jobs report with a big loss of 12,000 manufacturing jobs. Americans are working less hours and getting paid less for the hours they work.

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Transcript

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0:00.0	The Peter Schiff Show.
0:09.6	After flirting with the 29,000 level for several days, the Dow Jones industrial finally
0:16.0	managed to close above that level for the first time ever.
0:21.2	The Dow rose 90.55 points.
0:24.3	We closed at 29,030.
0:28.0	All of the major markets hitting new highs on the year.
0:32.8	All of the new record highs, except again the Russell 2000, which is at a new 52-week
0:37.9	high, but still is not where it was at its peak back in the fall of 2018.
0:46.6	Part of the impetus for this rally has been the anticipation of the trade deal, initially
0:55.1	a trade deal with China, and then a Phase I trade deal, which was a step down from the
1:01.8	grandiose deal that was originally promised.
1:05.8	But of course, the main driver of the rally has been the Fed.
1:09.8	I think the anticipation of a trade deal is responsible for some of the gains, but the
1:15.6	majority of the gains are clearly the result of the Fed.
1:20.3	The Fed's policy reversal, it's taking away the rate hikes and delivering rate cuts instead,
1:27.3	it's quietly returning to QE, even though it's officially denying that it's doing it, it's
1:33.2	clearly doing QE, and that is what has been driving the market.
1:37.7	Although I think the anticipation of a trade deal has acted as a rumor that traders
1:43.0	continuously bought and bought and bought, and what I have been warning all along is that
1:49.8	once we actually get a deal, well now the traders can sell on the news.
1:54.7	So I thought that the prospect of a deal where the president can pretend that it's going
1:59.6	to be great was actually going to be better than delivering a deal that can actually be scrutinized.
	...

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