A Biden Victory Is Not Good For The Stock Market

🗣  "(...) a Biden victory is not good for the stock market. It means much higher taxes and that is not going to be offset by the Federal Reserve.”

The U.S. stock market just had its worst week since March. In fact, if you look at just the second half of October, this is the biggest decline we've seen in the second half of October since 1987 and that was the year of the October 87 stock market crash!

This Time Stocks And Bonds May Crash Together

When the stock market crashed in Oct. of 1987, a sharp rise in bond prices not only cushioned the blow for diversified portfolios, but lower interest rates supported higher stock market valuations. This time stocks and bonds may crash together, leaving investors with no relief.

Bitcoin, Election & Stimulus

Bitcoin: The Biggest Bubble

If you measure the size of asset bubbles based on the level of conviction buyers have in their trade, the Bitcoin bubble is the biggest I've seen. Bitcoin hodlers are more confident they're right and sure they can't lose than were dotcom or house buyers during those bubbles.

Is a contested election good for the stock market?

On CNBC Fundstrat said a contested election is good news for the stock market because it will cause the Federal Reserve to backstop losses with more QE. Maybe if COVID starts turning people into Zombies we can all stay home and get rich, as the Federal Reserve money printing sends stock prices soaring.

The Economic Dependence On Stimulus

It's crazy to blame the problems in the economy or the stock market on a lack of stimulus. The Federal Reserve is already suppling constant monetary stimulus and the Federal government is providing huge fiscal stimulus. The problem is that the stimulus addicts now need an even larger dose.

Stock Market: All Bubbles Eventually Find A Pin

The Peter Schiff Show, Episode 622: All Bubbles Eventually Find a Pin

Watch and listen on Youtube: https://www.youtube.com/watch?v=9JFDrWGA4Nc

Highlights from this podcast episode:

• Stock markets tumble on renewed fears.Blue wave may not crest as once was expected.
• More stimulus comes with bigger government.
• Trump is the Republican Jimmy Carter.
• Trump’s legacy will be his successful Supreme Court nominees.
• The most important thing this election is to prevent Democrats from taking control of the Senate.

Elections: Biden Will Create A Weaker Economy

Bad news on the presidential election is perceived as good news for the stock market. Despite knowing a
Joe Biden win means lower corporate earnings and higher taxes, investors think the weaker economy Biden will create means even larger doses of fiscal and monetary stimulus.

Goldman Sachs Bets Against The U.S. Dollar

On CNBC: Goldman Sachs bets against the dollar on ‘blue wave’ prospects and vaccine outlook

Goldman is still too positive on the dollar, and doesn't understand that a delay in a covid vaccine is also bearish for the dollar. Such a delay will lead to an even weaker U.S. economy, larger budget and trade deficits, and even more money printing.

More Stimulus Only Weakens The Economy Further

The misguided goal of the "stimulus" is to get consumers to spend more. But excess past consumption is why the economy is so weak now. We must reduce consumption to free up resources to increase capital investment and production. More spending only weakens the economy further.

Very appropriate that Larry Kudlow was wearing a mask when he claimed the V-shaped recover was going strong, but that the economy needed an additional $1.8 trillion in government "stimulus." The economy can't be simultaneously strong and also in need of massive government support.

Much darker days for the U.S. dollar lie ahead. It's going way down and taking the entire American economy down with it.

Powell Doesn't Understand Economics

Powell doesn't understand economics. Low interest rates are only good for the economy if they naturally result from high savings and low debt. If they result from Federal Reserve manipulation, they are extremely harmful. Like any government price control, it results in adverse imbalances.

The Fed's misguided monetary policy will create the condition where any cure for an inflation rate that greatly exceeds its 2% target will be fatal to the economy. If the inflation disease doesn't kill the economy, the cure will. The question is, which poison will the Fed pick?

The Wrong Road To Economic Recovery

The economy doesn't need more consumption, it needs more production. Productive employment will stimulate the economy. Printing money and distributing it to non-productive people will not. It will only result in larger trade deficits, a weaker dollar, and higher consumer prices.

The Reasons Behind The Gold Sell-Off

Gold is selling off because traders now believe the Federal Reserve will not be as easy as once expected. While Fed policy is more likely to be much easier than expected, if traders are correct this development would be far more bearish for the stock market than it is for the gold market.

The lack of conviction gold stock investors have in the trade really is amazing. Despite the most positive fundamentals ever for gold, fear is far more pervasive than greed. Imagine what the market will look like when larger gold stock investors actually turn bullish on gold. 

Related trading instruments: SPDR Gold Trust ETF (GLD),Market Vectors Gold Miners ETF (GDX)

Buying The Gold Dips

Today's stock market rout was likely triggered by disappointment that the Federal Reserve was not dovish enough. The Federal Reserve may not be dovish enough to support a stock market bubble, but it's more than dovish enough to support a much higher gold price. Buy the dip!

Supreme Court: The Last Firewall Against Socialism!

The reason Democrats are so worried about a Trump Supreme Court pick is that their entire agenda is unconstitutional. Even if their radical policies are enacted into law a just Supreme Court can strike them down. It's the last remaining firewall to protect America from socialism.

It's Never The Time To Worry About The Deficits

On CNBC, Steve Mnuchin said that given a Covid weakened economy now is not the time to worry about deficits. But before Covid when the economy was supposedly booming, he was not worried about the deficits either.

In other words, it's never the time to worry about the deficits.

Stock Market Correction

Those hoping that a normal stock market correction will create a buying opportunity don't understand the market. A normal correction is much too small to create any real value in stocks. The only opportunity is reckless Fed policy making over-priced stocks even more expensive.

Greenspan Is Worried About Inflation

Alan Greenspan told  CNBC his primary economic concern is inflation. That's in sharp contrast to the view of the current Fed Chairman. Powell is worried inflation is too low while Greenspan is worried it's too high. If Greenspan is correct Powell's policy will end in disaster.

The Biggest Bubble Ever!

"On Thursday the biggest bubble ever may have popped without a pin!"

More QE will Only Weaken The economy

Chicago Federal Reserve President Charles Evans claims more QE is on the way to help the economy. The problem is the only things QE has helped prop up are asset prices, excessive debt, consumption, and government spending. 

More QE will weaken the economy further and exacerbate the collapse!

We Are Losing The War On Trade

The U.S. trade deficit "unexpectedly" surged 18.9 percent in July to $63.6B from an upwardly revised $53.5B in June. This is the widest trade deficit since 2008, so its larger than any monthly trade deficit under Obama. Donald Trump promised to win on trade. We're losing big-league.

Crude Oil Prices Are Going A Lot Higher

"They're getting rid of an energy stock Exxon Mobil (XOM)... Now that leaves Chevron (CVX) as the only oil company in the DJIA. Personally, I take that is bullish sign for energy stocks. I think people are under invested in energy. People really have no idea how much higher oil prices are headed. I think they're headed ultimately a lot higher and so I think that this is a good contrarian indicator."

Bearish Scenario For Stocks

I wonder how long it will take equity investors to realize that a collapsing dollar and soaring Gold price are bearish for stocks, as it will force the Federal Reserve to dump bonds, forcing interest rates to surge, the Federal Government to slash spending, and corporate earning to plunge.

Related trading instruments: SPDR S&P 500 Index ETF (SPY), SPDR Gold Trust ETF (GLD)

Why Traders Are Buying Stocks

CNBC's Jim Cramer is wrong about why investors are buying stocks. They aren't buying because they expect a COVID cure, but because they expect the Fed to keep printing money. They just don't understand how bad the consequences will be. If they did they'd be buying Gold instead.

Related trading instruments: Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ), SPDR Gold Trust ETF (GLD)

The Federal Reserve Is Creating Dollars To Buy Bonds

The only way the Federal Reserve can suppress interest rates is by creating dollars to buy bonds. The more dollars it creates the more value the dollar loses, and the faster consumer prices rise. That puts upward pressure on rates so the Federal Reserve must create even more dollars to keep rates low.

Buy Your Gold Before Too Many Figure It Out

It looks like the Fed's 2 percent inflation target, which started out as a ceiling, is about to officially become a floor. The irony is that the actual inflation rate will be so far above 2 percent that we may never step foot on that floor again. Buy your gold before too many figure this out.

The Next Crisis Will Be A Dollar Crisis

The U.S. dollar's decline is welcomed as good news. Many were concerned that a strengthening dollar risked domestic deflation, hurt U.S. exports, lowered corporate earnings, and threatened emerging markets. Cheers will soon turn to tears as a dollar crash becomes the next crisis.

How Will Stocks Fare Under Biden?

If you think U.S. stocks can do well under Biden as they did well under Obama, think again. When Obama took office stocks were ending a decade long bear market, with the NASDAQ down 70 percent. It's since soared 7-fold. The economy is far worse now and the Federal Reserve can't blow another bubble.

The Role Of A Central Bank

We don't want a Central Bank that helps the Federal Government go deeper into debt. We want a central bank that forces Congress to cut spending or suffer the adverse consequences of rising interest rates and recession if it fails to do so.

An easy way to tell how bad a job Powell is doing as Fed Chair is that every member of Congress is praises him and thanking him for his help. We need a Fed Chair with the courage to do what's right for the country even if it's unpopular with Congress and the public at the time.

Bitcoin, Gold and Inflation

While Goldman Sachs is correct to warn its clients to avoid Bitcoin, its assessment of the U.S. economy, the U.S. Dollar and inflation is wrong. But once they finally figure out what should already be obvious, they will advise their clients to buy gold, just at much higher prices.

U.S. Dollar: The Reason Why Goldman Sachs Is Bullish

Maybe the real reason Goldman Sachs is so bullish on the dollar is that as a primary dealer of U.S. Treasuries, they have a lot of dollars to sell. If Goldman's clients realized the dollar's fate, they wouldn't buy any Treasuries. Whether default or inflation, loss is inevitable.

Inflation Is Bullish For Gold

Investors are selling gold and gold mining stocks because a rising Dow Jones means risk is on, so safe havens are reflexively sold. But the Dow Jones Industrials Average is only up because the Federal Reserve is creating inflation to prop it up. This is ultimately far more bullish for gold than it is for the Dow.

The Rise Of Gold

The relentless rise in the price of gold will call into question the viability of the U.S. dollar and its ability to continue to as the world's reserve currency. Given the lack of yield, if the dollar keeps losing value relative to gold, it will lose its reserve status to gold.

Does Powell Watch The Price Of Gold?

Someone should also ask Powell if he watches the price of gold, and if there is a price that would be high enough to concern him that Fed monetary policy is too loose, and that a dollar crisis might result from a failure to raise rates sharply and sell down the balance sheet?

The Risk Of Inflation

The main reason the Federal Reserve doesn't want to acknowledge the risk of inflation is that it's not prepared to do anything to put out the fire once it really gets started. So, it plays down the risk as long as it can, knowing that ultimately the inflation fire will burn the economy down.

Many People Have Over-Reacted To The Actual Health Threat

The crazy thing is that while so many people have over-reacted to the actual health threat posed by Covid-19, they have under-reacted to the grave financial and economic threats posed by the increase in government spending, borrowing, and money printing in reaction to Covid-19!

The U.S. Needs More Savings

Powell was asked what the Federal Reserve can do to make the economy more resilient to these type of shocks. The question is ironic as its the Fed's fault the economy is so vulnerable to these shocks in the first place. What's needed is more savings, which requires higher interest rates!

Two Wrongs Do Not Make A Right

Unfortunately, there is now a growing consensus that since we have abandoned capitalism during bad times, we must also abandon it during good times. If we socialize the losses, we must also socialize the profits. While this is logically consistent, two wrongs don't make a right.

How Long Before A Currency Crisis?

The national debt now exceeds 24.6 trillion dollars. It was just two weeks ago that it hit 24 trillion dollars. 

We are adding $1 trillion per month to the national debt. That was the size of the entire national debt as late as Oct. 1981. 

How much longer can this pace continue without a crisis?

Gold Stocks Are The Perfect Hedge

Gold stocks are the perfect hedge few portfolio managers own, as they will rise regardless of which direction stocks move. If stocks rise due to Federal Reserve money printing, gold stocks will rise more. If stocks fall due to a weak economy and falling earnings, gold stocks will also rise.

Clearly, everything that is happening right now in the economy, with central banks, is extremely bullish for gold. There is no question about it.

Read the complete article here: Peter Schiff: Gold Is the No-Brainer Investment

Market Update: Stock Market, Federal Reserve and Socialism

Why The Stock Market Is Rallying

Trump repeated that pre-Coronavirus the U.S. had the strongest economy in world history, and the stock market rally proves it's still strong and that he's doing a great job. The economy was weak before the virus and the market is rising because the Federal Reserve is doing a horrible job.

The Misery Of A Socialist Decade

When Nixon took the U.S. off the gold standard in 1971, he reluctantly proclaimed "I am now a Keynesian in economics," ushering in a decade of rising inflation, unemployment, and interest rates. We have now moved beyond Keynes. The misery of a socialist decade will be far worse.

Federal Reserve: 3.5 months of QE3 in 1 week

It took the Federal Reserve a bit longer to finish the calculations, but its balance sheet rose by $284.7 billion last week. That's another 3.5 months of QE3 in 1 week. The Fed's balance sheet now stands at $6.368 trillion. But it won't stand there for long as it marches toward $10 trillion!

Some Perspective On Initial Claims

A total of 22.034 million initial jobless claims have been filed over the past 4 weeks. That's 59.36% of the Great Recession's entire 18-month total of 37.118 million.

U.S. Economy: Breaking Records

Everyone expects bad new, just not this bad. Industrial production dropped 5.4 percent in March, exceeding expectations for a 4.2 percent decline. It was the biggest fall since January of 1946, after World War II ended and we stopped making weapons, and the 5.9 percent year-on-year (YOY) drop is the biggest since November 2009.

Stock Market: The Real Nominal Bottom

Does anyone really expect this bear market to end with Netflix (NFLX) and Amazon (AMZN) making new record highs? It seems to me that a real nominal bottom won't be made until these leaders are also shot!

Gold Is One Of The Best Bargains One Can Buy

If you think the price of gold is expensive now that its above $1,700 wait another week and see how expensive it is. In relation to the amount of money the Federal Reserve has already printed, and the amount it's about to print, gold at today's price is one of the best bargains one can buy.

Related trading instruments: SPDR Gold Trust ETF (GLD), Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ)

All The Government Is Doing Is Printing Money

Nobody should be getting a check from the government because the government doesn't have any money. All the government is doing is printing money and they're destroying the value of everybody's savings.

Related trading instruments: SPDR Gold Trust ETF (GLD)

Earnings, JP Morgan Chase & Credit Cards

While Jamie Dimon, CEO of JPMorgan Chase, expressed concern that many bank customers will have trouble paying their credit card bills, he expressed optimism about those customers now earning more in unemployment benefits that they earned working, paying on time and spending more.

Housing Prices: Look Out Below!

JP Morgan Chase, the nation's largest lender, announced that effective Tuesday homebuyers will need FICO scores of 700 and 20 percent down payments to qualify for a mortgage. Housing prices will have to crash so most buyers, especially first time buyers, can afford to put down 20 percent. Look out below!

A Few Thoughts On The Current Crisis

The national debt just passed $24 trillion, up $4 trillion since Donald Trump took office. He will add more debt in 4 years than Bush did in 8. If reelected he will add more debt in 8 years than Bush & Obama did in 16. Instead of draining the swamp, he is draining the nation.

What will the Federal Reserve do if inflation picks up?

Someone needs to ask Powell what the Fed’s response will be if inflation really heats up? Will the Fed do nothing and let inflation get much worse? Or will it jack interest rates way up and sell bonds to shirk the money supply? Is the Fed prepared to do this during a recession?

The problem with student loan forgiveness

The biggest problem with student loan forgiveness is the moral hazard for both students and colleges. Since loans don't have to be repaid, students won't care how much they borrow. Colleges will exploit this by raising tuition even fasting, sending the cost to taxpayers soaring.

This Rally Is All About The Fed!

U.S. stock market futures are rallying off the much larger than expected jump in weekly unemployment claims. This clearly shows that investors know where their bread is buttered. This rally is all about the Federal Reserve, and the worse the economy gets, the more money the Fed will print.

China Will Buy Oil, Not U.S. Treasuries

It looks like the Chinese are getting smarter, and will be buying oil instead of U.S. Treasuries. This is just the beginning, as soon the entire world will be buying real stuff instead of Treasuries. That means the Federal Reserve will buy more Treasuries as Americans buy a lot less stuff.

U.S. Economy: There Is No Way To Go Back To Where We Were

It wasn't fine before the crisis. We didn't have a solid economy. We had a bubble. That's the problem. And the bubble has been pricked. There is no way to go back to where we were. It's like trying to unscramble an egg. It can't be done.

Record Initial Claims

Another 6.648 million Americans filed for unemployment last week, shattering the record set the prior week. With generous new benefits for losing one's jobs, and powerful incentive (likely to be extended) to remain unemployed, don't expect people to return to work any time soon.