Market Outlook: More From The Fed

[Rajiv]

From "Market Outlook: More From The Fed"

Peter Schiff, chief executive of Euro Pacific Capital takes a more bearish stance. He says, "the Fed can't protect the market, they can’t stop the economy from collapsing. They made the bed under Greenspan and we’re all going to have to lie in it."

"This move is like a trial balloon," continues Schiff. "Bernanke would love to cut the Fed funds rate but he knows the dollar would collapse. Bernanke knows the economy is going into recession, but he can't tell the truth, he can't tell the truth on why he’s not cutting (the Fed funds rate).

Schiff advises investors avoid financial shares. "The financials Financial Select Sector went up because of short covering, but they're going a lot lower, they’re ticking time bombs. I remember the homebuilders, people were recommending the stocks because they were trading at low multiples, but earnings vanished and earnings will vanish in the financials."

See also "US a paper tiger, says doomsayer"

He's one of the doomsayers having a day in the sun as the US stock market plummets. A regular on the business shows, Schiff is shouting from the rooftops that this is the beginning of the end for the US economy.

The disturbing thing is he's been right so far, making his clients at his Connecticut-based brokerage firm Euro Pacific Capital wealthy by having predicted years ago that the US dollar would start falling and tipping them into euro-denominated assets.

Among his predictions: a housing-led slump, even depression, with at least a 20 per cent US economic contraction. He says the US dollar will lose half its value.
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"People call us the biggest economy in the world but it's false, we'll be lucky if our per capital GDP is still in the top 20 in two years' time."

[flow5]

Re: Market Outlook: More From The Fed

So where are his arguments. Just a bunch of tripe.

[Jim Nickerson]

Re: Market Outlook: More From The Fed

So where are his arguments. Just a bunch of tripe.

flow5,

What are your arguments that Schiff's perspectives are tripe?

[Rajiv]

Re: Market Outlook: More From The Fed

Those were just news snippets of his opinions. However, here is one of Schiff's latest commentry - "Lenders take the jab, borrowers take the knockout"

The current weakness in domestic markets has recently been magnified overseas as panic spread to foreign investors with exposure to U.S. asset backed debt. Some commentators point to this reaction in an attempt to disprove the belief that foreign assets offer protection from falling U.S. stocks. I believe such conclusions are premature. Global stock markets will soon decouple from ours, and strong returns overseas will occur even as U.S. stocks slump.
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In contrast to the recent declines in U.S. stocks, which are driven by deteriorating fundamentals and a poor outlook for corporate earnings and the U.S. economy, the steep drops in many foreign stocks do not stem from financial distress in the companies themselves, but simply from the short-term distress of their highly leveraged shareholders. Remember, the root of the problem lies in the inability of American borrowers to repay their debts. While foreign lenders may be getting stung a bit, they will take their losses and move on. On the other hand, American borrowers will face much bleaker futures.
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Foreigners are suffering now because they loaned money to Americans who could not repay. However, as we are the ones who are broke, we are the ones who are in real trouble. Furnished with a greater appreciation of the risks, foreigners will now buy fewer dollar-denominated bonds collateralized by U.S. real estate, automobiles, receivables, credit card debt, etc. Without a ready secondary market for asset-backed debt, Americans will find it increasingly difficult to buy consumer goods or real estate on credit. As discretionary consumer spending grinds to a halt, real estate prices plunge and our economy falls into a protracted recession, the developing bear market in U.S. stocks will continue.

[Guest]

Re: Market Outlook: More From The Fed

Peter Schiff is very opinionated, and a major pain in the neck to practically everyone - and to my intense irritation as one of his clients (argued with him a bunch of times) he's very often correct, which is enough to make us all grind our teeth down to stumps listening to his (constant) diatribes.

He was making these calls years ago when barely a hint of economic decline in the US existed. Now the hints are broad and all around us. I would hesitate a long time to bet against his thesis. But he is absolutely not to be confused with the likes of Janszen in depth of analysis.

Regarding decoupling of global economies from the US, I think this will be the big surprise of the 2010's. As the US sinks into the debt mire, the industrializing world soars, and Jim Rogers (one again) is proved right on his commodity bull market call. The only thing which poses a severe risk to killing developing world growth is the oil question - and that is a huge risk.

My view, and it's certainly among the least qualified on economics in this community, is that the above decoupling is why the US markets are heading into ugly trading ranges, rather than a crash. The rest of the world will refuse to go down with the US this time, putting a floor under global markets. In ten years the leaders of the Dow will be commodity stocks, in sympathy with global growth. They are the ones which will keep the DOW from crashing (nominally).

[FRED]

Re: Market Outlook: More From The Fed

Peter Schiff is very opinionated, and a major pain in the neck to practically everyone - and to my intense irritation as one of his clients (argued with him a bunch of times) he's very often correct, which is enough to make us all grind our teeth down to stumps listening to his (constant) diatribes.

He was making these calls years ago when barely a hint of economic decline in the US existed. Now the hints are broad and all around us. I would hesitate a long time to bet against his thesis. But he is absolutely not to be confused with the likes of Janszen in depth of analysis.

Regarding decoupling of global economies from the US, I think this will be the big surprise of the 2010's. As the US sinks into the debt mire, the industrializing world soars, and Jim Rogers (one again) is proved right on his commodity bull market call. The only thing which poses a severe risk to killing developing world growth is the oil question - and that is a huge risk.

My view, and it's certainly among the least qualified on economics in this community, is that the above decoupling is why the US markets are heading into ugly trading ranges, rather than a crash. The rest of the world will refuse to go down with the US this time, putting a floor under global markets. In ten years the leaders of the Dow will be commodity stocks, in sympathy with global growth. They are the ones which will keep the DOW from crashing (nominally).

What's Schiff's record? Pulled this off of Reddit.com

iTulip uses models of how the political economy and financial system actually work, then talks to a lot of insiders to determine where we are in the process.

Note: One call each, not over and over like a broken clock.

• NASDAQ Bubble
• How the NASDAQ Bubble will End: Nov. 1999
• NASDAQ Crash: Mar. 2000
• NASDAQ Prediction Acknowledged by NYTimes, Boston Globe, etc.
• Gold price bottom: Aug. 2001 Reprinted as chapter in America's Bubble Economy, John Wiley & Sons, 2006
• Housing Bubble
• Yes. It's a Housing Bubble: Aug. 2002
• Housing Bubbles Are Not Like Stock Market Bubbles: Jan. 2004
• Housing Bubble Correction: Jan. 2005
• Housing Bubble Top: Jun. 2005
• Recession Q4 2007: Oct. 2006
• March Crash 2007: July 2007

[flow5]

Re: Market Outlook: More From The Fed

Peter Schiff didn't explain a ******* thing.

[Mega]

Re: Market Outlook: More From The Fed

I think Peter ROCKS!
But everytime he talks its "Have you read my book yet?"...........i am VERY temped to go on his radio show (Thursday nigts i think) and get him chatting.

"Mike have you read my book?"

"Read your book Peter!....Its the best book i every read, i think everyone on the planet should read it!.....So much so i scanned EVERY page and put it on the internet.......anyone can read it anytime they like". Its OK Peter no need to thank me.....happy to help spread the message ;)

I wonder what he say to that?
Mega

[Guest]

Re: Market Outlook: More From The Fed

Fred, Flow5 - You guys are absolutely right - on consideration, I've over-represented Peter. He has been right (eventually) on the housing bust, about which he truly is a stopped clock, and right to a superficial extent on the savings deficient American and that American's role in holding up the global economy.

For the record, I've always thought of Schiff as "right on some issues, but shallow otherwise". He is the one who got me out of real property in San Diego 2004, and for this I was grateful as now it opens up new options.

OK - so I take it all back - the guy deserves only limited praise. Now go tell Mega that Peter is shallow in his analyses. Seems Mega thinks Schiff is the best thing since sliced bread.

What remains about Peter (and struck me even years ago) is a prodigious capacity for self promotion. Still, he's miles and miles smarter than Cramer! It's all relative. :rolleyes:

[bill]

Re: Market Outlook: More From The Fed

Regarding decoupling of global economies from the US, I think this will be the big surprise of the 2010's. As the US sinks into the debt mire, the industrializing world soars, and Jim Rogers (one again) is proved right on his commodity bull market call. The only thing which poses a severe risk to killing developing world growth is the oil question - and that is a huge risk.

I agree,
The US economy anchor ropes to the rest of the world are beginning to snap one by one as other countries are less dependent and influence. The US will slowly drift behind and go threw a restructuring process. One part of that restructuring is 3^rd world labor pools to draw from as said in my previous post. The following article gives you a idea of what that will be like.

http://www.forbes.com/feeds/ap/2007/...ap4032990.html

It's not easy. The immigrants who have flooded these communities are stretching schools and law enforcement. Still, at a time when other rural towns are slowly dying, Dodge City and meatpacking towns like it boast thriving economies.
"If these people can get past the gauntlet of the border, we welcome them here with open arms," said Ford County Sheriff Dean Bush, Dodge City's modern-day counterpart to Wyatt Earp.
But many of his fellow citizens seem lost. Randy Ford and his wife, Betty, have lived in Dodge City for 35 years. They no longer attend the city's Independence Day events. They can't understand what the singers - Spanish crooners singing Latin favorites - are saying.
"We don't go anymore because we don't want to be Mexican," he said. "We want to be American."
In Washington, the debate over immigration sometimes seems to be a clash of extremes. But here, in the wide-open spaces where one-dimensional economies stoke small towns, there is plenty of room for ambivalence.

[metalman]

Re: Market Outlook: More From The Fed

I agree,
The US economy anchor ropes to the rest of the world are beginning to snap one by one as other countries are less dependent and influence. The US will slowly drift behind and go threw a restructuring process. One part of that restructuring is 3^rd world labor pools to draw from as said in my previous post. The following article gives you a idea of what that will be like.

http://www.forbes.com/feeds/ap/2007/...ap4032990.html

global markets correlation...

http://online.wsj.com/public/resourc...ilydrop07.html

[bill]

Re: Market Outlook: More From The Fed

global markets correlation...

http://online.wsj.com/public/resourc...ilydrop07.html

Nice map,,can plainly see where the yen carry is unwinding. Can’t wait to invest some yen in a few of those commodity countries when the unwinding is finished.

[Jim Nickerson]

Re: Market Outlook: More From The Fed

Nice map,,can plainly see where the yen carry is unwinding. Can’t wait to invest some yen in a few of those commodity countries when the unwinding is finished.

bill,

Assuming you are an American rather than a Jap., how would you do what you wrote here? It seems to me it would take a sophisticted wheeler-dealer type to actually pull such as that off.

What are you watching to know when the yen is finished unwinding?

[bill]

Re: Market Outlook: More From The Fed

bill,

Assuming you are an American rather than a Jap., how would you do what you wrote here? It seems to me it would take a sophisticted wheeler-dealer type to actually pull such as that off.

What are you watching to know when the yen is finished unwinding?

No fancy sophistication about it we are in an asset pricing cycle down and when these leveraged speculators get bounced out and real buyer demand returns to normal then it would be an entry time. When the US enters recession and commodity news articles say demand has dropped significantly and the bull run may be ending “BUY”.

[jk]

Re: Market Outlook: More From The Fed

the question of whether or to what degree other economies are uncoupling from the u.s. is profound and important. schiff puts forth a scenario of [relatively] painless [for the non-u.s. world] uncoupling. it's hard for me swallow. nonetheless, at least he tries to deal with the issue. ka-poom theory and ej's writings in general are terrific, but don't shed much light [in my reading] on what might happen in europe and asia. i would welcome an extended discussion of this issue, and am especially curious about ej's thoughts on the matter.