Bubbles

Peter Schiff: When Stock Bubble Pops, Trump ‘Going To Have To Take The Blame’

As I mentioned in that last post, the U.S. economic expansion is now the third-longest since World War Two.

And if the next recession hits on President Trump’s watch, a number of Americans will blame him for it.

The same goes for a stock market crash.

Peter Schiff, the CEO of Euro Pacific Capital, touched on this in a recent interview with the folks over at Financial Argument, “a daily show that will cover issues surrounding the economic collapse.” From their exchange posted on YouTube.com on November 26:

FA: I wanted to start off with the stock market. I mean, we’re seeing it continually move up. And before Trump was President, he was out there saying that there’s bubbles in the stock market, there’s bubbles in housing, there’s bubbles everywhere. Now that he’s President, he really doesn’t say this anymore. And he’s saying that the stock market’s going up because of me, and it’s fantastic. When you look at the stock market, does it make any sense whatsoever, and can actually Trump take credit for this?
SCHIFF: Well, first of all, there was a bubble before Trump was elected. Clearly. And Trump pointed that out himself. That was one of his talking points on his stump speeches. There was a big, fat ugly bubble in the stock market. And if Trump wants to take credit for the bubble getting bigger, I would agree. I think there has been a lot of optimism, a lot of enthusiasm, among investors. And that has resulted in higher stock prices. But I think where Trump is getting into trouble is by claiming that the stock market going up is no longer a bubble. That now this is just a real bull market that reflects the improvement of the fundamentals since he’s been elected. That’s not the case. This is simply more air into the same bubble. And this bubble is going to burst, and I think unfortunately now that Trump has branded it- just like it was one of his buildings, he’s put the big “Trump” marker on it- when this thing pops, he’s going to have to take the blame.

(Editor’s note: Bold added for emphasis)


“PETER SCHIFF- Worst Stock Market Crash of a Lifetime Ahead of Us 2017-2018”
YouTube Video

Schiff, who correctly-called the housing bust and economic crisis last decade, speculated on the Federal Reserve’s future moves and a coming recession. From the discussion:

FA: The Fed is keeping everything steady as she goes right now. They’re not raising interest rates. They’re slowly unwinding their balance sheet. Are they backed into a corner?
SCHIFF: They’re not slowing unwinding their balance sheet. They talked about slowly unwinding the balance sheet. But the balance sheet hasn’t unwound at all. It’s as high as it’s ever been. I think this is all a bunch of talk. There’s no way they’re going to be able to shrink that balance sheet in any significant way because it would drive interest rates up and weaken the economy and affect asset prices. In fact, I think the next major move in the Fed’s balance sheet is another big leg up when they have to launch the next round of quantitative easing. Obviously, the U.S. economy is going to go back into recession. I think we’d already be in recession had Trump not won the election. And I do think that the enthusiasm surrounding his victory and the optimism, I think, probably postponed the recession for a year or two. But, it’s going to hit, and then, how is the Fed going to respond? Well, we know. In fact, Donald Trump has appointed a new Fed chairman to follow Janet Yellen that he’s confident will do exactly what she did. Or exactly what Bernanke did. Which is slash interest rates, and print more money, and buy government bonds, and buy mortgages, or buy whatever they have to buy to keep everything from imploding.

Here’s what Schiff had to say about a potential economic crisis in 2018:

I do think we’re going to see a downturn. We could see a crisis, but chances are the crisis itself will happen later.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

Share

Tags: , , , , , , , , , , , , , , , , ,

Bank For International Settlements (BIS): Global Economy Situation Similar To Pre-2008 Crash Era

At the end of last week I left readers with that post about individuals credited with publicly predicting the 2008 global economic crisis.

Yesterday, I learned that some organizations correctly forecast the carnage. In particular, the Bank for International Settlements (BIS). Phillip Inman reported on The Guardian (UK) website Sunday:

The BIS was one of the few organisations to warn during 2006 and 2007 about the unstable levels of bank lending on risky assets such as the US subprime mortgages that eventually led to the Lehman Brothers crash and the financial crisis.

Curious to know what the “central bankers’ bank” thinks about the state of the global economy these days? Inman revealed:

Investors are ignoring warning signs that financial markets could be overheating and consumer debts are rising to unsustainable levels, the global body for central banks has warned in its quarterly financial health check.

The Bank for International Settlements (BIS) said the situation in the global economy was similar to the pre-2008 crash era when investors, seeking high returns, borrowed heavily to invest in risky assets, despite moves by central banks to tighten access to credit.

The BIS, known as the central bankers’ bank, said attempts by the US Federal Reserve and the Bank of England to choke off risky behaviour by raising interest rates had failed so far and unstable financial bubbles were continuing to grow.

(Editor’s note: Bold added for emphasis)

I’m not going to steal The Guardian’s thunder here, so head on over to the article on their website for the full story.

By the way, Inman noted the following about the BIS chief economist who was around during those alarms sounded in 2006 and 2007:

William White, who now chairs the OECD’s review committee, warned last year that global debt levels had escalated to unstable levels largely in response to almost zero interest rates to create a situation that was “worse than 2007”.

(Editor’s note: Bold added for emphasis)

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Share

Tags: , , , , , , , , , ,

List Of Individuals Credited With Publicly Predicting The 2008 Global Economic Crisis

“Vice President Dick Cheney says that his boss, President George W. Bush, has no need to apologize to the American people for not doing more to head off the financial calamity, saying no one saw the crisis coming.

During an interview Thursday with The Associated Press in his West Wing office, Cheney defended the administration’s performance on an economy that is growing weaker daily and which recently collapsed in spectacular fashion. Cheney said that ‘nobody anywhere was smart enough to figure it out.’

-Associated Press, January 8, 2009

I always chuckle when I read what Dick Cheney said about the 2008 global economic crisis. Particularly that bit about “nobody anywhere was smart enough to figure it out.”

As a matter of fact, there were a bunch of “smart” people around warning about the coming carnage, in addition to the “crash prophets” I’ve been blogging about these past few days.

Gary Karz, creator/host of InvestorHome.com, cataloged these soothsayers in “Who Predicted The Global Financial Crisis?” He wrote:

In the years since the Global Financial Crisis exploded on the scene, there have been a number of articles and initiatives documenting the individuals that publicly predicted the crisis and arguably deserve credit for having sounded the alarm. This page summarizes those efforts and links to those sources (and I expect to update it over time as more information and research becomes available). While plenty of foreign leaders and professional doomsayers have long predicted the collapse of the US economy, to the extent possible it should be useful to differentiate them from those that legitimately warned about a financial crisis or critical elements of it based on some logical analysis that appears to have merit after the fact. I believe a large percentage of investors and home buyers were exposed to at least some credible warnings about a housing bubble, but clearly many people chose to ignore those warnings or dismiss the predictions of a coming housing crash and/or crisis as unlikely to come true. Separately, I was interested in hearing what these individuals prescribe…

(Editor’s note: Bold added for emphasis)

Separately, I am interested in hearing what these individuals have to say these days about the next global financial crisis.

Karz put together a comprehensive list of 2008’s “doomsayers,” which you can view here on his Investor Home website.

On a side note, VP Cheney was (still is?) a client of “Crash Prophet” Jeremy Grantham (on the Karz list), who said in a pre-crisis letter to his company’s shareholders we are now witnessing the first global bubble in history, covering all asset classes. “From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure and the junkiest bonds to mundane blue chips; it’s bubble time!”

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

Share

Tags: , , , , , ,

Thursday, November 30th, 2017 Bubbles, Crash Prophets, Housing, Investing, Recession 2 Comments

Peter Schiff: Invest Overseas, Buy Commodities To Avoid Either U.S. Stock, Dollar Plummet

Turning to “crash prophet” Peter Schiff this afternoon, the CEO of Euro Pacific Capital was recently interviewed by Scott Gamm of TheStreet. Schiff, who correctly-called the housing bust and economic crisis last decade, echoed colleague Jim Rogers in warning about a future bear market in U.S. stocks. From the exchange:

THESTREET: Peter, it’s been an incredible record run here. And the levels we’re seeing now even with this slight pullback were record highs not too long ago. So, what do you say?
SCHIFF: Well, the bubble keeps getting bigger. Donald Trump called it himself as a candidate. He said it was a big, fat, ugly bubble. He was right then. He’s wrong now because now he denies it’s a bubble because he’s now the President and so it’s his bubble. And so he’d rather it be a bull market. But the valuations here really are extreme. The complacency is also extreme. I mean, investors are willing to pay very high prices and have very little worry (chuckle) that the stock market is going to go down. And people have very short memories. I’ve mean, we’ve had two major 50 percent declines in the stock market this century, since 2000. So we’ve had the market cut in half twice and it can easily happen again, yet nobody seems concerned. And I think one of the reasons is because the last two times the market went down the Fed was able to bail out investors to bet on one bubble by inflating a bigger one. So a lot of investors may have been conditioned to believe that even if the market implodes, if they hold on, they’ll get their money back. But the third time might not be the charm. It’s possible that the Fed can’t blow a bubble big enough to bail out investors this time…
THESTREET: So do you think that tide kind of turns in the next year?
SCHIFF: Hey, I don’t know. There’s no way to know. I mean, I think Donald Trump has nominated somebody who will try and do his best to keep the air in the bubble- cut rates, QE 4. But at some point, the market forces will overwhelm the Fed. The market will go down. And if it doesn’t go down the dollar will collapse instead. But either way, you’re going to see the real value of U.S. stocks come way down, whether it happens nominally or not. And I have a feeling that if the Fed prints enough money to prevent the market from going down dramatically, then the real losses will be even bigger because of the implosion of the U.S. dollar.

(Editor’s note: Bold added for emphasis)

When asked about advice for investors as to where to put their money right now if they’re worried about U.S. stocks, the author of The Real Crash: America’s Coming Bankruptcy – How to Save Yourself and Your Country told viewers:

People who are in the U.S. market are overlooking much better returns from much better valuation levels that are happening overseas. So I think people should take advantage of the overpriced U.S. stock market, the overpriced U.S. dollar, and sell, and move money abroad. Get into the international markets- developed and emerging. Get into the commodities space. Look at oil hitting a new two-year high again today. This is going on in commodities across the board. We are coming off of major bear markets. We’re in the infancy of new bull markets. And I think the dollar is about to get killed. This is the first year in many years now that the dollar is down. But I think it’s the first of many. I think the dollar could fall for the next 5 to 10 years in a major, major bear market taking the dollar to all-time record lows. And this will enable enormous profits for people who are invested outside the U.S. in the right currencies, the right assets, the right companies. That’s what I think we’re doing with our clients at Euro Pacific Capital and that’s certainly what I’m doing with my own money.


“Peter Schiff Slams Bitcoin, Federal Reserve and Antitrust Regulators”
YouTube Video

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

Share

Tags: , , , , , , , , , , , , , ,

Jeremy Grantham On U.S. Bonds, Stocks, And A Market Crash

Regular readers of Survival And Prosperity may have noticed I retired the “Crash Prophets” page earlier this month (too much time to update). For those not familiar with this section, it’s where I compiled the investment activities/recommendations of “crash prophets” Dr. Marc Faber, Jeremy Grantham, Jim Rogers, and Peter Schiff (designation earned by being smart enough to spot the 2008 economic crisis and warning of future financial turbulence). Despite the retirement, I will continue to blog about the latest from these soothsayers.

And this morning I want to talk about Jeremy Grantham, the British-born investment strategist and founder/former chairman of Grantham, Mayo, Van Otterloo & Co. (currently overseeing $74 billion in client assets). In case readers missed it, a couple of weeks ago Grantham, whose individual clients have included former U.S. Vice President Dick Cheney and U.S. Secretary of State John Kerry, took part in an interview with The Wall Street Journal. The “crash prophet” discussed the booming U.S. stock market, a potential crash, and U.S. bonds. John Coumarianos wrote on the WSJ website on November 5:

With the S&P 500 up more than 15% this year, it may be time for a reality check. To that end, we spoke with Jeremy Grantham, co-founder and chief investment strategist at Boston-based money manager Grantham, Mayo, Van Otterloo & Co. and a noted spotter of market bubbles.

He thinks U.S. stocks and bonds will fail to generate inflation-beating returns over the next seven years, but he doesn’t see an imminent crash in share prices…

Mr. Grantham has already cemented his legend by arguing that U.S. stocks were overvalued in 2000 and again in 2007, anticipating the market’s two most-recent crashes. He also noted before the 2008-09 financial crisis that the relationship between home prices and income had become unglued, and said at least one large financial institution would fail.

By Mr. Grantham’s lights, U.S. stock prices are again high, with an overall Shiller price/earnings ratio (share price relative to the past decade of real average earnings) over 30, compared with its average of 16.8 since 1880. But profit margins also are unusually high, lending support to the high valuations, he says. And the Federal Reserve’s policy of keeping interest rates low supports share prices by making fixed-income investments less attractive as an alternative to stocks.

So this time, instead of a crash, stock valuations may take decades to revert to anywhere near the long-term average, Mr. Grantham says…

(Editor’s note: Bold added for emphasis)

The actual interview proved insightful, with Grantham communicating his bullishness on foreign stocks. The exchange can be read in its entirety here on The Wall Street Journal website.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

Share

Tags: , , , , , , , , , , , , , ,

Jim Rogers: ‘I Want To Own More Silver But I Want To Own It At A Lower Price Which I Expect’

Tonight I just got finished reading the transcript of a February 9, 2017, interview of well-known investor, author, and financial commentator Jim Rogers by Macro Voices’ Erik Townsend. As usual, the former investing partner of George Soros discussed a number of topics, including:

U.S. Stocks- “Happy days are here” if President Trump carries out those “wonderful things” he said he would (cut taxes, rebuild infrastructure, bring $3 trillion home which U.S. companies have overseas) and avoids trade wars

U.S. Dollar- Despite the correction, “it’s going to go too high, may turn into a bubble, at which point I hope I’m smart enough to sell it because at some point the market forces are going to cause the dollar to come back down because people are going to realize, oh my gosh, this is causing a lot of turmoil, economic problems in the world and it’s damaging the American economy.”

Junk Bonds- “I am shorting junk bonds still”

Precious Metals- “I’m still sitting and watching. I want to own more gold. I want to own more silver but I want to own it at a lower price which I expect.”

“War on Cash”- “Probably we are not going to have as many freedoms as we have now even though we are already losing our freedoms at a significant pace.”

The Singapore-based investor mentioned in a separate interview earlier this month regarding India’s demonetization efforts:

If governments do away with cash, it gives them more power and control.

Townsend’s interview was of Rogers was thorough and interesting, particularly that bit about silver. Head on over to the Macro Voices website here to listen to/read their exchange.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; a qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

Source:

Wadhwa, Puneet. “Modi is doing everything he can to get votes: Jim Rogers.” Business Standard. 2 Feb. 2017. (http://www.business-standard.com/budget/article/modi-is-doing-everything-he-can-to-get-votes-jim-rogers-117020200389_1.html). 13 Feb. 2017.

Rogers’ latest book…

Share

Tags: , , , , , , , , , , , ,

Jim Rogers: ‘Next Period Of Economic Turmoil Is Going To Be Worse Than What We’ve Seen In Our Lifetime’

A couple of days ago I came across an interview with well-known investor, author, and financial commentator Jim Rogers that was published on The Globe and Mail (Canada) website back on January 26. The former investing partner of George Soros in the legendary Quantum Fund answered a number of questions, including one about expressing “some pessimism about the world, particularly the U.S.” Rogers pointed out:

Every four to seven years since the beginning of the Republic, we’ve had economic turmoil. It has now been eight years since we had our last problem. We’re overdue. Mr. Trump has sworn trade wars with Mexico, China and a few others. If that happens, it’s all over. Trade wars have always led to bankruptcies—and often have led to wars, as well…

(Editor’s note: Bold added for emphasis)

Rogers added this warning later on in the exchange:

The next period of economic turmoil is going to be worse than what we’ve seen in our lifetime…

(Editor’s note: Bold added for emphasis)

When asked how he prepared financially for such upheaval, the Singapore-based investor replied:

I’m very long the U.S. dollar. It is not a safe haven- the U.S. is the biggest debtor nation in history- but people think it is, so there will be flight into it. It might even turn into a bubble, depending on how bad the turmoil is. Let’s hope I’m smart enough to sell. My plan then is to buy gold

(Editor’s note: Bold added for emphasis)

Greenback, then gold for Mr. Rogers.

Back on December 7, 2016, I blogged about a different interview in which this gameplan was mentioned.

On January 23, I brought up a MarketWatch article featuring Jim Rogers in which markets reporter Sue Chang wrote:

“This is a good time to add dollars,” said Rogers, who believes that the greenback will continue to rise through this year into 2018

(Editor’s note: Bold added for emphasis)

The Chairman of Rogers Holding also talked about where he sees the best investment opportunities now and other interesting subjects in the insightful Globe and Mail piece, which you can read on their website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; a qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

Share

Tags: , , , , , ,

Survival And Prosperity
Est. 2010, Chicagoland, USA
Christopher E. Hill, Editor

Successor to Boom2Bust.com
"The Most Hated Blog On Wall Street"
(Memorial Day Weekend 2007-2010)

Happy New Year

PLEASE RATE this blog HERE,
and PLEASE VOTE for the blog below:



Thank you very, very much!
Advertising Disclosure here.
ANY CHARACTER HERE
Emergency Foods Local vendor (Forest Park, IL). Review coming soon.
ANY CHARACTER HERE
Legacy Food Storage Review coming soon
ANY CHARACTER HERE
MyPatriotSupply.com reviewed HERE
ANY CHARACTER HERE
Buy Gold And Silver Coins BGASC reviewed HERE
ANY CHARACTER HERE
BulletSafe reviewed HERE
ANY CHARACTER HERE
BullionVault BullionVault.com reviewed HERE
ANY CHARACTER HERE
This project dedicated to St. Jude
Patron Saint of Desperate Situations

Categories

 

Archives