The Federal Reserve May Secretly Want to Sink the Record-Breaking Stock Market

TheStreet ^ | Sep 19, 2017 | Scott Gamm

[familyop]

A big Federal Reserve meeting is coming up. Here is one thing that could happen if the Fed gets too aggressive.

Despite its independence, the Federal Reserve may quietly want a bear market that takes down a president that loves tweeting about the stock market.

Peter Schiff, CEO of Euro Pacific Capital, told TheStreet the "[Janet] Yellen put" in the markets could expire under President Trump. "I don't know if the Fed has much love for Trump," he said, adding that the Fed had the markets' back during the Obama Administration.

"Maybe the Fed would be happy to see a bear market that could be blamed on Trump." Schiff thinks the markets could easily correct 20%.

One black swan event Schiff sees is the notion of investors abandoning the euphoria over Trump's presidency, which helped fuel the stock market rally this year.

"We've had a huge move up since the election of Trump even though prior to the election the expectation was if Trump won it [would be a disaster for markets]," he said.

When asked if the two straight quarters of double-digit earnings growth has sparked the rally in stocks this year, as opposed to solely Trump, Schiff pointed to earnings headwinds in the retail sector.

The Federal Reserve is scheduled to meet later this week.

Watch the full interview with Peter Schiff:

[bankwalker]

The volatilty ETN XIV has blown up and will cost credit suisse over $500M. Any other holders will take a proportionate hit. This could cascade.

[familyop]

For lack of any conservative radio reception here, I’ve been listening to NPR off and on while driving during the day to see what they’re up to. Earlier, this morning, a woman was saying that stocks will fall much further, claiming that the crash is caused by inflation. She told listeners to sell and stay out of the market for a while. I don’t drive very far, so I didn’t get her name or title.

There’s been quite a bit of nasty propaganda coming out of NPR against the President. Hideous and stupid network to listen to, but it’s interesting to hear about what they’re doing next.

[ptsal]

Audit the FED

THEN terminate the beast.

[familyop]

"The volatilty ETN XIV has blown up and will cost credit suisse over $500M. Any other holders will take a proportionate hit. This could cascade."

Thank you. Asia might be interesting. Will have a look.

[familyop]

Yes, some decreases in Asia, but nothing to panic about. So far, it looks like other corrections I’ve seen off and on over the past decade.

[Karl Spooner]

Many are predicting hyper-inflation (for a lot of good reasons) is coming in the next few months. Driving down the stock market when it is a good hedge against inflation is war against the American people. Since they suppress the precious metals markets too, the future may be very bleak for us.

[867V309]

This crash is a planned attack designed to take attention away from the memo.

The problem with that is the 'memo problem' isn't going away. Not tomorrow, next week, next month or probably next year.

Those of us who experienced Watergate know it was a long process. The headlines of a stock market decline will not overshadow the drip-drip-drip revelations of barkie administration criminality which will continually come to light.

[familyop]

I’m sorry. On that volatility index(?), is that a bet for or against volatility? Any kind of synopsis, pointer or reference would help. Thank you.

[rfp1234]

I presume Peter Schiff is not related to Pencil Neck Schiff.

[plain talk]

The key thing is the 4th qtr growth nos. Over 4 percent. The Fed has no more excuses for artificially keeping interest rates low. Trump recovery is taking off and interest rates and inflation will rise. This puts pressure on stocks already at nosebleed levels.

[Jane Long]

Yep. Exactly what the folks on FoxBiz were saying, today.

[ResponseAbility]

****Many are predicting hyper-inflation (for a lot of good reasons)****

I’m all ears, please name the reasons...

[plain talk]

Well I didn’t listen to any of the talking heads today. I am just a retired average schmuck who has been at this a long time. It’s pretty obvious to me what’s going on. Markets don’t go up forever. Anyone unprepared for 10-20% corrections after a runup of 30% in a year should not invest.

It would be nice for fixed income interest rates to eventually rise a bit.

[gnarledmaw]

Im not an expert on economics but Im pretty sure you forgot the step where they steal the underpants.

[familyop]

So overvaluation, program trading, herd behavior—maybe some of the possible causes of the crash of 1987?

[ConservativeMind]

The unraveling of QE will suck up inflation through deflation.

[familyop]

"Or it could be that China is responding to Donald Trump, by deciding to reset their currency peg to the dollar.

They pull out of dollars. Reset their currency. They get back in at the new rate. Immediate profit."

There might be something to that, although I haven't checked to see how much effect the Chinese call to sell treasuries had. That could lower bond prices. The rate (yield) would have to go up for them to profit from it, though. Raising yields can lower prices, but I don't know if that works in reverse (i.e., lower prices causing higher yields). ;-)

Could be, though, that the PLA was banking on our Fed raising the rate again, though, so they could buy in again cheaper. That could backfire, too, BTW, causing a selloff in treasuries with suckers holding cheap treasuries (higher yields, lower prices.), unless they're in it for the long terms.

[plain talk]

Dunno. I don’t consider a correction of 10% or so after a runup of 88% over five years to be a “crash”.

There is definitely a herd mentality to markets and they overrun and underrun and correct themselves over time.

Best thing is to invest as much as you can save (20% or more if possible) over decades into a mix of stocks and bonds and just let it be.

[familyop]

Dow future
-584.00

Fluctuating back upward again for now.

[familyop]

"Dunno. I don’t consider a correction of 10% or so after a runup of 88% over five years to be a 'crash'."

That's a good and true point. Thanks! See? I was impulsively indulging in the language of the "herd." ;-)