Earlier this month, Peter Schiff wondered out loud if the twin deficits of government budget and trade could spark an October surprise. The month isn’t over yet, but it certainly hasn’t been a good one for stock markets.
The Dow is down 3.8% in October. And it’s the best-performing of the stock indexes. The S&P 500 is down about 4.7% on the month. The Nasdaq has dropped 7.4%. Dow Transports have plummeted 8.3%. And the Russell 2000 has suffered a 9.2% decline. Now, if you want some good news, look at gold. It’s up about 3% this month. But all in all, there is a lot of gloomy news on Wall Street.
All of this doom and gloom led Peter to ask an important question in his latest podcast. How many canaries have to die in the coal mine before the mainstream wakes up?
The dollar has gained a little ground as bond yields have increased, but Peter said the dollar is ultimately going to turn around when people realize that the US economy isn’t nearly as strong as is generally believed.
The Federal Reserve released the minutes from the most recent FOMC meeting last week. The Fed continues to express extreme confidence in the US economy and maintains its stance that it will continue raising interest rates.
Of course, that is the real reason that the markets continue to fall is that the Fed is continuing to threaten the markets with higher interest rates.”
The mainstream continues to come up with excuses for the falling stock market. Last week, they talked about the trade war, the situation in Italy, and the tensions with Saudi Arabia over the murdered journalist. But Peter had a different explanation. We’re in a bear market.
The market probably would have fallen even if none of those things happened. You know, when you’re in a bear market, and I think there’s a very good chance we are in a bear market, you don’t need an excuse for the market to go down. The market just goes down. It’s just that when people don’t know they’re in a bear market, they’re always looking for excuses. They can’t accept reality.”
Reprinted from SchiffGold.com.