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Results 101–150
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Negative Rates May Be Positive for Gold
by John Browne of Euro Pacific Capital,
As 2015 came to a close, most investors believed that 2016 would be a year dominated by a series of Fed rate hikes. That conviction solidified in mid-October when comments from multiple Fed officials convinced many that prior hints that the Fed would stay at zero percent rates had been false alarms. The Fed delivered on its promise in mid-December by actually raising rates by 25 basis points. Based on this, gold declined by 10% from October 14 to the end of the year, nearly matching its six year low. Many on Wall Street thought the declines would continue into 2016. They were decidedly wrong.
The Winter of Discontent
by Peter Schiff of Euro Pacific Capital,
The Winter of 2015-2016, which came to an end a few weeks ago, has been officially designated as the mildest in the U.S. in 121 years according to NOAA. While this fact will certainly add a major talking point in the global warming debate, it should also be front and center in the current economic discussion. The fact that it isn't is testament to the blatantly self-serving manner in which economic cheerleaders blame the weather when it's convenient, but ignore it when it's not.
April Fools in March
by Peter Schiff of Euro Pacific Capital,
It may be almost impossible to underestimate the gullibility of professional Fed watchers. At least Lucy van Pelt needed to place an actual football on the ground to fool poor Charlie Brown. But in today's high stakes game of Federal Reserve mind reading, the Fed doesn't even have to make a halfway convincing bluff to make the markets look foolish.
Two Down – Two to Go
by Peter Schiff of Euro Pacific Capital,
The Federal Reserve’s years-long campaign to sheepishly back away from its own policy forecasts continued in earnest last week when it officially reduced the four expected 2016 quarter point hikes, suggested back in December, to just two.
Global Stakes for the Brexit Vote
by John Browne of Euro Pacific Capital,
On February 20th, UK Prime Minister David Cameron announced that the 'in/out EU referendum' he had promised in the campaign for the last parliamentary vote would finally take place on June 23rd. The outcome of the long-promised vote could have a tremendous impact not merely on the future of Mr. Cameron and his coalition but on the economic future of Great Britain and much of the world, including the European Union (EU) and the United States. It's arguable that the referendum will be the most significant vote the world will see between now and the U.S. presidential ballots in November.
An Escalating War on Cash
by John Browne of Euro Pacific Capital,
On February 16th, The Washington Post printed the article, "It's time to kill the $100 bill." This came on the heels of a CNNMoney item, the day before, entitled "Death of the 500 euro bill getting closer." The former cited a recent Harvard Kennedy School working paper, No. 52 by Senior Fellow Peter Sands, concluding that the abolition of high denomination notes would help deter "tax evasion, financial crime, terrorist finance and corruption."
The Fed's Nightmare Scenario
by Peter Schiff of Euro Pacific Capital,
Operating under the mistaken belief that a modest dose of inflation is either a prerequisite for, or a by-product of, economic growth, the nation’s top economists have been assuring us for quite some time that inflation will stay very low until the currently mediocre economy finally catches fire. As a result, they believe that the low inflation of the past few months has frustrated Federal Reserve policy makers, who have been supposedly chomping at the bit to keep hiking rates in order to restore confidence in the present and to build the ability to cut rates in the future if the nation were
Through the Looking Glass on Rates
by John Browne of Euro Pacific Capital,
On January 29th, Japan’s central bank governor, Haruhiko Kuroda, announced that the Bank of Japan would introduce a Negative Interest Rate Policy, or NIRP, on bank reserve deposits held in excess of the minimum requisite. The European Central Bank, and central banks in Switzerland, Denmark and Sweden have already partially blazed this mysterious trail. The banks have done so in order to weaken their respective currencies and to light a fire under inflation.
Clueless in Davos
by Peter Schiff of Euro Pacific Capital,
Making their annual pilgrimage to the exclusive Swiss ski sanctuary of Davos last week, the world's political and financial elite once again gathered without having had the slightest idea of what was going on in the outside world. It appears that few of the attendees, if any, had any advance warning that 2016 would dawn with a global financial meltdown.
Lifting Sanctions on Iran a Mixed Bag
by John Browne of Euro Pacific Capital,
From a financial perspective, the New Year has been anything but happy. As of January 20th, the S&P had fallen over 9% since the beginning of the year, to levels not seen since 2014,reflecting a loss of some $2 trillion in market value. Compounding matters was the 30% collapse in oil prices, which brought crude down to the lowest levels in 13 years. The New Year has also seen further evidence of recession in the U.S., which has appeared in a string of bad manufacturing service sector data.
Mission Accomplished
by Peter Schiff of Euro Pacific Capital,
The new rounds of rate cutting and Quantitative Easing that the Fed will have to unleash will echo the military "surge" in Iraq in 2007. Those fresh troops were needed to roll back the chaos that the Administration had ignored for so long. But just as that surge only bought us a few years of relative calm, look for the gains brought about by our next monetary surge to be even more transitory. That is a development for which virtually no one on Wall Street is preparing.
China Takes a Big Step Forward
by John Browne of Euro Pacific Capital,
On November 30th the International Monetary Fund (IMF) announced that it would admit China’s Renminbi currency, commonly known as the Yuan, to the select basket of reserve currencies that make up its Special Drawing Rights (SDR’s). Having been stalled by U.S. influence for many years, the long-awaited IMF decision acknowledges the massive transfer of financial power from the old West to the new East. The move heralds an era of potentially great change with global implications for politics, economics and investments.
Fed’s Rocket Ship Turns Hoverboard
by Peter Schiff of Euro Pacific Capital,
Over the past year, while the U.S. economy has continually missed expectations, Federal Reserve Chairwoman Janet Yellen has assured all who could stay awake during her press conferences that it was strong enough to withstand tighter monetary policy. In delivering months of mildly tough talk (with nothing in the way of action), Yellen began stressing that WHEN the Fed would finally raise rates (for the first time in almost a decade) was not nearly as important as how fast and how high the increases would be once they started.
European Union Challenged from Right and Left
by John Browne of Euro Pacific Capital,
The heinous ISIS attack in Paris is a game changer in Europe. In addition to the horrific amount of individual casualties, the attack has also threatened severe damage to the long term survivability of the European Union as a political entity. Based on the unpopularity and unfeasibility of immigration controls under the EU's Schengen Plan, the events have opened up the Union to renewed attacks from the right, just as its support from the left is crumbling as a result of opposition to EU-mandated fiscal austerity. This two-front onslaught may be too much for the Union to endure.
The Shadow Rate Casts Gloom
by Peter Schiff of Euro Pacific Capital,
Nearly 92% of economists surveyed this week by the Wall Street Journal expect that our eight-year experiment with unprecedented monetary easing from the Federal Reserve will come to an end at the next Fed meeting in December. Since we have had the monetary wind at our back for so many years, at least a few have begun to question our ability to make economic and financial gains against actual headwinds. But in reality, the tightening cycle that the forecasters are waiting for actually started last year. Sadly, the markets and the economy are already showing an inability to handle it.
QE’s Creeping Communism
by Peter Schiff of Euro Pacific Capital,
Most economists and investors readily acknowledge that the current period of central bank activism, characterized by extended bouts of quantitative easing and zero percent interest rates, is a newly-blazed trail in economic history. And while these policies strike some as counterintuitive, open-ended, and unimaginably expensive, most express comfort that our extremely educated, data-dependent, central bankers have a pretty good idea as to where the trail is going and how to keep the wagons together during the journey.
Reshuffling the Deck in the Mideast
by John Browne of Euro Pacific Capital,
The U.S. presence in the Middle East, which for years provided some control over one of the world’s most volatile regions, appears to have dissolved into chaos. By removing Saddam Hussein from power, the U.S. removed his tyrannical but stabilizing hand from the powder keg that always existed in the poorly designed nation state of Iraq. Rather than attempting to repair the damage, President Obama appears intent on leaving what he terms “a quagmire.”
Failure to Launch
by Peter Schiff of Euro Pacific Capital,
The popular belief that the U.S. economy has been steadily recovering has endured months of disappointing data without losing much of its appeal. A deep bench of excuses, ranging from the weather to the Chinese economy, has been called on to justify why the economy hasn't built up any noticeable steam, and why the Fed has failed to move rates off zero, where they have been for seven years. But the downright dismal September jobs report that was released last Friday may prove to be the flashing red beacon that even the most skilled apologists can't explain away.
Groundhog Day at the Fed
by Peter Schiff of Euro Pacific Capital,
Every dictator knows that a continuous state of emergency is the best means to justify tyrannical policies. The trick is to keep the emergency from breeding so much paranoia that routine activities come to a halt. It's best to make the threat external, intangible and ultimately, unverifiable. In Orwell's 1984 the preferred mantra was "We've always been at war with Eurasia," even though everyone knew it wasn't true. In its rate decision this week the Fed adopted a similar approach and conjured up an external threat to maintain a policy that is becoming increasingly absurd.
Immigration: A Political and Economic Issue
by John Browne of Euro Pacific Capital,
Donald Trump has successfully placed immigration at the center of the U.S. Presidential election. But while the issue is still largely a debating point in the United States, it has quickly and violently become a life and death issue for the European Union, which is in the midst of the most significant immigration and refugee crisis since the Second World War.
Meet QT; QE's Evil Twin
by Peter Schiff of Euro Pacific Capital,
There is a growing sense across the financial spectrum that the world is about to turn some type of economic page. Unfortunately no one in the mainstream is too sure what the last chapter was about, and fewer still have any clue as to what the next chapter will bring. There is some agreement however, that the age of ever easing monetary policy in the U.S. will be ending at the same time that the Chinese economy (that had powered the commodity and emerging market booms) will be finally running out of gas.
The Fed Is Spooking the Markets Not China
by Peter Schiff of Euro Pacific Capital,
Fasten your seat belts, this ride is getting interesting. Last week the Dow Jones Industrial Average was down more than 1,000 points, notching its worst weekly performance in four years. The sell-off took the Dow Jones down more than 10% from its peak valuations, thereby constituting the first official correction in four years. One third of all S&P 500 companies are already in bear market territory, having declined more than 20% from their peaks. Scarier still, the selling intensified as the week drew to a close, with the Dow losing 530 points on Friday, after falling 350 points on Thursday.
What Kind of "Improvement" Does the Fed Want?
by Peter Schiff of Euro Pacific Capital,
If GDP growth only averages 2.0% in the Second Half (which I think is likely), then 2015 growth will only be about 1.7% annually. Given that the Fed didn't raise rates in 2012, 2013, and 2014, when growth was well north of 2%, why would they do so now? Yet Wall Street and the media stubbornly cling to the notion that 3% growth and rate hikes are just around the corner. Old notions die hard, and this one has taken on a life of its own.
The Euro Isn't Dead
by Peter Schiff of Euro Pacific Capital,
While the world can count dozens of important currencies, when it comes to top line financial and investment discussions, the currency marketplace really comes down to a one-on-one cage match between the two top contenders: the U.S. Dollar and the Euro.
The Nuclear Deal is Mostly about Oil
by John Browne of Euro Pacific Capital,
The recent nuclear non-proliferation agreement between Iran and the U.S. has created a firestorm debate in the Middle East and both sides of the Atlantic. While the deal is supposedly all about nuclear power and nuclear bombs, its practical implications are all about oil. But the conclusions we should make about its impact on the energy sector are far from clear. A ratification of the deal would allow Iran to make lucrative long term production and distribution contracts with foreign energy firms.
Currencies Depend on Faith, Gold Doesn’t
by Peter Schiff of Euro Pacific Capital,
In his July 17th Blog, Let's Get Real About Gold, author and Wall Street Journal columnist Jason Zweig likened investor interest in gold with the "Pet Rock" craze of the 1970's, when consumers became convinced that a rock in a box would provide continuous companionship, elevate their social standing, and give them something hip to talk about at parties. Zweig asserts that investor faith in gold, which he argues is just another inert mineral with good marketing, is similarly irrational, and has kept people from putting money in the much more lucrative stock market.
How Socialism Destroyed Puerto Rico, and How Capitalism Can Save It
by Peter Schiff of Euro Pacific Capital,
While Greece is now dominating the debt default stage, the real tragedy is playing out much closer to home, with the downward spiral of Puerto Rico. As in Greece, the Puerto Rican economy has been destroyed by its...
The Big Picture
by Peter Schiff of Euro Pacific Capital,
The past four years or so have been extremely frustrating for investors like me who have structured their portfolios around the belief that the current experiments in central bank stimulus, the anti-business drift in Washington, and America's mediocre economy and unresolved debt issues would push down the value of the dollar, push up commodity prices, and favor assets in economies with relatively low debt levels and higher GDP growth. But since the beginning of 2011, the Dow Jones Industrial Average has rallied 67% while the rest of the world has been largely stuck in the mud.
Geopolitics Will Trump Economics in Greece
by John Browne of Euro Pacific Capital,
Based on the continued failure of the negotiating parties to make any substantive progress in the talks over Greek debt payments, the financial world is tied up in knots over a possible Greek exit from the European Union. The uncertainty has manifested in both high and low finance, with a sharp sell-off in bonds, particularly EU and Greek government debt, and heightened retail withdrawals from Greek banks as depositors become wary of capital controls that would be imposed in the case of an exit. All concerned parties should likely breathe easier.
The Punch Bowl Stays
by Peter Schiff of Euro Pacific Capital,
It is well known that I don’t think much of the ability of government officials to correctly forecast much of anything. Alan Greenspan and Ben Bernanke have made famously clueless predictions with respect to stock and housing bubbles, and rank and file Fed economists have consistently overestimated the strength of the economy ever since their forecasts became public in 2008.
The Fed Considers a More Seasoned Approach
by Peter Schiff of Euro Pacific Capital,
Just as the steady torrent of awful economic data, which began in the First Quarter and continued well into April and May, had forced many market analysts to grudgingly concede that 2015 would not see the robust economic growth that most had expected, the statisticians arrived on the scene like a cavalry charge and routed the forces of pessimism with a wave of their spreadsheets.
See No Evil: What We Chose to Ignore in the April Jobs Report
by Peter Schiff of Euro Pacific Capital,
We live in an age where bad economic news is not only unwelcome, but it is routinely overlooked or excused. On the other hand, good news is spotted and trumpeted even when it doesn't exist. An ideal illustration of this dangerous tendency towards collective selectivity came last week when the markets and the media somehow turned an awful employment report into an ideal data set that confirmed all optimism and contained nothing but good news for investors. In truth, it was anything but.
British Election: Repercussions for America
by John Browne of Euro Pacific Capital,
The British General Election, on May 7th, was an epic in two respects. First, in spite of polls forecasting a hung parliament, David Cameron’s Conservative Party was given unexpectedly large support, winning 331 seats, or 51 % for an overall majority of four, and showing once again the failure of left wing parties to make traction in Europe.
The Embarrassment of Transparency
by Peter Schiff of Euro Pacific Capital,
Over the past decade or so, "transparency" has become one of the buzzwords that has guided the Federal Reserve's culture. The word was meant to convey the belief that central banking was best done for all to see in the full light of day, not in the murky back rooms of Washington and New York. The Fed seems to be on a mission to prove that its operations are benevolent, fair, predictable, and equitable.
GE's Restructuring Pleases Investors and Avoids Other Risks
by John Browne of Euro Pacific Capital,
On April 10, General Electric, which for 123 years has been one of America's best known and most highly respected companies, announced a radical return to its basic industrial roots. After years of disappointing share performance, and a campaign of criticism by frustrated investors, Chief Executive Jeff Immelt decided to spin off most of its $500 billion GE Capital arm which, if taken as a stand-alone company, would have been the seventh largest bank in the U.S.
China Finally Stops Fighting the Stock Market
by Peter Schiff of Euro Pacific Capital,
Although China's economy has been leading the world in annualized growth since the days that mobile phones had retractable antennas, there have always been some aspects of the country's commercial and financial system that loudly broadcast the underlying illogic of a Communist Party's firm control of burgeoning capitalism. China's stock markets were one such venue where things just didn't add up...literally.
U.S. Isolated in Opposition to Chinese Bank
by John Browne of Euro Pacific Capital,
Over the past few decades while the economic power of the Chinese has grown exponentially, many observers have been surprised by the relative willingness of China to operate within the financial and economic framework established by the dominant Western order. But it should now be blatantly clear that Beijing prefers to act slowly, deliberately and quietly to advance its agenda.
Give'em the Old Razzle Dazzle
by Peter Schiff of Euro Pacific Capital,
Janet Yellen channels Billy Flynn? Last week the Fed Chairwoman treated us to a master class of rhetorical misdirection which produced some memorable examples of doublespeak, including the soon to be classic "Just because we removed the word 'patient' does not mean we're going to be 'impatient."' But perhaps more surprising than her new heights of verbal dexterity was the market's euphoria at being so blatantly manipulated. Never has the financial world enjoyed a lie so thoroughly.
A Patient Fed Considers Losing Patience
by Peter Schiff of Euro Pacific Capital,
I have always argued that quantitative easing and zero percent interest rates were misguided policies to combat economic weakness. But as the years went on, misguided turned into irresponsible, which led to ridiculous, and then turned into dangerous. But lately, the only word that comes to mind is "surreal." How should we react when central bankers begin to speak like Willie Wonka?
Greek Problems Born from Socialism
by John Browne of Euro Pacific Capital,
Like many of the important discussions in the economic world today, the negotiations between Greece and its European creditors has become increasingly absurd . Late on Friday, February 20, in a tense meeting between the new Greek Finance Minister and a host of ministers from 19 Eurozone countries, Germany apparently 'authorized' negotiators to accept a four-month extension of the $272 billion bailout so long as the Greeks promised to make a series of difficult fiscal steps needed to stay solvent over that time frame.
The Herd Can Be Blind
by Peter Schiff of Euro Pacific Capital,
Going into 2015 the economic outlook held by the U.S. investment establishment could not have been much more positive, and more unified. Pundits saw all the variables aligning to create the best of all investment worlds, a virtual "no-brainer" of optimism. Many believed that the 5.0% annualized growth in 3rd quarter would stay strong in the 4th Quarter and then usher in a strong 2015, which many believed would be the best economic year since the crash of 2008. The only question that divided most forecasters was how good the year would be.
Greece Dependency Has Created Dangerous Illusions
by John Browne of Euro Pacific Capital,
Once again the crisis in Greece is threatening the unity of the entire euro zone. Many analysts are asking what must be done to restore viability to the Union's weakest link. Lost in this discussion is that modern Greece, formed in 1830, has never really been required to stand on its own. Generations of support from abroad, typically given for strategic reasons, has created a false sense of prosperity in the country and has prevented the Greeks from accepting the realities of their current situation.
The Bravado of Borrowers
by Peter Schiff of Euro Pacific Capital,
Last week a scene unfolded in Athens, largely unnoticed by American eyes, that provided all the visual and metaphorical symbols needed to define the current state of the global economy. Hollywood's best screenwriters couldn't have laid it out any better.
Tsunamis Most Often Come Without Warning
by John Browne of Euro Pacific Capital,
On Thursday, January 15th, the Swiss National Bank (SNB) discontinued its three year effort to maintain its minimum currency floor of the Swiss franc. In a single day the move sent the Swiss Franc (SWF) climbing a massive 21% against the U.S. dollar and 41% against the euro. The move sent shockwaves of unprecedented ferocity through the massive foreign exchange (FX) market, which is by far the largest, and most highly levered, trading market in the world.
Switzerland Wins As Its Central Bank Surrenders
by Peter Schiff of Euro Pacific Capital,
If anyone had any doubt how severely the global economy has been distorted by the actions of central bankers, the "surprise" announcement last week by the Swiss National Bank (SNB) to no longer peg the Swiss franc to the euro should provide a moment of crystal clarity.
The Hidden Perils of Low Interest Rates
by John Browne of Euro Pacific Capital,
Late last year, with the U.S. economy experiencing falling unemployment and seemingly low inflation, observers were extremely confident that the Federal Reserve would move judiciously in 2015 to restore 'normal' interest rates sooner rather than later. However, in light of the recent fall in both stocks and oil, that conviction has softened considerably.
Hurts So Good: When Exactly Are Falling Prices Bad?
by Peter Schiff of Euro Pacific Capital,
The sudden fall in the price of oil provides a unique opportunity to examine the widely held belief that deflation is economic poison. As many governments and central banks have vowed to fight deflation at all costs in 2015, the question could hardly be more significant. While falling prices may strike the layman as cause for celebration, economists believe that it can kick off a nasty, and often inescapable, negative cycle, which many believe leads inevitably to a prolonged recession, or even a depression.
Results 101–150
of 482 found.
