Tags: Peter Schiff | Stocks | Economy | Market

Strategist Peter Schiff: Stocks Are So Strong Because 'Economy Is Very Weak'

 (AP/Mark Lennihan)

By    |   Wednesday, 15 February 2017 02:15 PM

Peter Schiff, CEO of Euro Pacific Capital, warns that savvy investors shouldn’t be too quick to get all caught up in the celebration of the stock market seemingly hitting new record highs on a daily basis.

It may all come crashing to an end sooner rather than later.

“The economy is very weak and that's one of the reasons that the stock market has been strong,” he told CNBC.

“It's been the weak economy that has been the primary reason the Fed has been able to keep rates so low for so long," he said. "And in fact it's been these low rates that are actually one of the reasons that the economy is so weak, but all of this benefits the financial markets, it benefits the stock market, it keeps it propped up at artificially high levels, but it undermines the real economy," he said.

"That's why so many Americans are hurting and why so many voted for Donald Trump,” he said.

“I think I've been correctly bearish on the U.S. economy ever since the Fed began this ridiculous monetary experiment. That's why Donald Trump was elected president. If the economy was in good shape, not only wouldn't he have been elected, he wouldn't have been the Republican nominee,” he said.

Schiff also doesn’t have much faith in the current central bank’s monetary strategy.

“When (Federal Reserve Chairman) Janet Yellen talks about whether or not it would be appropriate to raise rates, what was inappropriate was slashing rates in the first place. It was inappropriate to leave them as low as they were as long as they were and now she's talking about ow it would be a problem if they raised rates too slowly," he said.

“It is a problem, that's why Janet Yellen is so reluctant to raise rates. That's why she's barely moved them up over the last few years because she's afraid of the consequences when she tries to remove this unprecedented accommodation,” he said.

“I mean nothing at all changed. What's appropriate and what the Fed is going to do are two totally different things. The Fed is going to raise interest rates as slowly as they can possibly get away with and at some point they're going to have to come up with an excuse why they're going to stop raising rates and why they're going to cut rates again and why they're going to go back to QE," he said.

"All of this is inevitable, but even if the Fed does nudge interest rates up a little bit more before they ultimately reverse course, it's not going to matter," he said.

“Inflation is headed up not just on a producer level but on the consumer level and inflation is going to be rising at a pace that is much faster than any rate hikes that we might get from the Fed. So real rates are going to be falling even if the Fed raises nominal rates,” he said.

“I think the dollar ultimately is going to drop substantially so I think you're going to see a bigger drop in the price of stocks,” he said. 

To be sure, Trump will be a demanding leader who applies the best of his negotiating skills to push for U.S. growth, bestselling author David Horowitz told TheStreet.com.

Trump won’t be an ideological purist like Republicans who support free trade but don't fight for fair trade, Horowitz said. “If you just say, ‘well we're for free trade and we're not going to look at the deals that we make’ -- that's not a good idea,” he said. “We've had an anti-business president now for eight years who doesn't take a hard-nosed attitude towards these deals. Trump is going to get better deals for us, which is still free trade.”

Horowitz's new book "The Big Agenda: President Trump's Plan to Save America"  reveals Trump's "first 100 days strategy" to roll back Obama's legislative and executive record.

"Big Agenda: President Trump's Plan to Save America" is available at bookstores everywhere – or get your copy on Amazon – Click Here Now

And to accomplish his agenda, Trump would be wise to appoint a supporting cast of free-market conservatives to his administration, Forbes Media CEO Steve Forbes tells Newsmax TV.

(Newsmax wire services contributed to this report).

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Peter Schiff, CEO of Euro Pacific Capital, warns that savvy investors shouldn't be too quick to get all caught up in the celebration of the stock market seemingly hitting new record highs on a daily basis. It may all come crashing to an end sooner rather than later.
Peter Schiff, Stocks, Economy, Market
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2017-15-15
Wednesday, 15 February 2017 02:15 PM
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