Friday, July 17, 2015

HOT Trader Slams Peter Schiff on His Forecast that the Fed Will Not Raise Interest Rates

In a heated debate on CNBC yesterday, trader Scott Nations slammed Peter Schiff, CEO of Euro Pacific Capital, for saying that Fed Chair Janet Yellen will not raise interest rates this year and  Schiff's claim that another round of quantitative easing could be in the cards.

"Peter, you do a great job of making these outlandish predictions and 1,000 of them come out of your mouth, 999 of them are wrong and then you live forever on one of them," said Scott Nations, on Thursday's "Futures Now." "It sounds like you are trying to do that now. What about now?" proclaimed Nations.

Nations is wrong in pointing to futures market as a predictive indicator (See my article on futures and gaming markets:Bettors 'Prediction' Market Bombs on Greek Referendum Call).

But, I believe he is correct in his position that the Fed is very likely to raise rates by the September Federal Reserve Open Market Committee meeting.

My current position in the EPJ Daily Alert is that the Fed is likely to raise rates by September if the unemployment rates drops to 5.2% or lower. It is currently at 5.3%.

The key Fed members, Fed Chair Janet Yellen, Fed Vice-Chairman Stanley Fischer and New York Federal Reserve President William Dudley. have signaled such a move in speech after speech. Occasionally, government officials will lie, but you have to look at things in context and there is very little reason for them to telegraph in precise  detail when they are planning on raising rates unless they actually plan on such a hike.

My one caveat is that becasue the stock market is on extremely shaky ground at present, and a stock market crash can not be ruled out before the Fed's September 16-17 Fed monetary policy meeting, a hike will not occur in the face of a crash . But, if there is no crash, I fully expect a rate hike, and see little chance (like zero) of a new round of quantitative easing anytime soon.



  1. Peter said that IF they were to raise rates it would be by 25 points and then they would reverse direction shortly after and begin QE4.

    1. The market is forcing yields up.
      The Fed is trying to create the appearance that rising yields are its plan and a sign of recovery.

  2. There has been no rate hike yet and these tools are yelling at Schiff like he's been proven wrong already. Desperate propaganda.

  3. I think Yellen knows the unemployment rate is bogus, which is why she began talking about the workforce participation rate. In theory, if every single American stopped working permanently, the official unemployment rate would drop to 0%. Bogus number.

    Also, the rate hike question is interesting. I think Peter is right in that if they begin to hike in September or even later that the bubble will begin to leak, prompting the Fed to reverse course and start easing again. This bubble is already long in the tooth, huge, and ripe for bursting, so the question becomes: Does the Fed hike this year, thereby popping the bubble and risk dealing with 2008 on steroids? Or does the Fed continue to enact ZIRP and allow market psychology to begin the shift away from expecting deflation and toward expecting inflation? Honestly, at this point, with commodities already tanking and business already faltering, they might as well just keep rates at zero until commodities and precious metals start to turn upward. Otherwise they are going to spill the punchbowl and make a big mess much sooner than they have to.

  4. As EPJ's well informed readers know, increasing rates will trigger the false recovery to unravel (even faster).

    If these Fed intellectuals actually knew what they were doing or understood how bad the situation was they wouldn't raise rates at all, so as to stall the inevitable.

    But they are arrogant, clueless and live in sanitized vacuums out of touch with reality. In that context they will valiantly and ceremonially move the needle so it's not lying on "E" but sheepishly retreat once they see the chaos it unleashes.

    I see not QE4 but EQ1 (Easing Quantitatively) to undo the damage.

    They'll call QE another name to bamboozle the masses.

  5. They are propping up an enormous debt bubble Robert. If the Fed reduces their support, they risk crashing the bond market. The Treasury is broke and the banks are broke.