Tuesday, May 23, 2017

The Instability of the System is Something We Should All Be Concerned About

When asked about the confidence that is currently boosting the markets, Rickards’ remarked, “First off, I don’t put a lot of stock in confidence reports… There is a high correlation between consumer confidence and the stock market. The reason consumers are confident is because the stock market is going up. As soon as the stock market goes down, consumer confidence is going to plunge. So what could cause it? Imagine that snow is building up on a mountainside. You could look at it and see its unstable and know it is going to collapse. All it takes is one snowflake to come along, start a slide and disturb others while gaining momentum. The next thing you know the whole avalanche is coming down. Who do you blame? The snowflake or the system as a whole?”

“What I am doing is looking at the system as a whole. It is the instability of the system that we need to be concerned about… There are lots of things that could cause it. That’s not the important aspect to focus on. My advice to investors is get gold now. Don’t go all in, I recommend 10% of your investable assets. That’s not 50% or 100%. That’s your insurance if everything I am saying is wrong, you won’t get hurt with that slice of gold… But if things do get bad and fall apart you’ll be very happy to have it.”

Wednesday, May 17, 2017

The Reality of the Trump Tax Plan

Offering his insights the author explained, “I’ve looked at it and understand the details but it is almost meaningless. I think this is for show and something of a “trophy” for Donald Trump’s first hundred days. They want to put a stake in the ground and begin negotiation but the numbers [on the tax bill] don’t add up and it would never get through the U.S Congress with the present form.”

“It is completely devoid of detail and even the points given don’t give specifics. It is an interest starting place and a good discussion point but I don’t take it very seriously at all. There will be a tax bill later on in the year though.”

When asked how the market has responded in the past months to the talk about the tax plan he pressed. “President Trump was elected in November and the U.S market went up with the S&P jumping 100 points, the Dow Jones went up 1000 points – because of the possibility of the Trump tax cuts. Then in December the Dow Jones went up another 1000 points because of the possibility of the Trump tax cuts. Then again in January the market went up another 1000 points because of the Trump tax cuts. This is bubble behavior. The market went up three times based on the same tax cuts.”

“[The President] is only going to cut taxes once. The market seems to react at every rally opportunity. There is an old saying on Wall Street “buy the rumor, sell the news.” Late today the U.S stock market averages turned down because they took a look at the tax cut proposals released today and it didn’t have a lot of the things they wanted with details expected. It is a one page press release, so we still have more to see. I think the market is going to reserve judgement.”

“If, in fact, the proposed tax bill doesn’t come anywhere close to what Trump is describing the market is going to sell off because they cannot meet expectations.”

Sunday, May 14, 2017

Rickards: Trump Tax Plan is a Sideshow

Jim Rickards joined Sky News Australia while speaking from New York City he delved into the expectations of the Trump tax plan proposals, what the political landscape shows the general public and how the market could react.

When asked about his read on the proposed “largest tax reform in U.S history” Rickards did not hold back. “In a carnival or circus you used to have something called a side show. It would have funny acts with sword swallowers, flame swallowers or living mermaids. I view this whole thing as a side show. I don’t think that analysts should take it very literally. I think it is very difficult for viewers outside of the United States to understand. Most democratically elected parliamentary systems operate under where when the Prime Minister directs something, if they have a working majority, it becomes the law. While there is usually some debate, the leadership typically gets what they want.”

Wednesday, May 10, 2017

Jim Rickards: The Numbers Impacting the Fed

Jim Rickards joined Stephen Guilfoyle on The Street to discuss his latest take on the numbers that will move the Fed in through its decision making process. During the conversation Jim Rickards and Mr. Guilfoyle, also known as “Sarge” on Wall Street, cover how the Federal Reserve will continue to push rates higher and potentially trigger a recession.

To begin the discussion Sarge prompted Rickards’ on his read regarding the trajectory of monetary policy in the United States. Rickards noted, “I see the Federal Reserve raising rates in June — the market is getting there, they’re not quite ready yet though. The Fed is on track to raise rates four times a year until 2019 in order to get the Federal funds rate at 3.25%. The expectation is rate hikes in March, June, September, December in a sequence until 2019.”

“There are only three reasons that the Fed might his a “pause button.” There are only three reasons they would do so. First, if job creation falls below 75 thousand per month, which is a pretty low hurdle. Second, if the stock market fell out of bed and I don’t mean 5%. If the Dow was to fall more than 2000% that would cause the Fed to pause. The third thing would be disinflation. Inflation is currently moving toward the Fed’s goal but if it started to move the over way [you could see the central bank take a pause]. If you don’t see those things then expect the Fed to raise four times a year.”

The bestselling author went on to note, “This has nothing to do with the business cycle. This is where I think Wall Street has got it wrong in assuming “you’re raising rates when the economy is strong, so the economy is strong” which has been true for seventy years – it’s not true now. They’re raising rates into weakness. The Fed has to get rates up so that they can cut them in the next recession. They skipped a cycle and now have to make up for lost time.”

Jim Rickards is an American economist and bestselling author who just released the paperback version of his book The Death of Money. Rickards’ is a currency wars expert who has advised the United States government on issues related to currency wars and international economics.

When asked whether the Fed could cause the next recession Rickards’ pressed, “They might. That’s the finesse. Can you raise rates in order to prepare to cure the next recession, without causing the recession you’re trying to cure? I think the answer is probably no. For the first time ever the Fed is tightening into weakness. Now the Fed is tightening for a completely different reason than the business cycle. They’re trying to make up for lost time.”

When asked whether the Federal Reserve is acting on partisan reasoning Rickards’ did not hold back in expressing, “I have recently written on just that where I noted – Donald Trump owns the Fed. What I mean is he’s got three vacancies that he’ll be able to fill. There is a lone Republican on the Federal Reserve’s board with Jay Powell. He’s been alone ‘in the sandbox’ for years and he’s going to potentially three Republican replacements joining him to take up four seats. Janet Yellen [the chairman of the Federal Reserve] is up in January 2018.”

“While that will need Senate confirmation, expect President Trump to name her replacement by November – if not sooner. So that will allow for a fifth Republican on board. Then, Stanley Fischer term with end in June 2018. That will allow for six seats to be filled. At that point Lael Brainard will be the last remaining board member from a Democrat. No president has had that many vacant seats at one time since Woodrow Wilson… You’d have to go all the way back to the creation of the Fed in 1913 when Woodrow Wilson had a vacant board except for two automatically filled seats.”

“Trump owns the Fed. Whatever Trump wants, he’s going to get. The question is, what does Trump want? A lot of speculation is that he’ll want ‘easy money’ because he’s talking about a cheaper dollar. [Expect Trump] to put ‘hard money’ people on the board to not fight the currency wars but to fight the trade wars.”

The Street host then asked whether Rickards’ whether he expected practitioners rather than academics to be appointed? Rickards took the case to point saying, “I think there will be a mixture. The leading candidate right now to replace Janet Yellen is Kevin Warsh. He was on the board before and there is no reason for him to go back on the board unless he’s going to be chairman.”

Rickards’ signals, “If he is seen being appointed to one of the vacancies, you know he’ll be the future chairman. That would make Yellen a lame-duck from day one. I think we will see people appointed who will believe that interest rates should already be at 2%.”

Sunday, May 7, 2017

Jim Rickards: Trump Owns The Fed

Jim Rickards joined The Lance Roberts Show to discuss Trump’s first 100 days in office, the Fed and what he has identified as The Death of Money. During the conversation Rickards calls attention to the biggest underreported story facing Trump and what to anticipate in the economy going forward.

Lance started the conversation asking about Rickards impressions on Donald Trump’s initial first weeks in office and the “bumps out of the gate” coming out. Rickards began by noting, “Historians and pundits like to talk about the first 100 days of a president. It is a big deal because there is no doubt that a President’s power is at its peak just after the election. The second term and lame-duck periods are difficult to getting much done. With Trump it has been a mixed bag. He’s had some high profile legislative failures. They failed with repealing Obamacare and it appears it is going to take longer than expected with tax reform.”

“On the executive order side, this has been a revolution. Whether you look at climate change, more military spending the U.S profile in the middle east, trade and tariffs, etc. Trump has done a lot of what he said he was going to do. So, on the one hand a lot of activity and promises kept. I would think that to continue but with some high profile failures also… Most presidents get Congressional Honeymoon, but it appears Trump’s got more of a burning bed.”

Monday, May 1, 2017

James Rickards - Gold Repeats Itself

James Rickards discusses the cyclical nature of the markets and how they always repeat themselves time and time again throughout history. This time, it is never different. Gold will rise again.

Friday, April 28, 2017

They're Going To Lock Down The System

This week, seasoned financier, risk manager and author Jim Rickards returns to the program to share the predictions from his new book The Road To Ruin: The Global Elite's Secret Plan For The Next Financial Crisis.

Rickards warns of a coming confidence boundary in central bank omnipotence. Once breached, trust and belief in the central banking cartel quickly vaporizes. Rickards predicts that boundary will be crossed by 2018 or sooner; and when it is, the entire financial system will go into lockdown, freezing access to our money.

Friday, April 21, 2017

James Rickards: End Game for the Global Economy

On Mises Weekends this week, James Rickards joins Jeff to discuss The Road to Ruin, his latest book outlining what financial elites have planned for the next financial crisis. Rickards highlights a number of policy tools governments and central bankers have created for themselves, and points to their handling of recent crises in Cypress and Greece bail-in approach as patterns for the rest of the world.

- Source

Friday, April 14, 2017

James Rickards: China Disaster to Trigger Gold Run...

Is a massive collapse brewing in the Chinese economy? Perhaps, and what would this entail? Can it be staved off, or are we looking at a massive economic collapse on the horizon, that will have drastic effects on the world? James Rickards explores.

- Source

Monday, April 10, 2017

I'm Extremely Bullish on Gold Under a Trump Presidency

Gold's got a little bit of a headwind right here in the short run, because I expect the Fed to raise interest rates in March.

If they don't, they'll almost certainly raise them in June, I think March, but whether it's March or June, you're looking at a rate hike, you're looking at the market discounting further rate hikes. This is what Janet Yellen said in her recent testimony before the Congress, and so that's going to make the dollar stronger which is a little bit of a headwind for gold. But just looking passed that a little bit, we have an extraordinary situation where there are three vacancies on the Federal Reserve Board right now. Two completely empty seats, and one, Dan Tarullo, who just announced his resignation.

He announced it, but I think it'll be effective sometime in April, so count that as a third seat and then we have two others, one Janet Yellen, her term expires next January, so the President's going to have announce that replacement by December, and then beyond that, Stan Fisher in the middle of next year. You're looking at three seats immediately for appointees by the end of the year, including a new chairman, and then one just six months behind that. There are only seven seats on the Board of Governors at the Fed, so Trump is going to fill five of them at a minimum, so five of them in the next 16 months, and there's one Republican already on the board, Jay Powell, you don't hear much about Jay Powell, that's because he's outnumbered by the Democrats. Well, that's about to change.

He's going to find a lot of his buddies sitting next to him, so Yellen, to say her days are numbered as Chairman is an understatement. She's going to be outvoted, outgunned, out manned almost immediately once the President makes these announcements. So, Trump basically owns the Federal Reserve Board because of this appointment position situation, so Trump's going to get whatever he wants. The question is what does he want? Well, he kind of told us. He and Steve Mnuchin, the new Secretary of the Treasury said they want a weaker dollar. Well, okay, if you want a weaker dollar, then don't be raising rates, don't be pursuing a tight money policy.

If Trump follows through on the logic of the cheaper dollar, he's going to appoint doves to the board, the market's going to get the signal immediately, and the price of gold is going to soar because easy money, weak dollar means higher dollar price for gold. So, we've got some very short run headwinds, maybe between now and April, but for the certainly the second half, even the last three quarters of the year, I'm extremely bullish on gold.

- Source, Jim Rickards