Current Thoughts for 12/16/2015

Fed raised rates and those are CNBC are happy as can be. All is well in the world and the economy is back on track. Start planning your early retirement and send those grandkids a nice big check because you don’t have to worry about money anymore. DOW was up 222 points and even gold managed to gain today. What more can you ask for?

The truth is this is a one and done Fed rate hike. Janet Yellen even made the comment which no one but me will concentrate on in that she said they would have to do something if “global deflationary pressures” existed. Excuse me Ms. Yellen, but do you even analyze global economies? Is Europe implementing QE to fight deflation? Is China contracting? Is the Baltic Dry Index at a record low?

Baltic Dry Index Record Low

If no one is shipping anything, is this inflationary and a sign of economic growth or deflationary? How can the Fed or anyone at CNBC not see this?

There is much more data than this showing signs of deflation on the horizon. We did get a kick higher in gold and we took advantage of it in the trading room over at Seeking Alpha by gong long JNUG and NUGT.  This is what I said pre-market for playing the Fed and gold; “If news comes in as expected, then we may get a little spike up in stocks but then a retreat and for gold a little spike down and then a move higher.”

I got the gold right but not stocks but I do sell gold and don’t sell stocks. Now that we have the Fed rise in rates I can finish the last bit of my book and send it off to the editors. Those like Goldman Sachs predicting 4 rate increases next year haven’t a clue. CNBC consortium predicts 3 rate increases. Yellen says rate hikes will remain data dependent.  I’m already telling you what the data will say; nothing good.

Yellen even today used the 5% number for unemployment when the read data says 9.9% which you can find in the U-6 chart from the Bureau of Labor Statistics. It went UP last report. UP Ms. Yellen, not down. According to the Fed, those that are no longer in the labor force (not counted) are just that, not counted!

U-6 Unemployment Rate

This you will recall is one of the Fed’s mandates; stable unemployment. Is 9.9% unemployed stable in your opinion?

Looking at the U.S. industrial production report today we saw its sharpest decline in 3.5 years and a downward revision of last month’s report by .04%. Industrial output ell 0.6 when economists were expecting a fall of 0.1%. These economists must be the same ones working for the Fed as they see everything through rose colored glasses.

Lastly, the big banks were quick to raise the Prime Rate today but naturally they did not raise deposit rates for savers.






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About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534


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