About this episode
* Another day, another 450-point swing in the Dow Jones * The market opened about 250 points higher off the back of overseas markets * Japan was the standout; it was up about 7% on the hope of more money printing * All overseas markets were stronger and the U.S. followed that lead, but at the end of the day, the market was down about 240 points, a lot of selling coming in the final hour * Huge swings almost daily over several weeks generally indicates a change in trend * The long-term trend of a rising market followed by extreme volatility usually marks the end of that trend * All this volatility is based on rate hike uncertainty * Sentiments range from rate hikes coming either in September, October, or December * The first rate hike is not scaring everybody, it is the consequences of interest rate normalizaion * If the Fed does raise rates, I think the market will start looking toward the next rate cut * This bubble is so big, the slightest pin will prick it * The Fed's only option will be stimulus to get out of the next recession * The cycle will be much shorter because of the amount of debt we have * Sentiment is coming from everywhere asking the Fed not to raise rates, which plays into the Fed's hand * This disguises the Fed's actual intention not to raise rates * Market volatility today was probable due to the JOLTS report today which unexpectedly jumped up to the highest level in years, indicating a huge number unfilled jobs * The JOLTS numbers have been good for years, and wages still have not gone up * This is just the raw number of jobs, so these may be a larger number of part time jobs open replacing full time jobs * Many low-paying jobs won't be filled because entitlements provide higher compensation * Everyone is on pins and needles because they know that cheap money is the only thing that is fueling the economy - it's not real earnings * The market may have sold off anyway because there has been a lot of technical damage done to this market and it is likely to go down until the Fed admits that rates are not going up * The stock market, unlike the foreign exchange market or the commodities market or the emerging markets have not discounted rate hike normalization * This means that if the Fed does rates by a quarter point, the dollar could sell off because it is too little too late * It could be the shortest tightening cycle ever * The stock market needs to know that the Fed is not going to raise rates * The U.S. will lose its safe haven appeal * One small example why the Fed can't raise rates is the sub-prime Auto Loan bubble, which is now above a trillion dollars * The short-term benefit to the economy is increased manufacturing, inventory and jobs * But the huge reduction in credit quality of these loans provides risk of fewer future sales due to longer payoff terms * It is much easier to default on an auto loan than it is to default on a home * If we have a trillion dollars in auto loans, if we go into recession next year, we would lose at least $100 - 200 billion on car loans which will further exacerbate the recession in a big way * High-paying jobs in the auto industry will be lost,and the Fed has to know this already * Another trend is a record high in auto leases because they offer lower monthly payments * Leases are not the best choice unless they are bought for a business, providing a tax write-off * Otherwise, for personal use, your payments never end - you never own the car/li> * I have already recommended not to borrow money to buy a car * Save your money and buy a used car you can afford * In the Chinese economy, most cars are purchased with cash, from savings Our Sponsors: * Check out FRE and use my code LISTEN20 for a great deal: https://frepouch.com * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy