About this episode
* Tomorrow we have the most highly anticipated Fed meeting ever, but this will not be the last time I'll say this * We'll also be anticipating October and December if the Fed does not raise interest rates in September * The odds are they won't do it * I put a Bloomberg story on my Facebook page: Yellen's former aid says a rate hike would be a serious error * Why? The official target for the Fed Funds Rate now is at a range of 0 to .25 basis points * The Fed is contemplating a rate of .25 which is the high end of the existing range * If they decide to keep the rate at .25, all they've done is fixed the rate at the high end of the range * This is not even a rate hike * Why would this be a disaster? * Isn't that an admission that the economy is fragile? * When Alan Greenspan lowered interest rates to 1% after the dot com bubble and after Sept 11, people though, this is ridiculous! * Now we are talking about raising rates to a quarter of that and it is considered a disaster * What is going to change between September and October and October and December - unless they get worse * The serious error is to prick the bubble economy * The more serious error is for the Fed to raise rates and then admit that it was a mistake they lose credibility * We're going into recession regardless * If they raise rates, they will have to launch QE4 sooner * Any rate hike will sow the seed of a rate cut * On the topic of a recession, let's talk about the economic news we got today * The first release we got was August Retail Sales * A rise of .3 was expected and we got a gain of .2 * These are not great numbers * The worse number of the day was Empire State Manufacturing: last month's horrible number was -14.92 the lowest since 2009 * Wall Street was looking for -.5 * September was -14.67; barely an improvement * Back to back the worse numbers since the great recession * The media barely reported on this number at all, but if it were good, it would have been in the headlines * The Redbook Year over Year Same Store Sales Index has collapsed - right now it is at 1.3 * Previous years ranged between 3% and 5% * Industrial Production was expected to fall by .2, but fell by .4 * Capacity Utilization dropped from 78 last month to 77.6 * Manufacturing output dropped as well to -.5 * Auto manufacturing had its biggest drop in 4 years * I have been talking on this podcast about the Auto Bubble and we are getting more evidence that the bubble has burst * The biggest decline in manufacturing in 4 years is pretty good evidence * The fact that there is a huge inventory of unsold cars on dealers' lots is evidence that the market is saturated * We got more news from business inventories: up .1 as expected * Sales are also falling, so the inventory to sales ration is still 1.36, a notch below the record high from the '08 financial crisis * Inventories have to come down a lot more because sales are not there * They are not there because the economy is weak * Earlier strong GDP growth was from inventory buildup * All the evidence points to recession * Employment numbers, which are theoretically good, are a lagging indicator * All the leading indicators of the economy are flashing a warning * Yet the media is ignoring the warnings and paying attention to Janet Yellen * She is pretending the economy is strong so she can pretend to raise rates * We need to allow the economy to go through that unfortunate crisis and allow the bubble economy to burst and the real economy to heal * The Federal Reserve shot us up with all these monetary drugs so unfortunately we have to check into monetary rehab 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