No Alien Invasion And No Rate Hike – Ep. 197

  • Aliens didn’t invade the Earth, and the Federal Reserve didn’t raise interest rates
  • If you remember, I was pegging the probability of each at roughly the same
  • True to form, the Federal Reserve did pretty much exactly what I thought they were going to do and not raise interest rates
  • Now I thought they might have tried to lower expectations for the probability in the markets of a December rate hike
  • Even though they didn’t say that, that was the effect of their announcement
  • If you look at the dot plots, for example, the FOMC members were looking for rates to be lower for longer
  • Surely, if you look at the reaction to the market, the market does not appear to be worried about a rate hike coming in either November or December, even though the Fed still maintains the narrative that the possibility still exists
  • The Fed reiterated that the case for a rate hike had increased
  • But, they chose not to raise rates despite their narrative
  • Their reason was that they wanted to see more data
  • This is exactly what I said after Yellen’s statement at Jackson Hole
  • The media interpreted her statement as a signal that a September rate hike was likely
  • What did I say?
  • I said the Fed didn’t say anything about hiking
  • They were speaking about the case for a hike
  • I described it as a scale from, say 0 – 10
  • If the case were a 3 and then it became a 4, the case had strengthened
  • But if the Fed needs 10, and we’re only at 4, they’re not going to hike
  • They never came clean about their scale, they simply said that the case for a hike had increased
  • That doesn’t mean they were going to raise rates, and that’s exactly what happened
  • It’s interesting that in all of the prepared remarks and in the following press conference
  • Janet Yellen never once admitted that the economy is weakening
  • In fact, she continues to pretend that everything is great
  • Ironically, one of the questions in the Q&A had to do with Donald Trump’s position that the Fed is not raising interest rates for political reasons
  • Which, of course is exactly why they’re not raising them
  • If they raise interest rates, everything would collapse, and so would Hillary Clinton’s election prospects

Peter Schiff is an economist, financial broker/dealer, author, frequent guest on national news, and host of the Peter Schiff Show Podcast.

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