Economic guru Peter Schiff warns savvy investors that the current Trump bull-run stock market actually is flashing many obvious danger signals if one would only ignore the dazzle and examine the details.
“The stock market is rising despite the fact that there are very, very negative factors that are building, that are hiding in plain sight, that everybody is ignoring,” Schiff said on a recent podcast.
Schiff cited various danger signals, including rising inflation, as evidenced by the surging price of oil, the tanking dollar, and warning signs in the bond market with reports China plans to quit buying US Treasuries, Seeking Alpha explained.
Bloomberg News recently reported that Chinese officials reviewing the country’s vast foreign exchange holdings have recommended slowing or halting purchases of U.S. Treasury bonds amid a less attractive market for them and rising U.S.-China trade tensions.
Schiff, the CEO and chief global strategist of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut, says it’s the perfect setup for a 1987-style crash that nobody sees coming, Seeking Alpha cited him a saying
"That’s going to be the crazy part. When it’s going to happen, everybody is going to say, ‘Well, nobody could have possibly seen this coming. How could anybody have possibly known this was going to happen?’ I mean, this is the most obvious crisis ever, yet of course, yeah, they’re oblivious,” Schiff said.
Schiff also doesn't sound optimistic about the White House
“The president is talking about, ‘Why do we let all these immigrants in from these shithole countries?’ Well, I think our creditors are going to think about the same thing. I mean, why should they flush their hard-earned money down this s***hole? Why do they want to flush their money down the U.S. toilet? Which is what it is when it comes to lending money to the U.S. government," Schiff said.
"So, that could be very scary – if the Fed announces it is going to buy bonds and bonds tank anyway. That is the beginning of the end,” Schiff predicted.
Meanwhile, China’s foreign exchange regulator denied all reports of China considering slowing or halting purchases of U.S. Treasury bonds could be based on erroneous information, Reuters explained.
China has been diversifying its forex reserves investments and its investments in U.S. Treasuries is market-driven, the State Administration of Foreign Exchange (SAFE) recently said on its website.
China’s forex reserves management departments are responsible investors, the SAFE added.
Wall Street’s main indexes edged lower on Thursday as declines in healthcare and energy stocks paused a rally that had driven the Dow Jones index to its fastest ever 1,000 point gain, Reuters said.
Investors are keeping a close eye on corporate earnings reports, given the runup in stock valuations.
“This might just be a little bit of a pullback, especially after yesterday’s significant gain, until we get further into the earnings season,” said Lindsey Bell, investment strategist at CFRA Research in New York.
However, she said optimism was still intact.
“There is hope and anticipation for progress in policy. Infrastructure will be the next major one, it should help boost economic and corporate activity.”
For his part, Trump says the mainstream liberal media twists the facts and distorts reality.
"Do you notice the Fake News Mainstream Media never likes covering the great and record setting economic news, but rather talks about anything negative or that can be turned into the negative. The Russian Collusion Hoax is dead, except as it pertains to the Dems. Public gets it!" the president recently tweeted.
(Newsmax wire services contributed to this report).
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