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Optimism about a trade deal with China along with increasing expectations that the Federal Reserve will slow the pace of interest rate hikes buoyed the markets last week.
This has led many pundits to declare that the correction is over. Some have even declared its a new bull market. In his latest podcast, Peter Schiff said that’s not what’s happening at all. What we’re seeing is a typical bear market correction and a recession is right around the corner.
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Day - Friday - CNBC - Dow - Correction
All day Friday, pundits on CNBC emphasized that the Dow has risen out of “correction” territory, meaning it is no longer 10% below its highs. Peter took issue with this analysis.
First of all, we didn’t enter a correction. We entered a bear market. Now, bear markets have corrections too. They’re called rallies. Except the people and CNBC don’t get that. They think the only correction is a move down in a bull market.”
Peter - Correction - Market - Slope - Hope
Peter said this correction is actually helping this bear market fall a “slope of hope.”
So, what is driving this bear market correction? Just like Peter predicted – the Federal Reserve.
Rate - Hike - December - Federal - Reserve
As I’ve been saying, I began forecasting, even before the first rate hike in December of 2015, that if the Federal Reserve ever tried to normalize interest rates, it would never succeed. It would never be able to get rates back to normal because somewhere along the way they would tip the stock market into a bear market, cause a recession, and the Fed would back off....
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