Peter begins this week with an episode covering last Friday's stock market crash, Bitcoin's recent performance, and the start of President Trump's so-called “silent” trial.
Last Friday, the Nasdaq fell 2%, with members of the “Magnificent 7” as Nvidia and Netflix, down 14%. Peter believes Friday's close is the natural consequence of Wall Street's bet on rate cuts to maintain the 2023 uptrend:
“To me, this is the start of a long overdue decline in these stocks. …The reason Wall Street assumed the Fed would be able to impose all these cuts was because everyone thought inflation was going to fall, but to me that seemed like a ridiculous assumption to make, and the evidence that were piling up made it clear that inflation was bottoming out, at least according to how they measure it.
This shouldn't surprise us, since the Magnificent 7 relies more on low interest rates than other stocks:
“The Nasdaq ignored (the rise in bond yields) because these are the stocks most sensitive to interest rates. … Companies that will enjoy big profits in the future – growth stocks – those future profits are much more valuable today when interest rates are low. So when they're not low — when they're higher — these stocks should take a much bigger hit.
Despite all the financial signs pointing to economic crisis, Congress is still trying to spend money it doesn't have:
“The House just passed this ninety-five billion dollar foreign aid bill. Where does the money come from to cover the cost of foreign aid? No one allocates money to pay for this. We just voted for bigger deficits. The national debt increases overnight by almost a hundred billion, on top of other gains, because we are going to give another sixty-one billion dollars to Ukraine. …What did this money buy us? The deaths of thousands, even tens of thousands, of Ukrainians and Russians.”
During the Wall Street turmoil and Israel's retaliation against Iran Bitcoin temporarily fell below $60,000:
“What’s important is not that Bitcoin rose when other risk assets rose. What is significant is that it fell when other risk assets fell! It doesn't behave like gold, so it's not really digital gold. I mean, it might be a digital technology stock, but without any profit or revenue. This has more in common with a typical money-losing tech company than it does with gold.
Bitcoin experienced a rare event last week, its reduction by half, but Peter dismisses the hype and points to cryptocurrency's even higher transaction fees as proof that it cannot function like money:
“Even if people wanted to use Bitcoin as a currency, it can't be used that way because it's too expensive and too slow. And it is not because it fails as a currency that it succeeds as gold, because it is an even greater failure as gold than as a currency – because it is not a store of value, because it has no value to store, and it is not a refuge. This proved it twice last week; Whenever people are worried, they sell their Bitcoin even faster than their stocks.
As opening statements in Donald Trump's trial begin this week, Peter comments on the banana republic-style legal system targeting the former president:
“What if Trump wasn’t Trump?” What if he wasn't running for president, he was just a regular guy doing the same thing? Would there be any charges filed here? Of course not! … He is accused for what he is. It's illegal. There is something called equal protection under the law. He is entitled to the same legal treatment.
The silver lining to the left's legal campaign against Trump is that it could end up working against them:
“If Trump hadn't run for office, maybe they wouldn't have done it. Maybe their main goal is to influence the outcome of this election, which is even more ironic because they're trying to claim, “Oh, Trump interfered in the election.” They are interfering! They are interfering with the 2024 election. That's what this is about. It's about trying to stop Donald Trump from winning, but you know the problem is their plan backfires because he has more support.”
If the economy continues on its current trajectory, a poorly timed recession and persistent inflation could spell electoral disaster for President Biden and the ruling left.
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