Beware of the Bear

The bulls are running down Wall Street, but are bears lurking just around the corner? The mainstream doesn’t think so, but Peter Schiff does.

The Dow Jones climbed nearly 400 points Thursday after the Chinese announced a willingness to resume trade talks with the United States. No agenda was set, but the mere prospect of progress injected a shot of optimism in the market. Walmart also helped drive the surge, rising 10% after it beat earnings expectations.

In his most recent podcast, Peter asked the obvious question: why did the slimmest hope that we could see some resolution in the trade war give the stock market such a big bounce? It’s not like the market tanked because of the trade spat. In fact, everybody expects America to win. It’s the Chinese market that has been killed because of the trade war. It didn’t rally at all based on the prospect of talks

The narrative is that Trump’s tough stand will eventually force the Chinese to give in. Peter said it’s possible the Chinese could give up something unsubstantial, but that the administration would try to spin it into a big win.

The fact that we are nearing the longest bull market in history give investors to pause in and of itself. We’re due for a downturn just based on the history of the market cycle. But that’s not how the mainstream is spinning it. All of the pundits are optimistic, saying the bulls still have a long way to run. We’re not hearing anybody out there in the mainstream financial press saying, “Hey, be cautious. We’re living on borrowed time. Bull markets don’t normally last this long.”

Peter said he doesn’t think the losses in dollar terms will necessarily be worse than say the Great Depression. But in terms of purchasing power, that’s where you’re going to see the real impact of the next crash.

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