Fed Worried Cost of Living Not Rising Fast Enough – Ep. 112

* The Dow Jones finished up almost 140 points - back over 17000

* The Dow has now rallied 1,000 points since its lows on Friday following the lower than expected Non-Farm Payroll number

* The market originally sold off until traders realized that bad news is good news and they bought the dip

* The buying intensified today following the release of the FOMC minutes from the last meeting

* I predicted the markets would experience a rally based on the weak Non-Farm Payrol number

* The U.S. market looks like it's standing still compared to the markets overseas

* Now that so many traders are starting to connect the dots and realize that a rate hike is not around the corner we've seen a huge rally in overseas stocks, particularly in emerging markets

* All currencies continue to gain against the dollar

* Silver prices earlier in the week hit a 3-1/2 month high

* Gold got back above 1150

* Oil prices are close to $50/barrel

* All of this is happening because traders are beginning to pare back their rate hike bets

* In light of today's release of the dovish September FOMC meeting minutes the trend will intensify

* Why were people surprised by the dovish minutes?

* If you read the minutes, the real reason the Fed did not raise rates is because inflation is too low

* They also said they would risk credibility raising rates below 2%

* Lose credibility with whom?

* If they are afraid to raise rates with inflation below 2%, they why have they been bluffing that they are about to raise rates?

* The official inflation number has been below 2% the entire time they have been talking about a rate hike

* I have been saying that they will continue to pretend to raise rates, but they won't

* I thought it was funny that Netflix raised their rates 11% - the Fed must have thought this was good news

* The real reason the Fed won't rais rates is that they don't want to prick the bubbles

* We have a bubble in the stock market

* A bubble in the real estate market

* A bubble in the bond market

* Auto loans, student loans, consumer credit, art - you name it

* The Fed doesn't want the government to deal with higher interest rates

* Look at the headline in the Wall Street Journal about foreign central banks beginning to dump treasuries

* Look at how many treasuries China has sold

* This is the tip of a huge iceberg

* How is the Fed going to end QE when it has to take the other side of the mother of all trades?

* CNBC cited overseas problems washing up on our shore as the reason why the Fed won't be raising rates - these are not overseas problems

* The problems started here - they're just coming back

* The overseas markets were reacting to higher interest rates and a strong dollar

* This game is going to end - the next time the dollar goes down, it's down for the count

* Rather than having foreign central banks coming to its rescue, they are going to be joining in the dollar selloff just like everybody else

* I wanted to comment on an Robert Wenzel's article in the Economic Policy Journal

* Wenzel appears to be referring to me but does not mention my name

* Here's the title of his piece, dated September 18, following the most recent Fed meeting:

* "The Absurd Idea That The Fed is Not Going to Raise Rates"

* Wenzel refers to "certain so-called Austrians out cheering that they were proven correct in their view that the Fed will not raise rates..."

* Many people commented that he must be referring to Peter Schiff, but he denied this

* Wenzel seems to believe I do not think the Fed should raise rates

* I am not saying what I think the Fed should do, I'm saying what I think they will do



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