Michael Pento Exclusive: Markets Have Priced in Trump Getting EVERYTHING He Wants… What If He Doesn’t?
By Mike Gleason
GoldSeek.com
Monday, 6 March 2017
Mike Gleason: It is my privilege now to welcome in Michael Pento president and founder of Pento Portfolio Strategies and author of the book The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market. Michael is a money manager and who ascribes to the Austrian School of Economics and has been a regular guest on CNBC, Bloomberg, Fox Business News, and also the Money Metals podcast.
Michael, it’s great to have you on with us again, and thanks so much for joining us today. Welcome back.
Michael Pento: Thanks for having me back on Michael, and great to be on with Money Metals.
Mike Gleason: Well the last time we had you on was right after the election back in November, and a lot has happened since then in terms of the Trump administration taking shape. Now on that front I want a zero in on the monetary policy side of things here first off.
Now we’ve been hearing Trump and his Treasury Secretary Steven Mnuchin make lots of little comments lately about wanting a weaker dollar. Now we used to hear US officials talk up a strong dollar even through we never really believed them. It sounds like you don’t believe them this time around either.
You’ve written at least if you look at the policies they’re pursuing, despite saying they want a weaker dollar, they seem more likely to get a stronger dollar. At least vs the other world currencies. Am I understanding it correctly, and why do you think that?
Michael Pento: Well, first of all just to be clear, no fiat currency regime ever wants stronger currency because in the modern Keynesian group think they believe you grow through exports. How you engender exports is by crushing your currency. You grow the stock market, you grow wealth by ruining your currency. Completely antithetical and illogical, but that’s what they think.
But why do I think the dollar should be strengthened? By the way, the dollar’s up to a 14 year high. I’ve been long the dollar, and I’ve been right. The reason I believe the dollar should strengthen here for a while longer is (because) you have a more aggressive Fed. You look at interest rate differentials, you look at where the U.S. 10-Year, it’s at 2.45% as opposed to Japanese bonds and German bunds and European bonds… there is more value here in the United States, that flows into the United States and the U.S. dollar.
You have different monetary policies, the Federal Reserve is on record saying they want two or three or four rate hikes depending on who you talk to. I even heard five this morning from one of the governors. You have a rate hiking mode here the United States as opposed to the continuation of QE, albeit from 80 billion euros to 60 billion euros in the Euro zone.
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