VideoPeter SchiffPeter Schiff

S&P Near a Record... 60% of Its Stocks in a Bear Market

The presenter links rising Treasury and Japanese bond yields with pressure on mortgage borrowers, small-cap stocks, and market breadth, while warning that historical drawdowns offer a cautionary precedent rather than a certainty. He argues that weak consumer sentiment and higher inflation expectations challenge the view that households are in strong shape, and discusses rate policy, AI, and trade as factors that could shape the outlook. He also details allegations surrounding his bank's closure, the audit and reserve position, and the length of the receivership, arguing that customer repayments have been unusually slow.

Market BreadthInterest RatesInflationInvestor SentimentEquitiesBanking

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Key Takeaways

The 10-year Treasury closed at 5.16%, its highest closing yield in roughly 19–20 years, while mortgage rates were around 7.2%–7.25%; the presenter attributed mortgage rates not yet reaching 8% to Fannie and Freddie buying long-term mortgages. He said rising rates were reducing the value of mortgages those agencies had already purchased and causing them to lose money.

The presenter argued that bond yields were rising despite falling oil prices and continued to climb after the Fed’s 25-basis-point hike, contrary to expectations that the hike would reassure markets about the Fed’s inflation commitment. He also said the market probabilities of two or three additional hikes rose during the week.

The Russell 2000 fell 1.3% during a week of rising rates, which the presenter said put its businesses under more rate pressure than large technology stocks. The weakness coincided with narrow S&P breadth: the average stock was 19% below its high, and 41 stocks made new 52-week lows versus 14 new highs while the index was near a record.

The presenter said current weak market breadth resembles conditions at the 1973 and 1999–2000 peaks, which preceded S&P 500 declines of about 48% and 49.2%, respectively. He offered those episodes as a warning—not a certainty—that the market could face substantial downside.

The presenter argued that rising yields could harm the economy, widen budget deficits, and lead to more money printing and inflation, which he believes would support gold and silver. He also described gold as a potential hedge if central banks seek an alternative to Treasuries amid a weak bond market.

The presenter cited consumer sentiment falling from 51.7 to 48.1 as one-year inflation expectations rose from 4% to 4.6%, and argued that fear of higher future prices was pulling purchases forward. He warned that if this behavior spread, hoarding could empty shelves and prompt merchants to raise prices faster.

The presenter argued that rate increases should restrain consumer and government borrowing and spending, which he says fuel demand and inflation, while business investment that expands supply should continue. He warned that if the Fed stopped raising rates and lifted its inflation target, inflation could reach 4% or 5%, potentially requiring larger rate increases later.

BANK-CASE

Audit And Reserves — The presenter says media scrutiny preceded a stricter audit of his bank, which found technical issues but no evidence of the tax evasion, money laundering, or other financial crimes alleged in media coverage. He says the bank made no loans and was 100% reserve, and argues that depositors were not at risk.

“And so they did and the audit was probably a lot stricter because they were under a microscope now to find something…”—

Capital Contributions — The presenter says he contributed $250,000–$300,000 each month to cover his bank's losses, keeping its capital roughly $2–$3 million above its liabilities. He says this created a cushion between the bank's assets and what depositors were owed.

“Every month I was writing a check for $250 $300,000 to the bank to plug the losses so that the bank's capital would stay about $2 to $3 million positive…”—

IRS-OSF Coordination — The presenter says emails he has seen indicate that the IRS first began working with OSF in December 2021, before his bank was shut down in June 2022. He also cites a memorandum of understanding between OSF and the IRS concerning the shutdown. He says the IRS agreed to produce earlier emails he had not yet seen.

“But according to the emails I've seen, the IRS first started working with OSF in December of 2021.”—

BOND-MARKETS

Treasury Yields — The 10-year Treasury closed at 5.16%, its highest close in roughly 19 or 20 years; the 30-year closed at 5.49%, around a 22-year high. The 2-year briefly topped 4.9% before closing at 4.85%. The presenter expected it to move above 5%, putting the 2-, 5-, 10-, and 30-year yields above that threshold.

“The 10-year Treasury closed Friday at 5.16%. So this is the highest it's been the highest on a closing basis in whether is it 19 or 20 years…”—

Japan Yields — Japan's 10-year JGB yield settled at 3.05%, and its 30-year yield reached 4.13%, which the presenter described as a record high. The 2-year and 5-year yields were 1.91% and 2.38%, respectively.

“The 10-year JGB settled the week above 3%. 3.05. That's the highest close that I recall. And the 30-year yield at 4.13. Again, that's the highest…”—

Mortgage Rates — The presenter said mortgage yields were above 7%, at around 7.2% to 7.25%. He attributed their not yet reaching 8% to the Trump administration directing Fannie and Freddie to buy long-term mortgages. He argued the agencies were losing money as rising mortgage rates reduced the value of mortgages they had already purchased.

“Mortgage yields are now above 7%. I think about 7.2 7 and a quarter…”—

ECONOMY-POLICY

Sentiment And Inflation — The presenter cites University of Michigan consumer sentiment falling from 51.7 to 48.1. One-year inflation expectations rose from 4% to 4.6%, while five-year expectations edged up to 3.4%. He presents the figures as evidence against the view that consumers are in strong shape.

“Look at the consumer confidence numbers that came out this week. We got the final numbers for the month for University of Michigan, but consumer sentiment dropped from 51…”—

Pulled-Forward Spending — The presenter argues that fears of higher future prices are pulling purchases forward. He warns that if the behavior spreads, hoarding could empty shelves and prompt merchants to raise prices faster.

“When just the Peter Schiff podcast listeners do it, it's no big deal…”—

AI Wildcard — The presenter identifies AI as a potential wildcard that could prevent history from repeating. But he says it is unclear how quickly its economic benefits will arrive or whether they will come soon enough.

“The only potential wild card again is AI, but we don't really know how fast these benefits of AI are going to be delivered in the economy and if it…”—

RECEIVERSHIP

Receiver Incentives — The presenter argues that appointing a receiver can create a conflict of interest: the receiver may have an incentive to prolong liquidation and keep earning fees rather than promptly returning customers' money. He says he had been assured he could self-liquidate the bank instead.

“you know, while we still thought that everything was fine, but the OSV commissioner had assured me many, many months before she even began talking to the IRS cuz I…”—

TRADE

China-Iran Talks — The presenter says the president did not secure China's commitment to stop buying oil from Iran. He characterizes China's statement opposing an Iranian nuclear weapon as a limited outcome of the meeting.

“I know that the president is trying to get China to back away from buying oil from Iran and there was no commitment in that respect.”—

Trade Deficit — The presenter says China's surplus was a record last year and could exceed $1 trillion this year. He argues that although the U.S. trade deficit with China has fallen, the overall U.S. deficit remains enormous as imports shift to other countries at higher prices.

“China has already shown that it doesn't need the United States…”—

Breadth Crash Warning

Schiff warns that unusually weak market breadth has preceded severe S&P 500 declines in two historical episodes, while emphasizing that the pattern is a caution rather than a certainty.

Bond Yields Surge

He says Treasury yields are climbing to multidecade highs despite stock investors’ confidence that rising rates will not hurt equities.

Global Rates and Mortgages

Schiff connects higher Japanese and U.S. yields with mortgage costs and pressure on housing, including Fannie Mae and Freddie Mac’s purchases to restrain rates.

Oil Link Breaks

He notes that bond yields continued rising even as oil fell, breaking the earlier relationship markets used to infer inflation and Fed policy.

Consumers and Hoarding

Schiff cites falling consumer sentiment and rising inflation expectations, arguing that consumers are buying ahead and hoarding because they expect prices to rise.

Markets Misread Gold

He argues that rising yields could ultimately support gold and silver by worsening deficits and inflation, while central banks seeking alternatives to Treasuries may buy gold.

Hidden Bear Market Breadth

Although the S&P 500 is near a record, Schiff says most constituent stocks are far below their highs, with 60% in bear-market territory.

History Rhymes Again

He compares today's exceptionally poor market breadth with 1973 and 2000, when the S&P later fell nearly 50%, and cautions against assuming this time is different.

Ackman and Inflation Target

Schiff rejects Bill Ackman's call to raise the inflation target, arguing that higher rates restrain consumer borrowing while investment that expands supply can remain productive.

China Summit and Tariffs

He says the China summit produced little meaningful progress on Iran or Russia and argues tariffs are raising costs for Americans rather than solving trade imbalances.

Bank Shutdown FOIA Fight

Schiff recounts his requests for IRS communications about the closure of his Puerto Rico bank, alleging regulators found no evidence of the crimes alleged in media reports.

FOIA Fight With IRS

He describes a lawsuit that forced the IRS to release more records and says thousands of additional pages, including earlier communications, are still expected.

Settlement And New Disclosures

Schiff says newly unredacted emails raise questions about IRS coordination with Puerto Rican regulators and what officials knew before the bank's closure.

Press Conference Double Standard

He contrasts the publicity around his bank's shutdown with the lack of similar attention to a Puerto Rican bank whose former CEO was convicted of crimes.

Jim Lee Email Questions

Schiff says emails show IRS chief Jim Lee sought answers before a press conference, suggesting he did not know the case details and expected allegations of criminal conduct.

MOU Proof Of Coordination

He claims an IRS response confirmed an agreement with the local regulator, contradicting public statements that the regulator acted independently.

Unanswered Questions Expose Narrative

Schiff highlights unanswered questions in the emails, arguing that officials had no concrete examples of wrongdoing and that the bank's owner faced no apparent criminal case.

Publicity Stunt Motive

He alleges officials viewed the bank's closure as a publicity benefit for Puerto Rico and federal agencies, despite the absence of evidence that it stopped financial crimes.

Portugal Freeze Fallout

Schiff says Portugal's freeze of the bank's account delayed customer repayments for months, while criticizing the regulator's refusal to challenge the public allegations.

Receivership Numbers Breakdown

He says only 78 of roughly 3,500 customers had received money after more than four years in receivership, compared with thousands repaid while the bank operated.

Government Vs Free Market Rant

Schiff argues that a government-appointed receiver is costly and slow, citing millions in expenses and substantial compensation to the receiver while customers wait.

Congress Won't Act

He says Republicans in Congress have not pursued his allegations against the IRS, despite campaigning against alleged government targeting.

Wrap Up And Investing Pitch

Schiff closes by asking listeners to subscribe and consider diversifying from expensive U.S. stocks into international, emerging-market, and precious-metals investments.

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Important Disclaimers

Not Investment Advice: For education only — not financial, tax or legal advice.

AI-Generated: Made by AI from source transcripts and may contain errors.

No Guarantees: Past performance does not predict future results; investing carries risk.

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