Fed Leaks, Fast Food, Housing & Gold – Ep.98

* S&P and the NASDAQ made new record highs * Stock market continues to ignore all the bad news about the economy * Bad news is not being ignored in the foreign exchange markets * Negative economic news is buoying the stock market because it removes fear of interest rate hikes * Weak economy means more cheap money which means higher stock prices * Oil prices hitting highest prices of the year * Gold is back above the 1200 level * April PMI Manufacturing Flash Index at 54.2 biggest miss ever * New Home Sales tumbled by 11.1% - biggest drop since July of 2013 * March Durable Goods slight bump based on military aircraft, but less transportation, the index unexpectedly declined .2% * Durable good orders, less defense and transportation dropped for the 7th consecutive month * April Service Sector PMI missed lowest expectations at 57.8 - the biggest miss ever * Dallas Fed Manufacturing Survey - recorded significant drop at -16; biggest losing streak ever * There will be a delayed reaction from the market to first quarter's bad economic news on top of this quarter's economic news * A Boston Fed official is considering retaining "balance sheet tools", i.e. QE * In other words, the Fed is considering not having an exit strategy - because it can't exit * We have done all sorts of crazy things that we never would have done but for zero percent interest rates and QE * A market that was built for 0% interest rates can't handle 2% interest rates * The product of all this stimulus will be big increases in prices, and the Central Banks are setting the stage for higher inflation * Declining Swiss consumer prices are described as "dangerous" * Currently, the Swiss consumers are enjoying lower prices and do not need a government "cure" * The law of supply and demand is so simple that only an economist would fail to understand it * Keynesians will spin ever-conflicting news to support their theory * Fitch has downgraded Japanese government debt to A- because or the Japan's deteriorating fiscal condition * Based on that logic, why is the U.S. AAA? * There is a general fear of downgrading U.S. debt, based on fines levied against the S&P * The real problem will be the collapse of the dollar, which means the debt will be repaid in dollars without purchasing power Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

27 Huhti 201520min

* Markets have been volatile but economic data still looking bad * Chicago Fed National Activity Index: contrary to expectations, came in at -.42 in addition a downward correction for last week to a 2-year low * Weekly Redbook Same Store Sales Survey down to lowest annual increase in 4 years with a dramatic rate of decline in recent months * Implausible excuses, such as the weather or the timing of Easter, attempt to mask the fact that the economy is just weak * Oil prices moved above $57, forming a sizable W-bottom * Canadian dollar up about 5% * Canadian inflation, especially food prices up * This signals the end of rate-cutting cycle in Canada * Central banks around the world are going to have to dial back on their cheap money policies * The "Threat of Deflation" will be in the rear view mirror * Central banks may like high prices, but consumers don't * President of the Federal Reserve Bank of Boston Eric Rosengren stated our 2% inflation goal is "too low" * He thinks higher inflation allows for more growth, and allows interest rates to remain low * Cheap money does not create economic growth and doesn't create employment - it undermines both * Cheap money applied to a slower economy creates a vicious cycle * A weakening dollar will put upward pressure on already rising consumer prices * The Fed is hinting at a higher inflation goal * The problem is we can't do anything about our inflation because our debt is out of control * Fiscally solvent countries are able to raise rates and still service their debt * All the U.S. can do is "talk tough" * If they had a "Hall of Economists" in Disneyland, the Keynesians would have to be in Fantasyland * Paul Krugman's Keynesian experiment is blowing up the U.S. economy * Everybody will figure it out before Paul Krugman does Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

22 Huhti 201520min

* Disney's theme parks are a monument to capitalism as it existed when Walt Disney envisioned Disneyland * The Hall of Presidents, however manages to honor presidents who supported big government over the free market * The choice of presidents demonstrates revisionist history that supports the liberal, big-government narrative * Whenever you expand government you contract liberty * The Dow ended the week down 279 points; NASDAQ down 75 * The search is on for excuses but the real issue is not global causes but U.S. economic performance * Housing Starts and Permits were way below estimates * Jobless claims were higher than expected * Leading Economic Indicators weaker than expected this month after last month's downward revision * Core CPI came in twice expectations, but described as "better than expected" * The dollar had a very weak week; Canadian dollar had strongest week in years, with a possible rally going forward * Weakness in Stock Market, continuing weak economic data makes June rate hike less and less likely in the minds of traders * The most prominent poster boy for the myth of the U.S. economic recovery, Paul Krugman, recently published an article claiming victory for U.S. Keynesian economic policy * Krugman claims U.S. is performing better than Europe due to Keynesian policies * Perception is not reality: the U.S. is not doing as well as Krugman would have us believe * Krugman references an article by Germany Finance Minister Wolfgang Shauble, criticizing him for rejecting macroeconomics * Macroeconomics IS B.S. and should be rejected * Krugman infers that Europe's woes are the result of rejecting Keynesianism * Shauble warns against going for the "quick fix" of Keynesian policies * Germany understands that austerity, rather than debt, is the answer * Krugman believes we should continue to create bubbles through stimulus and debt * It will be interesting to see what Krugman says when the U.S. economy slips back to recession as Europe grows * Europe's approach was not perfect, but it is better than the politically expedient solution championed by Krugman Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

19 Huhti 201528min

* Dollar usually drops on bad news but rallies because traders automatically buy on the dip * Bad news is dismissed because the first quarter "doesn't count" * This puts greater pressure on the last 3 quarters to make up for the first quarter and still show growth * Expectations of a bump similar to last year are based on non-repeatable conditions - Obamacare and inventory build * Inventory to sales ratio is the highest it has been since 2009 * What is the basis for dismissal of the bad news in Q1? * Data confirms that the consumer is already broke * Consumers will be hit with rising oil prices * Traders who are loading up on the dollar are ignoring all the evidence that they are wrong * The wake-up call will be like the sub-prime mortgage crisis * The same thing will happen in the Foreign Exchange Markets when they realize the story is not about a recovery but about another round of QE * Changing trend coming in the dollar * Changing trend in the oil market * Changing trend in the gold market * If we don't get a recovery in the summer how is the Fed going to raise rates in Q4? * Election year 2016 will likely see no rate hikes * Retail Sales missed Wall Street expectations with a bounce of only .9 * March Small Business Optimism fell to lowest level in 9 months * Hiring Plans dropped to lowest level in 6 months * Business Inventories for February rose to .3 based on weak wholesale sales * Inventory to Sales Ratio holding at 1.36 (highest since July of 2009) * My radio broadcasts from a year ago predicted that the data was not reflecting reality * April Empire State Manufacturing Index missed expectations at -1.9, near a 2-year low * Employment down * Hours worked down * New orders down to 3-year lows * Prices paid went up * March Industrial Production dropped .6, missing expectations - 4th consecutive month below estimate * This news can't be blamed on April showers * Those who have been betting on the recovery are about to realize they made the wrong bet Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

16 Huhti 201518min

* Markets continue to rally worldwide * Record highs overseas - much more action in Asia * Markets riding a sea of liquidity * Gold had an interesting week, closing at 1207 * The dollar had one of its best weeks in months * In terms of other currencies gold was at a 2-year high * This means that the euphoria about the dollar is not universally shared * Commodities in general were up - crude oil was up - holding above 50 * This is a good indication of a solid bottom on the price of gold * Traders continuing to make bullish dollar bets in the face of bad economic data * Traders are willing to throw out the first quarter - regardless the excuse * The bounceback from Q1 2014 was due to reasons that will not be repeated * Obamacare created a huge rush to sign up * There was a big inventory build anticipating future sales * Bets for a 2015 Q2-3 rebound are based on optimism for consumer spending * February Revolving Credit tumbled by $3.7 billion * Non-Revolving Credit surged $19.2 billion - mostly student loans * Consumers are cash poor, yet Wall Street believes they will start buying when the temperature rises * Government under-reporting student loan defaults due to forbearances * Wednesday release of FOMC minutes encouraged the dollar speculators because there were discussions about higher interest rates in June * Currency traders still haven't figured out the the Fed's comments are all theater * They are playing the game based on FedSpeak until it falls apart * A drastic turn in the FOREX markets will take a lot of people down with it * February Wholesale Trade declined again after January reported biggest decline in 6 years * This marks the first 3-month decline since 2008 financial crisis * Inventories rose slightly because of decline in sales * Inventory to Sales Ratio at 1.29 - highest since 2008 financial crisis * 2014 GDP increase was due to rush to build inventory in anticipation of recovery * Bottom line: economic data shows that a second-quarter bounce in the GDP is just wishful thinking * Ben Bernanke's new book titled "The Courage to Act" belongs in the fiction section * Let historians justify his role in history - it is far to early to claim success * This is the same guy who was blind-sided by the 2008 financial crisis * He claimed courageous decisions in the face of critics, while actually putting politics and the banks ahead of the country * His book may be coming out on eve of next economic fire that he set Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

11 Huhti 201521min

* Big double standard in the media regarding "sexism" * Rolling Stone story based on complete fiction about a woman who claimed she was raped in a fraternity house * The reporter accepted the woman's story without checking sources * After the facts were out, the reporter apologized to everyone except the men who were falsely accused and the fraternity involved * Where is the outrage that the real victims did not receive an apology? * Is it sexist to assume that men do not deserve apologies when wrongly accused? * The reporter refuses to condemn the woman who lied * The primary apology must go to the wrongly accused, the fraternity and to the university Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

8 Huhti 201518min

* Media's take: Why run for President if you can't win? * "He's too Libertarian to win" * "He is not as Libertarian as his father" * "Rand Paul is closer to the mainstream than his father" * His chances are as good as anyone's at this point * He is actually closer to his father than he is to the mainstream * If you like Ron Paul, how can you not like his son? * Rand will maintain his father's supporters * There are a lot of Libertarian Republicans, and Rand will attract most of those votes * Rand has a chance to win in 2016 and in 2020 * If he wins, he will maintain his strong principles Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

8 Huhti 20159min

* When employers empower certain groups with special privileges they become clubs with which to beat the employer * Employers are then reluctant to put themselves in a position to be bashed with that club * Large companies must prove diversity and go out of their way to hire minorities * That kind of discrimination is the right of the employer * Whenever you hire anyone you make yourself vulnerable to frivolous suits * The government has made American business less competitive by appealing to the job seekers not the the job creators * This eventually backfires on the job seekers by minimizing the number of employers * I established my offshore bank because government regulation made it so much harder for me to service my international clients * This drove away jobs that would have been in America * Now it is impossible for our company to accept foreign accounts, including Americans living overseas * My offshore bank may not accept offshore accounts or non-American customers * Government regulations are now making it difficult on Americans who live abroad * Every business in the country is being undermined by growing government regulation Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

7 Huhti 201519min