Debt Explodes as Stimulus Hopes Implode – Ep 617

* Today was the expected day for expected rate hikes, indicating economic "lift-off" * The June rate hike is off the table and everyone is focusing attention on September * The prepared remarks are just a smokescreen to maintain the pretense that the economy can withstand a rate hike * The Q&A session after the the prepared remarks were more revealing * Janet Yellen ducked the question of why people who recommend postponing the rate hike to 2016 are wrong * Yellen stated that the "dots" used to forecast rates are based on mere projections * The FOMC is always too optimistic about the economy, so if they are wrong again, the dots are meaningless * Yellen tacitly admits she is hiding behind the data, stating that even if rates to rise, it will be a nominal amount * Yellen's response to CNBC's Steve Liesman question regarding what labor milestone would justify a rate hike was especially telling * She said she needs to see further improvement in the Labor Market before she begins to raise rates * How much improvement does Yellen expect in the labor market over the next three months? * There is a good chance that the labor market will not be as strong in the next three months * She is letting the cat out of the bag; saying that rate hike is not likely in September, either * Yellen questioned the "obsession" about when rate hikes start because the first rate hike will not necessarily indicate normalization * She is indicating that a rate hike may be symbolic * The highly stimulative rate of zero to .25 is only necessary when trying to sustain a bubble * In response to a question about the Federal Reserve under Greenspan, Yellen indicated that it was a mistake for him to raise rates slowly and methodically * I was vocal Greenspan's decisions at that time, arguing that his actions were creating the real estate bubble * Yellen is now moving interest rates even more slowly over a period of 7 years * I may not be the only person who noticed how dovish Yellen's statements are * The knee-jerk reaction on the Fed's statement was to buy the dollar, but quickly turned into a selloff, and it intensified during the Q&A session * The dollar was on the lows of the day as it gets closer to the time rates were expected to raise * My video blogs are always available on schiffradio.com and on YouTube Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

18 Jun 201519min

* Dow under pressure on the back of EU talks with Greece * There is a lot of room for the market to decline pending the Fed's announcements * The consensus is that rates will hike September or later * If Fed does not rates in September, Election year next year might also put off rate hikes * Bloomberg article quotes B of A hinting that additional stimulus would further damage the economy * B of A admits this risk has been getting the least amount of attention * Empire State Manufacturing Index missed 5.9 forecast - came in at -1.98 * May Industrial Production expected +.2 - came in at -.2 * Capacity Utilization dropped 78.3 to 78.1 * Manufacturing down .2 * Industrial Production has been negative for 4 of the last 6 months * Currency markets still believe Fed will raise rates * Consumer spending was up in May because of rise in gas prices * Weekly Jobless claims saw a slight uptick - exceeded forecast * Bloomberg Consumer Comfort Index continues to decline * Listener's Questions, Peter's Answers to resume on this podcast * Submit your questions on schiffradio.com Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

15 Jun 201520min

* Once again, a week of worse than expected economic data punctuated by another better than expected non-farm payroll report from the government * ADP private sector payroll report was slightly below estimates * 5,000 manufacturing jobs lost - 3rd consecutive monthly decline * Unemployment rate dropped * Labor participation rate up to 62.9 - .2% above lowest point * Large sector of labor force still comprised of older workers * Teens, twenties and thirties are at all-time lows * Older Americans want part-time jobs, so increase of part-time jobs contribute to increase in all jobs * Given the strong government jobs number, the media is discounting all the weak data, including GDP, productivity, consumer spending and industrial production * The jobs we're creating do not reflect economic strength * The weekly unemployment numbers are hovering at 42-year lows * Does anyone believe that this is the strongest economy in 42 years? * The hiring numbers are suspect to begin with because of the government's assumptions * The Trade Deficit dropped not because our exports surged, but because out imports plunged * Our economy is too weak to support a greater number of imports * A closer look at the data behind the government jobs number actually supports the rest of the weak economic data * Personal Income and Spending on the month missed estimates * May Manufacturing PMI dropped slightly * April Factory Orders fell by more than expected * Year over year, orders are down 6.4% * 6th consecutive month that factory orders have been down year over year * This has only happened in America during a recession * Mortgage applications fell sharply on the week - 7.6% decline, led by a 12% decline in re-fi's * May Services PMI fell to 56.2 - lowest level since January * ISM Non-Manufacturing Index dropped to 55.7 - the lowest level of the year * The revision to Q1 Productivity - 3.1% decline * We also had a decline in 2014 Q4 * Corporate profits plunged 5.9% in Q1 * Unit Labor Costs surged by 6.7% - this does not represent wages * All this data predicts future layoffs * The Fed knows this, so they are reluctant to raise rates * The Bloomberg Weekly Consumer Comfort Index fell to 42.5 the 8th consecutive decline - the first time in its 30 - year history * The Dow continued to decline on the jobs report * NASDAQ still hanging in * Margin debt is at a record high * The dollar was stronger on the week * The euro finished positive * By next year European inflation will force the Bundesbank to retreat from QE * Gold was down on the week, as euro strength signals QE less likely in Europe * Expectations of rising interest rates have been suppressing gold, but when reality rears its ugly head, the sellers will be gone and the buyers will be out in full force Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

6 Jun 201530min

* Short week closed with some horribly bad news * People are not paying attention to the data; they are paying attention to the Fed * Government released revision to the GDP: -.7 * The assumption of deflation is cooked into the number * Most Q2 data is weak * Q1 Corporate profits plunged by 5.9% * JP Morgan announced 5,000 layoffs * Corporations are already levered up to the max * May Chicago PMI plunged back down to 46.2 - close to March's -year low * April Durable Goods fell .5 * March Services PMI fell to 56.4 - second monthly drop * May Dallas Fed Manufacturing crashed to -20.8; fifth consecutive monthly decline * The Fed has never predicted a recession; in fact they have forecasted economic growth while in a recession * Bloomberg Consumer Comfort Index: fell for the 7th consecutive week * There are fewer good jobs available and if someone loses their job the are likely to have to take one they are overqualified for * The Fed is too concerned about maintaining the illusion of prosperity to allow genuine prosperity * They are propping up the stock market and the housing market, pretending everything is OK, and allowing the government to continue deficit spending * People still think the Fed will raise interest rates; the most we would get is a trivial hike< just to say they raised rates to get things back to normal * There is no more normal anymore; the new normal is interest rates at zero and perpetual QE until the whole thing blows up * How can we expect to learn from our ancestors when we can't even learn from our own mistakes? Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

30 Mai 201518min

* The U.S. dollar started out this morning on the defensive * Government released CPI numbers generated a sharp reversal across the board * Gold sold off, but closed slightly down against the dollar * April CPI up just .1% on the month; year over year prices dropped -.2% * Lowest CPI since October 2009 * Core CPI (excludes food & energy) rose .3% * Biggest monthly jump since March 2006 * News sent dollar up on anticipation that rate hike will be more likely * Inflation benchmark is just as real as the 6-1/2% unemployment goal * Traders still haven't figured out that if we ever approach the goal, it will be moved * Biggest factor within the .3% rise in the Core was +.7% in health care costs * Biggest increase since January 2007 - prior to Obamacare * Rising costs will slow consumer spending, weakening the economy and undermining employment * Yellen in a press conference today did not actually project a rate hike * It's all about extend and pretend; actually postponing the rate hike will buy the Fed some time before launching QE4 * Increased inflation as the economy cools down means stagflation * The media is spinning increased inflation as good news * Bad economic news released yesterday: * Unemployment numbers came out higher * Fewer hires mean fewer fires * Chicago Fed National Activities Index came in at -.15 * Three month moving average down to -.23 * MAY PMI expected to rise to 54.6 unexpectedly declined to 53.8 - lowest lever in 16 months * Bloomberg Consumer Comfort Index continued to slide from 43.5 to 42.4 * May Philadelphia Fed looked for a bounce back to 8; missed expectations with 6.7 * Missed expectations 5 out of the last 6 months * Existing Home Sales expected improvement over March; dropped to 5.04 million * Kansas City Federal Reserve Manufacturing Index missed expectations at -13; dropping for 5 consecutive months * Economic data as bad as 2009 and inflation is getting worse * Janet Yellen acknowledged underlying issues with unemployment number, mentioned discouraged and part-time workers * Labor Force Participation Rate is not improving * Low-skilled jobs in jeopardy with minimum wage hikes * $15/hr fever will further hurts employment and erodes the tax base * Higher minimum wage will transform workforce because employers will hire better workers for the higher wages * Movement will substitute technology for labor costs * Minimum wage hikes will undermine the economic recovery that Janet Yellen pretends is existing * So she can continue to pretend that the Fed's monetary policy is working * And she can pretend that they can actually raise interest rates * In the unlikely event Yellen tests a rate hike, they will have to acknowledge that they were wrong * The Fed can always blame the data for deciding not to raise rates and therefore save face Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

23 Mai 201524min

* Earlier today latest FOMC minutes released * Once again the weather is blamed for missed expectations, pretending the economy is better than it is * Now the Fed dismiss numbers as inaccurate, because seasonal adjustments are off * Why does the government need to seasonally adjust the numbers * Yearly GDP is the number that matters * Once the numbers begin adjusting the numbers you open the floodgates to manipulation and subjectivity * Wall Street analysts tend to be more optimistic for the first quarter * Studies show that Consumers spend most money in Q4; by the following Q1 consumers are taking a break * Same studies show Q2 is usually stronger * Why does the government have to come back with a new GDP measurement in order to come up with a bigger number? * To come up with low unemployment numbers they find ways to under-calculate the unemployed and count under-employed * Analysts are discounting weak data and expecting eventual rate hikes * The Fed is denying the weak economy not because they want to raise rates, but because they can't admit that their monetary policy has failed * Mixed economic data came out this week * Housing Market Expectation Index dropped from 56 in April to 54 in May - missing estimates for fifth time in 6 months * Housing Starts surged to 6 or 7-year high * Lingering optimism for a recovery * Walmart came in far below estimates, attributing miss to the strong dollar * Walmart is a net importer, so the strong dollar should work in its favor * Big drop in gasoline prices in Q1 did not provide a boost for Walmart because the underlying economy is weak * Los Angeles is the largest city in the country to pass the $15/hr minimum wage * They staggered the increase over 5 years, so adverse effects will not be directly attributed to those who voted for the increased minimum wage * It will be difficult to measure decisions not to hire as a result of the minimum wage * The $15/hr minimum wage makes it illegal to hire low-skilled workers for less, preventing them from gaining skills in order to earn more later * We're hiring at Schiff Gold - If you are interested contact Matthew Malleo 800-465-3160 Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

21 Mai 201527min

* S&P responds to bad news with new high; DJ just barely off record high * Dollar continues to fall * The currency traders still have not accepted the significance of bad news * Lower dollar will be the trend * Friday got a trifecta of bad economic news * Thursday Weekly Jobless Claims number declined to 264,000 - lowest weekly jobless claims in 42 years * Why are there so few job losses? Because so few people are getting hired * Government numbers come from the Birth/Death Model, which assumes a certain number of businesses created each month * What if these businesses are not actually created? * This would explain lower number of unemployment claims * There's no way we can say that the economy is the best it has been in 42 years * Empire State Manufacturing Index, which was weak last month, expected to be +5, came in at 3.09; below estimate for the 4th month in a row * Both Business Expectations and Hiring declined from April to May * Industrial Production Capacity Utilization was expected to be flat; down again .3% * This is not the 5th consecutive monthly decline in Industrial Production; longest losing streak since 2009 * Consumer Sentiment Number 95.9 in April - expected to hold steady - came in at 88.6; biggest drop since December 2012, and biggest miss ever * If the job market is so strong, why is confidence plunging? * The percentage of employees who fear losing their jobs is at highest level since March of 2009 * The bubble is rapidly deflating * Unofficially, I think we have been in recession for the entire "recovery" * The government is not accurately measuring inflation in the GDP deflator * The Fed has not forecast a single recession * Recessions always happen contrary to forecasts * If we are in a recession there can not be a rate hike * At some point they are going to have to acknowledge that the numbers are not accurate * The unemployment rate is going to have to tick up at soe point this year * At some point after the end of the quarter it will become obvious that there is no rate hike coming * The only question is, What is the Fed going to do? * The Fed has not managed to shrink the balance sheet, and further QE will take the deficit to a whole new level * This will put massive downward pressure on the dollar * Oil prices will spike * Cheap gas prices did not create a bounce in Q1 * Consumer Confidence will plunge * Reality is finally going to set in on the failure of the Fed monetary policy Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

17 Mai 201520min

* Another week and another round of bad economic news * Wall Street may be finally paying attention * JOLT Report projected at 5.158 million; came in at 4.994 million * April Retail Sales expected to rise .2%; came in flat * X Automobiles expected an increase of .5, actual number was .1 * Beneath the surface there was a collapse in retail sales in all areas except groceries * Weakest year over year increase in retail sales since 2009 * Department Store Sales experienced the biggest drop since January 2014 * A look beneath the headlines of the jobs numbers reveals that the jobs are not good jobs * The Birth/Death Model assumption added 175,000 jobs to the last jobs report * These numbers came from a biased source * The fact that there is no spending is evidence that the job market is not as robust as the numbers claim * Jobs numbers can be made up but retail sales can't * Wall Street is surprised that we have weak data because they believe we are experiencing job growth * March Business Inventories up .1% versus expectation of .2% * February Business Inventories was revised down from .3% to .2% * I estimate that Q1 GDP will contract by greater than 1% * The Atlanta Fed just revised down their Q2 GDP estimate to .7, which would indicate the U.S. economy contracted for the first half of the year * The Fed is still looking for 3% rise in GDP for 2015, which would mean we would need growth of 6% for the last half of the year * It is more likely that we will get a negative number again for Q2 * Two consecutive contracting quarters will indicate an official recession * If we are in a recession, the Fed will not raise rates and is more likely to respond with stimulus * I predicted that a pause in QE3 would trigger another recession * When the Fed is unable to raise rates to stimulate the economy, the only trick they will have up their sleeve will be QE4 * When that happens, the moves we saw today in the FOREX and Precious Metals markets will look tame by comparison * The dollar has already broken its uptrend * Europe, with the exception of Greece is experiencing growth in GDP, and Great Britain is doing better than Europe, because they shrunk their government instead of applying stimulus * What we are going to get next is old-fashioned Keynesian, pump-priming stimulus * Will that give us economic growth? Not a chance. * The last three rounds of QE didn't give us economic growth and neither will the next one * It may blow more air into the stock market bubble, but the air is going to come out of the dollar bubble even faster * Where is the Fed's balance sheet going to be at the end of QE4? It is 4.5 trillion right now. * How can anyone possibly believe Janet Yellen when she says she is going to shrink the balance sheet? * Are creditors are going to get wise and there is going to be a run on the dollar * You can see the beginnings of it today * The dollar was down across the board * Gold was back to about $1,250; every time it gets to this level it gets knocked down by short-sellers, but eventually they are going to have to give up * All this bad economic data is going to sink in * It is not the weather * The market still has to adjust for the reality that the economy is really weak * The Fed will not admit that QE didn't work, so in the face of recession they will have to do it again Our Sponsors: * Check out Aeropress and use my code GOLD for a great deal: https://aeropress.com * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * Check out Boll & Branch: https://boilandbranch.com/SCHIFF * 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

14 Mai 201519min