The Peter Schiff Show Podcast

* As I said in my last podcast, when the the Federal Reserve issued its press release yesterday at 2:00pm, Janet Yellen did not give the markets they were hoping for; in a way, it was almost as if she threw them an anchor instead, because the Dow Jones ended up falling about 200 points as a result of the disappointing statement * The statement was dovish, but it wasn't dovish enough, and even though the Dow recovered about half those gains, I think the market is still on the defensive, given the fact that Janet Yellen still did not veer from the projected rate hike path, even though the Fed went out of its way to say that the tightening would be very gradual and that rates would still be low for a long time * And the Fed will continue reinvesting all all the maturing bonds, so the balance sheet will not shrink at all * They will continue to reinvest interest and principal payments, meaning the balance sheet will continue to grow, so it's still QE, just a slimmed down version * But I do expect full-blown QE4 to come before the November election * I do believe that this is the first step in a reversal of policy because Janet Yellen did acknowledge that economic growth slowed last year * In fact, it slowed more at the end of the year, as we will see when we get the first look at the Q4 GDP tomorrow; I think the economic slow-down is continuing in 2016 * The Fed also said that they were monitoring the financial and global markets and will take in consideration the effects that these might have on economic growth, inflation and employment * Obviously, the effects on economic growth are going to be negative - it's the reverse wealth effect * The Fed puts a lot of stock in the wealth effect, but it's a two-edge sword * The Fed statement also mentioned that they are still targeting 2% inflation but that they're not quite there, and expressed concern that they might not meet that goal * To me, acknowledging the economy is slowing, going out of their way to mention that they are monitoring the global economy is an easing from their rhetoric * The Fed is going to have to do a lot more than that subtle suggestion * I think it is enough to turn the dollar; it has been weakening across the board today * Oil prices have moved up a bit * Gold stocks have actually done a little bit better than gold - gold and silver were both hit today: gold was down about $10/11, silver was down about .30 * There was a huge sell order that came in early in the morning and just knocked the markets down in about a minute, which has been typical * It looked like the metal was poised to continue to move higher * We'll see what happens tomorrow when we get the GDP * But one of the reasons it looked like today should have been a big day for gold was the economic news that came out early this morning on December Durable Goods * They were looking for a +.2 increase, following a 0% gain in November * Instead, first they revised the November's number to -.5 and then, instead of improving, we dropped 5.1 - Huge decline! * You have to go back to the '08 financial crisis to find a Durable Goods that bad * It gets worse when you look at the details * Strip out transportation: they were looking for zero, instead we got -1.2 * On top of that, they took last month's -.1 and made it -.5 * The worst one is Core Capital Goods: last month was down .4 and we got -4.3 * Year-over-year Capital Goods is down 7.5% * So, given this number and the Fed's statement yesterday, I expected gold to build on its momentum, but for that big sell order that happened early in the morning * The gold stocks held up today, despite the big drop in gold * I expect a rally tomorrow if we get a weak GDP number, and now a lot of people are looking for a weak... Our Sponsors: * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

29 Jan 201627min

* The Mario Draghi "No-Limits"-inspired rally from Thursday and Friday of last week ended on Monday with the Dow Jones down just over 200 points; the NASDAQ was down about 75 points, so an even bigger percentage drop * But today the market reversed; the Dow actually recouped 100% of what it lost, it rose 282 points by the close * A lot of volatility in the oil markets; down yesterday and up above $30/barrel today * The bigger action today was in gold, up another $12 or so, the highest price for gold since the first week in November, last year * Gold stocks had a big up day today, but they still have to rise about 8% to get back to where they were when gold was the price it is today * Some of the battered down currencies in the commodities space had a good rally; the Canadian dollar and the Aussie dollar * I think what the markets are preparing for is some type of statement from the Fed tomorrow; they began their 2-day meeting today and they will release a statement - there's no press conference * People are looking for the Federal Reserve to acknowledge some type of change in the economy and therefore soften their stance on their 2016 rate increase projection * The last time we heard from Janet Yellen, the Fed was on track for 4 rate hikes in 2016, and since then, no one has said anything to contradict that, despite what has happened in the U.S. and global markets * Perhaps this recent market rally will give Janet Yellen a reason not to show her hand * Of course, if she disappoints the markets and continues to pretend everything is great, this market's going down hard and all the gains will be surrendered * Maybe she'll try to walk a middle ground by acknowledging the problems in China and in the oil market and say that the Fed is monitoring the situation in case there us unexpected spillover to the U.S. economy which is still otherwise in great shape * She may save face by suggesting that if these outside influences somehow wash up on our shores, and they effect employment and inflation, maybe it will adjust its policy *  I'm not sure if that will be enough for the market; if the market sells off, the Fed is going to have to come back and quickly release more dovish rhetoric * I read an article on Monday's Wall Street Journal and I posted it on my Facebook pageand it really was the equivalent of, This Time It's Different * The headline was, "Recession Signals are Flashing Red" - they've been flashing red for a long time and the WSJ has been ignoring it * The article says that, despite all the bad economic events and data that in the past have led to recession, that this time it's different * The article tells us why we don't have to worry this time, while acknowledging the bad data and events, they say we can rest easy because we have this really strong labor market, and in prior recessions the labor market wasn't as strong * Therefore, since the labor is so strong, we can ignore all the other signals that seem to be flashing recession * I have said many times on this podcast, there is no strong labor market; it exists only in the eyes of statisticians who simply look at a rate of 5% and ignore how we got there * They want to ignore the millions of people who have left the weak labor market and millions more who have settled for part time jobs * So the weak labor market is consistent with all the other data that the WSJ is acknowledging, but tells us to ignore * If we counted all the people outside of the labor market who are discouraged as unemployed, and we also counted all the underemployed people, and the unemployment rate was over 10%, then the WSJ would have to say, "Well, it's a recession!" * How can a recession wait for the government to decide how it ... Our Sponsors: * 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 Jan 201629min

* The U.S. stock market ended the week with a 2-day rally, in fact the Dow Jones closed better than 200 points today, to about 1690 *  NASDAQ, even stronger, up 119, closing at almost back up to 4600 * The rally actually began early yesterday morning, and not just in stocks * Oil had a huge rally, in fact, today alone, crude was up $2.72 back above $30, at $32.25 * What sparked the rally was comments made by Mario Draghi at an ECB press conference that followed their official statement that they were leaving interest rates unchanged - they are already negative * Right about that time, the Dow futures were already down 100 points and it wasn't looking good for the open of the U.S. stock market * But then, in Draghi's press conference, he said there was no limit to what the ECB is prepared to do to generate more inflation in Europe * He strongly hinted that in the next meeting in March, they may announce additional stimulus * He saw the weakness in the markets and decided to take one for the Fed, because ultimately it's the Federal Reserve who has to come out with the "Whatever it takes" comment" to shore up the markets * I don't think the ECB is going to be enough, even if Japan joins the party, it won't be a real party until the Federal Reserve shows up * This was enough to cause a small, short-covering rally * What's interesting, though, about the Draghi comments, is that he specifically addressed the problems of low oil prices and low food prices * Do you think the population of Europe worries that food is too inexpensive? * Is it really so important that gas is more expensive in Europe? * None of these are real concerns, and the proof is, if they really wanted the prices to be higher, they could just adjust the Value Added Tax to increase prices to exactly 2% * Why print all this money, hoping that the result is higher gas prices? * The truth is, the price of gas and food in Europe is not the problem - Mario Draghi knows its not the problem * He wants to create inflation to prop up the equity markets * But the press takes Draghi at his word, that inflation is the problem * Stock prices are the prices they are worried about being too low * They also want more inflation to mitigate the effect of government-mandated higher wages * So the one motivating factor behind Draghi's comments was not food or gas prices * Obviously lower food and gas prices help the European economy * All the markets went up on the hint that the ECB is going to further stimulate the economy * That proves that the only reason the stock market has rallied is because the central banks - it's not about the fundamentals * The Fed will have to capitulate and acknowledge that more stimulus is coming * The press is focusing on the idea that the Fed will slow down its initial goal of 4 rate hikes in 2016 * But that's not enough * If the Fed tightens more slowly, and the ECB and Japan are easing, then the story is still about the tighter U.S. monetary policy vs Europe and Japan, which will continue to create the global problem of a high U.S. dollar * We aren't going to get drunk on Europe's liquor - we need our own bartender pouring the drinks * Is it enough to get a short-covering rally? Sure. * Nothing goes down in a straight line * We don't know that Draghi will actually deliver stimulus in March. What if the price of oil goes up above $40/barrel before then? * Mario Draghi went out of his way to praise Janet Yellen, agreeing with the Fed's December rate hike decision * Ironically, the U.S. economy is doing better than Europe, but the U.S. economic data is getting worse, and in Europe it is improving * By the time all the revisions are done, Our Sponsors: * 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 Jan 201623min

* The bear market in global stocks continues, and I believe we're in a bear market in the U.S. * Technically the major averages are not quite down 20%, although some of the averages are * Transports were down 30% from their highs * The Russell 2000 was down more than 25% * Many individual sectors are way down into bear market territory, as are some individual stocks * IBM hit a new 6-year low; and, of course, IBM is the poster boy for share buy-backs * Imagine how much shareholder money has been flushed down the toilet buying back stock at over $200/sh and now we're looking at 12o and falling * But remember: all bear markets begin as corrections * The bear market of 2001, when the S&P was cut in half, and the NASDAQ fell by 80%, started as a correction * The same thing in 2008 - they were calling that a correction, too, until they realized that it was a bear market * In fact, the main thing I am hearing today is the comeback - the Dow had a huge comeback because it was down more than 560 points at the low and it closed down at just 249 * The NASDAQ was down more than 160 and it closed down only 5 * Had we closed at the lows of the day maybe we would be closer to a short-term bottom * This is another short-covering inter-day rally creating a slippery slope of hope for the market to continue to slide down * Today, we have hit the most 52-week lows in any month since September of 2008 * Earlier in the day, we were showing the biggest monthly point drop in the history of the stock market * It's not just the worst January, it's the worst month of any year, ever * The market has got to be telling us that not only are we in a bear market, but we are in a recession * The market is forward-looking: it is telling us that we are in a recession * The bond market is priced as if we are in a recession * Maybe that is because we are in a recession * All the economic data indicates a severe recession * The market is behaving as though something bad is happening - we haven't seen action like this since 2008, yet people are dismissing all of this evidence * If it walks like a recession, quacks like a recession, smells like a recession, it is a recession * There are now more people acknowledging that the Fed should not continue raising rates in the near future - an article in the Guardian says:"Janet Yellen and Fed left with face full of egg after interest rate rise blunder" accuses the Fed of raising rates too early * The problem isn't that they raised rates early, it is that they raised them too late * Actually the real problem is that they never should have lowered rates to zero in the first place * I said this from the beginning: They sealed their fate as soon as they dropped rates to zero - no matter when they raised rates it would be a disaster, and the longer they waited it would be a disaster * What is ridiculous is that the Fed wants us to believe that they can raise rates, after leaving them at zero for so long, and that we could sometime just be fine * The narrative that Ben Bernanke, Janet Yellen and the Obama administration have been selling is that they saved the economy * The economy is in much worse shape now than it was 7 years ago * Instead the Fed's poisonous cure made us sicker than ever - That is what I wrote in "Crash Proof" * When I forecasted the bursting of the real estate bubble and the Great Recession and financial crisis, I said the economy could withstand that * What would kill it was the Fed's cure, they came up with the exact remedy I was afraid they would and it is having this exact effect Our Sponsors: * 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 Jan 201629min

*  The Dow  Jones ended another down week on a down note, dropping 390 points * The NASDAQ was down 126 points *  This is the worst January in the history of the stock market the Dow is off about 13% from its highs, the NASDAQ about 15%, firmly in correction territory * We are probably in a bear market right now, because ultimately these indexes will be down 20% * Some indexes are already firmly in the bear camp; the transportation average is down about 27.5%; the Russel 2000 is down aboutr 23% * Many sectors are in a bear market - the auto market, retailers, financials * Home builders not quite in bear market territory yet but they are at 4-year lows * Beneath the sectors there are many individual stocks that are down 30 - 80% - GoPro now down 82% from last year as a highly touted IPO * Yesterday we had about a 200 point rally because the Fed's Dudley, who saved the market in October of 2014 by hinting of QE4 causing the market to take off * This time, Bullard came out and did say something dovish, but not dovish enough, and did not want to say  there was something wrong with the economy, so he simply stated that oil prices were too low and inflation might not rise quickly enough, so the Fed should hike more slowly * Today, another Fed governor came out, William Dudley and contradicted Bullard, strongly optimistic, saying the market is going to grow above trend in 2016 and he said that some of the negative economic data that has come out recently (which may qualify as the understatement of the decade) should be ignored, in the context of a strong labor market * In other words, no matter what other negative data is out there, in the markets or in the economy, as long as we're still creating 200,000-300,000 mostly low-paying, part time jobs monthly, everything is fine * If everything is fine, and there are so many people with jobs, why are retail sales plunging?  Why are corporate earnings plunging? * Assuming all these jobs really exist, they won't for long because if sales and earnings are collapsing, what are companies going to do with their work force? * Walmart announced today they are closing about 150 stores in the U.S., laying off about 10,000 people * I have saying for a while I expected retailers to announce significant layoffs, but I think it is going to be across the board * Everything that was built on the Fed's bubble is imploding; all the phony wealth that was the result of QE is disappearing rapidly * It's amazing that the Federal Reserve believes in the wealth effect on the way up, but somehow it is oblivious to it on the way down * I think it is going to work even stronger in reverse; the amount of spending from cut backs will produce a reverse effect even larger than the one they tried to create with QE and zero percent interest rates * How could Bullard, in the face of all this negative economic data say that since the Fed raised rates, his outlook on the economy has not diminished at all? * It's so ridiculous that he must not believe it - he is trying to pretend that everything is good * The whole rate hike was about instilling confidence * Based on the data, they should not have hiked rates * Now, as the markets are imploding and the data is getting worse, Dudley is out there saying everything is great * How much longer can he get away with saying that? * Pretty soon, he is not going to have that much credibility * That's what is going on with the Fed, in fact JP Morgan today pushed back their estimate for the first rate hike in 2016 from March to June * That's how is started last year; everybody was looking for a rate hike, in March, then June then September, then they finally got it in December and now people are already dialing back estimates of the next rate hike Our Sponsors: * 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 Jan 201634min

* Last night I watched President Obama deliver the State of the Union Speech and probably the only good thing about the speech is that it was his last one * It will probably go down in history as the most clueless State of the Union Address ever * All he talked about was how great the economy is - how he created all these jobs * He even had the chutzpah to take credit for reducing the budget deficit! * President Obama will have doubled the national debt during his presidency * He added more debt than every president from George Washington to George Bush, combined, yet he's taking credit for reducing the deficit * At least when George Bush gave his final State of the Union Address he acknowledged problems brewing in the economy * He acknowledged concerns being addressed by the American people and validated them * He talked about the stimulus plan he had, which I did not agree with, but at least he knew the economy was in some trouble * Although he acknowledged that economic growth was slowing and that housing was down, he didn't come close to preparing Americans for what was about to unfold by the middle of the year * In fact, when the President delivered that State of the Union Address, the economy was already in recession, although the government had not acknowledged it yet * He had no idea how precarious the state of the economy was, we were on the precipice of  a big cliff and he was still optimistic, long term, but cautious given the slowdown in the economy and he wanted to come up with some kind of stimulus to mitigate the slowdown * He did not foresee or warn about the severity of the problem, but at least he acknowledged some problem * In contrast, rather than at least acknowledging weakness in the economy, President Obama claims victory over the Great Recession, that he restored economic health and vitality * The few problems in the economy are beyond his control because the economy is changing * What we do need is more government money for education, to train people for this new economy, we need a higher minimum wage, we need higher taxes on the rich, but other than that everything is great * President Obama's State of the Union Address is on the order of magnitude more clueless that George W. Bush's last SOTU on the eve of the Great Recession * We are now on the eve of a collapse even greater, yet President Obama is saying everything is awesome * What President Obama did is to lecture the American people as to why they have nothing to be concerned about - basically saying that anyone who says that the economy is in decline is peddling fiction. * Obviously the people who don't recognize the decline in our economy are in denial, or have a political agenda * What the President said is, "If you think the economy is headed in the wrong direction, if you think America is in decline, you're wrong, it's just that the economy is changing * Remember, you voted for me and I promised change * It's changing because it's getting worse, that's the change * President Obama points to technology as the problem in the economy - a transition that only makes you feel like you're falling behind even though you're not * The technological revolution did not begin with the election of President Obama * It has been no more transformative, even less so, than the industrial revolution * Machines put a lot more people out of work than computers but we saw an expanding labor force, but women left the labor force, because their husbands started making more money * Real wages were rising * The industrial revolution took place in a free market economy * The technological revolution is taking place in a government controlled economy * The reason so many people are suffering is not because so many techno... Our Sponsors: * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

13 Jan 201629min

* Hi everybody, this is Peter Schiff and I am recording this on Friday, January 8, and Wall Street just finished the worst opening week to a new year in the history of the stock market * The Dow Jones was down another 1% on Friday to finish the week better than 1,000 points - it was a 6% decline on the week * Now there have been weeks that have been down more than 6% in the history of the stock market, in fact we had one about 4 years ago, but we've never had a week this bad in the first week of January * Now, the financial media is coming up with all sorts of excuses to blame this big decline on * On Monday, they were blaming the sell-off on the rumors that North Korea tested a hydrogen bomb * But for most of the week, they were blaming the sell-off of the U.S. stock market on the sell-off in China, despite the fact that China rallied on Friday and we sold off * The Chinese market was down about 10% on the week, despite the Friday rally * The U.S. stock market is not falling because of the Chinese stock market. The Chinese stock market and the U.S. stock market are falling for the same reason * It's not that one is causing the other, they're both going down and the reason they're falling is because the Federal Reserve raised interest rates in December and they are threatening to raise them at least 4 more times, according to the most recent minutes. * The belief that the Fed is going to keep raising rates is putting pressure on the Chinese currency, the Yuan, to decline along with a lot of other currencies that have already fallen substantially against the dollar, on the anticipation of higher interest rates * It's the weakness in the Chinese currency that is pulling down the Chinese market, but it's all because of the Fed - but that's the same reason we're going down * If you remember, all year I was saying that I didn't think the Fed was going to raise rates at all in 2015, and the reasons were: * I thought thee economy would not be able to handle it - the Fed always claimed that they were data dependent and I thought they were hiding behind that, but I though they could use the weak data, which had been coming all year, as cover for not raising rates - in fact, that was their cover until they backed themselves into a corner because they had promised to raise rates by the end of the year and a refusal to raise rates would be an admission that the economy was weaker than forecasted * I also said I didn't think the market could handle a rate hike.  It had stopped rising based on the absence of QE, but if the Fed actually increased rates, the air would come out of the bubble a lot faster * So with the economy going down and the stock market going down, I thought the next thing they would do is reduce rates back to zero and launch QE4 and would look like complete fools * So by not raising rates, they would look like a lesser fool by acknowledging that the economy needed additional stimulus * We may already be in a recession * The Atlanta Fed has already downgraded their forecast for 2015 Q4 to just .8% * I think by the time we get the first estimate on the 29th the month, we could actually have a negative number for the fourth quarter * If you look at all the data that's coming in, and I'll get to that in a minute, we can easily have a negative first quarter of 2016, and we're in recession * If the economy is in recession, and we are in or close to a bear market in stocks, and without the Fed, there's nothing to stop this market from falling, the Fed will have to come to the rescue of both the economy and the market with QE * But if you remember, a lot of analysts were very sanguine about the market's ability to handle a rate hike, but here we are, the Fed raised rates just a few weeks ago, and the Dow has dropped better than 1, Our Sponsors: * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

9 Jan 201628min

* Well the Dow Jones got clobbered again today, down 252 points at the close * The NASDAQ down about 55 * The transports continue to get clobbered down another 146 points, decisively in bear market territory * CNBC blamed the entire decline on jitters over North Korea's hydrogen bomb test * I admit that this prospect is not good, but I don't believe that announcement was the reason for the decline * The real problem is the Fed removing the monetary herion from the addicts on Wall Street and this is the withdrawal * Former President and CEO of the Federal Reserve Bank of Dallas, spoke on CNBC yesterday and he admitted that the Fed "engineered a stock market rally" * They wanted all this phony wealth to cause us to make irrational decisions * That's what happened during the dot com bubble and to a greater extent during the housing bubble * Here you have it from the words of a former Fed president, a voting member who voted for QE 1 & 2 who is saying that the Fed did this to create a "wealth effect" * He even said, don't be surprised if the market goes down 20% - it's still overvalued - he admits the Fed was propping it up * Obviously if the Fed removes the props the market will go down * After Simon Hobbs asked Fisher if he is going to apologize, he said," Don't blame me, I voted against QE3!" * He is throwing his colleagues, including Janet Yellen, under the bus * Now that he is no longer at the Fed, he refers to it as a "giant weapon that is out of ammunition" * The Fed still has ammo: cut rates (in this case, even to negative) and QE4, their big bazooka * There's plenty of ammo left and it will be fired a lot sooner than people think * Korea is an excuse, but Richard Fisher is letting the cat out of the bag, but no one in the media is picking up on this * Also in the markets today, while stocks were going down, gold was going up - gold hit a 2-month high today * As fast as it is going up in dollars, it is going up even faster in other currencies, like the Canadian dollar, which hit a 9-year low, the Australian dollar * The yen was up - the dollar/yen is breaking down - to me that is a very scary proposition for the markets to see this strength in the Japanese yen * Oil prices continued to drop, down another $2 today - we're trading below $34 * Gold stocks were up - you'd think they would be up a lot more because mining costs are plunging and revenue is going up, but Wall Street is oblivious to the bargains that exist in the mining stocks * We got a lot of economic news today and most of it was, as is typically the case, bad * Yesterday vehicle sales were at a 6-month low * Last year was a record for auto sales, but December was a 6-month low despite all the Christmas giveaways * Meanwhile the inventory to sales ratio continues to rise - a new high since the 2008-2009 great recession * Also GM got clobbered today, down about 4% - already down 9% for the year and down more than 20% from its 52-wk high - that is a bear market * This is telling me that the auto bubble has popped * There are going to be a lot of layoffs in the auto sector - good, high-paying jobs * I have said that starting in January 2016 we would start to see layoffs because the numbers have been horrible * Sure enough, Macy's today announced a restructuring, laying off thousands of workers because of disappointing sales throughout the year * We will see a huge blow-up in the securitized market for auto loans * They layoffs are coming - the low unemployment number is the rear view mirror * Looking at the actual economy in the windshield is a disaster for jobs * This is deja vu - in 2008 the subprime market had already exploded - the housing market problems should have bee... Our Sponsors: * 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 Jan 201632min