The Peter Schiff Show Podcast

* I am recording this podcast on Cyber Monday * Cyber Monday first got its name because e-commerce wanted its own version of Black Friday * It's losing some significance, given it is losing some of its competitiveness because of the strong online sales during Black Friday * Online sales were up about 20% over last year, but the brick and mortar retail sales were down about 10% * The retailers' inventories were positioned for a big increase * I think this holiday sales season will be weaker than expected, just as last year was * I think we may see more returns on the online sales this year * When the after Christmas sales start, we'll see more aggressive pricing in the brick and mortar stores, getting rid of excess inventory * What is the Fed going to do with weak Black Friday sales data? * We got more data out this morning, the Chicago PMI, horrible number * Last month we got a bounce up to 56.2 * It turned out to be a dead cat bounce - November's number was expected at 54 and delivered 48.7 * We are back in contraction mode * If the Fed does raise interest rates in December, it will prove that it was not data dependent, and that the Fed's credibility was the primary reason for the hike * This Friday, the Non-Farm Payroll number will be the last number before the Fed's December meeting, making it once again, the most important jobs number ever * Former Fed Governor Lawrence Lindsey recently pointed out on CNBC that the Fed has created another bubble * He stated that asset price inflation is going to end badly * In response, Joe Kernan questioned the assumption that the asset bubble will end badly * Historically, all bubbles end badly * I also wanted to comment on a WSJ article today predicting that the Fed would continue to raise interest rates, while the ECB would continue to ease rates into negative territory, and that U.S. interest rates would be 2.75% by early 2018 * How can they know that this will happen? * If this is the case, it also assumes that there will not be a recession between now and 2018 * This would make it the longest recovery in history, while also requiring the most stimulus * The WSJ article also assumes that the European economy will remain in recession for two years * The article's logic is that the dollar is going to go up and the euro is going to go down * Which brings me to gold * Gold was down about $15; however gold stocks did not make a new low - up about 2% today * This is a positive technical divergence * The gold stock price may be anticipating a dovish December Fed meeting * The ECB and Japan is talking up inflation, which is bullish for gold * The problem is that if the ECB is more dovish than the Fed, it depresses gold prices in dollars * The dollar is still losing its value * All fiat currencies are being debased * In the U.S. economy, M2 is growing at 6% a year * Even if you believe the government's GDP numbers, it is growing at 2% a year * So the money supply is growing three times the GDP * That is as inflationary a monetary policy as we've ever had * We have money supply growth, negative interest rates and no ceiling on the national debt * This is an extremely bullish environment for gold, but the market is simply looking at the price of the dollar vs. the euro * At some point the dollar is going to be weaker than the euro * This looks a lot like the 1960's when the price of gold was constant because of artificial intervention * There was a lot of demand for physical gold at that time * Eventually when the artificial constraints were removed, the price of gold skyrocketed * There are some artificial influencers on the price of gold right... Privacy & Opt-Out: https://redcircle.com/privacy

30 Nov 201539min

* Tomorrow is Thanksgiving Day, one day before Black Friday * The one day of the year where Americans make their annual pilgrimmage there they stampede to the nearest mall to buy stuff they really don'[t need and can't afford * It's almost like a black and blue weekend * I believe that this will be a pretty weak holiday weekend; by the time we get the sales numbers next week, it's going to be pretty dismal * The news that brought the euro down this morning was rhetoric coming from Mario Draghi , head of the ECB * He's talking about expanding the QE program to a 2-tiered system * Why is Draghi so determined to talk down the euro and talk up inflation? * He is in pursuit of Keynesian economics' holy grail - inflation * If only we can succeed in getting prices to go up faster then we would have economic growth and prosperity * Believing that a rising cost of living is the secret sauce of economic growth * If you search the internet, you see that no one is critical of this * If rising prices are so important, why not just raise the VAT? * You could obtain the exact amount of inflation desired if the real goal is to rais prices * But that's not really the goal, because they would just raise the VAT * The real goal is to wipe out government debt and to mitigate the effects of wage hikes imposed by the government * Academia and the press all give them a pass on the idea that rising prices create prosperity * The truth is the reverse: prosperity comes from reducing costs * As things get cheaper, more people can afford them - I use the example of cell phones * Now even poor people can afford a cell phone * Falling prices lift standards of living and falling prices result from a productive economy * Inflation results from government interference and it doesn't make things better * Let's go over the economic data this week * It's been a mixed bag * On Monday we did get the manufacturing PMI number, expected to come in at 54.5 which would have been an improvement * Instead, we got 52.6, the lowest number in 2 years * I've been talking about this for a long time on this podcast - the manufacturing recession is already here * The mainstream media dismisses this because manufacturing is so small it doesn't really matter * That statement says so much * A downturn in manufacturing will preclude a downturn in the service sector * We also got existing home sales that came out on Monday - they were below estimates * There's plenty of evidence that the housing market has already rolled over, and if the Fed were to raise interest rates, it would push it even further down that hill. * The big number that came out yesterday was the revision to Q3 GDP * Initially the government reported that the GDP was up 1.5% * Everybody expected an upward revision and that's exactly what we got - a revision to 2.1 * The problem was, the number was due to a big build in inventory * I have been talking about this for months on this podcast; we have huge amounts of unsold inventory * Businesses have been more optimistic than they should have been based on the Fed's recovery rhetoric * This mistake shows up as a positive in the GDP * The other big factor is that the government assumes that inflation is just 1.3% * I don't believe that for a second * Health insurance alone is costing the average American's cost of living more than 2% * Today the Atlanta Fed just reduced their Q4 GDP estimate from 2.3% down to 1.8% * What the third quarter giveth, the fourth quarter taketh away * Buried in that GDP report are some other bad numbers * There was a 4.7% decline in corporate profits for the quarter - the biggest decli... Privacy & Opt-Out: https://redcircle.com/privacy

25 Nov 201536min

* Friday the 13 was an unlucky day on Wall Street * The Dow was down over 200 points - the second back to back decline of over 1% since August * What was happening in August? Everybody was convinced the Fed was going to raise rates in September * Now, everybody is just as convinced that the Fed will raise rates in December * Once again, as I predicted a week ago, the market sold off * We are down over 650 points on the week * Nasdaq is down today even more - 1-1/2% * The carnage was once again led by the retailers * Bad earnings out of Macy's Nordstrom's Walmart and others set the scene for new share price lows * I have been warning about this all year, based on inventory numbers * All the evidence is flashing recession * The Fed has been saying that they are data dependent - open your eyes and look at the data! * This data is consistent with the beginning of a recession * Yes, unemployment is low, but unemployment is always low when recessions begin * I think the Fed knows they are not going to raise rates * The Fed minutes are coming out next week and we'll get an insight into the deliberation between the members * All Janet Yellen said was that an interest rate hike was a "live possibility" - The market did the rest. * They took the word "possibility" and assumed that it was a probability * Let's look at the economic data that came in today: * First, October Producer Prices - they were looking for a rise of .2, because last month, they actually fell by .5 * We didn't get .2; we got -.4 * As of last month, year over year producer prices have declined 1.1% * Now they are down 1.6% on the year * This is going the opposite direction of the Fed's goal of 2% inflation * The worst number was retail sales: * They were looking for a rise of .3, which is still not a big rise - but we got an increase of just .1 * To add insult to injury, they had adjusted last month's forecast to zero * Also x auto, they were looking for a gain of .4 and instead got a gain of .2 * These numbers will subtract from Q3 and Q4 GDP * We also got September inventory numbers: * The consensus was a rise of .1, but instead we rose .3 * This rise was not a result of an increase of sales, it is because sales are not keeping up with inventories * The inventory to sales ratio rose to 1.48 fro 1.47 * The last time we had this number was during the financial crisis * I have been pointing out that these inventory numbers have been padding the GDP for the last several quarters * This has been ignored on Wall Street * This means future GDP will plunge as companies need to liquidate inventories and not replenish them * Not only that, they will be liquidating their workforce * The heavy layoffs may not happen this year - more likely they will come in January and February * The odds are that the Fed is not going to raise rates in December and the odds against a rate hike as the market continues to sink, with more and more bad economic news * This bad news about retail sales was unexpected by the market as evidenced by the sharp drop in share prices * Is the Fed going to raise rates just as the economy is turning down? Not a chance. * If they do, imagine how much worse the economy will be * The question is: When is the Fed going to come clean and admit that they are not going to raise rates and will their excuse be and will the markets buy it? Privacy & Opt-Out: https://redcircle.com/privacy

14 Nov 201518min

* When I recorded my last video blog, I mentioned how positively the market reacted to jobs report, which could signal the Fed to raise rates * I said there might be a delayed reaction and, in fact it did * Four days into this trading week we are down more than 450 points * Also, I did an interview on CNBC.com where I said I felt the retail markets would have a a tough time this Christmas * That was translated into headlines that I stated that consumers would have a horrible Christmas, which was not my point * So far, my prediction about the retail space is bearing out, bad earnings reports from Macy's Walmart, Men's Wearhouse, and its subsidiary, Joseph A. Bank, Nordstrom and Neiman Marcus * The data that the Fed depends on is getting worse and worse * If the Fed raises rates in December, it will prove that they have not been data dependent, they were delaying * Copper a six-month low today, oil prices are down, gold hit a new low inter-day but rallied back and the dollar finished broadly lower for the day * Based on these market prices, the Fed will have another excuse to delay rate hikes, again * What will stop the stock market from falling? The only thing that will stop it is if the Fed takes a rate hike off the table * I recently wrote a commentary where I reference the shadow rate * Tightening actually began about 18 months ago when the Fed started tapering * The Fed's monetary policy is not just about rates, it is also about easing and foreward guidance * When the Fed began tapering they were tightening * When they began talking about raising rates that was the equivalent of tightening, because the markets braced for the hikes * That's why the economy is rolling over, that's why the stock market is rolling over * Given how weak this recovery has been and the enormity of the stimulus required, if the Fed removes all stimulus it will result in a worse than normal reaction in this over-valued stock market compared to previous tightening cycles * More evidence of the weakening economy is the number of millennials still living with their parents is at a record high * I posted a Bloomberg article on my Facebook page about the number of young women living at home is the highest in 70b years * Bloomberg prefaces the article by stating that this is not a sign of a weak economy, but clearly it is * This also affects housing: * Couples are delaying buying "starter homes" which delays or prevents them from saving up for a down payment on their dream house * I also wanted to discuss the Fox Business Republican Debate * I believe Rand Paul was actually the winner of that debate * Paul stood out, and made some good points, which allowed him to move forward in the polls * Paul is drawing a contrast, as he made the point that the real threat to the U.S. is not a military threat from the outside, but the self-inflicted threat of a weak economy * Our debt is a bigger enemy than ISIS * Paul also avoided jumping on the immigration bandwagon. Immigration is not the problem. If we turn off the welfare magnet, then the only people who come to America will be the people who want to work * The country would benefit from that, because it will keep labor costs down and boost productivity * The anti-immigrant voice of the Republican party will be vilified as racist in the general election Privacy & Opt-Out: https://redcircle.com/privacy

13 Nov 201535min

* Friday, November 6, 2015 * Earlier today the government released the Non-Farm Payroll Report for the month of October * I was told that this was the most import Non-Farm Payroll report ever * They were looking for 190,000 jobs and we created 271,000 jobs * Everybody now has jumped to the conclusion that a December rate hike is a lock * There is nothing in this jobs report that indicates that * The reason everybody believes that the Fed is like to raise rates is because Janet Yellen testified before Congress earlier in the week * This is what the Fed Chair said about interest rates: * If we get further improvements in the labor market and we make progress at achieving the Fed's inflation goal of 2% in the medium term * How much improvement and what kind? We don't know, because thus far, no improvements have been enough to prompt a rate hike * Yellen said that if we got those improvements, then a rate hike in December would be a "live possibility" * This does not mean it will actually happen - it means it is possible * She did not even use the word probable * I don't think the Fed is going to raise rates in December * We have one more "most important" jobs report between now and December and this month's numbers may be revised down, as others have * From my perspective, if the Fed does not know that they will raise rates by now, they will not decide on the spur of the moment after a jobs report * Even with positive economic news, the Fed still does not have to raise rates; they can come up with another excuse, real or unreal * What happens if the stock market declines after a rate hike? what would the Fed do then? * "Extend and Pretend" is working like a charm for the Fed now * Getting back to today's job's report: * This is the strongest month of the year following the two weakest months of the year * Both of those months arrived with expectations of upward revisions, and they did not happen * The three month average is 187,000 jobs * The last three months have been slower than any prior three month period this year * Last year, the 3-month average was about 250,000+ jobs * So the job market is much slower this year than it was last year when the Fed was looking for "more improvements" before raising rates * The unemployment rate did decline, but so far no positive data on unemployment rates have prompted the Fed to raise rates * The Labor Force Participation Rate stayed at 62.4% which matches the low of this so-called recovery * So we are not seeing more people entering the labor force * This is not a sudden accelleration in the pace of job growth * Let's look at the quality of the jobs: * Most of the jobs, about 200,000 of the 271,000 jobs added are low-paying service sector jobs * In second place, at 45,000, is temporary help * Third place, at 44,000, is retail trade * The fourth largest category is leisure and hospitality * Manufacturing, mining, logging, transportation sectors lost jobs * Where it really gets bad is in the demographics: * All job gains went to people 55 and older * People under the age of 55 lost 35,000 jobs * If you look at the gender, men from 25 - 54 lost 119,000 jobs * What would explain this? * Older people can no longer afford to be retired, and are supplementing their retirement incomes * Some of the older people are taking better jobs because they are more experienced * Why are more women getting jobs? * Women who were previously homemakers also need to supplement their incomes * When you look at the demographic numbers, it is further proof that the Fed's explanation of the labor force participation rate is wrong Privacy & Opt-Out: https://redcircle.com/privacy

7 Nov 201523min

* Here we go again; Janet Yellen was on Capitol Hill testifying about the banking system * Forget about all her comments about how solvent the banking industry is - of course it's not * The banking system is more vulnerable and more highly leveraged than before the bailout * I am focusing on what she did or did not say about the Fed's intentions to raise rates in December and how the markets reacted * Headlines following the testimony were about the probability that the Fed will raise rates in December * The December meeting will be a live meeting with a rate hike on the table * The official probability of a December rate hike rose from 50% to 60% * When the Fed did not raise rates in October they removed language referencing concerns about international markets * This was interpreted as a more hawkish stance on the part of the Fed * The global economy was used as an excuse, but the Fed had no intention of raising rates in October * In December when it doesn't raise rates, it'll use another excuse * The markets wants to believe that the Fed will rates, and as soon as Yellen's comments were released, the dollar soared and gold tanked * Let's look at what Janet Yellen actually said: first I am going to go to a Reuters story, Fed's Yellen sees possible December rate rise * That's all it takes, just the mention of a possibility makes everybody jump to the conclusion it is going to happen * Here's Yellen's quote directly from the artice: * "What the committee has been expecting is that the economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2 percent target over the medium term," * "If the incoming information supports that expectation then our statement indicates that December would be a live possibility." * She is saying, if we get the improved data we're expecting * The labor market has been weakening and the last two jobs numbers have been quite weak * Yellen says it is possible if we get improvements we expect we will raise rates * Anything is possible... it is more probable that she is not going to raise rates in December * She actually says it's a long shot * She's been saying this all year and it has not meant anything * Reuters omitted from the article that Yellen followed up the above statement by reiterating that at this point, the Fed still has not made up its mind * Another story from CNBC:Janet Yellen: December rate hike a 'live possibility' * Here's a Yellen quote from this article: * "Now no decision has been made on that and, what it will depend on, is the [Federal Open Market Committee's] assessment at the time. That assessment will be informed by all of the data that we collect between now and then," * This implies that they intend to collect data from now until the December meeting and make their decision on that data * If the Fed does not know now, how different can the data be? * If nothing is going to change, why not make a decision? * Yellen's monetary policy is to pretend to raise rates and then not do it * If you actually listen to what she is saying, it is far more probable that she won't raise rates, because thus far, we have not seen an improvement in the data she is tracking * Even if the Fed sees improvements, they still might not raise rates * Here's the one thing that Yellen is not doing: she does nothing to alter the false perception that a rate hike is likely Privacy & Opt-Out: https://redcircle.com/privacy

5 Nov 201527min

* I am recording this podcast from New Orleans, where I am attending the Investment Conference * Today, I am going to talk predominantly is the FOMC statement that came out yesterday following the conclusion of their 2-day October meeting * It was largely expected that the Fed would not raise interest rates in October and that's exactly what happened * I predicted this a long time ago * What is amazing is that, as a result of this announcement, more people expect the Fed to raise rates in December * Going into this announcement, the dollar was on the defensive, silver was up about .50, gold was up $15.00 * It sure looked like people were expecting a more dovish tone from the Fed * After all, a lot of bad economic news has come out since the September meeting * When the Fed statement was released, there was no such change in language * This now leads people to believe that the statement was hawkish * They still don't understand the game: Nothing has changed. * the Fed has to pretend that a rate hike is right around the corner in order to pretend that the recovery is real * They can't admit that the economy is weak because they want to take credit for saving the economy * They have to keep pretending, and they have to keep making up excuses * Steve Leesman was asking why we need emergency rates when the emergency is over * The emergency is not over, as far as the Fed is concerned because there is no real recovery * If we had a legitimate recovery, of course the Fed could raise rates * Thus the game: they continue to talk as if they might raise rates, and the markets buy it * As soon as their statement came out, gold tanked, it ended up down about $10, silver gave up most of its gains, and the dollar was broadly higher * If you actually read the statement, there is nothing hawkish about it * It is basically the same as the September * The only thing that stands out is an absence of concern * The FOMC is not worried about all the bad news * "In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. " * None of that is going to happen. The labor market is deteriorated - the labor force participation rate is still shrinking * These are metrics Janet Yellen needs to see improve * The Fed knows that these minutes will be misinterpreted * They want to preserve the illusion that a rate hike is possible so they can preserve the illusion that this is a legitimate recovery and not a gigantic bubble * But, what's going to happen when the Fed doesn't raise rates and ends up launching QE4 the Fed is going to have zero credibility * The U.S. economy is in worse shape now than it was leading into the 2008 financial crisis * Now everybody is talking about how important the jobs number will be - the Fed has not raised rates in 7 years. How can one jobs report make the difference? * Meanwhile we've had months of stronger jobs numbers and the Fed did not raise rates * I think the truth is the Fed has decided not to raise rates * But they still need to maintain the perception that they might raise rates and that'... Privacy & Opt-Out: https://redcircle.com/privacy

29 Okt 201527min

* This is the first podcast I've been able to record since the death of my father, Irwin Schiff, who passed away on Friday * If you're interested in learning more about him and the circumstances surrounding his death, I would encourage you to read my commentary, "The Death of a Patriot" * There also links to many other articles written about him on my Facebook page * You can also find on my YouTube channel, my father's debate for the 1996 Libertarian Nomination for President * You can also find on the internet a video he created called, "The Secrets of a Tax Free Life" * He died in jail because of his political beliefs and for standing up for his Constitutional rights * While in prison, my father got insufficient medical care, he lost all his teeth, lost his eyesight and eventually died of cancer * In my father's case, even if he were wrong, the penalty should have been a civil case * My father was steadfast in his beliefs, and did not want to be released unless he won his appeals * The Dow was up more than 300 points today * The strength came from the ECB, as Draghi suggested that the ECB was considering expanding QE * The ECB is trying to talk the euro down * The ECB did not actually do anything, they just jaw-boned the markets with the idea of more QE * This was a euro story - the dollar was only up against the euro * The New Zealand dollar was up 1.3% against the U.S. dollar * Gold was up 2% in terms of euros * Silver was up .15 in dollars despite the big jump in the dollar index * This lays more foundation for the Fed not to raise rates * At some point, I think the Fed will another round of QE * The reason Draghi suggested QE was over fears that inflation is too low * It is running at .9%, but according the ECB, the holy grail is 1.9% * Draghi was asked why he is spending so much money to raise inflation when he earlier said that low inflation is good for purchasing power * How does the ECB think they can pinpoint inflation to exactly 1.9%? * Draghi's answer was that low inflation makes debt harder to repay * What Draghi is saying is that it doesn't reduce debt enough * Why is it good to transfer wealth from creditors to debtors? * He also said that with low inflation, real wages will rise * Why is this a problem? Because the government artificially boosted wages in the first place expecting inflation to mitigate their true effect in the economy * What's really too high is not so much wages as labor costs, due to government mandates * We want workers to have higher wages in a free market based on their productivity * All that is undermined in the ECB's quest to generate inflation * Draghi also questions the accuracy of is numbers * Central bankers are trying to prop up the stock market and the government * The real debt the central banks want to wipe out is government debt * This is not what central banks are supposed t do, they're supposed to be independent * Another reason the U.S. market might have been strong is because of all the weak economic data that came out * Housing was stronger than expected, but everything else was pretty weak * The Chicago Fed National Activity Index, which was -.41 came in at -.37 - back to back bad months * Also leading economic indicators experience their biggest drop in almost 3 years to -.2 * Last month was also revised down * Also the Kansas City Fed Manufacturing Index negative again Privacy & Opt-Out: https://redcircle.com/privacy

22 Okt 201525min