Wednesday, May 22, 2019

Peter Schiff: What's Going On With The GDP?

The Commerce Department released the first estimate of Q1 GDP growth on Friday. It came in higher than expected at 3.2%.

Somewhat surprisingly, the price of gold rose on the news and the dollar showed some weakness. The primary reason was presumably lower inflation. This means the Fed still has the excuse it needs to continue the Powell Pause.

There was also some data in the Commerce Department's report that reveals shakiness in that growth number. In fact, Peter Schiff said he thinks this will likely be the strongest growth of the year.

An increase in inventories helped drive Q1 growth. This isn't necessarily a positive trend. It could mean that consumers aren't buying, causing inventories to pile up. In fact, final sales to domestic purchasers increased by only 1.4%. That represents the smallest increase in more than three years.

Trade numbers also helped boost growth. Trade deficits were lower in Q1. Trade deficits were high in the last half of 2018. Peter said he thinks that's because a lot of companies front-loaded shipments late last year in an effort to avoid tariffs.

Paul Ashworth, chief US economist at Capital Economics said, "Under those circumstances, we continue to expect that overall growth will slow this year, forcing the Fed to begin cutting interest rates before year-end."

- Source, Seeking Alpha

Friday, May 17, 2019

Peter Schiff: Of Course You Know, This Means War

As I suspected on Friday's podcast, the 400-point reversal that saw the Dow move from down 300 points + to up 100 points on the close was in fact, reversed today, and the Dow Jones actually closed below the Friday low, which is a huge negative, technically for the index. 

The Dow was down 617 points; that's about 2.4 %. But the real carnage was in the NASDAQ. That was down 3.4%. The Russell 2000 also down better than 3% - 3.2%, showing that domestically focused stocks are actually getting hit harder than the multi-nationals.

- Source, Peter Schiff

Thursday, May 9, 2019

Peter Schiff: Raise the Voting Age, Not the Smoking Age

I hope everybody enjoyed their Easter holiday, in fact, today is Easter Monday, so many parts of the world are still celebrating, including here in Puerto Rico. 

We are still in the holiday of Passover, so hopefully everybody who celebrates Passover, myself included, is still enjoying that holiday. 

In fact, this year, the first night of Passover coincided with Good Friday; a rare occasion that unites the two religions. We generally end up celebrating both.

- Source, Peter Schiff

Sunday, May 5, 2019

Peter Schiff: April Fools Day Comes Late

Tax Day, or as my father, Irwin Schiff used to say, "April Fool's Day". My father thought it was April Fool's Day because he believed that that was the day on which Americans basically voluntarily paid a tax that no law required them to pay and voluntarily filed a 1040 tax form that no law required them to file. 

Of course, my father ultimately went to jail and died and jail because of those beliefs. I have been paying my taxes, although now that I live in Puerto Rico it's not nearly as painful as it used to be when I lived in Connecticut.

- Source, Peter Schiff

Wednesday, May 1, 2019

Peter Schiff: Political Theater of the Absurd

I began yesterday's podcast by pointing out the weakness in shares of the recent IPO of Lyft. 

In fact, I mentioned that Friday's close above the IPO price (the first time it closed above that price since the day of the IPO) the fact that it couldn't hold on to that rally, I thought that meant the stock looked even weaker, technically. 

And we got a big follow through today. Lyft sank about 11%, it closed near the lows of the day, 60.12. In fact, we did trade as low as 59.75 on the closing minutes of trading. 

We're now down about 32% from the opening print, after it went IPO on that day. 

We're 17-18% below the IPO price. If you happen to get the IPO price and you still have the stock, you're almost in a bear market from that purchase price.

- Source, Peter Schiff

Saturday, April 27, 2019

Trump Puts QE4 in Play

Stock market in the U.S. continued to grind higher today, although I still believe that this is a bear market rally. The Dow added a little better than 40 points; the NASDAQ up about 47, so a bigger percentage gain there. 

The S&P was up about 13 points. This was following the release of the March Nonfarm Payrolls numbers - aka the Jobs Report. There was a lot of hope that we would see a rebound in the month of March. 

Remember, in February, they initially reported just 20,000 jobs created, which was well short of what had been expected. It was probably something close to 200,000 jobs. 

And the consensus for March was for 170,000 jobs and we actually got 196,000 jobs.

- Source, Peter Schiff

Tuesday, April 23, 2019

Peter Schiff: Democracy has Failed, Not Capitalism

I agree that wealth inequality is a problem, but it is a problem that is created by government - created by the Federal Reserve. 

I was warning years ago, when the Federal Reserve first launched Quantitative Easing, that this was going to happen! 

This policy would only benefit assets at the expense of the overall economy. I've been warning about this for years. The government is doing this, not the market. 

So, yes, I want the government to do something about wealth inequality by getting out of the way. I want Capitalism to do something about inequality. 

Now, of course, there's always going to be inequality - that's part of capitalism. 

People are not going to be equal, because peoples' contributions are not equal. 

What is not normal right now is the extent of the disparity. That extreme inequality is not a function of Capitalism. If we enjoyed Capitalism, there would be less inequality.

- Source, Peter Schiff

Friday, April 12, 2019

Peter Schiff: US Economy Not As Strong As Wall Street and the MSM Pretend

Economist Peter Schiff joins me to talk about assertions that he’s “bad for TV”, Jerome Powell’s recent rate capitulation, the state of the gold market, why he thinks the gold standard will eventually come back, why the dollar will collapse, the sorry ass state of the financial media, the Joe Rogan podcast and his take on Trump and the Russian collusion story.

- Source, Quoth the Raven

Monday, April 8, 2019

We're Not Borrowing Ourselves Rich, We're Borrowing Ourselves Broke

Peter Schiff has been saying that despite the recent stock market rally and all of the optimism about an end to the trade war, a recession is a done deal. There is plenty of economic data to back up despite the recent economic growth. In his most recent podcast, Peter Schiff said that while the GDP number might look pretty good, the growth is unsustainable because it's all built on debt.

Last week, we got the first look at Q4 GDP. It came in slightly stronger-than-expected with a rise of 2.6%, on an annual basis. That compares to trade expectations of a rise of around 2.2%. If that holds, total 2018 GDP may well come in at Trump's target of 3%. This would be the biggest GDP number since 2005.

But Peter put this into a little different perspective. Consider this: in 2005, the national debt increased by $554 billion. That borrowing "purchased" 3.5% economic growth. In fiscal 2018, the national debt increased by $1.27 trillion. That's more than double the debt increase of 2005.

So, we had to add a lot more debt in 2018 to buy not as much growth as a much smaller amount of debt in 2005. So, the takeaway from that is this is unsustainable because the growth came at a heavy cost. We had to increase the amount of debt that we had by a lot more than the percentage that the economy grew."

And of course, it's not just government debt. Household debt is also at record levels.

As Peter put it, "We're not richer because of this economic growth."

If your debt is growing faster than your economy, then you're not getting richer. You're getting poorer. You would have been better off without the debt and without the growth … We're borrowing ourselves into poverty. We're not borrowing ourselves rich. We're borrowing ourselves broke."

There's another problem with the growth in Q4 2018. It may well have come at the expense of growth in Q1 2019. Mike Maharrey talked about this in last week's Friday Gold Wrap podcast, noting that US wholesale inventories posted their largest gain in more than five years. Inventories are factored into GDP. That likely gave Q4 a boost. But a pileup of goods in warehouses means people aren't buying.

The consumer spending number for December released last week bears this out. It was down 0.5.

Meanwhile, personal income was up. This could mean Americans are saving. If so, it would be the first time that's happened at this level since the Great Recession.

Analysts are trying to figure out what the numbers mean. Peter had a pretty simple explanation. Americans have stopped spending because they're broke.

They've already borrowed so much money to pay for the spending of the past that they're just done. That expression, 'Shop 'till you drop,' well, maybe a lot of Americans have finally dropped and they're no longer shopping."

This could be a bad sign that Americans are at the end of their rope...

- Source, Seeking Alpha

Thursday, April 4, 2019

Peter Schiff: Powell Puts It to Congress

This year Fed chairman Jerome Powell made his obligatory visit to Capital Hill, where he spoke to Senators and Representatives about monetary policy.

Of course, this really just amounts to a press conference for Democrats and Republicans to either talk up the economy or talk down the economy, depending on who's got the White House. 

Trump is the President, so you have a lot of Democrats trying to talk about why the economy is actually weak and trying to get the Fed Chairman to say something negative about the economy, or negative about President Trump. 

And, of course you have the Republicans trying to get Powell to validate how great the economy is, and how Trump's policies are helping the economy.

- Source, Peter Schiff

Sunday, March 31, 2019

Peter Schiff: Are Debt Laden Consumers Finally Tapped Out?

The Dow Jones started off the final day of the week with a pretty strong rally; we were up a little better than 200 points earlier in the day. Then we got some weaker than expected economic data which I will get to a bit later, and the market sold off. 

The Dow never quite went negative, and then we rallied back and the Dow managed to end the week back above 26,000 with a 110 point gain. In fact all of the major indexes were positive on the day. 

What caused the early morning rally was optimism, once again, that a trade deal with China is about to be signed, and it's kind of amazing how often the markets can bite on this and keep rallying on regurgitated news, because, we've heard this before.

- Source, Peter Schiff