The Peter Schiff Show Podcast

Retail Sales Down Three Months in a Row

I've got so much to talk about today, it's hard to even figure out where to begin.  So I'll start with some of the economic data that came out today, in particular, the February Retail Sales number. Remember last month we had a bad number, -.3, the second month in a row we had a decline in retail sales.  The expectation was for a big rebound in February, +.4. Now, I suppose the good news, if you are looking for retail sales to pick up is that they revised the January number upward from -.3 to -.1.  Still a drop, but not quite as big. But instead of getting a rebound, we got another drop! We got another .1% decline in February.  That's a trifecta. Three months in a row of falling retail sales. That hasn't happened in 6 years. This is pretty rare.

Great Jobs, Lousy Sales

Why is this happening? Remember on Friday, we got this "beautiful", too-good-to-be-true, just what the doctor ordered jobs report that said about a million people got jobs. Why didn't any of those million people take their paychecks and spend them at a retailer? Trump is talking about all the great jobs and all the raises that people are getting and all the tax cuts, why are retail sales down for 3 months in a row?

Spike in Inventory Numbers

In fact, we also got some inventory numbers that came out that spiked up because of an 18-month slump in sales.  So inventories are building because nobody is buying what's on the shelf. Well, that doesn't make sense if you believe the economy is great and we've got all these jobs. But if you're like me and you've been very skeptical of the economy being good, this is a validation, because Americans are broke.

Borrowing at Record Highs

This is despite the fact that borrowing is at a record high.  Consumers are borrowing a lot of money, yet they're not spending it on retailers, what are they doing with the borrowed money? The government is borrowing a lot of money, we're running these huge deficits, yet it is not even affecting retail sales. That is really the goal, they want people to go out and shop, and it's not happening.

Atlanta Fed Again Lowers Q1 GDP Estimate

After the retail sales numbers came out, we got the Atlanta Fed updating their forecast for Q1 GDP.  Remember, this is the forecast that was at 5.4% about 5 or 6 weeks ago.  Of course, you remember on my podcast, as soon as that came out, I said, "This is crazy.  There's no way we're going to be anywhere near that. They will be doing this limbo for weeks and months and they're going to be lowering the bar".  On Friday, I reported on my podcast that they has lowered the bar to 2.5%, the lowest forecast since they started forecasting Q1 for 2018.  And what I said on Friday was, "They aren't done going lower. there's room for this bar to go down". I said I thought that the GDP for Q1 would be under 2%.

Goldman Sachs Also Lowers Q1 GDP Forecast to 1.9%

Today, after these retail sales numbers, the Atlanta Fed went down to 1.9%. That is a decline of 65% in their forecast from 5 or 6 weeks ago.  It's not just the Atlanta Fed.  Goldman Sachs is now at 1.9%.  And you know what?  This is probably not the low water mark. I think there is at least a 50-50 shot that we end up with a zero handle on Q1 GDP.

Borrowing Q2 GDP Growth and Shoving it into Q1

Given how weak the data has been coming in, especially the big trade deficits.  The only reason we might end with a 1 handle and not a zero handle is these rising inventories.  In the short run, they give a boost to the GDP, but if inventories are rising because nobody is spending, what does that mean? That means that businesses are going to allow the inventories to wind down, they're not going to keep stocking up.  So what we're doing is we're borrowing GDP growth from Q2 and we're shoving it into Q1.

NASDAQ New High

The stock market had one of its best days of the year; I think it was the second best day.  The Dow was up 440 points - just under 1.8%.  The NASDAQ was up 132 points; about the exact same percentage as the Dow.  The NASDAQ is now at an all-time record high! It closed at 7,60.81. That is a new record. We have taken out the high from before the 10% correction.  The NASDAQ is the only major index that has done that.  That is not the case for the Dow, the S&P or even the Russell 2000, but the NASDAQ has taken off.

Optimism Around Stocks Not Affected by Tariffs

Remember I talked about this on my last podcast; people are trying to create the idea that these tariffs might be good for U.S. based companies, maybe some of our technology companies.  I don't know how people are trying to spin this thing, but there's a lot of optimism about the sector of the economy that people believe will be not affected by the tariffs. Maybe there is a narrower set of stocks that everybody wants to pile into, and those stocks are disproportionately in the NASDAQ.

Perfect Nonfarm Payrolls Report

But the catalyst today was the perfect Nonfarm Payroll Report that came out today.  If I were a conspiratorial person, which I am not, you could really say, "Wait a minute.  This looks too good to be true. This is just what the doctor ordered ."  Remember, last time we had the jobs report, even though the jobs number itself was weaker than expected, the markets were spooked by the bigger jump in wages.  In fact, a lot of people thought that the 2.9% YoY growth in wages, and I think the month number was up maybe +.3, that that was really the catalyst for the big sell-off  that we had.  In fact, that was the number that everybody was looking for; not maybe the headline number, but the wage number.  People wanted to confirm that wages were really growing.

Market Worries Boost in Employment Might Hike Wages Too Much

Trump, of course, every time he talks, he talks about the enormous growth in wages that is really not taking place, although, the President talks about a lot of things that aren't happening and claims credit for them.  But the market was worried that we might get a bigger boost in wages which might mean inflation is coming, maybe the Fed will have to raise rates 4 times, instead of 3 times.

Beautiful Statistics

But yesterday, I watched the President's speech, and I'll get to that later, when he talked about the tariffs.  One of the things he was talking about when he was talking about the statistics, and specifically he was talking about the jobs numbers and the unemployment numbers - he referred to the statistics as being "beautiful". Everything was perfect, we had record low numbers: African-American unemployment was down, unemployment rate the lowest in I don't know how many years, and he said, "These statistics are beautiful!" That is his new word to describe government employment statistics.

Phony, Fake, Fraud, a Joke, Fiction, a Hoax

Well he had different words to describe those identical statistics when he was a candidate, and beautiful wasn't among them.  The words that he used as a candidate when describing the government jobs numbers were: phony, fake, fraud, a joke, fiction, a hoax.  Those were the adjectives he used when he was a candidate.  Now he says the numbers are beautiful.

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

NASDAQ New High

The stock market had one of its best days of the year; I think it was the second best day.  The Dow was up 440 points - just under 1.8%.  The NASDAQ was up 132 points; about the exact same percentage as the Dow.  The NASDAQ is now at an all-time record high! It closed at 7,60.81. That is a new record. We have taken out the high from before the 10% correction.  The NASDAQ is the only major index that has done that.  That is not the case for the Dow, the S&P or even the Russell 2000, but the NASDAQ has taken off.

Optimism Around Stocks Not Affected by Tariffs

Remember I talked about this on my last podcast; people are trying to create the idea that these tariffs might be good for U.S. based companies, maybe some of our technology companies.  I don't know how people are trying to spin this thing, but there's a lot of optimism about the sector of the economy that people believe will be not affected by the tariffs. Maybe there is a narrower set of stocks that everybody wants to pile into, and those stocks are disproportionately in the NASDAQ.

Perfect Nonfarm Payrolls Report

But the catalyst today was the perfect Nonfarm Payroll Report that came out today.  If I were a conspiratorial person, which I am not, you could really say, "Wait a minute.  This looks too good to be true. This is just what the doctor ordered ."  Remember, last time we had the jobs report, even though the jobs number itself was weaker than expected, the markets were spooked by the bigger jump in wages.  In fact, a lot of people thought that the 2.9% YoY growth in wages, and I think the month number was up maybe +.3, that that was really the catalyst for the big sell-off  that we had.  In fact, that was the number that everybody was looking for; not maybe the headline number, but the wage number.  People wanted to confirm that wages were really growing.

Market Worries Boost in Employment Might Hike Wages Too Much

Trump, of course, every time he talks, he talks about the enormous growth in wages that is really not taking place, although, the President talks about a lot of things that aren't happening and claims credit for them.  But the market was worried that we might get a bigger boost in wages which might mean inflation is coming, maybe the Fed will have to raise rates 4 times, instead of 3 times.

Beautiful Statistics

But yesterday, I watched the President's speech, and I'll get to that later, when he talked about the tariffs.  One of the things he was talking about when he was talking about the statistics, and specifically he was talking about the jobs numbers and the unemployment numbers - he referred to the statistics as being "beautiful". Everything was perfect, we had record low numbers: African-American unemployment was down, unemployment rate the lowest in I don't know how many years, and he said, "These statistics are beautiful!" That is his new word to describe government employment statistics.

Phony, Fake, Fraud, a Joke, Fiction, a Hoax

Well he had different words to describe those identical statistics when he was a candidate, and beautiful wasn't among them.  The words that he used as a candidate when describing the government jobs numbers were: phony, fake, fraud, a joke, fiction, a hoax.  Those were the adjectives he used when he was a candidate.  Now he says the numbers are beautiful.

Continued Stock Market Volatility

The U.S. stock market continues to be extremely volatile, and as I have said many times on this podcast, I think this volatility following a long-term record lack of volatility is a good sign that the uptrend has changed.  So there's a good chance that the bull market is now a bear market, although few people seem to realize that.  We're still relatively close to the highs.  In fact, the NASDAQ shrugged off the morning weakness and managed to gain for the fourth day in a row.

Choosing the Best Seats on the Titanic

I'm actually hearing people commenting that tariffs or a trade war could benefit U.S. companies; give them an edge over the multinationals.  All this is wishful thinking.  Maybe they're trying to argue that there are some seats on the Titanic that are better than others. Believe me, if the economy tanks, and the tariffs or a trade war exacerbate it, there will not be a place to hide in U.S. stocks.

Market Spooked by Cohn Resignation

The volatility started last night with the announcement of the resignation of President Trump's Chief Economic Advisor Gary Cohn. One of the reasons that his resignation spooked the market (Dow futures initially tumbled about 400 points) was that he is opposed to the tariffs. The fact that he is leaving would leave people to believe Cohn has lost that argument internally at the White House, so he is leaving a path to which he has objected.  For people who were thinking that Cohn would rein in the President, and that his rhetoric will not lead to action, now believe that Trump will go forward with the tariffs. So that's why the market sold off.

NASDAQ Finished Positive for the Fourth Day in a Row

By the time we opened up, the futures had moved off their lows and for most of the day the Dow traded between down a little over 100 and down 300.  But we had a rally near the end of the day. The Dow closed down only about 82, and as I said earlier the NASDAQ finished positive for the fourth day.

Exemptions for Canada and Mexico Good News - For Canada and Mexico

Part of the news is that Trump is considering exempting Mexico and Canada from the tariffs.  That's supposedly good news; I guess it lessens the probability that those countries will retaliate, but of course, a large portion of the deficits that Trump is concerned about in steel and aluminum, that's where the deficits originate. So the markets rallied on that news.  Also the Canadian dollar and the Mexican peso rallied on that.

Mexico and Canada Will Have More Trading Partners

If these rumors are true, and you never know; the President can change his mind from tweet to tweet, but if, in fact, the tariffs are enacted, exempting Canada and Mexico, that is great news for Mexico and Canada.  They are going to benefit from these tariffs.  The U.S. economy will not. Mexico and Canada will be able to sell more steel and aluminum to American consumers at even higher prices. So they will benefit, just as domestic steel companies with benefit. Canadian and Mexican steel exporters can shop the entire world, whereas American manufacturers will be limited to North American sources.

 

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

Continued Stock Market Volatility

The U.S. stock market continues to be extremely volatile, and as I have said many times on this podcast, I think this volatility following a long-term record lack of volatility is a good sign that the uptrend has changed.  So there's a good chance that the bull market is now a bear market, although few people seem to realize that.  We're still relatively close to the highs.  In fact, the NASDAQ shrugged off the morning weakness and managed to gain for the fourth day in a row.

Choosing the Best Seats on the Titanic

I'm actually hearing people commenting that tariffs or a trade war could benefit U.S. companies; give them an edge over the multinationals.  All this is wishful thinking.  Maybe they're trying to argue that there are some seats on the Titanic that are better than others. Believe me, if the economy tanks, and the tariffs or a trade war exacerbate it, there will not be a place to hide in U.S. stocks.

Market Spooked by Cohn Resignation

The volatility started last night with the announcement of the resignation of President Trump's Chief Economic Advisor Gary Cohn. One of the reasons that his resignation spooked the market (Dow futures initially tumbled about 400 points) was that he is opposed to the tariffs. The fact that he is leaving would leave people to believe Cohn has lost that argument internally at the White House, so he is leaving a path to which he has objected.  For people who were thinking that Cohn would rein in the President, and that his rhetoric will not lead to action, now believe that Trump will go forward with the tariffs. So that's why the market sold off.

NASDAQ Finished Positive for the Fourth Day in a Row

By the time we opened up, the futures had moved off their lows and for most of the day the Dow traded between down a little over 100 and down 300.  But we had a rally near the end of the day. The Dow closed down only about 82, and as I said earlier the NASDAQ finished positive for the fourth day.

Exemptions for Canada and Mexico Good News - For Canada and Mexico

Part of the news is that Trump is considering exempting Mexico and Canada from the tariffs.  That's supposedly good news; I guess it lessens the probability that those countries will retaliate, but of course, a large portion of the deficits that Trump is concerned about in steel and aluminum, that's where the deficits originate. So the markets rallied on that news.  Also the Canadian dollar and the Mexican peso rallied on that.

Mexico and Canada Will Have More Trading Partners

If these rumors are true, and you never know; the President can change his mind from tweet to tweet, but if, in fact, the tariffs are enacted, exempting Canada and Mexico, that is great news for Mexico and Canada.  They are going to benefit from these tariffs.  The U.S. economy will not. Mexico and Canada will be able to sell more steel and aluminum to American consumers at even higher prices. So they will benefit, just as domestic steel companies with benefit. Canadian and Mexican steel exporters can shop the entire world, whereas American manufacturers will be limited to North American sources.

 

Trade, Comparative Advantage and Protectionism

I want to devote this entire podcast on the subject of trade and comparative advantage and protectionism, and this trade war that President Trump is so confident about.  He wants to declare war because he thinks we are going to win.  He's a winner, and he wants America to win and so he wants to launch a trade war so that America can win.

The Trade Deficit is the Problem

I've been talking about how the trade deficits are at record highs.  We have the biggest trade deficits ever and Donald Trump, when he was a candidate rightly criticized these trade deficits. They are a huge problem. They are endemic of an even bigger problem, and Trump understands that.  He knows enough to realize that trade deficits are bad. I will give him credit where credit is due because most economists don't even see the problem with these trade deficits. They are wrong. Trump is right. The trade deficit is a problem.

Tariffs Will Not Solve the Problem

But where Trump is wrong is in thinking that these tariffs are going to solve the problem.  They won't.  They will make the problem worse.  This is the irony of these tariffs.  They will result in larger trade deficits, not smaller trade deficits. And that's even without any foreign retaliation; meaning, if China, if Europe, if our trading partners do nothing in response to these tariffs, the result will be larger, not smaller deficits. Manufacturing jobs - the very jobs that Trump is hoping to save will be lost as a result of these tariffs.

Mr. Trump: Slash Regulations!

I wish someone in the Trump administration, would share this podcast with President Trump.  He needs to really this about economics, to understand what needs to be done.  If Trump really wants to shrink America's trade deficit, there are ways to do that. He could slash regulations, not just talk about all the regulations, but actually slash a bunch of them.

Shrink Government

But the most important thing that Trump could do to make America more competitive in manufacturing is to shrink government.  We need to cut government spending on a massive scale.  We need to reform entitlements. These are things that President Trump doesn't want to touch. He's making government bigger.  What we need is more savings. We need more capital investment in plant and equipment - but that's not happening. These larger deficits are going to crowd out what little investment we have.

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

Trade, Comparative Advantage and Protectionism

I want to devote this entire podcast on the subject of trade and comparative advantage and protectionism, and this trade war that President Trump is so confident about.  He wants to declare war because he thinks we are going to win.  He's a winner, and he wants America to win and so he wants to launch a trade war so that America can win.

The Trade Deficit is the Problem

I've been talking about how the trade deficits are at record highs.  We have the biggest trade deficits ever and Donald Trump, when he was a candidate rightly criticized these trade deficits. They are a huge problem. They are endemic of an even bigger problem, and Trump understands that.  He knows enough to realize that trade deficits are bad. I will give him credit where credit is due because most economists don't even see the problem with these trade deficits. They are wrong. Trump is right. The trade deficit is a problem.

Tariffs Will Not Solve the Problem

But where Trump is wrong is in thinking that these tariffs are going to solve the problem.  They won't.  They will make the problem worse.  This is the irony of these tariffs.  They will result in larger trade deficits, not smaller trade deficits. And that's even without any foreign retaliation; meaning, if China, if Europe, if our trading partners do nothing in response to these tariffs, the result will be larger, not smaller deficits. Manufacturing jobs - the very jobs that Trump is hoping to save will be lost as a result of these tariffs.

Mr. Trump: Slash Regulations!

I wish someone in the Trump administration, would share this podcast with President Trump.  He needs to really this about economics, to understand what needs to be done.  If Trump really wants to shrink America's trade deficit, there are ways to do that. He could slash regulations, not just talk about all the regulations, but actually slash a bunch of them.

Shrink Government

But the most important thing that Trump could do to make America more competitive in manufacturing is to shrink government.  We need to cut government spending on a massive scale.  We need to reform entitlements. These are things that President Trump doesn't want to touch. He's making government bigger.  What we need is more savings. We need more capital investment in plant and equipment - but that's not happening. These larger deficits are going to crowd out what little investment we have.

Second Consecutive 300-Point Drop in the Dow

The Dow Jones was down 380 points today, in fact this is the second consecutive 300-point drop we've had in the Dow. The Dow is now down about 4% for the month of February which just ended today.  This also means the Dow's record-breaking monthly winning streak has also come to an end.  Remember, the Dow was up every month since Donald Trump was elected President including every single month in calendar year 2017. That is something that has never happened in the history of the stock market. There has always been at least one month during any year where the market went down - except for last year, when it went up every month and it was also up in January.Not so in February.  Big decline. The Dow dropped better than 1000 points on the month. We'll see if this is the beginning of a much bigger downturn.  In fact, it could easily be the beginning of a bear market.

Powell's Congressional Testimony the Catalyst

The supposed catalyst for the sell-off yesterday and today was Powell's testimony before Congress yesterday.  He goes before the Senate tomorrow - he was in front of the House yesterday to give his talk about the economy. The Congressmen's questions are all self-serving.  They are all talking for their own constituents and nobody really cares what Jerome Powell says - except the market. The stock market is looking and caring about what he says.

Powell is Hawkish

What Powell said that spooked the markets - he was optimistic! He was hawkish - he was bullish on the economy. First of all, what do we expect?  He is on Team Trump, just as Ben Bernanke said he was a team player when he supported the economy under Bush.  So the Republican narrative is that the economy is great - everything is booming and Powell is going to toe that same line. But of course, when Powell speaks, the markets listen, and the markets didn't like that upbeat tone. It made them think, oh, we're going to keep getting rate hikes. Maybe we're going to get 4 rate hikes instead of 3 - and the stock market sold off.

Will Powell Try to Fix What He Broke?

It rallied again a little this morning; we were up over 150 I think early in the day, but all of the decline happened in the last hour of trading, as is typically the case with some of these sell-offs.  So it doesn't bode well for tomorrow. - Unless Jerome Powell tries to fix what he broke.

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy

Second Consecutive 300-Point Drop in the Dow

The Dow Jones was down 380 points today, in fact this is the second consecutive 300-point drop we've had in the Dow. The Dow is now down about 4% for the month of February which just ended today.  This also means the Dow's record-breaking monthly winning streak has also come to an end.  Remember, the Dow was up every month since Donald Trump was elected President including every single month in calendar year 2017. That is something that has never happened in the history of the stock market. There has always been at least one month during any year where the market went down - except for last year, when it went up every month and it was also up in January.Not so in February.  Big decline. The Dow dropped better than 1000 points on the month. We'll see if this is the beginning of a much bigger downturn.  In fact, it could easily be the beginning of a bear market.

Powell's Congressional Testimony the Catalyst

The supposed catalyst for the sell-off yesterday and today was Powell's testimony before Congress yesterday.  He goes before the Senate tomorrow - he was in front of the House yesterday to give his talk about the economy. The Congressmen's questions are all self-serving.  They are all talking for their own constituents and nobody really cares what Jerome Powell says - except the market. The stock market is looking and caring about what he says.

Powell is Hawkish

What Powell said that spooked the markets - he was optimistic! He was hawkish - he was bullish on the economy. First of all, what do we expect?  He is on Team Trump, just as Ben Bernanke said he was a team player when he supported the economy under Bush.  So the Republican narrative is that the economy is great - everything is booming and Powell is going to toe that same line. But of course, when Powell speaks, the markets listen, and the markets didn't like that upbeat tone. It made them think, oh, we're going to keep getting rate hikes. Maybe we're going to get 4 rate hikes instead of 3 - and the stock market sold off.

Will Powell Try to Fix What He Broke?

It rallied again a little this morning; we were up over 150 I think early in the day, but all of the decline happened in the last hour of trading, as is typically the case with some of these sell-offs.  So it doesn't bode well for tomorrow. - Unless Jerome Powell tries to fix what he broke.

Remembering Irwin Schiff

Today would have been my father, Irwin Schiff's 90th birthday. If you're not familiar with my father's story, and I'm sure most of the people who listen to this podcast are familiar with my father but if you're not go to schiffbooks.com and pick up a copy of "The Federal Mafia," which was one of only 2 books banned by the Federal Government.  We have a lot of books, "The Kingdom Moltz" a book that really shows off my father's sense of humor.  It's beautifully illustrated by an artist named Andy Ice.  I always liked that book as a kid. The book is very appropriate now, because it really explains inflation and where it comes from.  My dad's old website, paynoincometax.com is still up, which has an archive of his old radio shows that he did weekly from Las Vegas. If you listen to my Dad, you'll know what I'm coming from.  My dad talks a lot about economics.

Everything is Great!

But today, everything is great; Wall Street had a huge relief rally today; the Dow Jones was up almost 350 points, pretty much closing right on the highs of the day.  The NASDAQ had an even better day, by percentage, up 120 points.  The Dow was down on the week until today, but this big gain brought it up for the week.

Down Day in the Bond Market

I think the reason the market was so strong was we finally got a down day in the bond market. The yield on the 10-year treasury went back down. We closed at 2.871.  Remember, we got to 2.95, we almost got to 3% and now we're back down to 2.871 on the 30 year. We had gotten up to 3.22 a couple of days ago.  I think this took a lot of pressure off the stock market and people came in buying. "Everything is great; nothing to worry about!"

Commodities Strong Across the Board

The commodity market, though, was very strong across the board.  Look at the surprise strength in oil.  Everybody was talking about oil prices coming down - we're already back up to $63.50 and above. Almost back the the highs.  Oil prices are going a lot higher. It's not just oil prices that are going up; commodities in general.  I think we are in the early stages of another major boom in commodity prices.  We had a big boom that ended in 2008 with the financial crisis.  This is going to be a bigger boom, because it's not going to end in a financial crisis.  This is going to be a dollar crisis, which is music to the ears of the commodity markets because they're all priced in dollars.

 

 

 

Our Sponsors:
* Check out Fast Growing Trees and use my code GOLD for a great deal: https://www.fast-growing-trees.com
* Check out Plaud AI and use my code GOLD for a great deal: https://www.plaud.ai


Privacy & Opt-Out: https://redcircle.com/privacy