The Peter Schiff Show Podcast

A Huge Risk-On Day

The markets rallied all over the world.  Everything was up. All the foreign markets - European markets, Asian markets, rallied.  It was a huge risk-on day. Stocks went up and bonds got clobbered. Yields rose on government bonds, the 10-yr. out to the 30-yr.

Insurance Rates Going Up

There will be a lot of pressure on insurance companies to pay claims for both recent hurricanes and where's that money coming from? It's got to come from the markets.  It is just not sitting there in a piggy bank. It is invested in stocks and bonds, so if they are going to pay claims, you would think that is a negative for the financial market as the insurance companies have to liquidate some of their portfolios, but not today!

Big Move Down for Gold

Risk-on, so you get rid of your safe assets, although I don't know why anyone would consider Treasuries safe, but everybody sold treasuries and bought U.S. stocks. They sold gold.  Gold was down $19 today. This is the biggest one day move I've seen in a while.  In fact, this $19 down move - gold has been moving up steadily to $1350 last week. I don't think I have ever seen a $19 up day.

Gold's Steady Climb

Gold's been going up slowly.  $5, $7, $3; maybe there was one $10 day, I think, but it has been a very slow, steady climb on a wall of worry.  And now, all of a sudden, we have a day where everybody is excited because the hurricane didn't do as much damage as it could have, and they all buy stocks. They dump gold and it goes down $19 in one day. Gold had been climbing before the hurricanes came around. and I don't think any of that gain was necessarily the result of the hurricanes.  Had none of these hurricanes happened, gold could have been exactly where it was before today.  Gold was rallying anyway.

Trump said Government was Too Stupid

When Donald Trump was originally elected President, I was out there warning, that budget deficits under the Trump Presidency are going to be huge.  Donald Trump never ran as a fiscal conservative or a Libertarian.  He didn't say government was too big, he just said it was too stupid. He promised just to be smarter. He didn't say he would make government smaller, only that he would make it more efficient. He would do a better job of using big government than politicians who have held the office before him.

Trump Promised More Spending

So it was my feeling that a Trump Presidency was going to result in increasing the budget deficits that would be necessary to finance a bigger government.  Also, Donald Trump never promised to cut government spending; cut entitlements.  In fact, he promised the opposite.  He promised not to touch entitlements, to allow them to continue to expand. He promised to spend more money on the military, more money on our vets, more money on infrastructure, more money to build a wall.  So I knew all of this would result in bigger deficits.

"Gentlemen's Agreement" to Raise the Debt Ceiling

But now, my suspicions have been confirmed. Now we have news that Donald Trump has basically made a "gentlemen's agreement" with Chuck Schumer to repeal the debt ceiling completely. There has been some debate again about raising the debt ceiling, we have this charade every year or so, where everybody pretends that they might not raise the ceiling and they raise it anyway.  We had a similar political theater going on until Donald Trump cut a deal with the Democrats to extend the last suspension of the debt ceiling for another 90 days. That's when we found out that they had also been working on this deal to eliminate the ceiling altogether.

Never Really Paying Off Bills

In recent years, the political spin has always been that lifting the debt ceiling is the politically, fiscally responsible thing to do.  That America always pays her bills, and because we always pay our bills, we have to raise the debt ceiling. Ironically, they have it backwards.  The reason they have to raise the debt ceiling is because America never pays her bills. If we paid our bills, we wouldn't have any debt.

Debt Ceiling was a Brake on Government Spending

What government wants to do is to continue to not pay the bills; to continue to borrow the money so that we can pretend to pay the bills.  And the obstacle to increase debt is the debt ceiling. Of course, we always raise that ceiling every time we approach it, but the fact that the ceiling is there, must provide some type of brake on government spending.

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Trump said Government was Too Stupid

When Donald Trump was originally elected President, I was out there warning, that budget deficits under the Trump Presidency are going to be huge.  Donald Trump never ran as a fiscal conservative or a Libertarian.  He didn't say government was too big, he just said it was too stupid. He promised just to be smarter. He didn't say he would make government smaller, only that he would make it more efficient. He would do a better job of using big government than politicians who have held the office before him.

Trump Promised More Spending

So it was my feeling that a Trump Presidency was going to result in increasing the budget deficits that would be necessary to finance a bigger government.  Also, Donald Trump never promised to cut government spending; cut entitlements.  In fact, he promised the opposite.  He promised not to touch entitlements, to allow them to continue to expand. He promised to spend more money on the military, more money on our vets, more money on infrastructure, more money to build a wall.  So I knew all of this would result in bigger deficits.

"Gentlemen's Agreement" to Raise the Debt Ceiling

But now, my suspicions have been confirmed. Now we have news that Donald Trump has basically made a "gentlemen's agreement" with Chuck Schumer to repeal the debt ceiling completely. There has been some debate again about raising the debt ceiling, we have this charade every year or so, where everybody pretends that they might not raise the ceiling and they raise it anyway.  We had a similar political theater going on until Donald Trump cut a deal with the Democrats to extend the last suspension of the debt ceiling for another 90 days. That's when we found out that they had also been working on this deal to eliminate the ceiling altogether.

Never Really Paying Off Bills

In recent years, the political spin has always been that lifting the debt ceiling is the politically, fiscally responsible thing to do.  That America always pays her bills, and because we always pay our bills, we have to raise the debt ceiling. Ironically, they have it backwards.  The reason they have to raise the debt ceiling is because America never pays her bills. If we paid our bills, we wouldn't have any debt.

Debt Ceiling was a Brake on Government Spending

What government wants to do is to continue to not pay the bills; to continue to borrow the money so that we can pretend to pay the bills.  And the obstacle to increase debt is the debt ceiling. Of course, we always raise that ceiling every time we approach it, but the fact that the ceiling is there, must provide some type of brake on government spending.

Threats from Hurricane Irma and North Korea

After a long holiday weekend the DJIA fell 234 points this Tuesday.  Finally we have some kind of negative reaction in the stock market to the bad news.  Over the weekend we got news that North Korea had successfully tested a hydrogen bomb, and now we know that Hurricane Irma, which is now listed as a category 5 hurricane, is one of the biggest, if not the biggest hurricane ever in the Caribbean.

Anything Can Happen

It looks like it is going to go right by Puerto Rico; for those who may be concerned about me, I am Connecticut now, so my family and I are not on the island, but we certainly have property there and we are also very concerned about our neighbors and the people of Puerto Rico. It is not likely to be a direct hit, but anything can happen.  It is projected to pass Puerto Rico Wednesday afternoon.

Irma Threatens Caribbean Islands on Heels of Hurricane Harvey

The people of the Virgin Islands are going to suffer a similar fate.  There are other Caribbean islands that will not be as fortunate; the hurricane is going to go right over them.  Who knows where it is going to go after that? There is a state of emergency in Miami, in the keys, from Key West all the way to Key Largo. It is a massive hurricane with lots of potential damage on the heels of Hurricane Harvey.

We're Broke

And you know what? We're broke. Harvey is almost a $200 billion price tag, and I don't know what Irma will be, because the government will have to bail out Puerto Rico and the U.S. Virgin Islands. There is no way the government can deny them relief - they are American citizens.  There was a lot of opposition to a Puerto Rican debt bailout but no one will be against giving money to Puerto Rico as a result of the hurricane.

Hurricane Aid for Puerto Rico instead of a Bailout

In fact, this could end up being a bonanza for Puerto Rico. They could end up getting a massive amount of aid all disguised as hurricane aid. They are talking now about power being out for 4-6 months in parts of the island because the government has so under-invested in the infrastructure - the government-owned power company.  Maybe Puerto Rico will get a bunch of money in order to re-build that infrastructure as part of the hurricane bail-out money. So money they could not get from Congress because of fiscal troubles may come through another channel.

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Threats from Hurricane Irma and North Korea

After a long holiday weekend the DJIA fell 234 points this Tuesday.  Finally we have some kind of negative reaction in the stock market to the bad news.  Over the weekend we got news that North Korea had successfully tested a hydrogen bomb, and now we know that Hurricane Irma, which is now listed as a category 5 hurricane, is one of the biggest, if not the biggest hurricane ever in the Caribbean.

Anything Can Happen

It looks like it is going to go right by Puerto Rico; for those who may be concerned about me, I am Connecticut now, so my family and I are not on the island, but we certainly have property there and we are also very concerned about our neighbors and the people of Puerto Rico. It is not likely to be a direct hit, but anything can happen.  It is projected to pass Puerto Rico Wednesday afternoon.

Irma Threatens Caribbean Islands on Heels of Hurricane Harvey

The people of the Virgin Islands are going to suffer a similar fate.  There are other Caribbean islands that will not be as fortunate; the hurricane is going to go right over them.  Who knows where it is going to go after that? There is a state of emergency in Miami, in the keys, from Key West all the way to Key Largo. It is a massive hurricane with lots of potential damage on the heels of Hurricane Harvey.

We're Broke

And you know what? We're broke. Harvey is almost a $200 billion price tag, and I don't know what Irma will be, because the government will have to bail out Puerto Rico and the U.S. Virgin Islands. There is no way the government can deny them relief - they are American citizens.  There was a lot of opposition to a Puerto Rican debt bailout but no one will be against giving money to Puerto Rico as a result of the hurricane.

Hurricane Aid for Puerto Rico instead of a Bailout

In fact, this could end up being a bonanza for Puerto Rico. They could end up getting a massive amount of aid all disguised as hurricane aid. They are talking now about power being out for 4-6 months in parts of the island because the government has so under-invested in the infrastructure - the government-owned power company.  Maybe Puerto Rico will get a bunch of money in order to re-build that infrastructure as part of the hurricane bail-out money. So money they could not get from Congress because of fiscal troubles may come through another channel.

Nonfarm Payroll Report Fails to Impress

Today is the first Day of September; and since it is the first day of a new month, and it is a Friday, we got the nonfarm payroll report. The consensus forecast was about 180,000 jobs.  The number came in at 156,000, well below the consensus. To make it worse, they revised down the prior 2 months by about 20,000 jobs each. The unemployment rate notched up from its 16-year low.  When Donald Trump, the candidate called 5% unemployment the greatest hoax on the American people, well, it's got to be an even greater hoax, now that it is 4.4%.

Donald Trump's Huge Reversal

I just put up a video on my YouTube channel, Donald Trump's Huge Reversal. I juxtaposed a lot of clips of Candidate Trump with President Trump. Candidate Trump talked about how terrible the economy and how the numbers are so phony and now he is embracing those same numbers, and of course it is the same with the stock market, calling it a big, fat ugly bubble. The stock market today continued to strengthen throughout the week, including in the aftermath of this weaker than expected nonfarm payroll number.

Some Silver Linings

Labor force participation held steady at 62.9, still very low. Average hourly earnings, which happened to be up .3% last month, the biggest gain we've seen in a while, in August it was up ,1% ; vert meager increases in average hourly earnings.  A lot of that may have to do with the higher minimum wages - just talking about minimal amounts of money here.  The average work week actually ticked down from 34.5 hours  to 34.4 hours, so Americans working slightly more hours and getting barely more money.

Is This The Beginning of a New Trend?

This was a relatively weak report; there were 2 bright spots; there was that there was a decline in government workers and a better than expected increase in manufacturing. We did see an increase of 36,000 manufacturing jobs; a lot more than the expected 9,000. We do have a 2-month jump in manufacturing jobs. The question is, "Is this the beginning of a new trend?"

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Nonfarm Payroll Report Fails to Impress

Today is the first Day of September; and since it is the first day of a new month, and it is a Friday, we got the nonfarm payroll report. The consensus forecast was about 180,000 jobs.  The number came in at 156,000, well below the consensus. To make it worse, they revised down the prior 2 months by about 20,000 jobs each. The unemployment rate notched up from its 16-year low.  When Donald Trump, the candidate called 5% unemployment the greatest hoax on the American people, well, it's got to be an even greater hoax, now that it is 4.4%.

Donald Trump's Huge Reversal

I just put up a video on my YouTube channel, Donald Trump's Huge Reversal. I juxtaposed a lot of clips of Candidate Trump with President Trump. Candidate Trump talked about how terrible the economy and how the numbers are so phony and now he is embracing those same numbers, and of course it is the same with the stock market, calling it a big, fat ugly bubble. The stock market today continued to strengthen throughout the week, including in the aftermath of this weaker than expected nonfarm payroll number.

Some Silver Linings

Labor force participation held steady at 62.9, still very low. Average hourly earnings, which happened to be up .3% last month, the biggest gain we've seen in a while, in August it was up ,1% ; vert meager increases in average hourly earnings.  A lot of that may have to do with the higher minimum wages - just talking about minimal amounts of money here.  The average work week actually ticked down from 34.5 hours  to 34.4 hours, so Americans working slightly more hours and getting barely more money.

Is This The Beginning of a New Trend?

This was a relatively weak report; there were 2 bright spots; there was that there was a decline in government workers and a better than expected increase in manufacturing. We did see an increase of 36,000 manufacturing jobs; a lot more than the expected 9,000. We do have a 2-month jump in manufacturing jobs. The question is, "Is this the beginning of a new trend?"

$1,300 Was a Coiled Spring Beneath the Market

We've been flirting with that $1300 level all year; I've been talking about all the resistance that was up there and every time the price of gold got near $1300 it was met with a tremendous amounts of selling, there was a lot of supply.  But as I have been saying on this podcast, the demand was building. It was a coiled spring beneath the market. The channel was narrowing.  The distance between the $1300 resistance and the support kept getting narrower and narrower.  I thought it was only a matter of time before we exhausted that supply and broke through that psychological $1300 level.

The Rally Held Firm All Day

Gold is up about $18-19 on the day; we closed at about $1310.  Finally, I think, there were people who were worried it wouldn't hold that level, people were thinking that we would sell off so we wouldn't quite get a close above $1300, we'd just get a trade above $1300. But the rally held firm all day long.  We actually closed on the highs of the day. In fact, as I am recording this, the price of gold is taking another jump.  Maybe it is the missile North Korea fired that went through Japanese airspace.  We're tacking on another  $10-11; we're now trading above $13.20.

The Dollar Is Now a Risk Asset

The dollar continued its weakness.  It is one of the reasons that gold continues to be strong. The dollar index made new lows today, down around 92.20, and looking at the action so far in the early evening. The dollar is not benefitting at all from this flight to quality. We're seeing a big rise in the Japanese Yen, a big rise in the Swiss franc.  Those are the go-to currencies.  The dollar is now a risk asset. People don't buy the dollar when they're worried, they sell the dollar when they're worried. Even the Chinese Yuan - new high for the year.

Gold Now Going Up in Terms of Everything

Of course gold, now, is not only rising in terms of dollars, but finally rising in terms of everything. Gold is going up in yen terms, it's going up in Swiss franc terms, even though those currencies are rising as well.  This is a key factor, and I think now that we have cleared out that resistance, there are a lot of people who thought there is no upside in gold.  Well they're about to find out just how much upside there is.

 

 

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$1,300 Was a Coiled Spring Beneath the Market

We've been flirting with that $1300 level all year; I've been talking about all the resistance that was up there and every time the price of gold got near $1300 it was met with a tremendous amounts of selling, there was a lot of supply.  But as I have been saying on this podcast, the demand was building. It was a coiled spring beneath the market. The channel was narrowing.  The distance between the $1300 resistance and the support kept getting narrower and narrower.  I thought it was only a matter of time before we exhausted that supply and broke through that psychological $1300 level.

The Rally Held Firm All Day

Gold is up about $18-19 on the day; we closed at about $1310.  Finally, I think, there were people who were worried it wouldn't hold that level, people were thinking that we would sell off so we wouldn't quite get a close above $1300, we'd just get a trade above $1300. But the rally held firm all day long.  We actually closed on the highs of the day. In fact, as I am recording this, the price of gold is taking another jump.  Maybe it is the missile North Korea fired that went through Japanese airspace.  We're tacking on another  $10-11; we're now trading above $13.20.

The Dollar Is Now a Risk Asset

The dollar continued its weakness.  It is one of the reasons that gold continues to be strong. The dollar index made new lows today, down around 92.20, and looking at the action so far in the early evening. The dollar is not benefitting at all from this flight to quality. We're seeing a big rise in the Japanese Yen, a big rise in the Swiss franc.  Those are the go-to currencies.  The dollar is now a risk asset. People don't buy the dollar when they're worried, they sell the dollar when they're worried. Even the Chinese Yuan - new high for the year.

Gold Now Going Up in Terms of Everything

Of course gold, now, is not only rising in terms of dollars, but finally rising in terms of everything. Gold is going up in yen terms, it's going up in Swiss franc terms, even though those currencies are rising as well.  This is a key factor, and I think now that we have cleared out that resistance, there are a lot of people who thought there is no upside in gold.  Well they're about to find out just how much upside there is.

 

 

The Joe Rogan Experience Podcast

I appeared the Joe Rogan Experience Podcast while on my trip this week to the West Coast. I first appeared on his show about 3 years ago, and since then the popularity of his podcast has really exploded. A couple of million have already listened to my most recent appearance.  I was on for 3 hours and I did almost all of the talking.

Huge Reaction to Minimum Wage Discussion

If you look at the YouTube video you'll see a tremendous amount of reactions, both positive and negative, which is a far greater reaction than the show usually gets. I could have set the record on thumbs down but I got more than 3 times the number of thumbs up. If you read the comments, many people are attacking me for being "mean" because I am against the minimum wage.

Why Am I Against the Minimum Wage?

This is the typical liberal reaction when they encounter someone who disagrees with the liberal agenda. They think I am out of touch, that I don't understand, I'm heartless, and they get so upset at me because they think I am a really bad guy. After all, only a really bad guy would want to exploit poor people by paying low wages. It would not dawn on them to think about why I am against the minimum wage.

Against Government Mandated Unemployment

I am not against people earning money; I am against mandated unemployment. I am against the government preventing people from acquiring the skills that would enable them to earn a lot more than the minimum wage in the future.  Liberals don't consider any consequences - it's all about how good they feel about themselves. "Who actually cares about the consequences of this law, just as long as I can feel morally superior to anyone who doesn't support the minimum wage law?"

For Entry-Level Jobs that Provide Value to Employer

I did explain that, but apparently it went right over their heads. I am trying to explain that the minimum wage law leads to more unemployment because it causes people with low skills to lose the opportunity to move up in the workforce through entry-level jobs that provide value for the employer.

 

 

 

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