The Peter Schiff Show Podcast

The U.S. dollar started out this morning on the defensive

Government released CPI numbers generated a sharp reversal across the board

Gold sold off, but closed slightly down against the dollar

April CPI up just .1% on the month; year over year prices dropped -.2%

Lowest CPI since October 2009

Core CPI (excludes food & energy) rose .3%

Biggest monthly jump since March 2006

News sent dollar up on anticipation that rate hike will be more likely

Inflation benchmark is just as real as the 6-1/2% unemployment goal

Traders still haven't figured out that if we ever approach the goal, it will be moved

Biggest factor within the .3% rise in the Core was +.7% in health care costs

Biggest increase since January 2007 - prior to Obamacare

Rising costs will slow consumer spending, weakening the economy and undermining employment

Yellen in a press conference today did not actually project a rate hike

It's all about extend and pretend; actually postponing the rate hike will buy the Fed some time before launching QE4

Increased inflation as the economy cools down means stagflation

The media is spinning increased inflation as good news

Bad economic news released yesterday:

Unemployment numbers came out higher

Fewer hires mean fewer fires

Chicago Fed National Activities Index came in at -.15

Three month moving average down to -.23

MAY PMI expected to rise to 54.6 unexpectedly declined to 53.8 - lowest lever in 16 months

Bloomberg Consumer Comfort Index continued to slide from 43.5 to 42.4

May Philadelphia Fed looked for a bounce back to 8; missed expectations with 6.7

Missed expectations 5 out of the last 6 months

Existing Home Sales expected improvement over March; dropped to 5.04 million

Kansas City Federal Reserve Manufacturing Index missed expectations at -13; dropping for 5 consecutive months

Economic data as bad as 2009 and inflation is getting worse

Janet Yellen acknowledged underlying issues with unemployment number, mentioned discouraged and part-time workers

Labor Force Participation Rate is not improving

Low-skilled jobs in jeopardy with minimum wage hikes

$15/hr fever will further hurts employment and erodes the tax base

Higher minimum wage will transform workforce because employers will hire better workers for the higher wages

Movement will substitute technology for labor costs

Minimum wage hikes will undermine the economic recovery that Janet Yellen pretends is existing

So she can continue to pretend that the Fed's monetary policy is working

And she can pretend that they can actually raise interest rates

In the unlikely event Yellen tests a rate hike, they will have to acknowledge that they were wrong

The Fed can always blame the data for deciding not to raise rates and therefore save face

* Earlier today latest FOMC minutes released

* Once again the weather is blamed for missed expectations, pretending the economy is better than it is

* Now the Fed dismiss numbers as inaccurate, because seasonal adjustments are off

* Why does the government need to seasonally adjust the numbers

* Yearly GDP is the number that matters

* Once the numbers begin adjusting the numbers you open the floodgates to manipulation and subjectivity

* Wall Street analysts tend to be more optimistic for the first quarter

* Studies show that Consumers spend most money in Q4; by the following Q1 consumers are taking a break

* Same studies show Q2 is usually stronger

* Why does the government have to come back with a new GDP measurement in order to come up with a bigger number?

* To come up with low unemployment numbers they find ways to under-calculate the unemployed and count under-employed

* Analysts are discounting weak data and expecting eventual rate hikes

* The Fed is denying the weak economy not because they want to raise rates, but because they can't admit that their monetary policy has failed

* Mixed economic data came out this week

* Housing Market Expectation Index dropped from 56 in April to 54 in May - missing estimates for fifth time in 6 months

* Housing Starts surged to 6 or 7-year high

* Lingering optimism for a recovery

* Walmart came in far below estimates, attributing miss to the strong dollar

* Walmart is a net importer, so the strong dollar should work in its favor

* Big drop in gasoline prices in Q1 did not provide a boost for Walmart because the underlying economy is weak

* Los Angeles is the largest city in the country to pass the $15/hr minimum wage

* They staggered the increase over 5 years, so adverse effects will not be directly attributed to those who voted for the increased minimum wage

* It will be difficult to measure decisions not to hire as a result of the minimum wage

* The $15/hr minimum wage makes it illegal to hire low-skilled workers for less, preventing them from gaining skills in order to earn more later

* We're hiring at Schiff Gold - If you are interested contact Matthew Malleo 800-465-3160

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Earlier today latest FOMC minutes released

Once again the weather is blamed for missed expectations, pretending the economy is better than it is

Now the Fed dismiss numbers as inaccurate, because seasonal adjustments are off

Why does the government need to seasonally adjust the numbers

Yearly GDP is the number that matters

Once the numbers begin adjusting the numbers you open the floodgates to manipulation and subjectivity

Wall Street analysts tend to be more optimistic for the first quarter

Studies show that Consumers spend most money in Q4; by the following Q1 consumers are taking a break

Same studies show Q2 is usually stronger

Why does the government have to come back with a new GDP measurement in order to come up with a bigger number?

To come up with low unemployment numbers they find ways to under-calculate the unemployed and count under-employed

Analysts are discounting weak data and expecting eventual rate hikes

The Fed is denying the weak economy not because they want to raise rates, but because they can't admit that their monetary policy has failed

Mixed economic data came out this week

Housing Market Expectation Index dropped from 56 in April to 54 in May - missing estimates for fifth time in 6 months

Housing Starts surged to 6 or 7-year high

Lingering optimism for a recovery

Walmart came in far below estimates, attributing miss to the strong dollar

Walmart is a net importer, so the strong dollar should work in its favor

Big drop in gasoline prices in Q1 did not provide a boost for Walmart because the underlying economy is weak

Los Angeles is the largest city in the country to pass the $15/hr minimum wage

They staggered the increase over 5 years, so adverse effects will not be directly attributed to those who voted for the increased minimum wage

It will be difficult to measure decisions not to hire as a result of the minimum wage

The $15/hr minimum wage makes it illegal to hire low-skilled workers for less, preventing them from gaining skills in order to earn more later

We're hiring at Schiff Gold - If you are interested contact Matthew Malleo 800-465-3160

* S&P responds to bad news with new high; DJ just barely off record high

* Dollar continues to fall

* The currency traders still have not accepted the significance of bad news

* Lower dollar will be the trend

* Friday got a trifecta of bad economic news

* Thursday Weekly Jobless Claims number declined to 264,000 - lowest weekly jobless claims in 42 years

* Why are there so few job losses? Because so few people are getting hired

* Government numbers come from the Birth/Death Model, which assumes a certain number of businesses created each month

* What if these businesses are not actually created?

* This would explain lower number of unemployment claims

* There's no way we can say that the economy is the best it has been in 42 years

* Empire State Manufacturing Index, which was weak last month, expected to be +5, came in at 3.09; below estimate for the 4th month in a row

* Both Business Expectations and Hiring declined from April to May

* Industrial Production Capacity Utilization was expected to be flat; down again .3%

* This is not the 5th consecutive monthly decline in Industrial Production; longest losing streak since 2009

* Consumer Sentiment Number 95.9 in April - expected to hold steady - came in at 88.6; biggest drop since December 2012, and biggest miss ever

* If the job market is so strong, why is confidence plunging?

* The percentage of employees who fear losing their jobs is at highest level since March of 2009

* The bubble is rapidly deflating

* Unofficially, I think we have been in recession for the entire "recovery"

* The government is not accurately measuring inflation in the GDP deflator

* The Fed has not forecast a single recession

* Recessions always happen contrary to forecasts

* If we are in a recession there can not be a rate hike

* At some point they are going to have to acknowledge that the numbers are not accurate

* The unemployment rate is going to have to tick up at soe point this year

* At some point after the end of the quarter it will become obvious that there is no rate hike coming

* The only question is, What is the Fed going to do?

* The Fed has not managed to shrink the balance sheet, and further QE will take the deficit to a whole new level

* This will put massive downward pressure on the dollar

* Oil prices will spike

* Cheap gas prices did not create a bounce in Q1

* Consumer Confidence will plunge

* Reality is finally going to set in on the failure of the Fed monetary policy


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S&P responds to bad news with new high; DJ just barely off record high

Dollar continues to fall

The currency traders still have not accepted the significance of bad news

Lower dollar will be the trend

Friday got a trifecta of bad economic news

Thursday Weekly Jobless Claims number declined to 264,000 - lowest weekly jobless claims in 42 years

Why are there so few job losses? Because so few people are getting hired

Government numbers come from the Birth/Death Model, which assumes a certain number of businesses created each month

What if these businesses are not actually created?

This would explain lower number of unemployment claims

There's no way we can say that the economy is the best it has been in 42 years

Empire State Manufacturing Index, which was weak last month, expected to be +5, came in at 3.09; below estimate for the 4th month in a row

Both Business Expectations and Hiring declined from April to May

Industrial Production Capacity Utilization was expected to be flat; down again .3%

This is not the 5th consecutive monthly decline in Industrial Production; longest losing streak since 2009

Consumer Sentiment Number 95.9 in April - expected to hold steady - came in at 88.6; biggest drop since December 2012, and biggest miss ever

If the job market is so strong, why is confidence plunging?

The percentage of employees who fear losing their jobs is at highest level since March of 2009

The bubble is rapidly deflating

Unofficially, I think we have been in recession for the entire "recovery"

The government is not accurately measuring inflation in the GDP deflator

The Fed has not forecast a single recession

Recessions always happen contrary to forecasts

If we are in a recession there can not be a rate hike

At some point they are going to have to acknowledge that the numbers are not accurate

The unemployment rate is going to have to tick up at soe point this year

At some point after the end of the quarter it will become obvious that there is no rate hike coming

The only question is, What is the Fed going to do?

The Fed has not managed to shrink the balance sheet, and further QE will take the deficit to a whole new level

This will put massive downward pressure on the dollar

Oil prices will spike

Cheap gas prices did not create a bounce in Q1

Consumer Confidence will plunge

Reality is finally going to set in on the failure of the Fed monetary policy

* Another week and another round of bad economic news

* Wall Street may be finally paying attention

* JOLT Report projected at 5.158 million; came in at 4.994 million

* April Retail Sales expected to rise .2%; came in flat

* X Automobiles expected an increase of .5, actual number was .1

* Beneath the surface there was a collapse in retail sales in all areas except groceries

* Weakest year over year increase in retail sales since 2009

* Department Store Sales experienced the biggest drop since January 2014

* A look beneath the headlines of the jobs numbers reveals that the jobs are not good jobs

* The Birth/Death Model assumption added 175,000 jobs to the last jobs report

* These numbers came from a biased source

* The fact that there is no spending is evidence that the job market is not as robust as the numbers claim

* Jobs numbers can be made up but retail sales can't

* Wall Street is surprised that we have weak data because they believe we are experiencing job growth

* March Business Inventories up .1% versus expectation of .2%

* February Business Inventories was revised down from .3% to .2%

* I estimate that Q1 GDP will contract by greater than 1%

* The Atlanta Fed just revised down their Q2 GDP estimate to .7, which would indicate the U.S. economy contracted for the first half of the year

* The Fed is still looking for 3% rise in GDP for 2015, which would mean we would need growth of 6% for the last half of the year

* It is more likely that we will get a negative number again for Q2

* Two consecutive contracting quarters will indicate an official recession

* If we are in a recession, the Fed will not raise rates and is more likely to respond with stimulus

* I predicted that a pause in QE3 would trigger another recession

* When the Fed is unable to raise rates to stimulate the economy, the only trick they will have up their sleeve will be QE4

* When that happens, the moves we saw today in the FOREX and Precious Metals markets will look tame by comparison

* The dollar has already broken its uptrend

* Europe, with the exception of Greece is experiencing growth in GDP, and Great Britain is doing better than Europe, because they shrunk their government instead of applying stimulus

* What we are going to get next is old-fashioned Keynesian, pump-priming stimulus

* Will that give us economic growth? Not a chance.

* The last three rounds of QE didn't give us economic growth and neither will the next one

* It may blow more air into the stock market bubble, but the air is going to come out of the dollar bubble even faster

* Where is the Fed's balance sheet going to be at the end of QE4? It is 4.5 trillion right now.

* How can anyone possibly believe Janet Yellen when she says she is going to shrink the balance sheet?

* Are creditors are going to get wise and there is going to be a run on the dollar

* You can see the beginnings of it today

* The dollar was down across the board

* Gold was back to about $1,250; every time it gets to this level it gets knocked down by short-sellers, but eventually they are going to have to give up

* All this bad economic data is going to sink in

* It is not the weather

* The market still has to adjust for the reality that the economy is really weak

* The Fed will not admit that QE didn't work, so in the face of recession they will have to do it again


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Another week and another round of bad economic news

Wall Street may be finally paying attention

JOLT Report projected at 5.158 million; came in at 4.994 million

April Retail Sales expected to rise .2%; came in flat

X Automobiles expected an increase of .5, actual number was .1

Beneath the surface there was a collapse in retail sales in all areas except groceries

Weakest year over year increase in retail sales since 2009

Department Store Sales experienced the biggest drop since January 2014

A look beneath the headlines of the jobs numbers reveals that the jobs are not good jobs

The Birth/Death Model assumption added 175,000 jobs to the last jobs report

These numbers came from a biased source

The fact that there is no spending is evidence that the job market is not as robust as the numbers claim

Jobs numbers can be made up but retail sales can't

Wall Street is surprised that we have weak data because they believe we are experiencing job growth

March Business Inventories up .1% versus expectation of .2%

February Business Inventories was revised down from .3% to .2%

I estimate that Q1 GDP will contract by greater than 1%

The Atlanta Fed just revised down their Q2 GDP estimate to .7, which would indicate the U.S. economy contracted for the first half of the year

The Fed is still looking for 3% rise in GDP for 2015, which would mean we would need growth of 6% for the last half of the year

It is more likely that we will get a negative number again for Q2

Two consecutive contracting quarters will indicate an official recession

If we are in a recession, the Fed will not raise rates and is more likely to respond with stimulus

I predicted that a pause in QE3 would trigger another recession

When the Fed is unable to raise rates to stimulate the economy, the only trick they will have up their sleeve will be QE4

When that happens, the moves we saw today in the FOREX and Precious Metals markets will look tame by comparison

The dollar has already broken its uptrend

Europe, with the exception of Greece is experiencing growth in GDP, and Great Britain is doing better than Europe, because they shrunk their government instead of applying stimulus

What we are going to get next is old-fashioned Keynesian, pump-priming stimulus

Will that give us economic growth? Not a chance.

The last three rounds of QE didn't give us economic growth and neither will the next one

It may blow more air into the stock market bubble, but the air is going to come out of the dollar bubble even faster

Where is the Fed's balance sheet going to be at the end of QE4? It is 4.5 trillion right now.

How can anyone possibly believe Janet Yellen when she says she is going to shrink the balance sheet?

Are creditors are going to get wise and there is going to be a run on the dollar

You can see the beginnings of it today

The dollar was down across the board

Gold was back to about $1,250; every time it gets to this level it gets knocked down by short-sellers, but eventually they are going to have to give up

All this bad economic data is going to sink in

It is not the weather

The market still has to adjust for the reality that the economy is really weak

The Fed will not admit that QE didn't work, so in the face of recession they will have to do it again

* First official jobs report of Q2

* Wednesday's ADP private payrolls were below expectations

* March was revised down, indicating a softer labor market

* Challenger job cuts numbers well above previous month, biggest year over year increase in 10 years

* The jobs number came in at 222,000 jobs with unemployment down to 5.4%

* The media is spinning the headline number

* The picture underneath the jobs report is not as nice

* The March downward revision by 41,000 jobs causes one to question whether today's job number will be revised downward given all the negative underlying data

* The stock market recognized this; sensing the Fed will remain on pause

* Average Hourly Earnings increased only .1%, half expectations

* Numbers of Americans who have left the labor force is now at a record high

* When employers are changing the nature of the workforce replacing full time workers with part time workers it distorts the net number of jobs

* The Household Survey indicates the breakdown of full time vs. part time

* The government makes no such distinction

* In April we created 437,000 part time jobs - biggest gain in part time employment since last June

* The number of full time jobs declined by 252,000 - the biggest drop of the year

* The bad news of full time job loss is buried beneath the superficial layer of part time jobs

* The demographic breakdown indicates workers 55 and older gained 266,000 jobs in April

* Workers 25 - 54 lost 19,000 jobs

* This blows a hole in the notion that labor force participation is going down because of retiring baby boomers

* Other bad news to hit this quarter's GDP:

* Wholesale Trade numbers: inventories expected to rise by .3% but rose by .1% - smallest gain since March of 2013

* Wholesale Sales expected to break 3-month losing streak; instead increasing streak to biggest year over year decline since November of 2008

* Earlier in the week, Q1 Productivity down 1.9% following 2.1% decline last quarter

* Unit Labor Costs rose more than expected +5%

* Challenger numbers show a big explosion in layoffs

* The reality is that the economy is weakening rapidly

* The Fed and the media don't want to acknowledge this because they are afraid of how the market will react

* Recent encounter with Former Fed Chairman Ben Bernanke

* Ben Bernanke was a speaker at the SALT conference

* I introduced myself to him after his presentation, told him "I am probably your biggest critic."

* He responded, "You have a lot of competition."

* Later that evening at a cocktail party I approached him and he offered to pose for a photo.

* Photo got more views and likes that most other photos on Facebook

* I tried to give him a cliff's notes version of my take on the Fed's part in the housing bubble

* Bernanke blamed regulations, Fannie & Freddie and the sub-prime mortgages

* I said the Fed created the conditions for Sub-Prime mortgages because low interest rates made them affordable

* I asked why he did not warn us in advance of the regulations, Fannie & Freddie and the Sub-Prime Mortgage business?

* Bernanke originally denied the housing bubble existed

* Ben Bernanke had no clue that the Fed's policies created the bubble even after it burst

* In hindsight, he lays blame on aspects of the market that he should have identified in advance

* I asked him, "how can can you be sure you were right, when interest rates are still at zero and the Fed's balance sheet still hasn't shrunk?

* Is there anything that might change your opinion that your decisions were right?

* He evaded the answer, but I believe he was sincere about his opinions

* Later that evening,

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First official jobs report of Q2

Wednesday's ADP private payrolls were below expectations

March was revised down, indicating a softer labor market

Challenger job cuts numbers well above previous month, biggest year over year increase in 10 years

The jobs number came in at 222,000 jobs with unemployment down to 5.4%

The media is spinning the headline number

The picture underneath the jobs report is not as nice

The March downward revision by 41,000 jobs causes one to question whether today's job number will be revised downward given all the negative underlying data

The stock market recognized this; sensing the Fed will remain on pause

Average Hourly Earnings increased only .1%, half expectations

Numbers of Americans who have left the labor force is now at a record high

When employers are changing the nature of the workforce replacing full time workers with part time workers it distorts the net number of jobs

The Household Survey indicates the breakdown of full time vs. part time

The government makes no such distinction

In April we created 437,000 part time jobs - biggest gain in part time employment since last June

The number of full time jobs declined by 252,000 - the biggest drop of the year

The bad news of full time job loss is buried beneath the superficial layer of part time jobs

The demographic breakdown indicates workers 55 and older gained 266,000 jobs in April

Workers 25 - 54 lost 19,000 jobs

This blows a hole in the notion that labor force participation is going down because of retiring baby boomers

Other bad news to hit this quarter's GDP:

Wholesale Trade numbers: inventories expected to rise by .3% but rose by .1% - smallest gain since March of 2013

Wholesale Sales expected to break 3-month losing streak; instead increasing streak to biggest year over year decline since November of 2008

Earlier in the week, Q1 Productivity down 1.9% following 2.1% decline last quarter

Unit Labor Costs rose more than expected +5%

Challenger numbers show a big explosion in layoffs

The reality is that the economy is weakening rapidly

The Fed and the media don't want to acknowledge this because they are afraid of how the market will react

Recent encounter with Former Fed Chairman Ben Bernanke

Ben Bernanke was a speaker at the SALT conference

I introduced myself to him after his presentation, told him "I am probably your biggest critic."

He responded, "You have a lot of competition."

Later that evening at a cocktail party I approached him and he offered to pose for a photo.

Photo got more views and likes that most other photos on Facebook

I tried to give him a cliff's notes version of my take on the Fed's part in the housing bubble

Bernanke blamed regulations, Fannie & Freddie and the sub-prime mortgages

I said the Fed created the conditions for Sub-Prime mortgages because low interest rates made them affordable

I asked why he did not warn us in advance of the regulations, Fannie & Freddie and the Sub-Prime Mortgage business?

Bernanke originally denied the housing bubble existed

Ben Bernanke had no clue that the Fed's policies created the bubble even after it burst

In hindsight, he lays blame on aspects of the market that he should have identified in advance

I asked him, "how can can you be sure you were right, when interest rates are still at zero and the Fed's balance sheet still hasn't shrunk?

Is there anything that might change your opinion that your decisions were right?

He evaded the answer, but I believe he was sincere about his opinions

Later that evening, people came up to me and commented that they appreciated the views, but that Ben Bernanke was strongly disagreeing with me

Bernanke will not hold the title of worst Fed Chairman because the worst is yet to come when Janet Yellen takes us into QE4

* Upcoming Appearances

* Thursday morning panel at the SkyBridge Capital SALT Conference in Las Vegas

* Liberty Forum - Salt Lake City

* MoneyShow - Las Vegas

* Economic News for the Week: March Factory Orders met expectations, but downwardly revised February number for 5th straight year-over-year monthly drop

* March Trade Deficit: $51.4 billion, a miss greater than $10 billion and the single worst trade deficit since October 2008 and largest monthly gain in nearly 20 years

* If the economy is so good, why do we have such a large trade deficit?

* Rising oil prices, along with other rising prices are putting additional pressure on consumers

* April U.S. Auto Sales fell, missing expectations for the 5th month in a row - sales at lowest year-over-year start since 2009

* The auto bubble has burst

* The United States has been spared the discipline of the market by virtue of the dollar being the reserve currency

* Gold is still just below $1,200/ounce - we will eventually run out of sellers who are keeping prices down, and when it goes up it will go up in a spectacular way

* Aussie dollar is up a percent and a quarter

* Canadian dollar up half a percent

* Euro up a third of a percent

* Swiss Franc up almost a full percent

* There was some good news: April ISM Service Non-Manufacturing Index rose, to 57.8, beating estimates

* New orders plunged into negative territory

* April PMI dropped from 59.2 in March to 57.4, a bigger drop than expected

* No one is looking for the April jobs number to be lower

* The consensus is also for unemployment to keep falling from 5.5% to 5.4%

* If we have all these jobs, why isn't the consumer spending?

* The answer is the jobs don't pay very much or the hours are reduced

* Meanwhile, as much as the Fed wants to pretend there is low inflation, the cost of living is rising

* The one safety net for the consumer was oil prices, and now that is gone


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