The Peter Schiff Show Podcast

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

* Markets on roller coaster ride final two trading days of this week

* Bad news parade marches on in April

* The players are still clinging to fantasy of U.S. economic recovery

* Dollar finished down substantially on the week - April was the first down month in 10 months

* Dollar has seen its highs and is heading lower

* Gold back below 1200

* Oil prices added to gains closed above $59 - moving opposite to the dollar

* Friday - March Personal Income & Spending flat below expectations

* Personal Spending also lower than expected; .4% gain

* Savings dropped from 5.7 to 5.3 - the lowest savings rate of the year

* April PMI Manufacturing Index - dropped more than expected to 54.1 even as weather warms

* ISM Manufacturing expected to rise to 52 - remained flat

* Employment Index dropped two points - the first drop in 2 years

* March Construction Spending fell by .6 missing expectations

* Atlanta Fed correctly forecasted Q1 GDP at .2, forecasting Q2 at .8

* Article on Zero Hedge: Goldman Sachs warning Europe about severe "Lowflation"

* Article in Bloomberg: Chinese can't "kick" savings habit

* Blames problem on "not enough government"

* The reason America is in so much trouble is that we don't save

* Once the Chinese have built up a cushion, then they will spend

* When our phony economy bursts, it will be apparent that we did not save enough and had too much debt

* America gives capitalism a bad name - we preach it but do not practice it

* We rely on a giant government-run ponzi scheme of socialized savings

* We are telling the Chinese they have too much free market capitalism

* We have been indulging our present and sacrificing our future

* The Chinese will be rewarded for their prudence

* The most ironic thing about the Bloomberg article is that they suggest Chinese would be better off under Communism


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* Government's first look at Q1 GDP

* There was a lot of optimism around Q1 with expectations above 3%

* Actual GDP was 1/5 of expectations at.2%

* The rest of the story of Q1 GDP:

* The deflator this time was negative - meaning that prices dropped by .1%

* The last time the deflator was negative was 2009 Q2; still in the Great Recession

* The previous occurrence of a negative deflator was in 1949

* I believe the true rate of inflation is higher than -.1%

* Inventory build continued into Q1 - businesses continue to believe the myth of the recovery

* Inventory to sales ratio are the highest they have been since the Great Recession

* They are still blaming poor economic performance on the weather. It is always cold in the winter; why is bad weather always a surprise?

* The Fed just released their official statement on interest rate policy

* They removed language from statement indicating it is unlikely that rates will rise

* Continuing give the illusion that they are progressing toward a point when they will raise interest rates

* The Fed went out of its way to dismiss all the bad economic news we got in Q1

* The dollar just had its biggest 2-day decline in 6 years

* The Fed came out and put a smiley face on the whole thing and the dollar recovered somewhat

* The Fed is never going to confess that they are worried; that's not their job

* What evidence is there that things will improve in Q2?

* Cheap gas windfall is over; oil prices have risen every week in the past month

* Early April economic data is negative

* An economy based on spending is a bubble; production grows an economy

* Consumers have lots of debt, but they don't have good jobs

* Decline in the dollar signals that the markets are already sensing this

* The Fed feels that economic growth will recover in Q2 & Q3

* They also said they need to see additional strength in the labor market

* Business are making foolish decisions because they believe the Fed

* As the economy disappoints, the labor market will continue to deteriorate

* The Fed can't raise interest rates and they are headed ror QE4

* We need more and more stimulus because we've built up a resistance

* The real crisis will be a dollar crisis

* When the economy heads south and the Fed has to do QE 4, the Fed will lose a lot of credibility

* Janet Yellen will not be able to deliver on her promise to shrink the balance sheet by the end of the decade


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Markets on roller coaster ride final two trading days of this week

Bad news parade marches on in April

The players are still clinging to fantasy of U.S. economic recovery

Dollar finished down substantially on the week - April was the first down month in 10 months

Dollar has seen its highs and is heading lower

Gold back below 1200

Oil prices added to gains closed above $59 - moving opposite to the dollar

Friday - March Personal Income & Spending flat below expectations

Personal Spending also lower than expected; .4% gain

Savings dropped from 5.7 to 5.3 - the lowest savings rate of the year

April PMI Manufacturing Index - dropped more than expected to 54.1 even as weather warms

ISM Manufacturing expected to rise to 52 - remained flat

Employment Index dropped two points - the first drop in 2 years

March Construction Spending fell by .6 missing expectations

Atlanta Fed correctly forecasted Q1 GDP at .2, forecasting Q2 at .8

Article on Zero Hedge: Goldman Sachs warning Europe about severe "Lowflation"

Article in Bloomberg: Chinese can't "kick" savings habit

Blames problem on "not enough government"

The reason America is in so much trouble is that we don't save

Once the Chinese have built up a cushion, then they will spend

When our phony economy bursts, it will be apparent that we did not save enough and had too much debt

America gives capitalism a bad name - we preach it but do not practice it

We rely on a giant government-run ponzi scheme of socialized savings

We are telling the Chinese they have too much free market capitalism

We have been indulging our present and sacrificing our future

The Chinese will be rewarded for their prudence

The most ironic thing about the Bloomberg article is that they suggest Chinese would be better off under Communism

Government's first look at Q1 GDP

There was a lot of optimism around Q1 with expectations above 3%

Actual GDP was 1/5 of expectations at.2%

The rest of the story of Q1 GDP:

The deflator this time was negative - meaning that prices dropped by .1%

The last time the deflator was negative was 2009 Q2; still in the Great Recession

The previous occurrence of a negative deflator was in 1949

I believe the true rate of inflation is higher than -.1%

Inventory build continued into Q1 - businesses continue to believe the myth of the recovery

Inventory to sales ratio are the highest they have been since the Great Recession

They are still blaming poor economic performance on the weather. It is always cold in the winter; why is bad weather always a surprise?

The Fed just released their official statement on interest rate policy

They removed language from statement indicating it is unlikely that rates will rise

Continuing give the illusion that they are progressing toward a point when they will raise interest rates

The Fed went out of its way to dismiss all the bad economic news we got in Q1

The dollar just had its biggest 2-day decline in 6 years

The Fed came out and put a smiley face on the whole thing and the dollar recovered somewhat

The Fed is never going to confess that they are worried; that's not their job

What evidence is there that things will improve in Q2?

Cheap gas windfall is over; oil prices have risen every week in the past month

Early April economic data is negative

An economy based on spending is a bubble; production grows an economy

Consumers have lots of debt, but they don't have good jobs

Decline in the dollar signals that the markets are already sensing this

The Fed feels that economic growth will recover in Q2 & Q3

They also said they need to see additional strength in the labor market

Business are making foolish decisions because they believe the Fed

As the economy disappoints, the labor market will continue to deteriorate

The Fed can't raise interest rates and they are headed ror QE4

We need more and more stimulus because we've built up a resistance

The real crisis will be a dollar crisis

When the economy heads south and the Fed has to do QE 4, the Fed will lose a lot of credibility

Janet Yellen will not be able to deliver on her promise to shrink the balance sheet by the end of the decade

* The Keynesian myth of mandating prosperity actually hurts the lower middle class and the working poor

* Something for nothing is appealing to voters, so politicians make empty promises that are good politics but bad economics

* A Seattle-based company called Gravity Payments has instituted a minimum salary of $70,000/yr

* This has given him great publicity, but how will this work in his company?

* Lower paying jobs will have to be eliminated, because they don't represent enough productivity to justify a raise that doubles the employee's cost

* Higher salaried workers are not hurt because they keep their job and perhaps get a raise for picking up the extra duties formerly handled by lower-salaried workers

* The most recent political gimmick in the State of Connecticut is a tax masquerading as a minimum wage law

* The Democratic State Legislature have proposed a law that will fine companies of 500 or more employees $1/hr for any worker who is paid under $15/hr

* How will this work in the State of Connecticut?

* Right away, business just over 500 employees will pare down to fall under the new regulation, so jobs will be lost

* In reality, this is just a tax increase on the people who can least afford it

* For employees who are currently working at the minimum wage, a $1 fine is cheaper than a raise from the current $9.15 rate to $15/hr, if they do not eliminate that person's job

* This is essentially another employment tax that will result in higher prices across the board

* Neither the employee nor the employer benefits

* For employees who are working above the current minimum of $9.15/hr a raise would cost the employer more than the $1 fine

* According to minimum wage law, it is illegal to cut the worker's pay - the only option is to cut the worker

* The penalty does not apply to higher paid workers; it only applies to jobs between the current minimum wage and the new minimum wage

* It will be cheaper to pay the tax than to raise wages, but there will be less money to to toward employees because a large percentage of the workers' wages are going toward a tax

* The reality of this new law, championed for the "little guy" is that the working poor will pay a higher marginal state income tax than the richest hedge fund managers in the state

* Will the voters be able to figure it out elected officials are going after the working poor?

* This tax will also raise the cost of living, wich also affects the poor more directly

* Packaging a tax to pass off as minimm wage is fraud

*


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The Keynesian myth of mandating prosperity actually hurts the lower middle class and the working poor

Something for nothing is appealing to voters, so politicians make empty promises that are good politics but bad economics

A Seattle-based company called Gravity Payments has instituted a minimum salary of $70,000/yr

This has given him great publicity, but how will this work in his company?

Lower paying jobs will have to be eliminated, because they don't represent enough productivity to justify a raise that doubles the employee's cost

Higher salaried workers are not hurt because they keep their job and perhaps get a raise for picking up the extra duties formerly handled by lower-salaried workers

The most recent political gimmick in the State of Connecticut is a tax masquerading as a minimum wage law

The Democratic State Legislature have proposed a law that will fine companies of 500 or more employees $1/hr for any worker who is paid under $15/hr

How will this work in the State of Connecticut?

Right away, business just over 500 employees will pare down to fall under the new regulation, so jobs will be lost

In reality, this is just a tax increase on the people who can least afford it

For employees who are currently working at the minimum wage, a $1 fine is cheaper than a raise from the current $9.15 rate to $15/hr, if they do not eliminate that person's job

This is essentially another employment tax that will result in higher prices across the board

Neither the employee nor the employer benefits

For employees who are working above the current minimum of $9.15/hr a raise would cost the employer more than the $1 fine

According to minimum wage law, it is illegal to cut the worker's pay - the only option is to cut the worker

The penalty does not apply to higher paid workers; it only applies to jobs between the current minimum wage and the new minimum wage

It will be cheaper to pay the tax than to raise wages, but there will be less money to to toward employees because a large percentage of the workers' wages are going toward a tax

The reality of this new law, championed for the "little guy" is that the working poor will pay a higher marginal state income tax than the richest hedge fund managers in the state

Will the voters be able to figure it out elected officials are going after the working poor?

This tax will also raise the cost of living, wich also affects the poor more directly

Packaging a tax to pass off as minimm wage is fraud

* S&P and the NASDAQ made new record highs

* Stock market continues to ignore all the bad news about the economy

* Bad news is not being ignored in the foreign exchange markets

* Negative economic news is buoying the stock market because it removes fear of interest rate hikes

* Weak economy means more cheap money which means higher stock prices

* Oil prices hitting highest prices of the year

* Gold is back above the 1200 level

* April PMI Manufacturing Flash Index at 54.2 biggest miss ever

* New Home Sales tumbled by 11.1% - biggest drop since July of 2013

* March Durable Goods slight bump based on military aircraft, but less transportation, the index unexpectedly declined .2%

* Durable good orders, less defense and transportation dropped for the 7th consecutive month

* April Service Sector PMI missed lowest expectations at 57.8 - the biggest miss ever

* Dallas Fed Manufacturing Survey - recorded significant drop at -16; biggest losing streak ever

* There will be a delayed reaction from the market to first quarter's bad economic news on top of this quarter's economic news

* A Boston Fed official is considering retaining "balance sheet tools", i.e. QE

* In other words, the Fed is considering not having an exit strategy - because it can't exit

* We have done all sorts of crazy things that we never would have done but for zero percent interest rates and QE

* A market that was built for 0% interest rates can't handle 2% interest rates

* The product of all this stimulus will be big increases in prices, and the Central Banks are setting the stage for higher inflation

* Declining Swiss consumer prices are described as "dangerous"

* Currently, the Swiss consumers are enjoying lower prices and do not need a government "cure"

* The law of supply and demand is so simple that only an economist would fail to understand it

* Keynesians will spin ever-conflicting news to support their theory

* Fitch has downgraded Japanese government debt to A- because or the Japan's deteriorating fiscal condition

* Based on that logic, why is the U.S. AAA?

* There is a general fear of downgrading U.S. debt, based on fines levied against the S&P

* The real problem will be the collapse of the dollar, which means the debt will be repaid in dollars without purchasing power


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S&P and the NASDAQ made new record highs

Stock market continues to ignore all the bad news about the economy

Bad news is not being ignored in the foreign exchange markets

Negative economic news is buoying the stock market because it removes fear of interest rate hikes

Weak economy means more cheap money which means higher stock prices

Oil prices hitting highest prices of the year

Gold is back above the 1200 level

April PMI Manufacturing Flash Index at 54.2 biggest miss ever

New Home Sales tumbled by 11.1% - biggest drop since July of 2013

March Durable Goods slight bump based on military aircraft, but less transportation, the index unexpectedly declined .2%

Durable good orders, less defense and transportation dropped for the 7th consecutive month

April Service Sector PMI missed lowest expectations at 57.8 - the biggest miss ever

Dallas Fed Manufacturing Survey - recorded significant drop at -16; biggest losing streak ever

There will be a delayed reaction from the market to first quarter's bad economic news on top of this quarter's economic news

A Boston Fed official is considering retaining "balance sheet tools", i.e. QE

In other words, the Fed is considering not having an exit strategy - because it can't exit

We have done all sorts of crazy things that we never would have done but for zero percent interest rates and QE

A market that was built for 0% interest rates can't handle 2% interest rates

The product of all this stimulus will be big increases in prices, and the Central Banks are setting the stage for higher inflation

Declining Swiss consumer prices are described as "dangerous"

Currently, the Swiss consumers are enjoying lower prices and do not need a government "cure"

The law of supply and demand is so simple that only an economist would fail to understand it

Keynesians will spin ever-conflicting news to support their theory

Fitch has downgraded Japanese government debt to A- because or the Japan's deteriorating fiscal condition

Based on that logic, why is the U.S. AAA?

There is a general fear of downgrading U.S. debt, based on fines levied against the S&P

The real problem will be the collapse of the dollar, which means the debt will be repaid in dollars without purchasing power

* Markets have been volatile but economic data still looking bad

* Chicago Fed National Activity Index: contrary to expectations, came in at -.42 in addition a downward correction for last week to a 2-year low

* Weekly Redbook Same Store Sales Survey down to lowest annual increase in 4 years with a dramatic rate of decline in recent months

* Implausible excuses, such as the weather or the timing of Easter, attempt to mask the fact that the economy is just weak

* Oil prices moved above $57, forming a sizable W-bottom

* Canadian dollar up about 5%

* Canadian inflation, especially food prices up

* This signals the end of rate-cutting cycle in Canada

* Central banks around the world are going to have to dial back on their cheap money policies

* The "Threat of Deflation" will be in the rear view mirror

* Central banks may like high prices, but consumers don't

* President of the Federal Reserve Bank of Boston Eric Rosengren stated our 2% inflation goal is "too low"

* He thinks higher inflation allows for more growth, and allows interest rates to remain low

* Cheap money does not create economic growth and doesn't create employment - it undermines both

* Cheap money applied to a slower economy creates a vicious cycle

* A weakening dollar will put upward pressure on already rising consumer prices

* The Fed is hinting at a higher inflation goal

* The problem is we can't do anything about our inflation because our debt is out of control

* Fiscally solvent countries are able to raise rates and still service their debt

* All the U.S. can do is "talk tough"

* If they had a "Hall of Economists" in Disneyland, the Keynesians would have to be in Fantasyland

* Paul Krugman's Keynesian experiment is blowing up the U.S. economy

* Everybody will figure it out before Paul Krugman does


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