Bad Economic News… When It Rains, It Pours – Ep 74
The Peter Schiff Show Podcast
Peter Schiff
4.6 • 5.9K Ratings
🗓️ 16 April 2015
⏱️ 19 minutes
🧾️ Download transcript
Summary
* Dollar usually drops on bad news but rallies because traders automatically buy on the dip
* Bad news is dismissed because the first quarter "doesn't count"
* This puts greater pressure on the last 3 quarters to make up for the first quarter and still show growth
* Expectations of a bump similar to last year are based on non-repeatable conditions - Obamacare and inventory build
* Inventory to sales ratio is the highest it has been since 2009
* What is the basis for dismissal of the bad news in Q1?
* Data confirms that the consumer is already broke
* Consumers will be hit with rising oil prices
* Traders who are loading up on the dollar are ignoring all the evidence that they are wrong
* The wake-up call will be like the sub-prime mortgage crisis
* The same thing will happen in the Foreign Exchange Markets when they realize the story is not about a recovery but about another round of QE
* Changing trend coming in the dollar
* Changing trend in the oil market
* Changing trend in the gold market
* If we don't get a recovery in the summer how is the Fed going to raise rates in Q4?
* Election year 2016 will likely see no rate hikes
* Retail Sales missed Wall Street expectations with a bounce of only .9
* March Small Business Optimism fell to lowest level in 9 months
* Hiring Plans dropped to lowest level in 6 months
* Business Inventories for February rose to .3 based on weak wholesale sales
* Inventory to Sales Ratio holding at 1.36 (highest since July of 2009)
* My radio broadcasts from a year ago predicted that the data was not reflecting reality
* April Empire State Manufacturing Index missed expectations at -1.9, near a 2-year low
* Employment down
* Hours worked down
* New orders down to 3-year lows
* Prices paid went up
* March Industrial Production dropped .6, missing expectations - 4th consecutive month below estimate
* This news can't be blamed on April showers
* Those who have been betting on the recovery are about to realize they made the wrong bet
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Transcript
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| 0:00.0 | The Peter Schiff Show. |
| 0:08.8 | Well you're not going to get a lot of podcasts for me this week. |
| 0:12.0 | I'm down here in Florida for the week on vacation. |
| 0:15.8 | My son is having spring break so I brought the family down to Disney World for the family |
| 0:22.8 | VK. |
| 0:23.8 | But I am going to take a break this morning to record some of my thoughts on the economic |
| 0:29.2 | news of the past couple of days and again the markets reaction or lack thereof to this |
| 0:36.0 | cold water being thrown in the faces of those who are still clinging to the belief that |
| 0:40.8 | the U.S. economy is recovering and that the Fed is going to raise rates. |
| 0:45.1 | Of course economic news has come out. |
| 0:47.5 | It's been bad news and the markets seem to shrug it off in particular the currency markets. |
| 0:53.0 | You know every time bad economic news unexpectedly comes out. |
| 1:00.0 | The dollar does sell off or maybe not every time but most of the time. |
| 1:03.9 | In fact I can normally tell when the news is coming out because I'll see a dip down |
| 1:10.4 | in the dollar and I'll say, ah-ha. |
| 1:12.2 | You know the economic news must have just been released and I'll go and I'll check Bloomberg |
| 1:16.2 | to see what it was but I can tell when it comes out because you can see the blip where |
| 1:22.1 | the dollar all of a sudden just starts getting hit lower because the bad news is always a |
| 1:27.1 | surprise because nobody expects it. |
| 1:29.9 | But then what happens is the dollar sells off when it gets bad news like happened on Tuesday |
| 1:36.2 | with all the bad news that I will get to. |
| 1:38.6 | And then it rallies back overnight because the traders are conditioned to buy every dip |
... |
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