Currency Traders Still Buying Rate Hike Rhetoric – Ep. 85
The Peter Schiff Show Podcast
Peter Schiff
4.6 • 5.9K Ratings
🗓️ 23 May 2015
⏱️ 25 minutes
🧾️ Download transcript
Summary
* 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
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Transcript
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| 0:00.0 | The Peter Schiff Show. |
| 0:09.6 | Well the US dollar started out this morning on the defensive overnight it had been down |
| 0:15.0 | across the board and then the government released the inflation numbers, at least the CPI |
| 0:21.2 | version of the inflation at 830 this morning and the dollar had a sharp reversal rising |
| 0:28.0 | across the board and closing today's session pretty much on the highs of the day up against |
| 0:34.5 | every currency gold which was up about six or seven dollars before the CPI news came |
| 0:40.9 | out did sell off but managed to close just off a buck or so so obviously the price of |
| 0:46.8 | gold was up against all the other currencies but down a bit against the dollar. |
| 0:52.0 | Let me give you the details on the April CPI. |
| 0:54.9 | First of all the headline number according to the government April CPI was up just 0.1% |
| 1:05.2 | on the month and year over year from April 2014 to April 2015 prices dropped negative |
| 1:14.5 | 0.2 so that is the lowest CPI since October 2009 on a year over your basis so October 2009 |
| 1:23.1 | again the great recession so on headline CPI this is the lowest number we've had since |
| 1:29.7 | the great recession but the core that's the number that caught the currency traders by |
| 1:35.5 | surprise the core right remember which excludes food and energy the core rose 0.3 and that |
| 1:44.2 | was the biggest monthly jump since March of 2006 so what is that you know nine years |
| 1:51.0 | ago almost right year over year the increase in the core was 1.8 and that is the biggest |
| 1:59.5 | year of year increase going back to January 2013 so it's been over two years since the |
| 2:06.6 | core CPI has risen by 1.8% now this sent the dollar up on the anticipation or expectation |
| 2:15.1 | that this makes a rate hike more likely after all increasing consumer prices well that's |
| 2:23.0 | one of the feds benchmarks right if inflation comes up to that 2% level they might raise |
| 2:28.0 | rates but I think that goal post is just as real as the 6.5% unemployment goal post if |
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