Will The Bad News Finally Matter? – Ep. 101
The Peter Schiff Show Podcast
Peter Schiff
4.6 • 5.9K Ratings
🗓️ 10 August 2015
⏱️ 21 minutes
🧾️ Download transcript
Summary
* One piece of positive economic news ISM Non-Manufacturing Index for July surged to 60.3 - highest number in 10 years
* The ADP Employment Report came in at 185,000 jobs, well below the consensus
* June Trade Deficit rose 7.1% - in line with expectations
* June Layoffs rose to 105,696 biggest layoff number in 6 years
* Consumer Comfort Index down to 40.3 second lowest number since November
* The Atlanta Fed dropped a bombshell forecasting Q3 at just 1%
* Given this slowdown, could we possibly have a rate hike?
* The stock market has had 6 consecutive down days
* The stocks with no earnings are doing the best
* Very reminiscent of the dot com era
* The "story stocks" are selling in 2015
* Companies that actually have earnings are experiencing the greatest pressure on their share price
* Every time we have a dip in the stock market, the Fed always comes to the rescue
* Why wait until the economy is slowing down to raise rates?
* They can't do that this time, unless they want to abandon their rate hike rhetoric
* They will have to take the rate hikes off the table
* Janet Yellen continues to say rate hikes are data dependent
* The data has been bad for quite a while
* The economy is growing at the slowest pace of the entire "recovery"
* All the Fed can do is go back to the drawing board with more QE, because they can't admit that it never worked
* The money printing is just getting started
* Not that it is going to work, but it is the only policy remedy the Fed has
* Some stocks are really getting beaten up as earnings continue to disappoint
* This topping pattern has got to worry the Fed
* Any rate hike will accelerate the decline
* We have a stock market bubble and raising rates will prick that bubble
* Ben Bernanke created the stock market bubble thinking the "wealth effect" would cure the economy
* Bernanke would not acknowledge that bubbles weaken the economy because it was not politically advantageous
* The First Republican Debate was held tonight, so please follow me on Twitter for my comments
* Donald Trump is far and away the leader in the polls and he is one of the few candidates who have been critical of the Fed
* The only other candidate in the race who knows anything about the Fed is Rand Paul
* Tomorrow could be a big day - the question is, if we get a bad jobs number, will we finally have a reaction in the currency markets?
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Transcript
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| 0:00.0 | We had one piece of positive economic news over the last several days. |
| 0:14.8 | It was the ISM non manufacturing index for July, which surged to 60.3 analysts were looking |
| 0:23.2 | for 56.2, a slight uptick from the 56 from June. That was the highest number in 10 years. |
| 0:31.1 | Although this was kind of the outlier, this index. Again, it's just the service sector, |
| 0:36.5 | non manufacturing. Manufacturing ISM has been quite weak. Of course, the service sector depends |
| 0:44.8 | on manufacturing imported products. It depends a lot on the economy. I believe that the service |
| 0:52.8 | whatever is going on now, I think you're going to see some sharp reversals as employers in that |
| 0:59.9 | sector finally come to terms with economic reality where today they're still living in denial. |
| 1:07.5 | Because most of the news that has come out over the last several days has been bad. |
| 1:13.1 | Let's start with the ADP Employment Report, which is a precursor to the government's official |
| 1:20.4 | non-farm payroll numbers that come out tomorrow. ADP reports on private sector employment. |
| 1:28.0 | They were looking for 210,000 private sector jobs. Instead, we only created 185,000. That's one of |
| 1:39.6 | the lowest numbers of the last couple of years. Well below the consensus, they even knocked down |
| 1:46.5 | last month a little bit from 237 to 229. Overall, much weaker number than what Wall Street was looking for. |
| 1:55.8 | In fact, the goods producing component was very weak. Only I think what, 9,000 jobs total of which |
| 2:04.4 | 2,000 were in manufacturing. That was another sign that the labor market is not improving, |
| 2:12.5 | but worsening. Again, remember Janet Yellen is claiming that as a precursor to a rate hike as a |
| 2:19.2 | requirement to a rate hike, the job market has to make additional improvements beyond the |
| 2:25.3 | improvements that have already been seen. Clearly, that is not what is going on. Not only is the |
| 2:30.9 | labor market not getting stronger, but it is in fact getting weaker. We'll get the |
| 2:37.6 | government's number tomorrow, and that will probably be the more important of the two. It's hard |
| 2:42.9 | to say with all these part-time jobs being created, it's always difficult to handicap the number. |
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