Peter Schiff: The Markets Are Afraid Of The Wrong Thing
Peter Schiff: The Markets Are Afraid Of The Wrong Thing
Via SchiffGold.com,
The markets have been jittery lately. The mainstream remains concerned about inflation – more specifically that the Fed is going to tighten monetary policy sooner…
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The markets have been jittery lately. The mainstream remains concerned about inflation – more specifically that the Fed is going to tighten monetary policy sooner rather than later to fight rising prices. But in his podcast, Peter Schiff makes the case that the markets are afraid of the wrong thing. They shouldn’t be worried about the Fed fighting inflation. They should be worried that it won’t.
There was a big global selloff in stocks earlier this week. The Dow was down nearly 900 points at its low. The mainstream blamed the big selloff on COVID fears. But Peter said he wasn’t so sure. After all, it’s not like anything really changed over the weekend. The delta variant of COVID-19 was just as much a problem on Friday as it was on Monday. Peter said he thought the coronavirus was a convenient excuse and that markets are becoming more concerned that the Fed is going to take away the punch bowl and prick the bubble.
The markets continue to fret over inflation. But it’s not inflation per se that they’re worried about.
What’s bothering the market is that the market believes the Fed is going to fight inflation - that the Fed is going to do what it said. After all, Jerome Powell just assured the nation, ‘Have faith. We will make sure there is no inflation. We believe it’s transitory, but in the event that we’re wrong, don’t worry. We’re going to be on the job. We’re going to use our tools. We’re reluctant to use them now, but don’t worry. We’ll use them in the future if we have to.’ And the markets are taking the Fed at its word. I don’t know why, but they still believe the things that Fed officials say.”
The markets are worried about higher interest rates and that the Fed will begin to taper asset purchases. They’re worried that the central bank will shut down the party sooner than expected.
The Reserve Bank of New Zealand recently announced an end to its quantitative easing program. Many believe this is a prelude to interest rate hikes in that country.
I think the fact that you have a central bank ending QE, the markets are now anticipating the other dominos that are going to fall. It’s not just going to be this one central bank in a small little country like New Zealand. This is simply indicative of something that’s going to be playing out on a much bigger scale with central banks all around the world. And that’s why it was a global selloff.”
The question is will the US follow that path? Peter doesn’t think so.
Even with the big risk-off day on Monday, investors didn’t pile into gold. The yellow metal was basically flat on Monday. And as risk sentiment returned on Tuesday, gold felt some selling pressure. Peter said the reason people aren’t piling into gold is because they not only think the Fed will fight inflation, but that it will be successful. But he thinks the price of gold will ultimately go way up.
Unlike the markets, I not only don’t expect the Fed to win a fight against inflation; I don’t expect it to get in the ring. I think inflation is going to win by default because the government’s not even going to attempt to fight because the consequences are too high. And that’s what the markets just don’t seem to understand.”
If the Fed was really willing and able to use its inflation-fighting tools, why hasn’t it started to use them given inflation has run hotter than expected every month this year?
Given the severity of the consequences of inflation not being transitory, it makes no sense for the Fed to roll the dice and take a chance. It should do something preemptively to prevent that from happening. The only reason it’s not doing something preemptively is because it doesn’t want to hurt the economy. Well, you should hurt the economy in order to prevent it from being hurt far worse in the future if the gamble doesn’t pay off.”
It’s easy to talk about doing something hard in the future. A fat guy can talk about going on a diet next week or next month. But actually going on that diet is a different matter altogether. When push comes to shove, will the Fed be able to back up its talk and give the economy the medicine that it needs, despite the consequences?
As difficult as it would be for the Fed to use its tools to fight inflation today, it’s going to be much more difficult tomorrow to use those tools because the inflation problem is going to be much bigger, which means they’re going to have to take a much bigger hammer to the economy. So, they’re going to do much more damage to an even greater leveraged economy when they have to fight an even larger inflation monster.”
Peter said investors are afraid of the wrong thing.
Instead of being afraid of the inflation fight, they should be afraid of inflation and the fact that it wins, that there is no fight, and it gets much worse than everybody expects.”
International
United Airlines adds new flights to faraway destinations
The airline said that it has been working hard to "find hidden gem destinations."
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Since countries started opening up after the pandemic in 2021 and 2022, airlines have been seeing demand soar not just for major global cities and popular routes but also for farther-away destinations.
Numerous reports, including a recent TripAdvisor survey of trending destinations, showed that there has been a rise in U.S. traveler interest in Asian countries such as Japan, South Korea and Vietnam as well as growing tourism traction in off-the-beaten-path European countries such as Slovenia, Estonia and Montenegro.
Related: 'No more flying for you': Travel agency sounds alarm over risk of 'carbon passports'
As a result, airlines have been looking at their networks to include more faraway destinations as well as smaller cities that are growing increasingly popular with tourists and may not be served by their competitors.
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United brings back more routes, says it is committed to 'finding hidden gems'
This week, United Airlines (UAL) announced that it will be launching a new route from Newark Liberty International Airport (EWR) to Morocco's Marrakesh. While it is only the country's fourth-largest city, Marrakesh is a particularly popular place for tourists to seek out the sights and experiences that many associate with the country — colorful souks, gardens with ornate architecture and mosques from the Moorish period.
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"We have consistently been ahead of the curve in finding hidden gem destinations for our customers to explore and remain committed to providing the most unique slate of travel options for their adventures abroad," United's SVP of Global Network Planning Patrick Quayle, said in a press statement.
The new route will launch on Oct. 24 and take place three times a week on a Boeing 767-300ER (BA) plane that is equipped with 46 Polaris business class and 22 Premium Plus seats. The plane choice was a way to reach a luxury customer customer looking to start their holiday in Marrakesh in the plane.
Along with the new Morocco route, United is also launching a flight between Houston (IAH) and Colombia's Medellín on Oct. 27 as well as a route between Tokyo and Cebu in the Philippines on July 31 — the latter is known as a "fifth freedom" flight in which the airline flies to the larger hub from the mainland U.S. and then goes on to smaller Asian city popular with tourists after some travelers get off (and others get on) in Tokyo.
United's network expansion includes new 'fifth freedom' flight
In the fall of 2023, United became the first U.S. airline to fly to the Philippines with a new Manila-San Francisco flight. It has expanded its service to Asia from different U.S. cities earlier last year. Cebu has been on its radar amid growing tourist interest in the region known for marine parks, rainforests and Spanish-style architecture.
With the summer coming up, United also announced that it plans to run its current flights to Hong Kong, Seoul, and Portugal's Porto more frequently at different points of the week and reach four weekly flights between Los Angeles and Shanghai by August 29.
"This is your normal, exciting network planning team back in action," Quayle told travel website The Points Guy of the airline's plans for the new routes.
stocks pandemic south korea japan hong kong europeanInternational
Walmart launches clever answer to Target’s new membership program
The retail superstore is adding a new feature to its Walmart+ plan — and customers will be happy.
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It's just been a few days since Target (TGT) launched its new Target Circle 360 paid membership plan.
The plan offers free and fast shipping on many products to customers, initially for $49 a year and then $99 after the initial promotional signup period. It promises to be a success, since many Target customers are loyal to the brand and will go out of their way to shop at one instead of at its two larger peers, Walmart and Amazon.
Related: Walmart makes a major price cut that will delight customers
And stop us if this sounds familiar: Target will rely on its more than 2,000 stores to act as fulfillment hubs.
This model is a proven winner; Walmart also uses its more than 4,600 stores as fulfillment and shipping locations to get orders to customers as soon as possible.
Sometimes, this means shipping goods from the nearest warehouse. But if a desired product is in-store and closer to a customer, it reduces miles on the road and delivery time. It's a kind of logistical magic that makes any efficiency lover's (or retail nerd's) heart go pitter patter.
Walmart rolls out answer to Target's new membership tier
Walmart has certainly had more time than Target to develop and work out the kinks in Walmart+. It first launched the paid membership in 2020 during the height of the pandemic, when many shoppers sheltered at home but still required many staples they might ordinarily pick up at a Walmart, like cleaning supplies, personal-care products, pantry goods and, of course, toilet paper.
It also undercut Amazon (AMZN) Prime, which costs customers $139 a year for free and fast shipping (plus several other benefits including access to its streaming service, Amazon Prime Video).
Walmart+ costs $98 a year, which also gets you free and speedy delivery, plus access to a Paramount+ streaming subscription, fuel savings, and more.
If that's not enough to tempt you, however, Walmart+ just added a new benefit to its membership program, ostensibly to compete directly with something Target now has: ultrafast delivery.
Target Circle 360 particularly attracts customers with free same-day delivery for select orders over $35 and as little as one-hour delivery on select items. Target executes this through its Shipt subsidiary.
We've seen this lightning-fast delivery speed only in snippets from Amazon, the king of delivery efficiency. Who better to take on Target, though, than Walmart, which is using a similar store-as-fulfillment-center model?
"Walmart is stepping up to save our customers even more time with our latest delivery offering: Express On-Demand Early Morning Delivery," Walmart said in a statement, just a day after Target Circle 360 launched. "Starting at 6 a.m., earlier than ever before, customers can enjoy the convenience of On-Demand delivery."
Walmart (WMT) clearly sees consumers' desire for near-instant delivery, which obviously saves time and trips to the store. Rather than waiting a day for your order to show up, it might be on your doorstep when you wake up.
Consumers also tend to spend more money when they shop online, and they remain stickier as paying annual members. So, to a growing number of retail giants, almost instant gratification like this seems like something worth striving for.
Related: Veteran fund manager picks favorite stocks for 2024
stocks pandemic mexicoUncategorized
Comments on February Employment Report
The headline jobs number in the February employment report was above expectations; however, December and January payrolls were revised down by 167,000 combined. The participation rate was unchanged, the employment population ratio decreased, and the …
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Prime (25 to 54 Years Old) Participation
Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.
The 25 to 54 years old participation rate increased in February to 83.5% from 83.3% in January, and the 25 to 54 employment population ratio increased to 80.7% from 80.6% the previous month.
Average Hourly Wages
The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES). Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.3% YoY in February.
Part Time for Economic Reasons
From the BLS report:"The number of people employed part time for economic reasons, at 4.4 million, changed little in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."The number of persons working part time for economic reasons decreased in February to 4.36 million from 4.42 million in February. This is slightly above pre-pandemic levels.
These workers are included in the alternate measure of labor underutilization (U-6) that increased to 7.3% from 7.2% in the previous month. This is down from the record high in April 2020 of 23.0% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).
Unemployed over 26 Weeks
This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.203 million workers who have been unemployed for more than 26 weeks and still want a job, down from 1.277 million the previous month.
This is close to pre-pandemic levels.
Job Streak
| Headline Jobs, Top 10 Streaks | ||
|---|---|---|
| Year Ended | Streak, Months | |
| 1 | 2019 | 100 |
| 2 | 1990 | 48 |
| 3 | 2007 | 46 |
| 4 | 1979 | 45 |
| 5 | 20241 | 38 |
| 6 tie | 1943 | 33 |
| 6 tie | 1986 | 33 |
| 6 tie | 2000 | 33 |
| 9 | 1967 | 29 |
| 10 | 1995 | 25 |
| 1Currrent Streak | ||
Summary:
The headline monthly jobs number was above consensus expectations; however, December and January payrolls were revised down by 167,000 combined. The participation rate was unchanged, the employment population ratio decreased, and the unemployment rate was increased to 3.9%. Another solid report.
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