Peter Schiff: The Fed Still Isn't Data-Driven
In this episode, Peter analyzes recent PPI and CPI reports, reiterates his September rate-hike prediction, and comments on the Tump-Musk X interview that garnered the country’s attention on Monday. He also diagnoses the source of high housing and education costs that have made the economy feel so brutal to everyday Americans.
Peter notes how this week’s PPI report, which came in better than expected, may reveal margin pressure on American business:
“Trade services actually includes a lot of the markups that retail companies would charge, and so the fact that this number went up less than expected may indicate there’s some pressure on margins going forward and that companies are eating a larger percentage of their increased costs. And so that doesn’t bode well for earnings if that’s the case. People like Elizabeth Warren are always accusing greedy companies of gouging the customers with price hikes, but more often than not, most companies do everything they can to insulate their customers. Raising prices is almost a last resort!”
The media is celebrating a slightly better-than-expected CPI report as well, but Peter reminds us how long it took to make this progress. Such a meager improvement is not the sign of a job well done:
“The headline number, which had gotten above 9% at the peak - it first went down to 3% in June of 2023. So 13 months ago, the CPI was at 3%. Now it’s at 2.9%— 13 months later. So what? It took us 13 months to shave one tenth of one percent off the CPI? … Why should the Fed be cutting rates? If anything, the Fed should be looking at these numbers and say, ‘You know what? Rates are too low. We stopped too soon.’”
With expectations building for rate cuts next month, the Fed will likely deliver:
“I still believe that, despite this data, we’re gonna get a rate cut in September. And the main reason we’re going to get a rate cut in September is because now the markets are counting on a rate cut in September. That’s why we rallied back from the sell off on Monday! And so now that the market is pricing in a September rate cut, there’s no way that Powell is not going to deliver. … He always meets market expectations. … What he doesn’t want to do is pull the rug out from under the market.”
Peter comments on the Trump-Musk interview that aired Monday and has since drawn fire from the United Auto Workers union. They seem to be unaware of the role they played in exporting the American auto industry:
“The UAW— they helped destroy the American automobile industry. Elon Musk is trying to rebuild it! They killed jobs in the auto sector. He’s creating jobs. … The only two the UAW didn’t destroy were Ford and General Motors. There were only two auto companies left in America thanks to the UAW.”
Peter agrees with Trump’s take on the Department of Education:
“The Department of Education is a waste of money. It doesn’t educate anybody! Just like the Department of Energy is a waste. It doesn’t produce any energy! In fact, we didn’t even have the Department of Energy until Jimmy Carter. So we don’t need it. Get rid of it! As well as a lot of other departments.”
In his closing remarks, Peter explains the source of two major problems hitting Americans’ wallets— housing prices and the diminishing value of college degrees:
“The free market brings quality up and price down. The government brings quality down and price up! … Now they say, ‘You gotta go get a college degree so you can get a job at McDonalds serving french fries.’ This is what the government has done to a college degree, and they did the same thing to housing, and Elizabeth Warren just doesn’t understand that.”