Retailers May Still Be In The Red After Black Friday – Ep. 120

The Peter Schiff Show Podcast

Tomorrow is Thanksgiving Day, one day before Black Friday The one day of the year where Americans make their annual pilgrimmage there they stampede to the nearest mall to buy stuff they really don'[t need and can't afford It's almost like a black and blue weekend I believe that this will be a pretty weak holiday weekend; by the time we get the sales numbers next week, it's going to be pretty dismal The news that brought the euro down this morning was rhetoric coming from Mario Draghi , head of the ECB He's talking about expanding the QE program to a 2-tiered system Why is Draghi so determined to talk down the euro and talk up inflation? He is in pursuit of Keynesian economics' holy grail - inflation If only we can succeed in getting prices to go up faster then we would have economic growth and prosperity Believing that a rising cost of living is the secret sauce of economic growth If you search the internet, you see that no one is critical of this If rising prices are so important, why not just raise the VAT? You could obtain the exact amount of inflation desired if the real goal is to rais prices But that's not really the goal, because they would just raise the VAT The real goal is to wipe out government debt and to mitigate the effects of wage hikes imposed by the government Academia and the press all give them a pass on the idea that rising prices create prosperity The truth is the reverse: prosperity comes from reducing costs As things get cheaper, more people can afford them - I use the example of cell phones Now even poor people can afford a cell phone Falling prices lift standards of living and falling prices result from a productive economy Inflation results from government interference and it doesn't make things better Let's go over the economic data this week It's been a mixed bag On Monday we did get the manufacturing PMI number, expected to come in at 54.5 which would have been an improvement Instead, we got 52.6, the lowest number in 2 years I've been talking about this for a long time on this podcast - the manufacturing recession is already here The mainstream media dismisses this because manufacturing is so small it doesn't really matter That statement says so much A downturn in manufacturing will preclude a downturn in the service sector We also got existing home sales that came out on Monday - they were below estimates There's plenty of evidence that the housing market has already rolled over, and if the Fed were to raise interest rates, it would push it even further down that hill. The big number that came out yesterday was the revision to Q3 GDP Initially the government reported that the GDP was up 1.5% Everybody expected an upward revision and that's exactly what we got - a revision to 2.1 The problem was, the number was due to a big build in inventory I have been talking about this for months on this podcast; we have huge amounts of unsold inventory Businesses have been more optimistic than they should have been based on the Fed's recovery rhetoric This mistake shows up as a positive in the GDP The other big factor is that the government assumes that inflation is just 1.3% I don't believe that for a second Health insurance alone is costing the average American's cost of living more than 2% Today the Atlanta Fed just reduced their Q4 GDP estimate from 2.3% down to 1.8% What the third quarter giveth, the fourth quarter taketh away Buried in that GDP report are some other bad numbers There was a 4.7% decline in corporate profits for the quarter - the biggest decline in corporate profits since 2009. Think about this: corporate profits are declining and inventories are growing Sales are down, profits are down; what does that tell you about employment? Continuing unemployment claims are continuing to rise If the Fed is really data dependent, then the fact that employment trends are starting to reverse could be sign...