Wall Street Clings to Economic Denial (Audio)

In yesterday’s podcast, Peter Schiff addressed the current stock market volatility, the United States housing market, retail sales numbers, and the American recovery fantasy.

Highlights from Peter’s podcast:

“I think if we close below the December low [on the Dow]… That could be a big enough decline that I think the Fed might have to come to the rescue with a clearer indication that rates are not only not going to rise anytime soon, but that QE4 is being considered. They might need to do that…

“They cannot let the stock market go into a bear market, because one of the pillars of this phony recovery is the stock market. It’s the wealth effect. It’s not just the stock market that’s in trouble, it’s the real estate market that’s in trouble. Despite the fact that the government is now letting people buy a house with 3% down… [They’re trying] to sucker more people into the real estate market to try to prop it up…

”If more people believed these [retail sales] numbers, you’d see a bigger move in the foreign exchange markets. This perception is dying hard. People are clinging to this fantasy as hard as they can. It might take Janet Yellen herself coming out and admitting…

“[Wall Street was] looking for retail sales – [minus] gasoline and [minus] automobiles – to be up by 0.6%. Instead, we were down by 0.3%. They got the direction wrong and they were way up on the magnitude… That was the biggest decline in that number since June of 2012… These are very, very weak numbers… In this case, bad news wasn’t good news for the stock market. It went down…

“What [this CNBC forecaster] doesn’t seem to understand is that he’s forecasting a US recession, but he’s also forecasting a strong dollar. I don’t think that’s possible. If the US goes into recession, the Fed will do QE4. The only reason the dollar is strong is because people believe the Fed is going to raise rates because the economy is strong… There’s no precedent for the Fed saying, ‘Well, I guess we’re going to have to suffer through a recession. This is the free market for you. We’ve got a lot of imbalances, we’ve got a lot of problems and this economy has to work it out. We’re just going to sit by and let it happen.’ There’s not a chance that Janet uber-dove Yellen is going to do that…

“I think now you’ve got a big bid in the bond market because of the strength in the dollar, even though people expect higher rates, they’re buying US Treasuries anyway as a proxy on the dollar. I think if they have to announce QE4, and people realize… that [the Fed] can never normalize rates [and] this is a permanent and there’s no exit strategy… That could be very problematic for the bond market, especially if people grasp the ramifications of that for inflation and the purchasing power of the dollar… The next QE could be bearish for bonds and the dollar… I think it will prevent the stock market from crashing, but I don’t think it will cause a huge rally…

“Legitimate safe havens would include gold, and there are also foreign markets… If you’re looking to get out of the eurozone or out of Japan, there are plenty of countries that you could invest in other than the United States – countries that are on much sounder economic footing, that don’t have all the liabilities…”

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