Wall Street Buried in Weak Economic Data, Not Snow (Video)

Peter Schiff appeared on Fox Business yesterday to discuss whether or not the Federal Reserve is going to start quantitative easing again in 2015. Anchor David Asman gave Peter credit for predicting that the economy is too weak for the Fed to rase interest rates, which Morgan Stanley now believes as well. On top of that, Asman credited Peter for predicting poor UPS earnings in the fourth quarter. Peter and Asman still wrangled over whether or not the US is falling into another recession.

Follow along with this partial transcript:

David Asman: Morgan Stanley saying today what our next guest has been saying for months now: that the economy is too weak for the Fed to start raising rates this year. So what happens now? … They say, Peter, that plagiarism is the sincerest form of flattery, so you should feel honored that Morgan Stanley listened to what you said and repeats it. What does happen now? If, in fact, the economy is getting weaker because of what is happening overseas, does the Fed get back into a QE mode where it actually starts buying bonds again?

Peter: First of all, it’s not because of what’s happening overseas, that’s the excuse… They never run out of them; it’s whatever’s going on. The minute the Fed stimulated the economy with quantitative easing and 0% interest rates, they guaranteed that it wouldn’t work. Because when you do it, you just create an artificial high. When the stimulus wears off, you’re always in worse shape economically than you were when it first began. That’s the point that we’re at. We’re going back into a recession in the United States, and it’s not just that the Fed is not going to raise rates. They’re going to have to do QE4 to keep us out of recession…

Asman: What other signs of a recession do you see?

Peter: All the economic data that has come out in the last few months has been pretty weak…

Asman: The last quarter we had a very strong GDP number.

Peter: Yeah, that was the GDP, but I’m talking the months since then. That was for Q3. The numbers for Q4, the months of October, November, December, and now January, have been very weak. And why was Q3 so strong? It was because of Obamacare and because of the big inventory build, because people were expecting a big Christmas. Look at the earnings Friday from UPS. They had a big disappointment, because holiday sales were not nearly as good as they thought. Meanwhile, they hired a bunch of people in preparation for a merry Christmas, and they got bah humbug. I was saying back then, a lot of the jobs that were created in the third and fourth quarter are going to be lost here in 2015, as businesses realize that the recovery they expected isn’t going to materialize. I think that’s what’s going to happen. We’ll see what the GDP number is on Friday, but that could be a lot weaker than people expect.

Asman: If it is a lot weaker, and the situation over in Europe doesn’t improve as a result of what the ECB does – go back to that first question. Will the Fed, will out own central bank get back into the bond buying mode?

Peter: Of course they’re going to. They guaranteed QE4 when they did QE1. These central bankers, they make our weathermen look good when it comes to forecasting. They keep talking about this great US economy… New York didn’t get buried in snow, but Wall Street got buried in bad earnings and weak economic data. We got three feet of it piling up. We’re going to have QE4. The only reason the dollar rallied – I heard you guys talking about the strong dollar – is because currency traders think it’s the European Central Bank and other central banks that are doing stupid things and that the Federal Reserve has finished doing stupid things. But we’re just getting started doing stupid things. We’re going to do QE4. We’re going to print more money than Europe, Japan, than everyone else combined.

Asman: By the way, another thing you were right on, you forecasted that UPS’ numbers were going to be weak. Indeed, they were weak. Perhaps they hired too many people thinking that they would have more business than what they did have. What else do you see for specific companies? Are you shorting any companies because of your beliefs?

Peter: I’m not short in the US stock market, because I do believe, ultimately, that in nominal terms, US stock prices will still trend up. But in real terms, I expect them to continue to lose value, especially priced in gold. Gold prices didn’t do much last year in terms of US dollars. They went up in every other currency. But year-to-date, gold is the best performing financial asset. Gold stocks are the best performing stocks. I think that’s going to continue for the rest of the year and probably for the rest of the decade.

Asman: Very quickly, the GDP numbers on Friday. What do you expect?

Peter: They’re looking for 3.2%. I think it’s more likely to be closer to 2.2%. But we’ll see. With Obamacare mixed up in there, you never know. They find a way to jack these things up by pushing money around. I think it’s much more likely to disappoint than hit their numbers.

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