Peter Schiff: Trump COVID-19 Positive; Employment Outlook Negative
We got the September jobs report on Friday but it was completely overshadowed by the announcement that President Trump tested positive for COVID-19. Peter talked about the ramifications of both in his podcast.
According to the Bureau of Labor Statistics seasonally adjusted number, the US economy added 661,000 new jobs last month. This was a significant miss from the well over 800,000 jobs economists were projecting. Still, the unemployment rate came in lower than expected, at 7.9%. That was a healthy drop from August’s 8.4%. That would seem like good news. But the drop in the unemployment rate was partly due to the number of people who just gave up. The labor participation rate fell from 61.7% in August to 61.4% in September.
Peter said it’s hard to know what to make to Trump’s positive COVID test. He said the thinks it’s a slight negative for his reelection chances, assuming he recovers with no problems.
The reason this might be a negative for the president is he’s got it. It puts the focus of the election with, what, just over 30 days to go, really back on COVID, which is not where the president necessarily wants it to be. And the accusation by the Democrats, right or wrong, is that he didn’t do a good job protecting the country from COVID. And obviously, he didn’t do a good job if he couldn’t even protect himself from COVID. You know, they’ve accused the president of not wearing a mask often enough. He’s made fun of Biden for how often he wears a mask, even in circumstances where you wouldn’t think a mask was required — he wears it anyway. Well, Trump is the one that got COVID. So far, Biden doesn’t have it. So, I think overall, that perception is negative.”
Trump having the coronavirus could also disrupt the last two debates. Peter said he thinks that would also work against Trump because he needs a knockout victory in the debates.
Overall, Peter said he was surprised that the dollar didn’t fall more and that we didn’t see a bigger rally in gold and silver on the news.
I do think that anything that increases the probability of Biden winning is bearish for the dollar and bullish for gold. And I think Trump getting COVID does that. Maybe the markets don’t handicap it the way I do. Maybe they figure it’s a non-event. … But again, gold is going up regardless of the outcome of the election, and the dollar is going down. It’s just that the moves will be even bigger if Trump ends up losing and Biden is the next president.”
As far as the jobs report goes, Peter said it’s just as well that it was overshadowed by the Trump coronavirus news because the report wasn’t particularly good. Even though a lot of jobs were “created,” Peter said it’s important to remember they aren’t really new jobs.
These are jobs that were lost being restored. These are people going back to the jobs they used to have. So, it’s not like, oh, we have this great, booming economy creating all these new jobs. No. We are just recreating the jobs we just destroyed.”
Longterm, Peter said he thinks a lot of these jobs were in fact lost. We just don’t know it yet.
I think a lot of these people who have been recalled, who have come back to work, I think ultimately their employers are going to realize, after the fact, that they don’t really need a lot of these workers, and a lot of these workers are going to be re-fired. Except next time it is going to be permanent, not temporary.”
There are certainly a lot more layoffs on the horizon, as we reported last week.
All-in-all, it wasn’t nearly as strong a jobs report as expected. And Peter said we need really strong reports because we’re trying to get out of a hole.
If you think there’s going to be a ‘V-shaped’ recovery, you’ve got to have strong numbers on the right side to come anywhere close to having a V, and the numbers that we’re getting just aren’t going to cut it.”
In this podcast, Peter also talked about the prospects and impacts of government stimulus.