Peter Schiff: Stock Market Pushed by “Irrational Exuberance” (Video)
So what are we to make of the continuing stock market climb?
Peter Schiff summed it up succinctly in a recent interview on Fox Business.
Well look, I think it’s a bubble.”
Peter admitted that doesn’t mean the bubble can’t get bigger. But he said the market is primarily pushing forward based on false optimism.
Peter pointed to the latest employment numbers to make a case that the economy isn’t as nearly as hearty as the mainstream seems to think.
This is a continuation of the same weak employment trends that put Trump in the White House. Almost a million people left the labor force in October. Third-biggest exit ever. We have a new record for the number of Americans not in the labor force. Labor force participation dropped to 62.7. And then look at real hourly earnings actually went down. They had to round it up to get it to zero. You have, I think, a third of the jobs created – a third – were waiters and bartenders, and most of those are part-time jobs. So, this is not a strong economy.”
But Fox Business Making Money host Charles Payne pushed back, saying despite the jobs numbers, other soft and hard data show that the “wheels of commerce are moving.”
Peter admitted there is a lot of optimism, but he called it “false optimism.”
Had Hillary Clinton won, I think we’d already be in a recession. And I think the reason that we’re not is because people are convinced that maybe things are going to get better – that we’re going to cut taxes, get rid of regulations, so we’re going to have a lot of economic growth. But I think people are overlooking an enormous problem that it’s actually getting worse, and I think once this false confidence wears off and people start being a little more realistic, I think we’re still headed to recession. Maybe it’s going to happen a year later, but this is going to be a big problem for the stock market, it’s going to be a problem for the dollar.”
Peter has made this case before. raising questions about whether Trump can actually deliver on the promises he made. With the dysfunction in D.C., that seems pretty unlikely. Nevertheless, investors continue pushing ahead like current Wall Street bull run can never end. Peter said investors need to beware of the current complacency relative to the overvaluation of the stock market.
Stocks have really never been this expensive and people have never been this sure that they’re not going to go down … Believe me, the US economy today has bigger problems than it had in 2007 before the financial crisis … I say there is a lot of irrational exuberance among professional investors, people that are managing money for a living.”
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