February 4, 2023

Philip Schiff: Easing Price Pumpiing Is Transitory

“It was not the increase in inflation that was transitory. That’s permanent. What is transitory is this slight reduce that we’re enjoying at this point. “

Last week, the Producer Price Index data finally showed some cooling of wholesale prices. That coupled with better-than-expected  CPI data   further buoyed hope that this Fed is winning the particular war on inflation. But in his podcast, Peter Schiff emphasized that easing inflation is transitory. And a weakening dollar will be a big portion of the story.

Markets rallied after the PPI data came out last week.

“ The financial markets liked this number and that was part of the reason for the rally that day — the reaction to this better-than-expected information on inflation. But you have to remember that all of this better-than-expected information on inflation is transitory. So , it wasn’t the particular increase in inflation that was transitory. That’s permanent. What is transitory is this slight decrease that will we’re enjoying now. ”

It’s important to remember that although the rate of increase will be slowing down, prices are still rising.

“ They’re just not going up as soon as they were. But all of that is definitely temporary because the reason that individuals saw a decline in the rate of increase in costs was because we obtained a correction in commodities, in particular oil prices. We now have also got a decline in longer-term interest rates. That has affected mortgage rates plus probably other debt payments that are being made. That is helping to reduce somewhat the rate associated with increase in costs businesses are going through. But all these factors are temporary. ”

Peter noted that will commodity prices have already turned their decline.

One of the reasons commodity prices dropped was the strength of the buck. But the dollar completely turned in the fourth quarter. Upon Sept. 27, just before the beginning of Q4, the dollar catalog reached 114. 11. Which was the highest level of the year. Following that the dollar index fell by nearly 8%. These days, the DIX is hanging just above 101.

Peter said he or she expects this dollar weak point to continue for the balance of the year.

“ I still think that 2023 could end up being among the worst years ever, plus maybe  the   worst year actually for the US dollar, and that weakness is going to help propel consumer prices much higher. Therefore , I believe that after this transitory reduction in the acceleration of the inflation rate, I think we will head higher again which before the year is over, we’re going to be printing year-over-year boosts in the CPI that will eclipse the high from last year. ”

Philip also covered some of the most current economic data that turned out last week. For instance, the Philadelphia Fed Manufacturing Index meant for January came in weak. And existing home sales furthermore underscored the growing weakness in the housing market. In 2022, existing home sales fell by 34%. That was the particular single biggest drop in home sales ever.

“ This means the drop is larger than it was during COVID. It can bigger than it was at any point throughout the 2008-2009 financial crisis. ”

Peter stated this has very ominous ramifications for the economy in 2023 because a lot of economic exercise that shows up in GDP is related to home sales.

“ So , all those people who are still clinging to the false hope how the economy is going to experience comfortable landing are not reading some of the very bold upper-case letters clearly written on this falling apart wall. ”

In this podcast, Peter also talks about the skidding in growth stocks, precious metal making a 9-month high last week, job losses in the technology sector, the wasteful meeting in Davos, and how the Netflix documentary on Bernie Madoff proves more regulations won’t help us.


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