Wall Street tycoon: Powell always meets market expectations

Well-known economists questioned, "It took the Fed 13 months to cut CPI by 0.1%. What's the point?"
Recently, Peter Schiff analyzed the recent producer price index (PPI) and consumer price index (CPI) in foreign media, reiterated his prediction of a September rate cut, and commented on Trump's interview with Musk, which attracted national attention on Monday. He also pointed out the root causes of the rising housing and education costs, which have made ordinary Americans feel that the economic situation is very severe.

Peter pointed out some details of the PPI report that was better than expected and may reveal margin pressures facing US companies: "Trade services actually includes a lot of the markups that retail companies charge, so the lower than expected growth in this number may indicate some margin pressures ahead and that companies may need to bear a larger proportion of cost increases. This is not good news for earnings. People always accuse greedy companies of exploiting customers by raising prices, but in fact most companies protect their customers as much as possible. Raising prices is often the last resort!"

The media is celebrating a slightly better than expected CPI report, but Peter reminds people how long it takes to get to this point. Such a small improvement does not reflect how well the Fed is doing its job: "The CPI peaked at over 9% and fell to 3% for the first time in June 2023. That is, 13 months ago the CPI was 3%, and now it is 2.9% - 13 months later the CPI has only shaved 0.1%. What does this mean? It took us 13 months to shave 0.1% off the CPI."

With the market increasingly expecting a rate cut by the Fed next month, the Fed is likely to deliver on that expectation: "I still believe that despite this data, we will see a rate cut in September, mainly because the market is now counting on a September rate cut. That’s why stocks rebounded after the sell-off on Monday! Since the market has already priced in the possibility of a September rate cut, there is no reason for Powell not to deliver. He always meets market expectations and he doesn't want to surprise the market."

Peter commented on Trump's interview with Musk, which was criticized by the United Auto Workers (UAW). They don't seem to realize the role they played in the outsourcing of the American auto industry: "The United Auto Workers helped destroy the American auto industry. Musk is trying to rebuild it! The UAW eliminated jobs in the industry. Musk is creating jobs. The only two companies that were not destroyed by the UAW are Ford and General Motors. Thanks to the UAW, there are only these two auto companies left in the United States."

Peter explained the source of the two main problems affecting Americans' wallets - the decline in housing prices and the value of college degrees. He said: "The free market has increased quality and reduced prices. The government has reduced quality and increased prices! Now they say, 'You have to get a college degree so that you can sell French fries at McDonald's.' This is what the government did with college degrees, and they did the same thing in the housing market."

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