Wall Street Bigwig: Powell always meets market expectations

Recently, Peter Schiff analyzed the latest Producer Price Index (PPI) and Consumer Price Index (CPI) in foreign media, reiterating his prediction of a rate cut in September and commenting on the interview between Trump and Musk, which attracted nationwide attention on Monday. He also pointed out the root causes of the rising housing and education costs, which have made ordinary Americans feel the economic situation is very severe.

Peter highlighted some details of the PPI report, which was better than expected, potentially revealing profit margin pressures faced by American businesses: "Trade services actually include a markup that many retail companies charge, so the lower-than-expected growth in this number may indicate some profit margin pressures in the future, and companies may need to bear a larger proportion of cost increases. This is not good news for profits. Some people always accuse greedy companies of exploiting customers by raising prices, but in reality, most companies are trying to protect their customers as much as possible. Raising prices is often a last resort!"

The media is celebrating a slightly better-than-expected CPI report, but Peter reminds people of how long it takes to make such progress. Such minor improvements do not necessarily indicate how well the Fed is doing its job: "CPI peaked at over 9% and by June 2023, it had dropped to 3%. In other words, 13 months ago CPI was at 3%, and now it's at 2.9% — 13 months later, CPI has only decreased by 0.1%. What's the significance of this? It took us 13 months to reduce CPI by 0.1%."

With market expectations for a Fed rate cut next month increasing, the Fed is likely to meet this 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 rate cut in September. That's why US stocks rebounded after being sold off on Monday! Since the market has already priced in the possibility of a rate cut in September, Powell has no reason not to deliver. He always meets market expectations and doesn't want to cause surprises in the market."

Peter commented on the interview between Trump and Musk, which was criticized by the United Auto Workers (UAW). They seem unaware of the role they played in the outsourcing of the US auto industry: "The UAW helped destroy the US auto industry. Musk is trying to rebuild it! UAW has eliminated job opportunities in this industry. Musk is creating job opportunities. The only two companies not destroyed by the UAW are Ford and General Motors. Thanks to the UAW, the US is left with only these two car companies."

Peter explained the root causes of two major issues affecting Americans' wallets — the decline in housing prices and the value of a college degree. He said, "The free market raises quality and lowers prices. The government lowers quality and raises prices! Now they say, 'You have to get a college degree to sell fries at McDonald's.' That's what the government has done with college degrees, and they've done the same thing in the housing market."