Perma-bear investor Peter Schiff says consumers have no confidence in the U.S. economy and are going to vote for anti-establishment candidates Donald Trump of the Republican Party and Bernie Sanders of the Democratic Party.
The top Libertarian financial analyst advised cautious investors to follow his course, pouring their funds into dividend-paying foreign stocks, as he believes the greenback will soon plunge.
Peter Schiff offered his comments and advice in an interview on Fox News last week after the Federal Reserve decided to leave its benchmark interest rate in the range of 0.25% and 0.50% and trim the number of expected interest hikes from four times this year to two.
“I said in the beginning of the year that I didn’t think the Fed would raise rates four times. I think there’s a better probability that they will reduce rates back to zero this year,” Schiff told his host. (Source: “Lack of Confidence in Economy Driving Trump and Sanders Voters,” YouTube, March 17, 2016.)
“I think the Fed is still oblivious to the fact that the U.S. economy is back in recession. The fact is that the U.S. economy is in a horrible shape,” said Schiff, who is head of Westport, Connecticut-based Euro Pacific Capital.
“Why do you think that Donald Trump is getting so many votes?” Schiff asked his host. Answering his own question, Schiff said, “All the exit polls show that the number one concern facing voters is the economy; yet Janet Yellen said the consumers are confident. No, they’re not. Those consumers are voters and they’re voting for Trump because they’re not confident.”
The real estate tycoon is leading Republican primaries with 681 delegates, followed by Senator Ted Cruz (425 delegates), and Governor of Ohio John Kasich (143 delegates). Trump needs to reach the magic figure of 1,237 delegates to snatch the Republican nomination. Some 1,042 delegates are available.
Peter Schiff laughed at the Fed for not behaving in accordance with its claim of being “data dependent.”
“Core inflation is up 2.3%—above the Fed’s so-called two-percent target, so I believe that [Janet] Yellen knows those numbers are bogus,” he argued.
Peter Schiff noted that the U.S. created a bunch of jobs last month, but 90% of those jobs were part-time jobs: “These were lousy jobs, low-paying jobs. These are Trump voters; these are Sanders voters. That is why they’re there because they have a part-time job and it’s lousy. Eighty percent of these jobs are service-sector jobs, maybe the minimum wage jobs. You can’t raise a family on these jobs; many kids can’t even move out of their parents’ house.”
Sanders is the main challenger to former secretary of state and former first lady Hillary Clinton in the Democratic presidential race. He has accumulated 870 delegates, but he is far behind Clinton’s 1,630 delegates. Some 2,265 delegates are available, and the potential nominee should reach 2,383 delegates.
Peter Schiff also voiced his belief that the U.S. currency will depreciate, urging retail investors to better throw their money into foreign markets to get “real inflation protection,” namely New Zealand, Switzerland, and Singapore.
“The dollar is falling across the board and that is going to produce spectacular returns outside the United States,” he said.
The U.S. dollar index has weakened 4.8% to 95.74 on Tuesday against a basket of currencies from its December 2 peak of 100.51.
“I would rather invest in dividend-paying foreign stocks in countries that are gonna see substantial appreciation against the dollar but also where the country has much better macroeconomics,” concluded Schiff.
iShares MSCI Singapore Index Fund (ETF) (NYSEArca:EWS), which is up 6.2% this year, provides a dividend yield of four percent, while iShares MSCI Switzerland Index Fund (ETF) (NYSEArca:EWL), which is down 4.8% this year, provides a dividend yield of 2.7%.