🔴Ep. 487: Borrowing Binge Masks Worst Economy Ever

🔴Ep. 487: Borrowing Binge Masks Worst Economy Ever



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The Peter Schiff Show Podcast – Episode 487
Recorded July 26, 2019

What is Really Happening to Corporate Profits? –

Both the S&P 500 and the NASDAQ rose to all-time record highs today; nominal highs, of course.  The Dow Jones didn’t quite make it to a new high, it did close better than 50 points higher – 27,192.45, but probably the most interesting thing about the record high, is what’s actually happening to corporate profits. I’m talking about operating profits, which are profits before you subtract interest and taxes.  I’m looking at some new statistics that came out today.  There were some revisions that came out from the government; some of them on the GDP, which I will get to a bit later in the podcast.

Corporate Operating Profits Moved Sideways Since 2014 –

Just looking at corporate operating profits, it turns out that operating profits actually peaked in the third quarter of 2014.  That is while Obama was still President, a few years before Trump was President. So corporate profits – operating profits peaked in Q3 of 2014.  And they basically have been going sideways ever since, although they have been dipping recently.  If you take a look at the last quarter, operating profits are now the lowest they’ve been since 2011.

Profits Have Gone up – but Not Operating Profits –

Now, the Dow Jones finished 2011 at about 12,000  – 12,200, I think was the end print. Well, we’ve more than doubled since then, but operating profits haven’t gone anywhere. How are you doubling stock values when the profits are staying the same?  Now, of course it’s not the profits – profits have gone up – but not operating profits. But operating profits are really more important if you want to look at what’s going on in the companies in these averages. Operating profits is how much money the companies make from operating their businesses.

Tax Cuts Boosted the Stock Market –

So, actual profits have risen even though operating profits have not. Why is that?  One: we got the big tax cuts. Corporate tax rates went way down so that enabled after tax earnings to rise. So that provided a boost to the U.S. stock market. But these corporate tax cuts are temporary. They are not permanent; corporate taxes are going to be raised.  Especially if I’m right about Trump being a 1-termer; the Democrat who succeeds Trump is going to raise corporate taxes.

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41 thoughts on “🔴Ep. 487: Borrowing Binge Masks Worst Economy Ever

  1. It seems to me the reason you're seeing the public behavior in Puerto Rico is they've convinced themselves the gov't benefits they've been getting are not stolen! They think it's their right to get it. They've moralized the gov't stealing for them. So, they don't recognize the pathology they've set in motion. They think the governor was a thief, but only because of what he took for himself. They're not going to look in the mirror and say they were the recipients of ill-gotten gains. Of course not! In their minds, they're just getting what they were entitled to.

    I don't know what they were like decades earlier, but to me, the citizenry is corrupt. Not to say we're any better. We've turned into a nation of thieves, ourselves, because we have much the same mentality. You got me thinking that with the current American attitude, we shouldn't bemoan politicians going in as paupers and coming out millionaires. After all, what do you expect from thieves but to milk the system for all it's worth?

  2. Despite this contradicting the happy talk, I find this reassuring. I've been looking at my portfolio, and I've been wondering if I'm missing out on something, because it's either not gone up that much, or it's been going sideways for a while. From what I'm hearing here, it's just in line with the real economy, which is what I want. I don't want to be in stuff that's going to blow up when this bubble bursts.

  3. Does anyone know where this data is coming from? I hate when videos don't cite there data. One set in particular, the Q3 2014 Operating profits statement. Where is this data from?

  4. I now fell as inept as your first live stream. No offense but I have never commented on a video because what's the point one more opinion. We all have enough of those. most of them suck besides who what's to read a thousand of those geeze. Anyway as I was driving to me local coin shop today to purchase a silver and small gold today. If the price of gold and silver double but the dollar because of inflation is 50% of it's value but now because of inflation but fold and silver is on up 50% isn't it the same thing? I'm a holder but I thought about it

  5. The Everest size mountain in the room when all is said and done, and which no one will really address, is the enormity of our treasury debt. Now at 23 Trillion!! And the indisputable fact that Congress has been running Trillion plus deficits each year for the last 10 years if OFF BUDGET EXPENDITURES ARE INCLUDED!! Regardless of what most of us are told, the FED has been purchasing the vast majority of these yearly deficits with monopoly money!! The true balance sheet of the fed is most likely far higher than 3 or 4 trillion. When the collapse comes, it will trump (no pun intended) all of our national and community events, what ever they may be. Get set or should I say get yourselves right with the Lord, as this will be far worse, and dangerous, and longer than most people can possibly understand.

  6. Me and my wife make a combined income of 120000 a year and live in a two bedroom apartment in California with our to kids. Rent is 1900 a month. We are trying to save cash as long as we can then move out of state

  7. If u would have shorted offshore junk and went long America, u might have some credibility, but u didnt, so u dont. If u have went long tech and short oil, u might some some cred, but u didnt, so u dont. Now that u have lost so much, were all rich, we can turn the other way and make more while u hope to break even at spy 200, lmao. Idiot

  8. All time highs. I think i recall at the beginning of the year how hyped Peter was to see the market crashing, we were in a bear market and we were going MUCH lower.

    Ooops. Broken clock. Just keep saying 1 thing until it happens.

  9. Trump will be re elected. Either way the problem is too huge there is no one party that can solve or reduce this problem in time. DP dont know and RP dont worry they all just keep borrowing. It's the children that will pay.

  10. Peter why dont you talk about all the billions that the corrupt politicians have taken from the government of Puerto Rico? Give Trump a break, hes going to reset the whole corrupt system after reelection. I'll believe that over these crooked commie democrats.

  11. We already are socialist. Have been sense 1915. So if we are forced to pay tax's and subsidize anyway we might as well get something in return like healthcare. It's kinda like saying "you don't want any free cookies " to the skinny kids while all the fat ass's are standing there with there hand in the cookie jar !

  12. If anybody is still reading this blog 2 days after Peter Schiff posted the video, the story behind the RV sales could be that young people are BUYING UP OLD RV's from private parties in order to LIVE IN THEM in lieu of renting an overly expensive apartment. It is arguable if living in an old RV parked on a public street is homelessness or not.

    RV dealers sell expensive, shiny newer ones that are meant for rich people. If you can't afford an apartment, you can't afford a fancy late-model RV, which can cost as much as a condo.

    When I was a kid in the 1960's, I was crazy about the Open Road Bel Air Walk-Thru Housecar, a chassis-mounted camper with a fold-down patio table at its rear. When the table was lowered, it revealed a sliding glass door to the bed area. It had a very small bathroom. Why mention it over 50 years later? These are still around, owned by unkempt looking, otherwise homeless people. The RV's are rusted, dented and they may not even run, anymore.

  13. 🧡💚💛💙 If Peter put 0.1% of his net worth into Bitcoin when we told him too, at $0.10c, he would literally be a Billionaire right now 🧡💚💛💙

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