Toys R Us Bankruptcy: Companies Saddled With Debt Can’t Respond to a Changing Marketplace

The air is rushing out of the retail bubble. It’s easy to finger-point at the internet and blame it for the black cloud enveloping the brick and mortar retail sector. But in truth, it’s not all Amazon’s fault. During a podcast last spring, Peter Schiff put his finger on a more fundamental problem. 

While online sales have increased significantly, they still don’t make up for the total decline in sales in brick-and-mortar stores. Peter believes the problems in the retail sector reveal disturbing economic truths about middle America. 

"Another reason people are shopping on the internet, other than just the convenience of not leaving your house when you’re doing your shopping, is the fact that the average American shopper is broke. They can barely afford to buy the stuff that they’re buying. In fact, most people are buying stuff that they can’t afford. They’re just buying anyway and they’re using a credit card…Retailing is a shrinking market because Americans’ pocketbooks are shrinking, their paychecks are shrinking.”

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Jamie Dimon (J.P. Morgan): Bitcoin Is A Fraud

Jamie Dimon came out and said bitcoin is is a fraud so now I'm kind of in his camp although I don't agree with everything that Jamie Dimon said and I think that there are problems that Bitcoin has that he doesn't even understand. He just assumes that the government is gonna shut Bitcoin down and you know if it actually worked he would be right.

Russia and China Are Buying Gold

Russia and China are buying gold specifically to minimize their dependence on the US dollar. (SPDR Gold Trust ETF (GLD), Newmont Mining (NEM), Barrick Gold (ABX), Market Vector Russia ETF Trust (RSX), iShares FTSE/Xinhua China 25 Index ETF(FXI))

Federal Reserve: A Cosmetic Reduction In Its Balance Sheet

Even if the Federal Reserve does get away with a cosmetic reduction in its balance sheet, the total will be completely reversed by the first month of QE4. (SPDR Gold Trust ETF (GLD), SPDR S&P 500 Index ETF (SPY), Nasdaq 100 Index ETF (QQQ), iShares Russell 2000 Index ETF (IWM), SPDR Dow Jones Industrial Average ETF (DIA))

Eliminating The Debt Ceiling

Now they're talking about eliminating the debt ceiling.

Donald Trump has got some kind of gentlemen's agreement going on with the Democrats that, "Hey, let's just get rid of this debt ceiling so that we never have to deal with the fact that maybe it won't be lifted" because the politicians have succeeded in making irresponsibility look responsible because every time there's a threat not to raise the debt ceiling they label the people who don't want to raise it as reckless or irresponsible. They say,  "You have to raise it, America always pays its bills you can't play around with our faith and credit."

The irony of it is we never pay our bills. That's why we have all this debt, I we were paying our bills we wouldn't have to raise the debt ceiling.

Stock Market, Tax Reform

I think the catalyst for the rise in the stock market continues to be the enthusiasm that really started yesterday based on president Trump's announcement that he was close to a deal on tax cuts and that the deal is supposed to be announced sometime before the end of the month.

Now of course, I've seen this movie before. I mean Trump has come out and made a lot of statements about a deal being ready being on the table, gonna happen soon and of course so far every time he has touted this nothing has materialized. 

Yet the markets are not looking at the boy who cried wolf, now they actually believe the President, they think he's serious and one of the things that he's saying that maybe makes this more credible is that he's saying that he's working with the Democrats that if he can't get something done with the Republicans he's already working on a plan with the Democrats and so one way or another we're gonna get this major tax reform.

But of course it's not really going to be tax reform. It's going to be tax cuts based on what the President is saying. We're not going to reform the tax code, we're not going to have a major shift that is going to make the economy more productive. 

The  President has already said that the rich are not going to get a tax cut at all. They may even have a tax hike. So if you're not going to lower the top rate if you're not going to reduce the marginal rate of tax you're really not going to get any economic stimulus because that's where the growth comes from. Where you lower the marginal rate and you may have a situation where people actually work harder at lower tax rates and produce more taxable income.