Inflation Wild Cards

A mixed day... Handicapping the Fed's next move... The surprise to keep in mind... Inflation wild cards at home and abroad... A recommended recipe for survival... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] A mixed day... Handicapping the Fed's next move... The surprise to keep in mind... Inflation wild cards at home and abroad... A recommended recipe for survival... --------------------------------------------------------------- Today was a 'mixed' performance... The benchmark S&P 500 Index and its equal-weight version were near even, though both are still near all-time highs set just a few days ago. The Nasdaq Composite Index was a little higher, but so were long-term bond yields and oil prices as Iran and Israel continue to escalate war in the Middle East... again highlighting the potential for energy supply disruptions in the region. A barrel of Brent crude oil – the international benchmark – is up to around $74 from below $70 just a few weeks ago. But that price is still well off a 52-week high above $90, as oil prices have trended generally lower since the recent 40-year-high inflation peaked in 2022. Gold's push to new all-time highs has cooled over the past week – though it popped higher yesterday, and the precious metal remains trading near $2,660. The interest-rate path... On Monday, Federal Reserve Chair Jerome Powell made some headlines at an event hosted by the National Association for Business Economics in Nashville, Tennessee... where he suggested that the central bank is not in a rush to cut rates further. It's "not something that we need to go fast on," Powell said, and made his plans explicit... If the economy performs as expected, that would mean two more cuts this year, a total of 50 more [basis points]. The Associated Press said that Powell's comments "disappointed the hopes of many investors that the Fed would implement another steep half-point reduction in its key rate before the end of the year." To which we first say, be careful what you wish for. As we've repeatedly written, bigger rate cuts could mean the economy is taking a turn for the worse... Alternatively, if the Fed is wrong about its policy (again), excess rate cuts could spark higher inflation (again) down the road. Second, if anything, I (Corey McLaughlin) take Powell's comments on Monday as an acknowledgment that he may have heard what the market has been saying recently. Longer-term bond yields (and inflation expectations) rose after the Fed's 50-basis-point rate cut in mid-September. But most importantly... What Powell said Monday probably won't matter all that much by the time the Fed next meets in November – or even by this Friday. That's when Uncle Sam shares the next "nonfarm payrolls" report and updated unemployment rate, covering September. The market is likely to take its cues from those numbers, even if they will be "revised" later. The Fed is following, too. Because remember, [on the day]( of the Fed's 50-basis-point cut decision, Powell said what might come next from the central bank... The actual things that we do will depend on how the economy evolves. If you're interested in the future path of monetary policy, you're probably better off watching what the economy is doing than anything the Fed is saying. As usual, the Fed is chasing reality. That said, enough other investors hang on central-bank expectations... Weaker-than-expected numbers on Friday would suggest a Fed more likely to cut rates by more than currently expected, which could stoke volatility. On the other hand, numbers at or close to expectations wouldn't upset the status quo, which tends to be bullish. As of today, federal-funds-futures traders believe what Powell is saying halfway. They're putting roughly 60% odds on a 25-basis-point cut at the Fed's November meeting. Add they're at 49% odds of rates being 75 points lower by the end of the year (with the other half split between bigger or smaller cuts. That would suggest they're expecting 25 points in November followed by another 50-basis-point cut at the central bank's final 2024 meeting in December. Keep this 'surprise' scenario in mind, too... Eventually, stronger-than-expected jobs numbers could upend all the prevailing narratives in the market today – including most notably the idea that inflation is continuing to ease. We've recently seen two early signs... Yesterday's Job Openings and Labor Turnover Survey ("JOLTS") report showed that the number of job openings in the U.S. increased to 8 million, from 7.7 million a month before. Today's private-payrolls report from payroll-processing firm ADP reported 143,000 jobs being added in September, which was higher than economists' consensus expectations of 128,000. The job gains were widespread across industries, led by leisure and hospitality (34,000), construction (26,000), education and health services (24,000), and professional and business services (20,000). At the same time, we've reported on other data in recent months that suggests hiring slowing down in the U.S. economy and pre-recession reactions in the market... So we'll want to keep watching to see if the major trend of job-market weakening and a rising unemployment rate since April 2023 turns around. However, moving ahead, if the labor market doesn't keep weakening as had been the case over the past year and this summer, the Fed's rate cut "cycle" could – or should – finish early. Then again, the central bank is typically slow to react, so the current rate-cut track could go on as planned until another "surprise" – like high(er) inflation numbers again return to prominence. Such is the trouble with trying to manipulate a $27 trillion U.S. economy. A pair of wild cards and a recipe... As we mentioned yesterday, the workers' strike at East Coast and Gulf Coast ports is on... and war surely isn't deescalating in the Middle East. The strike is inflationary in the short term, and the longer it goes on, has the potential to be recessionary in third-quarter GDP numbers. Meanwhile, the trouble in the Middle East, depending on how it develops, could also stoke inflation should it impact energy supply from major oil-producing countries and/or additional supply-chain concerns in the region. Remember, the Houthis are still attacking freighters in the Red Sea, and Iran is home to significant oil-production facilities that could be targets of Israeli retaliatory strikes to yesterday's missile attacks from Iran. That said, in a world where inflation is already reality – and we're willing to bet it will be in some form for our entire lifetime – you'll want to have a recipe to protect and grow your hard-earned wealth. Here's ours: buying shares of high-quality businesses at reasonable prices... owning inflation hedges such as gold... and being ready for the inevitable next credit-related crisis, both with protection in mind and because of the risk-reward opportunities that emerge amid a panic. --------------------------------------------------------------- Recommended Links: ['Today's Market Is a Trap']( If you're holding stocks, you can't afford NOT to see this urgent warning from Altimetry founder Joel Litman. He famously predicted the financial crisis in 2008, and is now sounding the alarm on a similar crisis unfolding on Wall Street – one that'll have dire implications for investors over the next 12 to 36 months. [It's time to move your money](. --------------------------------------------------------------- [Are You Ready for the Great Crash of 2024?]( This year, the S&P 500 Index has posted dozens of new all-time highs... the Federal Reserve just cut rates... and popular AI stocks have experienced an incredible run-up. But what should you expect next? Renowned investor Porter Stansberry just stepped forward with his next big prediction and how he's personally preparing (which you can do, too). [Click here to learn more](. --------------------------------------------------------------- New 52-week highs (as of 10/1/24): Automatic Data Processing (ADP), Altius Renewable Royalties (ARR.TO), Booz Allen Hamilton (BAH), Alpha Architect 1-3 Month Box Fund (BOXX), BWX Technologies (BWXT), Constellation Energy (CEG), CF Industries (CF), CME Group (CME), Western Asset Emerging Markets Debt Fund (EMD), Home Depot (HD), iShares U.S. Aerospace & Defense Fund (ITA), Jack Henry & Associates (JKHY), Kinder Morgan (KMI), Lockheed Martin (LMT), Meta Platforms (META), Northrop Grumman (NOC), NVR (NVR), Pembina Pipeline (PBA), RenaissanceRe (RNR), Sprouts Farmers Market (SFM), TransDigm (TDG), Toast (TOST), Vistra (VST), Utilities Select Sector SPDR Fund (XLU), and ProShares Ultra FTSE China 50 (XPP). In today's mailbag, some of your letters about your investing journey and the importance of financial literacy, the subject of yesterday's Digest... We'll share more and keep your notes coming to feedback@stansberryresearch.com. "I have never written back before but felt compelled to do so. Regarding the need for financial literacy, I couldn't agree more, however, who would do the teaching? It would be like the blind leading the blind! My college son has had to argue with his professor who thinks devaluing the dollar by 2% every year is a good policy. "People can stay out of financial trouble by knowing what they can afford and stop listening to what the bankers say they can afford. I didn't listen to what our mortgage lender said we could afford for a home. Instead, I knew what we should spend on a house (less than the lender wanted us to spend). Had we listened to our lender, when our household income dropped 33% due to the Covid hysteria, we would have gone into default on our loan. Instead, we tightened our purse strings and are still living in our dream home. "Financial literacy is important, but it can't be the literacy of the consumer spending agenda. It needs to be the agenda of personal responsibility, prudent spending and the value of saving. However, it has been really hard to teach my kids to save when they are rewarded with 0.05% interest on a savings account and subject to devaluation. It is hard to save and teach saving when there is little to no reward. "Keep up the good work!" – Subscriber M.K. Corey McLaughlin comment: Thanks, M.K. I couldn't agree more on all points. Sounds like you are a great teacher. "As a Math/Spanish teacher at the rural school where I first taught, I was asked to teach Personal Finance to tenth graders. One of the assignments was to go over their parents' budgets to find out what they had to do to live. One parent told me it was none of my business; true, I replied, but please go over it with your child. "When my husband of 37.5 years died 15 years ago, one of the first things I did was to understand our two-person pension budget and reduce it to my pension only. What a trip!" – Subscriber Polly R. "During most of my first 21 years my father worked the 2nd shift, so my mother 'raised me.' On my 16th birthday in 1951, she told me, 'Your father and I think you should get a job, and also to go to college after you graduate. I talked to Charlie down at the supermarket – he's waiting to interview you – why don't you go see him now.' I just said, 'OK,' went for my interview, and was hired. I worked after school every day and all day Saturdays (stores were closed on Sundays back then) through two years of high school and 4.5 years of college. I learned about business and managing money. "After working 8 or 9 years (during which I got married, bought a home, and had a son), I decided to start investing on a modest scale. Unfortunately, I connected with an unethical broker who made bad recommendations (all were speculations that fell 80% or more), so I switched to a much better broker and things went much better – my assets grew steadily. I started subscribing to financial newsletters (which I read carefully), and then started investing small amounts in some stocks that I believed had good promise, but I left 95% of my assets managed by professionals. "Over the next 50 years (I'll be 90 in just a couple of months) I slowly and steadily increased the share of invested capital that I manage, to the point where it is now 30%. My approach has been to own a lot of different investments (400 currently, but only 10 to 30 shares for ~90% of them). Early on I bought some that have grown very well... Overall, about 80% are good dividend payers (4% to 10% yield), and using dividends has enabled me to buy so many new holdings and also to increase all small initial holdings... "I cannot keep abreast of developments in every stock, but spend a couple of hours almost every day looking at the performance outlook of several holdings... My self-managed holdings have increased 50% over the past 3.5 years, with only a few dips larger than 2%. Everybody has a hobby they spend time on, and this is mine." – Subscriber Bill S. McLaughlin comment: Thanks for sharing, Bill, and happy early 90th birthday. You're inspiring. All the best, Corey McLaughlin Baltimore, Maryland October 2, 2024 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios. Returns represent the total return from the initial recommendation. Investment Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 1,375.6% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,341.6% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 1,013.6% Extreme Value Ferris BRK.B Berkshire Hathaway 04/01/09 711.0% Retirement Millionaire Doc TT Trane Technologies 04/12/18 516.1% Retirement Millionaire Doc WRB W.R. Berkley 03/15/12 496.8% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 477.5% Stansberry's Investment Advisory Porter AFG American Financial 10/11/12 468.9% Stansberry's Investment Advisory Porter TTD The Trade Desk 10/17/19 401.9% Stansberry Innovations Report Engel PANW Palo Alto Networks 04/16/20 351.4% Stansberry Innovations Report Engel Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 4 Stansberry's Investment Advisory Porter 3 Retirement Millionaire Doc 2 Stansberry Innovations Report Engel 1 Extreme Value Ferris --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Investment Buy Date Return Publication Analyst wstETH Wrapped Staked Ethereum 12/07/18 2,291.8% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 1,519.7% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,129.4% Crypto Capital Wade POL/USD Polygon 02/25/21 719.5% Crypto Capital Wade CVC/USD Civic 01/21/20 300.6% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Microsoft^ MSFT 12.74 years 1,185% Retirement Millionaire Doc Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root Rite Aid 8.5% bond 4.97 years 773% True Income Williams PNC Warrants PNC-WS 6.16 years 706% True Wealth Systems Sjuggerud Maxar Technologies^ MAXR 1.90 years 691% Venture Tech. Lashmet Silvergate Capital SI 1.95 years 681% Amer. Moonshots Root ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. --------------------------------------------------------------- Stansberry Research Crypto Hall of Fame Top 5 highest-returning closed positions in the Crypto Capital model portfolio Investment Symbol Duration Gain Publication Analyst Band Protocol BAND/USD 0.31 years 1,169% Crypto Capital Wade Terra LUNA/USD 0.41 years 1,166% Crypto Capital Wade Polymesh POLYX/USD 3.84 years 1,157% Crypto Capital Wade Frontier FRONT/USD 0.09 years 979% Crypto Capital Wade Binance Coin BNB/USD 1.78 years 963% Crypto Capital Wade You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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