Month: November 2021

As I outlined yesterday, inflation has arrived in the financial system… and there’s nothing policymakers can do to fix it.

When the U.S. opted to shut down its economy in 2020, it embarked on the single greatest mistake in policy history. Economies are not like Netflix, you can’t just pause them for a while without doing MAJOR structural damage.

That damage has arrived in the form of supply chain issues and labor shortages.

Everywhere you look, the manufacturing and delivery of goods and services is taking weeks if not months longer than usual.

• Over 100 cargo ships are just sitting off the coast of California waiting to be unloaded by dock workers who have changed jobs or simply aren’t returning to work.
• The trucking industry has been decimated as the shutdowns resulted in many drivers retiring early. Throw in vaccine mandates, and you’ve got even fewer truckers hitting the roads and transporting much needed goods.
• Coal and energy resources are sitting in the earth, as coal workers and oil employees changed careers entirely or are refusing to return to work.

And on and on.

Meanwhile, demand for everything has come roaring back as Americans are keen to return to “normal life” after a year in lockdown.

Regular Demand + Fewer Goods and Services =HOT INFLATION

And get this… the craziest thing about this whole mess is that the same policymakers who created it, can’t do a thing to fix it.

The Fed, which has printed over $4 TRILLION to prop up the financial system can’t print new workers keen to return to work. Keeping interest rates at zero doesn’t make oil prices come down. And spending $120 billion on QE per month doesn’t result in cargo ships being unloaded and life returning to normal.

Similarly, the DC crowd, which didn’t just choose to crash the economy, but has spent over $11 TRILLION in stimulus (50% of GDP) over the last 18 months, has no idea how to fix the mess they made (aside from spending more money).

The Department of Energy Secretary, the highest official for the energy industry in the U.S. doesn’t even know how many barrels of oil the U.S. consumes per day. The Secretary of Transportation is on paternity leave during the single greatest supply chain crisis in decades. The President thinks releasing 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) over several months will lower gas prices… when the U.S. consumes 22 million barrels of oil per day.

It would be hilarious if it wasn’t so tragic. And the reality is that it has unleashed an inflationary storm that is giving investors a ONCE IN A LIFETIME opportunity to get filthy rich from government incompetence.

During the last major bout of inflation in the 1970s, smart investors locked in gains in the QUADRUPLE digits (1,000% or higher). And THAT version of inflation was the kind the Fed could easily stop!

So you can imagine the profit potential of this crisis today.

I outline five investments that could explode higher as inflation rips through the financial system in a Special Investment Report titled Survive the Inflationary Storm.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

OK, now things are getting really serious.

We all know the Fed is dead wrong about inflation. It is not transitory… and least not in the “it will go away by itself” kind of way the Fed claims.

Worse still, there is nothing the Fed can much of it.

As I’ve noted before, monetary policy cannot fix the supply chain/ labor problems in the economy. The Fed can’t print oil or coal. QE doesn’t make dock workers return to work and start unloading containers. Maintaining lower interest rates doesn’t resolve issues in shipping/ trucking/ manufacturing/ etc.

This situation was already a MAJOR problem when it pertained to microchips and other manufacturing goods. But now it’s spilling over into something more critical.

Food.

In case you missed it, yesterday Bloomberg reported that the current nitrogen shortage has become so problematic that farmers aren’t able to procure the necessary fertilizer to produce their usual crop yields.

So, are we going to have to add a FOOD crisis on top of the inflation that is headed our way? 

Take a look at the below chart of agricultural commodities and you tell me.

That’s a 12-year bear market ending in spectacular fashion. Food inflation was already here BEFORE this nitrogen shortage. So what happens when the next round of crops doesn’t get anywhere near what is expected?

A true inflationary storm.

It’s horrifying, but it has ALSO presented us with the opportunity to profit from once in a lifetime event: the arrival of an inflationary crisis that cannot be slowed or stopped by the Fed.

During the last major bout of inflation in the 1970s, smart investors locked in gains in the QUADRUPLE digits (1,000% or higher). And THAT version of inflation was the kind the Fed could stop!

I outline five investments that could explode higher as inflation rips through the financial system in a Special Investment Report titled Survive the Inflationary Storm.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Inflation is bad… so much worse than the official numbers admit.

Dissecting all the gimmicks the Bureau of Labor Statistics (BLS) employed to understate the official inflation numbers would take pages and pages than we have this week. However, one of the more egregious examples concerns its “Shelter” component which is supposed to measure how much it cost to own or rent property in the U.S..

Now, “Shelter” comprises almost 33% of the CPI. So, it’s a MAJOR component of the official inflation number. And as such it is massaged to UNDER-state inflation in a MAJOR WAY.

The BLS counts “Shelter” via two different measures called “Rent of Primary Residency” and “Owners Equivalent Rent.”

Rent of Primary Residence is meant to represent what you would pay to rent a residence including extra charges such as parking or garage facilities.

Owner’s Equivalent Rent is meant to replicate your cost of owning a home based on what you could potentially rent it out for.

The BLS calculates both measures via public surveys. Setting aside the fact that NO ONE wants to talk to the BLS about their expenses (which renders them highly accurate), the BLS still massages the data it does collect to an absurd degree.

Case in point, according to the BLS, Rent of Primary Residence is up only 2.4% over the last 12 months while Owner’s Equivalent Rent is up only 2.9%.

In the REAL world, apartment rental costs are up 8% to 20% depending on the specific market. And Home Prices are up 20% in the last 12 months.

Even if you already own a home, meaning that you don’t need to buy one so the rise in home prices doesn’t hit you right now, you’re still paying more in property taxes and other items related to the spike in home prices.

Put simply, unless you live in a cave, your real-world Shelter expenses are up triple if not quadruple the BLS’s claim of ~3%. And remember, Shelter comprises almost 33% of CPI!

So, what would happen to CPI, which is already clocking in at 5.4%, if the BLS were to use ACCURATE REAL WORLD data for its Shelter component?

It would tell us that REAL inflation is at 7.95%.

It’s terrifying, but it also presents us with an extraordinary opportunity.

During the last major bout of inflation in the 1970s, smart investors locked in gains in the QUADRUPLE digits (1,000% or higher). And THAT version of inflation was the kind the Fed could stop!

So, you can imagine the profit potential of this crisis today.

I outline five investments that could explode higher as inflation rips through the financial system in a Special Investment Report titled Survive the Inflationary Storm.

To pick up a free copy, swing by

https://phoenixcapitalmarketing.com/inflationstorm.html

Best Regards