The Fed is trying to fight inflation by raising rates… but low rates were NOT what triggered inflation: rampant money printing and supply chain issues were the reason inflation ignited.
Some historical perspective…
Between 2008 and 2014, the Fed printed roughly $3 trillion to combat the Great Financial Crisis and its aftermath. The Fed printed that same amount in six months in 2020. And it would ultimately print a total of ~$5 trillion in just 24 months.
That’s correct, during the pandemic, the Fed printed nearly DOUBLE the amount of money that it printed in response to the Great Financial Crisis. And the Fed did this in 1/3 of the time (two years vs. six years).
The Fed was not the only one.
In fact, compared to what the Federal Government did, the Fed looked like a bunch of money printing/ spending amateurs. The Federal Government spent ~$6 in 2020 ALONE. It then spent another $1.9 trillion in 2021, for a total of roughly $8 TRILLION in two years.
Who would have thought that printed/ spending $13 TRILLION (61% of U.S. GDP) in 24 months would ignite inflation!?!
So what is the Fed’s response to all of this?
Raise rates from 0.25% to 4.75% while draining a measly $500 billion in liquidity from the system.
That’s right, the Fed believes it can rein in the inflation that was created by printing/spending $13 TRILLION by raising rates a little over 4%… and shrinking its balance sheet by 6%.
Give me a break.
So again, the Fed is playing a dangerous game today. Every month that it continues messing around inflation becomes more embedded in the financial system.
On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And it
explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
Throughout this week, I’ve pounded the table on the fact that the economic data the U.S. government has put out recently is a huge pile of BS.
We’ve covered everything from the jobs data, to inflation, and the recent retail sales results. By quick way of review, the highlights from my research are:
1) The reason the U.S. economy supposedly “added” 500,000+ jobs in January was due to an accounting gimmick, NOT because those jobs were actually created.
2) The Bureau of Labor Statistics (BLS) openly admits this, citing that without its “population control effect” the economy added… 84,000 jobs.
3) The only part of the inflation data that has dropped has been in Energy prices.
4) The reason Energy prices dropped was because the Biden administration dumped over 250 MILLION barrels of oil in the last two years.
5) Retail sales are booming because of INFLATION (things cost more), not because of consumer spending. The jump on credit card debt and massive decline in consumer savings confirms that Americans are maxing out their credit just to get by.
Perhaps the single most disturbing element of the above items is that they reveal the complete failure of the Federal Reserve to tame inflation. Indeed, according to the Taylor Rule which is widely considered one of the best indicators of where rates should be the Fed should have ALREADY raised rates to over 9% to stop inflation.
Instead the Fed has raised rates to 4.75% and is now talking about possibly one or two more rate hikes of just 0.25%.
Everywhere you look, the Fed is failing miserably at curtailing inflation.
1) Financial conditions are now as loose it not looser then they were before the Fed began tightening monetary policy.
2) Meme stock mania is back with garbage companies rallying 30%, 50% even 100% or more in the last few weeks… again just like before the Fed began tightening monetary policy.
3) The inflationary data is being revised upwards: December’s -0.1% CPI report has been revised upwards to 0.1%, November and October’s CPI numbers were also revised higher.
4) The Producer Price Index results for January 2023 were reported yesterday. They showed inflation rising 0.7% month over month. On an annualized basis this puts inflation over 9%.
And all of this is AFTER the Fed raises rates 4.5% and drains over $500 billion in liquidity from the system!
The Fed now has a choice: get serious about ending inflation and trigger a market meltdown… or face a debt crisis in the near future as bond yields roar to new highs, forcing the government to spend more and more money on debt payments.
Either way, the U.S. is heading for a crisis in the near future. And most investors are being lead like sheep to the slaughter!
On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And it
explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
Yesterday I wrote to you about the complete and utter BS that was the January jobs report.
By quick way of review…
1) The reason the U.S. economy supposedly “added” 500,000+ jobs in January was due to an accounting gimmick, NOT because those jobs were actually created.
2) The Bureau of Labor Statistics (BLS) openly admits this, citing that without its “population control effect” the economy added… 84,000 jobs.
Today I’d like to talk to you about a different type of economic BS… this time concerning inflation.
The prevailing myth in the media is that inflation is coming down.
This is complete and utter BS. The only data that has fallen has been in energy prices (well, that and used cars). And the reason energy has fallen is because the Biden administration dumped over 250 MILLION barrels of oil in the last two years.
If you don’t believe me, here’s the data straight from the inflation report announced yesterday. Where in this table are there any negative numbers (meaning inflation is turning down) for the months of November and December outside of energy (and used cars)?
“Yeah Graham, but the pace of inflation is slowing, this is a big win!” some media stooges might be saying.
Let me be blunt here…
The Fed raised rates from 0.25% to 4.75% in less than a year… while also draining $500 BILLION in liquidity from the system… and all it did was SLOW the pace at which prices are still RISING?
And that is a big win?
Oh and by the way, the BLS just changed its methodology for how it calculates inflation this year for some odd reason (hint: political pressure from the White House). If we calculated January’s inflation numbers using the methodology that was applied in December (a mere 30 days before) inflation would be rising at an annualized rated of…
9.6%.
WHOOPS!
Again, the inflation problem is NOT going away. What’s happening is that the government is spewing out complete and utter BS and pretending that the BS is reality.
It’s not. It’s BS. I know it. You know it. And yes, they know it… but it doesn’t look good if you keep spending trillions of dollars while inflation remains at a 40 year high, does it?
And once again, the most disturbing aspect of all of this is that Americans are investing their hard earned dollars based on this BS.
On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And it
explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
As I have been warning for weeks… inflation is resurging.
The only portion of the inflation data that declined last year was energy (well that and used car prices). The reason energy declined was because A) China was in lockdown and B) the Biden administration dumped 250 million barrels of oil on the market.
If you don’t believe me about this inflationary claim, you can take a look at December’s inflation data for yourself. Everything remains positive except energy and vehicles.
Obviously, for anyone paying attention, this raises a major concern..
What happens to inflation when china re-opens its economy and the Biden administration stops dumping oil?
The answer is simple: inflation comes roaring back.
The Cleveland Fed runs an inflation tracker called Inflation Nowcasting. In December, this data point was at -0.1%. It then jumped to 0.53% in mid-January, before ending the month at 0.63%. Today it’s at 0.68%. This represents a .78% swing in inflation in the span of six weeks. And it confirms that inflation is once again rising in the financial system.
Bear in mind, this is happening AFTER the Fed already raises rates from 0.25% to 4.75% while also draining $500 billion from its balance sheet.
So imagine what happens now that the Fed is SLOWING the pace of its rate hikes…
Gold has already figured it out: the precious metal has broken out of its downtrend and is right back to the levels at which it traded in March 2022 (when the Fed still had rates at 0.25%)!
This is the #1 threat to investors’ portfolios today… that inflation has come roaring back.
On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And it
explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
If you want to find out what is causing inflation… and why it won’t be going away anytime soon no matter what the Fed does, look no further than the below chart.
This is a chart of government spending since 2013. As you can see, government spending was in a clear trend right up until the pandemic, at which time it went absolutely bonkers.
Now, according to the economic data, the recession triggered by the pandemic ended in June 2020. And yet, both the Trump and the Biden administrations continued to spend at a pace FAR exceeding the historic trend.
How much exactly?
Some $20 TRILLION, or roughly 87% of U.S. GDP.
Bear in mind, we’re not talking about $20 trillion in total spending… we’re talking about $20 trillion in ABOVE-trend spending by the government.
Even worse, there is no sign that this above-trend spending is slowing down. If anything, it’s starting to accelerate again.
So, the Fed can raise rates and shrink its balance sheet all it wants. It won’t accomplish much while the government is pumping an extra $1+ TRILLION in above-trend spending into the economy every single year.
And rest assured, this spending isn’t going into productive endeavors. It’s going into paying people not to work, boondoggles, and various inflationary schemes.
Want to end inflation? Stop overspending and printing money. It’s really quite simple.
On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And it
explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
We’ve spent quite a bit of time analyzing the inflation situation in the U.S. lately.
By quick way of review:
The only inflationary data that has dropped is in the energy space (that and used cars).
The only reason energy prices have dropped is because A) China was in lockdown for Zero Covid and B) the Biden administration dumped 250 million barrels of oil onto the market.
Both A) and B) are over. China has reopened and the Biden admin has already depleted the U.S.’s emergency stash of oil by 40%… as a result of this oil and gasoline prices have bottomed and begun turning upwards again.
All of the above signal that inflation has “not peaked” no matter what the media claims. Indeed, if the latest news is anything to go by, inflation has now become fully entrenched in the financial system.
Welcome to the wage spiral in the U.S.!
The first signs of this appeared during the rail worker deal the Biden administration signed into law. Nestled amongst the various details of the deal was a 24% pay increase from 2020 through 2024 as well as immediate payouts of $11,000.
Bear in mind, this is a 24% pay increase that was signed into law in at the end of 2022. So, the 24% pay increase would actually be over the next two years, or 12% per year.
This is not an isolated incident either.
Wal-Mart, the single largest private sector employer in the U.S. (and the world) just announced it is raising its starting wage by 17%.
These are not small increases. And they indicate a wage spiral is beginning in the U.S.
Why does that matter?
A wage spiral is the Fed’s worst nightmare because there is NO easy solution. The only thing that can stop it is a SEVERE recession that features mass layoffs and a sharp rise in unemployment.
So we can all kiss that “soft landing” narrative good bye.
On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And it
explains in very simply terms how to make inflation PAY YOU.
We are making just 100 copies available to the public.
Yesterday I illustrated how the “inflation has peaked” narrative is a myth.
By quick way of review:
The only inflationary data that has dropped is in the energy space (that and used cars).
The only reason energy prices have dropped is because A) China was in lockdown for Zero Covid and B) the Biden administration dumped 250 million barrels of oil onto the market.
Both A) and B) are over. China has reopened and the Biden admin has already depleted the U.S.’s emergency stash of oil by 40%.
The markets are confirming this, with both oil and gasoline prices bottoming in the last two months.
Today we’re talking about another type of inflation: asset price inflation, specifically financial conditions.
Fed Chair Jerome Powell has stated multiple times (most recently on December 14th 2022) that the Fed focuses on financial conditions.
See for yourself.
With that in mind, it’s worth noting that financial conditions are now the easiest they’ve been in nearly a year. To put that into perspective, it means financial conditions are back to where they were BEFORE the Fed ended QE and began raising interest rates.
Anyone who thinks the Fed won’t notice this is out of his or her mind. And it only confirms that inflation is not gone in any meaningful way. If anything, we’re in the midst of a resurgence courtesy of energy prices and investors pouring into stocks again.
On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And it
explains in very simply terms how to make inflation PAY YOU.
We
made 100 copies available to the public.
Today
is the last day this report is available to the general public.
The longer I’m in this business, the clearer it becomes that no one actually reads anymore. Everyone simply trumpets headlines, or retweets articles, without looking at the data.
The latest and most glaring example of this is the claim that “inflation has peaked.” Everywhere you look in the media (and on social media) people repeat this statement as if it is a fact.
It is not. Inflation has not peaked. And the data confirms this.
Almost ALL of the drop in inflation data has come from energy prices falling. And energy prices have fallen because the Biden administration dumped over 250 MILLION barrels of oil from the Strategic Petroleum Reserve (SPR).
To put this into perspective, it’s nearly 40% of the SPR. And the Biden admin dumped it in the span of less than two years. THAT is why energy prices dropped, which accounts for almost ALL of the drop in inflation data.
See for yourself. Outside of the drop in energy prices, the only significant drop in prices occurred in used car vehicles. Everything else is still RISING in price year over year.
I bring all of this up because now that the Biden admin is no longer dumping tens of millions of barrels of oil on the open market, energy prices are bottoming.
Oil has bottomed and is starting to turn up.
The situation is even uglier for gasoline.
So, unless President Biden wants to empty the SPR to zero, this “inflation has peaked” narrative is over. Inflation is coming back in a big way. And NO ONE is positioned for it.
On that note, we published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And it
explains in very simply terms how to make inflation PAY YOU.
We
made 100 copies available to the public.
Today
is the last day this report is available to the general public.
The Fed will end its two-day Federal Open Market Committee (FOMC) meeting today at 2PM East Standard Time.
The known universe expects the Fed to raise rates by 0.5%. And the current consensus is that by this time next year, inflation will be down near 2%.
It’d be hilarious if it didn’t involve so much suffering.
To understand what I mean by this, let’s wind the clocks back a year to the Fed’s December 15th 2021, FOMC meeting. At that time, the Fed had only just decided that inflation was NOT “transitory.”
Bear in mind, inflation has measured by the Consumer Price Index (CPI) had cleared 5% in June of 2021. It had since increased to over 7% as of December 2021.
Despite this, the Fed had yet to raise rates or end its Quantitative Easing (QE) program: the Fed Funds Rate was at 0.25% and QE was around $105 billion per month.
Again, inflation was over 7%, the Fed Funds rate was 0.25% and QE was still over $100 billion per month. So, what did the Fed, with its army of economics PhDs and analysts predict would happen once the Fed started tightening monetary conditions in 2022?
The Fed’s official forecast for 2022 was that rates would be somewhere between 0.5% and 1%.
That is correct. With inflation over 7% and rates at 0.25% in December 2021, Fed officials predicted that one year later rates would be somewhere around 0.5%-1%. In fact, even the most HAWKISH Fed officials only saw rates around 1.25% in December 2022.
Don’t believe me? Here’s the dot plot from the December 2021 meeting.
Fast forward to today… and rates are at 4.5%. The Fed was not even in the ballpark.
But wait… it gets better.
Back in December 2021, the Fed also predicted where inflation, as measured by the Personal Consumption Expenditures (PCE) index would be a year later.
That prediction?
That PCE would be somewhere between 1.9% and 3% in 2022. In fact, the absolute worst case scenario Fed officials forecast for inflation in 2022 was 3.1%-3.2%.
See for yourself.
Fast forward to today and Personal Consumption Expenditures (PCE) inflation is 6%… or roughly DOUBLE the Fed’s WORST prediction.
I bring all of this up because the current consensus is that inflation has peaked, the Fed won’t need to be much more aggressive going forward, and that this time next year, inflation will have fallen back to the Fed’s target of 2%.
Good luck with that!
Unfortunately for anyone who is buying into this narrative today, the bear market is NOT over. With a recession just around the corner, stocks will soon collapse to new lows. And that’s even assuming that inflation DOES drop to 2% next year (it won’t).
If you’ve yet to take steps to prepare for this, we just published a new exclusive special report How to Invest During This Bear Market.Paragraph
It details the #1 investment to own during the bear market as well as how to invest to potentially generate life changing wealth when it ends.
As I mentioned on Monday, the Great Currency Wars have begun.
Japan is about to intervene directly in their currency markets. And why wouldn’t they… Japan imports most of its energy and food… and its currency is at a 24 year LOW due to inflation (as well as differentials between its monetary policy and that of the U.S. and E.U.).
In simple terms, one of the MAJOR currencies of the world is now trading like an emerging market currency.
The Euro isn’t far behind either. It’s at a 20-year low. Things are so out of control there that the ECB just raised rates by the most in history: a 0.75% rate hike. This barely made a blip in the Euro’s chart as it continues to collapse.
And guess what… all these currency interventions are inevitably going to result in central banks printing more money.
After all, that’s all they can do. They can’t print oil, or workers, or any of the other things that the economy needs.
Which means… inflation is only going to get worse.
On
that note, we just published a Special Investment Report concerning FIVE secret
investments you can use to make inflation pay you as
it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And
it explains in very simply terms how to make inflation PAY YOU.
We
are making just 100 copies available to the public.
Japan just hit the “panic” button regarding inflation.
Over the last few two years, the Japanese Yen has imploded as the country’s central bank continued to print money. In contrast, the central banks in both Europe and the U.S. are tightening. As a result of this difference in policy (EU and US tightening, Japan still easing) Japan’s currency has collapsed to a 24 year low.
A currency collapse like this under any condition is bad for the country. However, for Japan the issue is particularly bad as it imports practically ALL of its energy and food.
Imagine trying to buy gas or food when your currency just collapsed to a24 year low relative to your primary trading partners (China and the U.S.).
And so, on Friday, the country’s central bank, the Bank of Japan (BoJ), announced it will begin intervening in the currency markets to support the yen.
What does this mean?
The great currency wars have begun. We have reached the point at which major central banks will begin intervening directly in the currency markets to fight inflation. And ironically, this in turn is only going to unleash MORE inflation.
Why?
Because the only way for a central bank to intervene in the currency markets is to print more money! Indeed, if the policy response from the pandemic has taught us one thing, it’s that printing money is all policymakers know how to do!
On
that note, we just published a Special Investment Report concerning FIVE secret
investments you can use to make inflation pay you as
it rips through the financial system in the months ahead.
The
report is titled Survive the Inflationary Storm. And
it explains in very simply terms how to make inflation PAY YOU.
We
are making just 100 copies available to the public.
If you’ve been wondering why stocks suddenly exploded higher last month… wonder no more!
We were told the Fed ended its Quantitative Easing (QE) on March 9th 2022. That’s a strange claim given that the Fed’s balance sheet has expanded by $55 BILLION since that time. Heck, the Fed just bought ~$25 billion worth of Mortgage Backed-Securities (MBS) last week.
How odd… the Fed supposedly ended QE… but right as stocks began to break down, “someone” suddenly panic bought the markets forcing them higher… and then it turns out the Fed was actually expanding its balance sheet by $55 billion over the same time period.
To put this number into perspective, the Fed’s former QE program, the one that supposedly ended, was roughly $30 billion per month at the time it concluded. In this context, the Fed roughly DOUBLED the pace of its former QE to $55 billion… in the month AFTER QE SUPPOSEDLY ENDED.
So again, the Fed are total liars. QE didn’t end. In fact, it became larger!
Meanwhile, according to official data, inflation hit 8.5% in March of 2022… the highest year over year increase in over 40 years. And if we were to use accurate methods for measuring inflation, it’d be over 12%.
Again, the Fed is lying. They are not tightening monetary policy. And inflation is only going to get worse from here. If you want to protect your portfolio from what’s coming, you need to act now.
On that note, we just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead.
The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU.
The Fed is now
cornered courtesy of the coming inflationary recession.
Let’s start with the
economy first.
The 2s-10s yield curve
is just a 19.4 basis points away from inversion. The last FOUR times this yield
curve inverted the U.S. experienced a recession soon after. I’ve identified
that line on the chart below:
A recession is bad
enough news because it means a bear market in stocks and most likely a crash.
Here’s that same chart with the S&P 500 below it. Note what happened to
stocks soon after the yield curve inversion hit (note that the 1990 market saw
a 17% drop, but the chart doesn’t show it well).
On top of this, inflation is roaring in the financial system. Gasoline is up 80% in the last 12 months. Lumber is up 36%. Copper is up 15%. And wheat has exploded 90% higher!
Remember, the consumer accounts for 75% of GDP in the U.S. What do you think happens to consumer spending when inflation eats into incomes? There is a reason Presidential ratings are highly correlated to gasoline prices!
And all of this is happening when the Fed only just ended QE and still has rates at zero.
Yes, we are
rapidly heading into an inflationary recession, and the Fed hasn’t even begun tightening
yet. If the Fed tightens to rapidly to kill inflation, the economy collapses. And
if the Fed takes its time raising rates, inflation rages, and the economy again
collapses.
The Fed is officially
cornered. There is no possible way to navigate this mess without disaster. Remember
the last four recessions involved a stock market crash. This one will likely
prove no different.
For those looking to
prepare and profit from this mess, our Stock Market Crash Survival
Guide can show you how.
Within
its 21 pages we outline which investments will perform best during a market
meltdown as well as how to take out “Crash insurance” on your portfolio (these instruments
returned TRIPLE digit gains during 2008).
To pick
up your copy of this report, FREE, swing by:
Yesterday,
I outlined how the markets are likely at a very critical point regarding inflation.
By
quick way of review:
1)
Stocks initially love inflation because it boosts results
(companies don’t report inflation-adjusted returns, so any increase in product
pricing due to inflation is instead reflected as “growth”).
2)
This love relationship eventually turns to hatred as inflation leads to higher
operating costs, which squeeze profit margins.
In
yesterday’s article, I illustrated how this played out during the last major
bout of inflation in the 1970s.
At that
time, stocks initially roared higher as inflation initially boosted corporate
results. However, by the time 1974 rolled around and inflation (as measured by
the consumer price index or CPI) hit 11%, stocks began to crash, eventually
losing ~50%.
I mention all of
this because it is highly likely that something similar is about to manifest in
the markets today.
Stocks have erupted higher on the back
of inflation, courtesy of $11 trillion in Fed QE/ fiscal stimulus from the
Federal Government between March 2020 and today.
However, inflation is now taking a turn
for the worse. And, as usual, the signs are showing up in the currency markets
first.
The Fed is in the
process of ending its QE program. Fed officials have also signaled that they
intend to raise rates three or four times this year. All of this should be
highly U.S. dollar positive.
And yet… the $USD
is breaking down.
The greenback has
taken out key support (green line in the chart below). Even worse, it’s also
broken its bull market trendline (blue line in the chart below).
This is a MAJOR signal
that the Fed’s actions are not enough. Put another way, the Fed is behind
the curve on inflation! This is extremely negative for stocks as it means inflation
is getting out of control (just like in 1974).
So, what would a similar, 1970s-style crisis look like today? The market is warning us, though few have noticed.
For those looking to prepare and
profit from this mess, our Stock Market Crash Survival Guidecan show you how.
Within its 21 pages we outline which
investments will perform best during a market meltdown as well as how to take
out “Crash insurance” on your portfolio (these instruments returned TRIPLE
digit gains during 2008).
To pick up your copy of this report, FREE,
swing by:
We’ve now reached the point at which inflation will
become a major problem.
Inflation is not inherently bad for stocks. The reason
for this is that companies report growth in nominal terms, not
in “real” or inflation-based terms.
Think of it this way: XYZ company sells widgets for
$1.00. Then inflation hits and the company raises widget prices to $1.10. Even
if the company sells the EXACT same number of widgets,
revenues “grow” by 10%. After all, they don’t have to report that the 10% in
growth was 100% due to inflation!
This is why stocks often spike higher when inflation initially hits. We saw this during the last major bout of inflation in the early 1970s. At that time, stocks roared higher, rising 50% while CPI, which measures inflation, gradually rose to 6.3%.
However, the relationship between stocks and inflation quickly goes from love to hate once costs rise fast enough that profit margins are squeezed. To return to the 1970s, this started in 1973 as CPI hit 11%. From that point onward, stocks crashed losing almost 50%.
I bring all of this up because we are likely about to witness something similar today. Stocks have erupted higher on the back of inflation, courtesy of $11 trillion in Fed QE/ fiscal stimulus from the Federal Government between March 2020 and today.
This is the good part of inflation. And by
the look of things, it’s about to go sour. Indeed, we are getting clear signs
that costs are about to explode higher for corporations.
Profit margins are at all-time highs (there’s nowhere to go but down), while real wages (incomes adjusted for inflation) are DEEPLY negative.
Workers
are now demanding higher wages. This means higher operating
costs for corporations, which in turns means lower profit margins.
In simple terms, the clock is ticking for stocks. Sure,
they might not crash this week, but another bloodbath is coming. The markets
will soon be a sea of red. And the losses will be staggering.
The markets are warning us, but few have noticed.
The coming bust is going to be
life-changing for many people. Most will lose much if not everything. But
a small number of investors will generate LITERAL FORTUNES.
For those looking to prepare and
profit from this mess, our Stock Market Crash Survival Guidecan show you how.
Within its 21 pages we outline which
investments will perform best during a market meltdown as well as how to take
out “Crash insurance” on your portfolio (these instruments returned TRIPLE
digit gains during 2008).
To pick up your copy of this report, FREE,
swing by:
Ignore the goldilocks crowd, the inflationary tidal wave is only
just getting started.
Everyone likes to talk about inflation, but very few people
actually understand it. This goes for central bankers as well as the talking
heads in the financial media.
Wait a minute… aren’t central bankers supposed to be EXPERTS on
inflation?
Nope. And they’ve admitted as much publicly.
Janet Yellen, the former Fed Chair who now serves as Treasury
Secretary to the Biden Administration admitted back in September 2017 that the
Fed really has no idea how inflation works.
Speaking to the National Association for Business Economics in
Cleveland on Setpmerb 26th 2017, then Fed Chair Yellen stated the
following whopper:
My colleagues and I may have misjudged the strength of the labor
market, the degree to which longer-run inflation expectations are consistent
with our inflation objective, or even the fundamental forces driving
inflation.
This is central banker speak for “we really don’t
know what we’re talking about when it comes to inflation and what causes
it.”
Bear in mind… this was YEARS before the real inflationary tidal
wave hit in 2021. Unfortunately, it appears the Fed hasn’t figured much out
concerning inflation during that time.
To wit, in October of this year, after claiming that inflation
was “transitory” for months and months, current Fed Chair Jerome Powell finally
admitted that inflation is “well above target” and that “This
is a different situation from what the new Fed framework is designed to
address.”
At the end of the day, the current inflationary tidal wave is
quite simple.
Regular Demand + Fewer Goods and Services =HOT
INFLATION
Americans are returning to normal life as the economy reopens.
And in some areas of the economy, demand is exploding higher as people have
decided to stop putting off their dream purchases due to the “You Only Live
Once (YOLO)” mentality the shutdowns helped foster.
This demand is not being met by supply.
Why?
Because shutting down the economy disrupted the supply chain and
caused a major labor shortage. Having been paid to not work
for the better part of 18 months, many Americans have decided not to go back to
work… or to change careers from their previous work entirely.
This is happening in numerous sectors of the economy.
There are 8.6% fewer coal miners working today than there were
BEFORE the pandemic. The oil industry is experiencing an even worse situation:
only 1/3rd of the 100,000 employees let got by the industry in 2020 have
returned to work.
Oil is a SYSTEMIC item for the economy. Oil or oil
derivatives are present in lipstick, Vaseline, solar panels, polyester (stain
resistant clothes), chewing gum, crayons, Aspirin, pantyhose, sneakers,
detergent, CDs, concrete/cement, plastics of any kind, food additives,
fertilizers, pesticides, candles, milk cartons, pen ink, and more.
So you can imagine the impact that fewer oil employees will have
on things.
Dock workers aren’t returning to the workforce either. As I
write this there are dozens of cargo ships sitting off the coast of the U.S.
waiting to be unloaded. And many of those containers that are unloaded
don’t go anywhere because the trucking industry is also experiencing a labor
shortage.
Again, Regular Demand + Fewer Goods and Services =HOT
INFLATION
And 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 hundreds
of billions of dollars on QE per month doesn’t result in cargo ships being
unloaded and life returning to normal.
Similarly, the DC crowd has no idea how to fix the mess they
made.
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 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.
Yesterday, I outlined the dark truth about the economic shutdowns of 2020.
That truth?
That the shutdowns have unleashed an inflationary tidal wave.
Central bankers have been trying to create inflation for years. They’ve printed over $20 trillion in new money. And they’ve cut interest rates over 800 times. But inflation never fully showed up.
Then we shut down the economy and BOOM! inflation appeared.
Why?
Because shutting down the economy damaged/broke supply chains. And forcing people to stay home while scaring the heck out of them with a virus made them decide to not go back work even when the “all clear” was signaled. In any parts of the economy (coal mining, oil and gas, shipping/ trucking, etc.) people have decided to change career paths entirely.
As a result of this, today we are facing both a supply chain crisis and a labor shortage.
BOTH are inflationary.
Why?
Because both mean fewer goods and services are available.
Meanwhile, demand is returning to normal as the economy reopens. In some areas, demand is exploding higher as people have decided to stop putting off their dream purchases due to the “You Only Live Once (YOLO)” mentality the shutdowns helped foster.
Regular Demand + Fewer Goods and Services =HOT INFLATION
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 hundreds of billions of dollars on QE per month doesn’t result in cargo ships being unloaded and life returning to normal.
Similarly, the DC crowd has no idea how to fix the mess they made.
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 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.
I’ve noted many times in the past that the official inflation
measure, the Consumer Price Index, or CPI, is gimmicked to the point
of fiction.
The reason for this is simple: this is the number everyone looks
at. And if it reflected reality, Americans would realize that “quality of
life” in this country has been in decline for the last 40 years as real
costs of living have dramatically outpaced the rise in incomes.
Remember, if incomes do not rise at the same pace as inflation,
your real cost of living is rising. Ever wonder why back in the 1950s most
families got by on one income, while today both parents work and most families
have massive mortgages, over $10K in credit card debt, and $50K in student
loans?
Wonder no more!
What does this have to do with today?
Well, the official inflation data point, the CPI, claims
inflation is at 6.8%. This is a 40 year high. But because CPI is
gimmicked to UNDER-state inflation, the REAL rate of inflation is much, much
worse.
If you don’t believe me, take a look at the Producer Prices
Index (PPI), the CPI’s less known, less watched, but more accurate
cousin.
Unlike CPI, which is crafted by bean counters at the government,
PPI is based on actual information from actual producers of goods and services
who must adjust their costs based on inflation or lose profits in the real
economy…
Which is why the latest PPI data point is catastrophically
bad, clocking in at 9.6% year over year (YoY) for the month of
November.
Yes, 9.6% as in almost double digits.
Suffice to say, the Fed is WAAAAAAAAAYYYY behind the curve on
inflation.
How high will the Fed need to raise rates to stop this? 2%? 4%?
More?
More importantly for the financial system, how will the mountain
of debt that was issued based on interest rates of ZERO, going to react to the
Fed tightening monetary conditions.
Some $2 trillion in corporate debt was issued in the U.S. last
year alone. The U.S. Government issued another $5+ trillion. So
right off the bat, you’ve got $7+ trillion in debt that was issued while rates
were effectively at zero.
How is this going to adjust to rates at 1%? 2%? Higher?
For bonds with yields this low, every time the Fed raises rates,
there is a dramatic impact. Remember, the yield on U.S. Treasuries represent
the “risk free” rate of return against which the entire financial system is
valued.
So, when the Fed raises rates, that $7+ trillion must adjust
accordingly. This means those bond prices FALL and their yields RISE. And if
they rise enough, the investors begin to default.
And we’re just getting started here.
As Lawrence McDonald recently noted, globally there is
$30+ TRILLION MORE debt with sub-2% yields than there was the last time the Fed
attempted to raise rates.
How is all that debt going to handle higher rates? What if the
Fed has to raise rates way over 2% to stop inflation? What happens to the
mountain of debt that was created BASED on yields being at 0%?
If you think the Fed can navigate this successfully, I would
like to point out that the Fed wasn’t able to deflate the Tech Bubble nor the
Housing Bubble without creating full-scale crises.
What are the odds the Fed can successfully deflate this current
Everything Bubble… which is exponentially larger than the first two?
Look at the below chart and you tell me.
For those looking to prepare and profit from this mess, our Stock Market Crash Survival Guide can show you how.
Within
its 21 pages we outline which investments will perform best during a market meltdown
as well as how to take out “Crash insurance” on your portfolio (these
instruments returned TRIPLE digit gains during 2008).
To
pick up your copy of this report, FREE, swing by:
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.
Government bureaucrats have accomplished what Central Bankers have failed to do.
For decades, Central Banks have attempted to “create inflation.”
They’ve cut interest rates over 800 times.
They’ve printed over $20 TRILLION in new money.
They’ve even tried buying every asset you can name (corporate bonds, municipal bonds, student loans, auto loans, Treasuries, Mortgage-Backed Securities, etc.).
None of these strategies worked. Inflation never ran HOT. Heck, it never even rose above 3% for more than a few months.
However, with one simple move, government bureaucrats have accomplished what Central Bankers failed to do.
By shutting down the economy, the government has managed to create crises in both labor (people are not returning to work or have changed careers completely) AND the supply chain (items are delayed for months: sitting idly in cargo ships or simply not being produced at all).
These crises in labor and the supply chain are resulting in lower supplies of much needed resources. Factories are operating at partial capacity or in some cases, not operating at all. Grocery store shelves are running bare. Orders are taking twice if not THREE times as long to be fulfilled.
Much lower supplies + normal demand = HOT INFLATION.
And there’s NOTHING central banks can do to fix this.
The Fed can’t print employees or oil.
QE doesn’t suddenly make factories operate normally.
Yield curve control doesn’t start unloading cargo ships that are sitting at docks.
And the bureaucrats who created this mess don’t have any solutions for it either.
The Biden administration announced today that it will try to force oil prices lower by releasing 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) over the next few months.
This number (50 million barrels) sounds like a lot… until you consider that the U.S. consumes 20 million barrels per day.
Put another way, this release accomplishes nothing. Oil has already rebounded on the news and is back at $80 per barrel.
Again, this kind of inflation cannot be stopped by the Fed or the government. And it has 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 or fixed by government policies.
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.
