Don't Fight the Fed (2022 Edition)

Another Federal Reserve meeting is on tap... If the Fed's going to crash the market, it will be soon... Will the central bank stick to the plan or chicken out?... One solution for market uncertainty... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] Another Federal Reserve meeting is on tap... If the Fed's going to crash the market, it will be soon... Will the central bank stick to the plan or chicken out?... One solution for market uncertainty... --------------------------------------------------------------- It's another 'make or break' week... So it goes when inflation is still at 40-year highs, the manipulators at the Federal Reserve are about to announce their next move, and U.S. stocks (as measured by the S&P 500 Index) have rallied 8% since recent lows on October 12. We've seen this story before... Most Fed meetings over the past year – along with Fed Chair Jerome Powell's "until the job is done" speech in August and a few "surprise" inflation readings – have coincided with big turning points in the markets. This week will likely mark another. The Fed string-pullers meet again starting tomorrow and will publish their latest policy decisions at 2 p.m. Wednesday. About 30 minutes later, Powell will have a press conference and answer reporters' questions. Right, wrong, confusing, or untrue, what he says will probably influence the markets. I (Corey McLaughlin) will have a report on Wednesday, but for now, know this week is likely to be another volatile one... For starters, the story of 2022 returned today... The S&P 500 was down (just slightly), bonds were down (meaning yields were up), and the dollar rose again. As our Stansberry NewsWire editor C. Scott Garliss wrote today, [Wall Street hedge funds are anxious ahead of Wednesday's Fed announcement](. Specifically, they are eager to hear clues about the Fed's rate-hike plans... if or when the bank plans to change them. If folks hear any word that the Fed is thinking about slowing down rate hikes, don't be surprised if the recent rally in stocks continues. Conversely, if Powell goes all "Jackson Hole" on everyone again and says the central bank is intent on crushing inflation "until the job is done" without mercy for anything else, look out. He did that at his last press conference on September 21, and stocks slid by 5% in the hour into that day's close and in two full trading days that followed that week. I can't say with certainty what will happen this time, but I will handicap some possible outcomes... If the Fed is going to crash the market, it's going to do it soon... Remember, the stock market looks ahead. And while investor fear has rarely been higher lately, we haven't yet seen a full-blown panic... or capitulation... or crash. It's more like a slow burn with rays of misguided hope. We've seen panic in spurts, but nothing at the sort of circuit-breaking level of the pandemic lows or financial crisis. (Maybe our bar for "panic" is too high.) But the potential is there... The benchmark S&P 500 is already down nearly 20% this year... the tech-heavy Nasdaq Composite Index is off 30%... and many more individual stocks have fared worse. We've noted before that we've [already reached historical norms]( for a "bear market without recession." And now... The Fed's policy mistake of "transitory" inflation is in the past. But the next potential error is squarely on the table: overdoing rate hikes and encouraging a deep recession without knowing the path of inflation in the months ahead. In short, this week and at the central bank's next policy meeting in December, we'll see if Powell puts the economy's money where his mouth is... Specifically, does the Fed mean its tough talk about fighting inflation till the bitter 2% end, or will it chicken out? The last decade-plus of history says "chicken out" – and we're hearing more and more political pressure around the world being heaped on the Fed. But so far, the pivot hasn't happened yet in 2022. Interest rates have eclipsed previous cycle highs. The major U.S. indexes are down double digits. Bond prices have cratered with rising yields. And the U.S. dollar has been king of the fiat-currency jungle over the past 12 months... If the Fed signals it is not wavering from its rate-hike plans, the rest of the year could look pretty similar to what we've seen so far. If not, though, stocks could pop – in the short term at least. That's what happened after Fed meetings in January, March, June, and July when Powell's words comforted central-bank watchers. Lately, some Fed officials have struck an 'easier' tone... As Scott wrote today in his piece previewing the Fed's announcement and [how it could move the markets](... San Francisco Fed President Mary Daly has suggested the changes year-to-date are starting to weigh on economic output. She along with others like Vice Chair Lael Brainard and Kansas City President Esther George are worried about excessive tightening. That doesn't mean they're going to cut rates, it simply means there's a reason for pause. This has been what we've heard more frequently from Fed officials over the past month or so. They foresee raising interest rates to a level near 5%, then holding them there and seeing what impact they have on the economy. As I wrote [in the October 13 Digest](... One of the Fed string-pullers, Chicago Fed President Charles Evans, said at a business conference in Chicago earlier this week that the consensus goal from Fed members is to have a "4.5%-ish" benchmark interest rate "by early next year." Then, the bank might be more patient with the pace of raises ahead... As Scott wrote today, Powell could send this message to a wider audience on Wednesday... If Powell says the Fed wants to start studying the effects of rate hikes, that will be key. Scott said any comments from Powell that lean dovish (inclined to ease rates) will set off a rally, while anything hawkish (inclined to raise rates) will spark a sell-off. In other words, "don't fight the Fed." It's not a wise thing to do, even if it's wrong... or we disagree with its decisions. As [I wrote in June]( ahead of another Fed meeting when we did see a twinge of panic in the markets... We hate to keep harping on the Fed (really), but for better and worse, what it does matters a lot. The phrase "Don't fight the Fed" exists for a reason. The Fed doesn't really have an incentive to change course just yet... Yes, there's growing political pressure, which is a potential incentive worth considering. The United Nations is warning that a stronger dollar is [hurting the rest of the world](. And JPMorgan Chase CEO Jamie Dimon laments that banks' high reserve-balance requirements are imperiling the economy. But remember, the Fed's congressional mandate is low inflation ("stable prices") and maximum employment. It has one without the other, as has been the case for about the past year. The story hasn't changed. Yes, "official" inflation data might have peaked, but it's still at 40-year highs and might not be declining as quickly as many folks hope... On Friday, we learned the Fed's preferred inflation measure – the core personal consumption expenditures ("PCE") index – rose by 0.5% from the previous month and grew by 5.1% year-over-year in September. That's an increase from 4.9% annual growth in August and 4.7% growth in July. Plus, today's jobs market is still "tight" with millions of openings (even if data suggest more and more people taking on part-time jobs to make ends meet)... and people keep spending money (even if more of it is happening using credit cards). Second, we can take lessons from the 1970s... History suggests that if the Fed eases up on rate hikes, sure, stocks could go higher in the short term... but this could also prolong high inflation. Powell knows this. It was part of his big speech in Jackson Hole in August. And barring a banking-system breakdown or imminent financial crisis (like the recent British meltdown), the central bank has reasons to keep hiking rates. I'm not even sure the Fed governors know whether they'll raise rates or not. We'll find out what they say soon enough. But things remain uncertain. Here's one solution for the uncertainty... We just saw most of the former-darling "FAANG" tech stocks, other than Apple (AAPL), get destroyed after reporting earnings last week. This could be a sign of an "earnings recession" to come – or it could be the worst of it. We can't know for sure. But whether you think "the bottom" is in or you see more downside ahead, it's clear that new market leaders are emerging. And, go figure, they are the old reliable stocks we love to own in any market condition... These are businesses that produce gobs of free cash flow, reward shareholders, and sell products that folks keep on buying. Even if inflation remains high, these types of businesses will be successful and generate profits because they can raise their prices without hurting demand for their products or services. Here's a timely example... You and your neighbors probably bought a few bags of this company's products to get ready for tonight in particular. Its stock has been a holding in our flagship Stansberry's Investment Advisory since our founder Porter Stansberry recommended it [back in 2007](. It's up more than 550% since then... in a period that includes the financial crisis, the COVID-19 panic, and the current bear market. Hershey (HSY) has relevance far beyond today's Halloween tradition. This "boring," essentially inflation-proof business has been outperforming the broader market significantly all year. Our DailyWealth Trader editor Chris Igou pointed this out in his Friday issue... Hershey shares are up 24% year-to-date, while the S&P 500 is down nearly 20%. As [Chris showed his subscribers]( the stock is one of the relative few that has traded above its long-term, 200-day moving average (200-DMA) all year. Plus, in broader market rallies, Hershey has consistently pierced its short-term, 50-day moving average (50-DMA) as well. As Chris wrote... Now, we know Hershey is a great business. Most people love chocolates, candy, and other types of sweets Hershey makes. So whether we're in good or bad times, folks will buy these products. It's also a world-class brand. Everyone knows the Hershey name. Importantly, there's one thing that has stood out the entire time... Hershey is in a strong uptrend. It's trading above both its rising 50-DMA and 200-DMA... It's unlikely you'll find a stronger trend in this bear market. And it shows how important following the trend can be. Now, this isn't a recommendation to buy Hershey shares today. That's not what we do in the Digest. The point is, whether you think "the bottom" is in or that there's more downside ahead for U.S. stocks – because of the Fed or anything else – it's useful to look at what's leading the market today. And that's stocks like Hershey... steady, established, highly profitable businesses. Said another way, it's easy to be a genius in a bull market where "everything goes up." It's harder to find what works when the broader market is down. But there are winners if you know where to look. It Will Get Worse Before It Gets Better Marko Papic, chief strategist of alternative investment asset-management firm Clocktower Group, told our editor-at-large Daniela Cambone that the "Fed is in a really big bind" as it looks to ease the pace of rate hikes... [Click here]( to watch this episode of the Daniela Cambone Show right now. And to catch all of the videos and podcasts from the Stansberry Research team, be sure to [visit our Stansberry Investor platform]( anytime. --------------------------------------------------------------- Recommended Links: [Until MIDNIGHT: Claim Over 75% OFF This Ironclad Crash-Protection Plan]( What happens in the coming weeks could make or absolutely break your retirement. That's what history has shown when stocks are falling, inflation is rising, the Fed's raising rates, and economic activity is slowing. But Dan Ferris just stepped forward with an insanely simple solution to protect your wealth. Until midnight tonight, [click here for details](. --------------------------------------------------------------- ['THIS WILL DEFINE MY LEGACY']( After four decades of preparation... Dr. David Eifrig stepped forward with the most important announcement of his life. If you've EVER followed his research – or simply don't want to miss what Doc calls "the biggest opportunity I've ever seen... in any market... any asset... anywhere" – you need to see what he has revealed immediately. [Full details here](. --------------------------------------------------------------- New 52-week highs (as of 10/28/22): AutoZone (AZO), Booz Allen Hamilton (BAH), Biogen (BIIB), Dollar General (DG), Comfort Systems USA (FIX), Gilead Sciences (GILD), General Mills (GIS), Huntington Ingalls Industries (HII), Hershey (HSY), Humana (HUM), Lockheed Martin (LMT), McDonald's (MCD), Northrop Grumman (NOC), O'Reilly Automotive (ORLY), Rollins (ROL), Texas Pacific Land (TPL), UnitedHealth (UNH), and ExxonMobil (XOM). In today's mailbag, thoughts on [Danny "the Goof" Ferris' latest Friday Digest](... and the future of the U.S. economy... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Dan, I believe the jerk that coined the phrase 'Danny the goof' should look in the mirror at the real goof and especially when he has to eat his hat because he didn't prepare! I have been a subscriber for ten plus years and realize only God knows the future. Stansberry is top notch because they have different opinions that allow us subscribers to choose which to follow. "Dan is a humorous, experienced, and wise analyst who keeps us on our toes and yet laughing when times are dangerous! I look forward to reading his comments! Dan keep up the great work! Don't let that little gnat annoy you!" – Paid-up subscriber Larry N. "Hey Dan, I found your rant today about that doofus's email hilarious. You have been a very consistent value investor guru all along. That doesn't mean you have been a perma bear – not even close. It just means that for those of us who are allergic to losing money, you have very important advice to follow. "I am an Alliance member and I met you in the hall at the Wynn last year between presentations and we had a very nice chat. It was nice to actually meet you and some of the other people who give us all this wonderfully researched information in person. "The thing that struck me most about you was how aligned our thinking is about many geopolitical issues that will not be in any newsletter. The opportunity to talk face to face 'off the books' as it were, with you (and other gurus at Stansberry) was well worth the price of admission. "To the fellow who's thinking about your musings over the years being bearish all the time, he truly is 180 degrees out of phase with reality. I have found you to be what I would expect of an excellent value investor all along. Shrewd assessments of current market conditions, REALISTIC expectations, well-reasoned and logical analysis of the situation in question and a good dose of contrarian thinking. "Plus, a dry sense of humor that I always look forward to experiencing through your writings and podcasts. Keep up the good work! I will be taking to heart many of your recommendations for the foreseeable future due to the total irresponsibility of the government money printers and the whole generation of neophytes trading on Robinhood that are herding themselves into the chute for slaughter. "I missed the annual meeting this go round, and most likely won't go to Vegas again (once was enough for MY lifetime). But I do hope to cross paths again next time you guys have a shindig in a place I don't mind traveling to." – Stansberry Alliance member Tom P. "I totally agree with subscriber Alan K.'s post [[in last Tuesday's mailbag](. Over 60 percent of the U.S. population is living from paycheck to paycheck. Several thousands of them have resorted to using credit cards to pay for day to day necessities. Housing prices are still crazy expensive, the Fed has killed the supply side for home builders with the forced interest rate hikes, and homes are NOT going to get much cheaper going forward when home builders are NOT building huge amounts of new homes. So the beat goes on. "If home values fell 20 percent, they would still be selling for more than they are worth. Young people are locked out of buying a house because they don't have $80,000 for the down payment, or $3,000 for the monthly payments. "Amazon's earnings numbers and forward guidance recently told the real story of the state of the economy. With crazy mortgage payments, or ridiculous rent payments, crazy gas prices and the rising cost of food, consumers can't afford to buy 'stuff' at Amazon... "And if you think the Fed can wave a magic flag, raise interest rates into the heavens and suddenly everything is hunky dory, you are as clueless as Powell, Joe, and K. Yes, the U.S. (and we the people) are in for some serious economic fallout from all the missteps of the people in office. (In my opinion)." – Paid-up subscriber John M. All the best, Corey McLaughlin Baltimore, Maryland October 31, 2022 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst ADP Automatic Data 10/09/08 856.2% Extreme Value Ferris MSFT Microsoft 11/11/10 842.4% Retirement Millionaire Doc MSFT Microsoft 02/10/12 722.3% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 572.6% Stansberry's Investment Advisory Porter ETH/USD Ethereum 02/21/20 552.4% Stansberry Innovations Report Wade AFG American Financial 10/12/12 451.9% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 431.3% Retirement Millionaire Doc WRB W.R. Berkley 03/16/12 413.8% Stansberry's Investment Advisory Porter TPL Texas Pacific Land 11/05/20 369.4% Stansberry's Investment Advisory Gula ALS-T Altius Minerals 02/16/09 300.5% Extreme Value Ferris 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 5 Stansberry's Investment Advisory Porter/Gula 2 Extreme Value Ferris 2 Retirement Millionaire Doc 1 Stansberry Innovations Report Wade --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst ETH/USD Ethereum 12/07/18 1,279.0% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,155.1% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,090.9% Crypto Capital Wade MATIC/USD Polygon 02/25/21 876.2% Crypto Capital Wade TONE/USD TE-FOOD 12/17/19 517.7% 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 Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade 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 ^ 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%. 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. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberrycustomerservice.com. Please note: The law prohibits us from giving personalized investment advice. © 2022 Stansberry Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Stansberry Research, 1125 N Charles St, Baltimore, MD 21201 or [www.stansberryresearch.com](. Any brokers mentioned constitute a partial list of available brokers and is for your information only. Stansberry Research does not recommend or endorse any brokers, dealers, or investment advisors. Stansberry Research forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Stansberry Research (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.