The Degradation of U.S. Dollars

The final 'inflation week' of 2022... Expectations for a downtrend to continue... The degradation of U.S. dollars... The trouble with manipulation... Cheap, hated, and in an uptrend... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] The final 'inflation week' of 2022... Expectations for a downtrend to continue... The degradation of U.S. dollars... The trouble with manipulation... Cheap, hated, and in an uptrend... --------------------------------------------------------------- Once more for old times' sake... It's the final "inflation week" of the year. At 8:30 a.m. Eastern time tomorrow, the U.S. Bureau of Labor Statistics ("BLS") will publish the November consumer price index ("CPI") data. In past years, these acronyms mattered mainly to obscure economists... Not this year. Tomorrow morning marks our final look at official inflation numbers before turning the page to 2023. (December's data – playing out right now – will come out in early January.) We've been doing it all year. As I (Corey McLaughlin) [wrote back in June]( introducing the "inflation week" idea... You might not have heard about it... or, at this point, perhaps maybe you feel like every week is inflation week. Here's what we mean... The same way we monitor earnings season each quarter, I have begun watching for the latest "official" inflation numbers each month. Somebody has to do it, after all... and you might want to as well, because market volatility and interest have tended to ratchet up during the past few inflation weeks... After all the discussion about inflation the past 12 months and given that December is a sleepy time in the market, there's less pre-report hype around tomorrow's CPI release than we saw in the summer... Back then, you may recall, a fake BLS press release made its way around the Internet the night before the June inflation data release and caused a stir. Back then, many folks were questioning if or when we'd finally hit peak inflation. So far, it looks like that peak is behind the U.S., by official measures at least. The reported CPI hit a high just above 9% in June, was 8.5% a month later, and went below 8% last month... and the month-over-month pace is showing signs of normalization. I would be surprised if these trends reversed in November, but we'll be taking a look at the CPI data early tomorrow morning anyway. That's because it matters for what happens next... and could rile up the markets one more time before the year is out. Importantly, we're also not forgetting inflation numbers are still at 40-year highs... thanks to all the pandemic stimulus combined with supply problems. The unwind, if it comes at all, will likely be messy. The expectations... As we often say, the markets can largely be a game of expectations. Based on the past several months of inflation data, the expectation for November's CPI numbers is for inflation to keep coming down... As our Stansberry NewsWire editor C. Scott Garliss [wrote this morning]( leading inflation indicators – like Federal Reserve system forward-looking surveys of businesses – are suggesting this to continue... Every month, the regional Fed banks gauge business activity within their districts. Their research teams send surveys to manufacturing executives in their areas, asking them about current business and what the state of activity might be six months down the road... We're focused on the data from the Dallas, Kansas City, New York, Philadelphia, and Missouri surveys. These figures are important because according to the U.S. Bureau of Economic Analysis, Texas accounts for 9.4% of domestic economic output, New York makes up 7.7%, Pennsylvania is 3.7%, and Missouri is 1.5%. In other words, they make up more than 22% of the U.S. gross domestic product. That means that trends in those Fed districts have more of an effect on what's taking place nationally. The prices received component tells us what companies are collecting for their finished goods – or basically, what it's costing individuals to buy something. We can compare it with the BLS' CPI. The November reading pointed toward further weakness in the CPI... As you can see, it's a leading indicator of the direction of inflation. The readings for prices received tend to peak before or right around the same time as the CPI. As Scott noted, large components of the CPI are also coming down lately, like gas prices... Take a look at the following chart of the American Automobile Association's ("AAA") national cost average for a gallon of regular unleaded gasoline compared with CPI. It's telling us a similar story... So don't be surprised on Tuesday when we see CPI data ease once more. So, if you hate inflation like me – remember, you're listening to a guy who once dreamed about [a crocodile named inflation eating my money]( – pop some champagne, drop the balloons, and call in the marching band. If things remain on track, the CPI should continue its downward trend when new data is published tomorrow. As we've noted recently, it could fall down somewhere close to 3% [in mid- to late 2023](. That's still higher than the Fed's 2% goal, of course... We should also note that the CPI, while widely followed, isn't the Fed's preferred inflation measure. That's the core personal consumption expenditures ("PCE") price index, which at last check is around 5% – higher than it was in July and August. Inflation or deflation?... Depending on who you ask, inflation could stay well above the 2% level for longer. Yesterday in the Financial Times, Mohamed El-Erian, the chief economic adviser at Allianz and a speaker at our Stansberry Conference in 2021, wrote an opinion piece including the following analysis... Rather than fall to 2-3 per cent by the end of next year, US core PCE inflation will probably prove rather sticky at around 4 per cent or above. This is what happens when an inflationary moment is allowed to get embedded into the economic system. The world's most powerful central bank is now confronted with two unpleasant choices next year: crush growth and jobs to get to its 2 per cent target or publicly validate a higher inflation target and risk a new round of destabilised inflationary expectations. The appropriateness of the 2 per cent inflation target itself is, of course, an issue. It is far from obvious that the Fed would opt for it were it to start afresh today. A target of 3-4 per cent would ultimately be more likely, given the fluidity of the supply side, the energy transition, the required resource reallocations and, of course, the experience with the zero lower bound in the decade of the 2010s. Given all this, it could prove tempting for the Fed to continue to signal a 2 per cent inflation target but, in practice, end up pursuing a higher one hoping that the public will accept it over time as indeed a superior and stable objective. I could not agree more with that last part specifically. The Fed can say it wants inflation down to 2%. But it could end up crying uncle or taking the easy way out by saying, hey, the new level is 3% or 4%... and moving on with "easy" policy once again next year or in 2024 if or when an official recession strikes. That, of course, doesn't help the degradation of the value of U.S. dollars for future generations. But it does make life easier for those living and working in the financial system today. Now, the CPI's annual inflation rate might be going down from 40-year highs. And the U.S. dollar might have gotten stronger relative to other major world currencies in 2022. But don't let the softening of extreme inflation and this year's dollar strength distract you... Inflation continues to eat away at the dollar's nominal value, even if it's at a slightly slower rate than the record-setting pace of a few months ago. Another camp suggests inflation could turn all the way around into deflation if the Fed ends up making drastic mistakes with its next series of policy moves. If that were to happen, the Fed might already be making these mistakes as we write. That's a large reason why the central bank has indicated it will slow down the pace of its interest-rate hikes – increasing rates by 50 basis points at a time, to a range near 4.5%, rather than another 75-basis-point jump – at its policy meeting this week. The Fed will announce its next moves Wednesday, and we'll have coverage. The central bank sees the pace of inflation easing, at least in the official numbers – but the Fed always says that monetary policy acts with "long and variable lags." In other words, no one knows. So the Fed doesn't seem to just want to stop rate hikes entirely or keep up the 75-basis-point run it has done at each of the past four meetings. Such is life trying to artificially control the largest economy in the world... Every move has consequences. So we'll be watching tomorrow to gauge the path of inflation one more time in 2022, to see how the Fed could react and what could happen in 2023. As Scott wrote in the NewsWire today, a continued downtrend in inflation – relatively speaking – could lead folks back into stocks... The data we're seeing support the Fed moving forward with a 0.50% interest-rate hike in its upcoming meetings this week (tomorrow and Wednesday). And the steady shift in these numbers gives the central bank a reason to think harder about the direction of monetary policy going forward. The sooner money managers get a sense that we're at peak interest rates, the quicker they'll become more optimistic about risk assets like stocks. They'll also rush to lock in attractive yields on high-quality assets, like U.S. Treasurys, before it's too late. As for new data we've already seen... On Friday, the BLS published its producer price index ("PPI") data for November. This measures the prices paid for raw materials... in other words, costs for businesses. This trend continued to show easing price increases in November. The PPI – which, like CPI, measures year-over-year growth in its headline number – came in at 7.4%. That's down from 8.1% in October, according to the BLS. You can see there's still a ways to go for the PPI to go back to "normal" levels, but it has been coming down quick over the past year. The 7.4% number for November was actually a little bit above Wall Street expectations of 7.2%... This one report might be emblematic of the story to watch in 2023: inflation coming down, but not by as much as many people might think... and sticking around in certain industries more than in others. Finally, today, cheap and hated and in an uptrend... Last week we mentioned a few "cheap and hated" ideas: emerging markets, gold, silver, and bonds... After the current "strong dollar" year, these sectors and assets are definitely cheap and hated... They were just waiting for an uptrend to present itself, as required to fit the popular three-pronged trading criteria developed by our Dr. Steve Sjuggerud and followed by his True Wealth team. Well, last week, Steve's team published an idea that fits all three: cheap, hated, and in an uptrend. And where they found it might surprise you. A lot of investors are overlooking this part of the world right now, or at least are afraid to invest in it. Of course, that's the point: That means opportunity. Existing True Wealth Systems subscribers and Stansberry Alliance members can find [all the details here]( on this opportunity, which our colleague Brett Eversole says could return 50%-plus gains in just a couple of years. What Happened to $220K Bitcoin? Max Keiser's prediction for bitcoin in 2022 didn't work out, but he remains bullish, even in the wake of the FTX crisis. "The hash rate has never been higher," Keiser tells our editor-at-large Daniela Cambone. "The axis of power, the pendulum of power is swinging away from the U.S. dollar and fiat currencies. It's a new century." [Click here]( to watch this episode of The Daniela Cambone Show right now. And to catch all of the podcasts and videos from the Stansberry Research team, be sure to [visit our Stansberry Investor platform]( anytime. --------------------------------------------------------------- Recommended Links: ['This Is What I'll Tell the Pentagon Tomorrow']( While everyone's worried about inflation, cryptocurrencies, and a looming recession, professor and forensic accountant Joel Litman plans to deliver an even more surprising warning when he meets with top military brass at the Pentagon tomorrow. [Until midnight tonight, see Joel's full warning right here](. --------------------------------------------------------------- ['The EXACT Day Stocks Will Finally Bottom']( Goldman Sachs doesn't know... Bank of America doesn't know... Morningstar doesn't know... But Marc Chaikin believes he does. He called the bottom in 2020, just 24 hours before the fastest bull market in history. Now, Marc has spotted the NEXT market bottom – and he's sounding the alarm. Plus, he's sharing the names of what he says will be the best- and worst-performing stocks of 2023. [Click here for full details](. --------------------------------------------------------------- New 52-week highs (as of 12/9/22): Novo Nordisk (NVO). In today's mailbag, feedback on [Dan Ferris' latest Friday Digest]( about two disasters to burn into your memory... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Bravo Dan! Love the humor! Makes it easier to remember. I have never seen Bankman-Fried, but I could picture a geeky pajama boy with his uncombed hair sticking up from his sleep trying to talk to the best looking lady at the party! Thanks for the lessons and the humor!" – Paid-up subscriber Larry N. "Dan, Thank you for nailing it again. I invest 90% of my money in real estate, but I enjoy reading your musings greatly. It's helpful to me because it's mostly about human psychology. Whether the asset is dirt, a business, or electronic bits – yes, I own a little stock (9%) and crypto (1%) – it's all about greed, FOMO, and taking things personally. If you understand how you function and how others function, and you seriously try to control yourself, you can win. Most people don't, though. I don't have any hope of Sam or Cathie figuring that out though. They'll think of another swindle (sorry, unbeatable opportunity) and burn more of other people's money. It's just what they do." – Paid-up subscriber Tim P. "Dan, You may not be a lawyer, but you are correct about SBF being brought to the U.S. and eventually prosecuted for his numerous crimes. SBF will extradited by the U.S. from the Bahamas, not deported by the Bahamas to the U.S. Keep up your great work for all subscribers!" – Alliance Member Bob M. "Hello Dan, Each golden nugget you write about is better than the one before. You have left a lasting legacy with Stansberry subscribers, exposing the FTX and ARK fraudsters. "I only hope the new and younger subscribers re-read this article at the start of every New Year. It will serve them and their loved ones well all their investment lives. "Happy holidays and New Year. God bless and thanks for all your great insights and advice. The Stansberry subscriber family appreciates all you do." – Paid-up subscriber Steve P. All the best, Corey McLaughlin Baltimore, Maryland December 12, 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 10/09/08 908.0% Extreme Value Ferris MSFT Microsoft 11/11/10 880.3% Retirement Millionaire Doc MSFT Microsoft 02/10/12 755.6% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 567.3% Stansberry's Investment Advisory Porter ETH/USD Ethereum 02/21/20 465.3% Stansberry Innovations Report Wade BRK.B Berkshire Hathaway 04/01/09 443.2% Retirement Millionaire Doc AFG American Financial 10/12/12 436.7% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 415.6% Stansberry's Investment Advisory Porter ALS-T Altius Minerals 02/16/09 323.8% Extreme Value Ferris FSMEX Fidelity Sel Med 09/03/08 307.9% Retirement Millionaire Doc 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 Extreme Value Ferris 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 1,119.0% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,098.2% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,066.8% Crypto Capital Wade MATIC/USD Polygon 02/25/21 866.9% Crypto Capital Wade TONE/USD TE-FOOD 12/17/19 396.9% 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. 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