The Collar Doesn't Matter

The Federal Reserve speaks... The real world continues... Inflation is bad for our health... Workers are unhappy... It doesn't matter what collar you wear... Big forces are coming to a head... Joel Litman on the market's 'dangerous illusion'... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] The Federal Reserve speaks... The real world continues... Inflation is bad for our health... Workers are unhappy... It doesn't matter what collar you wear... Big forces are coming to a head... Joel Litman on the market's 'dangerous illusion'... --------------------------------------------------------------- The central bankers have spoken – again... As we talked about yesterday, today marked the latest Federal Reserve policy meeting. As was widely expected, the U.S. central bank decided to "pause" rate hikes for the second time this year, letting its benchmark bank-lending rate stay in a range of 5.25% to 5.5%. In brief, that's what happened... And then there were the Fed's more uncertain thoughts about the future... Specifically, we learned what the fly-by-stars sailors led by Captain Jerome Powell are seeing under the cloudy skies of the U.S. economy right now, what they may do with it, and how the weather might be ahead. That's more of what the markets care about today... because, like it or not, Fed monetary policy serves as a backdrop for the investing environment. As I (Corey McLaughlin) mentioned in [yesterday's edition]( this Fed meeting marked one of the quarters where its members published their outlooks and predictions for the economy for the rest of the year and over the next few years. The Fed's outlook on GDP, inflation, and unemployment could give insight into whether the central bank is preparing to shift its policy plans substantially or stick to raising rates intermittently to keep fighting inflation. Notable market variables have cropped up in the past few months... including rises in oil prices, signs of a weakening labor market, and higher GDP growth expectations for this year. What they're predicting now... In its Summary of Economic Projections, or SEP, the Fed members predicted stronger real GDP growth (2.1% in 2023, double its 1% guess in June), a lower unemployment rate (3.8%, down from a 4.1% prediction in June), and slightly lower core inflation (3.7% for the rest of this year, versus a 3.9% projection three months ago). At the same time, though, the central bankers are projecting the Fed's benchmark lending rate to stay above 5% throughout next year, though with a slight 50-basis-point cut. It's also predicting around a 4% fed-funds rate in 2025, half a percentage point higher than its projection three months ago... They also think the unemployment rate is going to rise and be above 4% through at least 2026, though not as high as they thought in June. And they expect inflation will drop to 2.5% next year and 2% by 2026. In the time until then, everyone will be just fine. Deal with it. Overall, the Fed is painting a rosy picture while also telling us to expect a "higher for longer," tougher monetary-policy environment. It's a big change from what the economy enjoyed in the 15 years before the COVID-19 pandemic... trillions of dollars in economic stimulus... and high inflation struck. In his press conference after today's announcement, Powell sounded as if the Fed was close to the end of its rate hikes, with just one more 25-basis-point raise likely to come by the end of the year. He said... Real interest rates now are well above mainstream estimates of the neutral policy rate... They are meaningfully positive, and that's a good thing. We need policy to be restrictive so that we can get inflation down to target, and we are going to need that to remain the case for some time. The central bank has been giving this message for more than a year. So for now, investors might not care enough to make stock prices slide, so long as the pace of inflation comes down generally and unemployment doesn't keep trending upward and higher than expected. That's the "soft landing" dreams are made of... But keep in mind that the Fed rarely gets any of these projections right. It was wrong on inflation on its way up and has been wrong on the pace of it coming down, and wrong on GDP and unemployment expectations. Still, all this Fed talk and rationale may fly in a world of acronyms, spreadsheets, and data. And it fosters a banking system propped up by a seemingly limitless supply of money if needed and, in turn, the stock market. But... In the meantime, the real-world economy has already proven bad for our health... Yesterday, the American Heart Association published new research about work-related stress. This has long been known as a source of psychological angst and bad for physical well-being, too. Now, the latest research says this stress could double men's risk of heart disease. The study, run by a Canadian university, followed more than 6,400 white-collar workers without cardiovascular disease with an average age of 45 between 2000 and 2018, and measured levels of two factors relative to the incidents of heart disease... - Job strain, of the typical sort like heavy workload, tight deadlines, and lack of autonomy - "Effort-reward imbalance" Listen, work stress, or job strain, is probably totally unavoidable... You won't catch me saying everyone can or should live in a utopia where challenges at a job aren't part of daily life, or that everyone deserves a raise. The second factor, though, caught my attention. The researchers defined an "effort-reward imbalance" as feeling like you're not properly rewarded for your job either in pay, benefits, or security. Everybody probably feels that way somewhat, of course, which might be the point... The results were inconclusive for women... But among male white-collar workers in Canada who faced both job strain and feeling like they weren't being valued enough, researchers found a 49% greater chance of having heart disease compared with those who did not experience these two stressors together. That tells me this study was about more than just the typical on-the-job stresses. The broad cost of inflation... There are various factors that go into a person not feeling valued at work... Some could be their own issues and not the employers'. But an economy in which inflation is routine in a fiat-currency system is a big, unspoken backdrop... If the last few years have proven anything, it's that the source and influence of inflation are out of most employers' full control. Many companies may feel like they are unable to reward even their best employees because higher costs are eating into their budgets. At the same time, when costs rise for people at home and income stays the same or doesn't keep up, stress builds. People get angry at all kinds of things. Some people may start stealing stuff – or worse. And on and on... And keep in mind, this study was done from 2000 to 2018 when the pace of inflation was low. Imagine how much more it might show that work and the economy are bad for our health if it were run the last few years, with inflation at 40-year highs. Blue-collar workers feel the same way... It doesn't matter what collar you wear. The economy is tough for all types of workers right now. We mentioned the study about white-collar stress. On the blue-collar front, we've gotten several notes from subscribers lately with thoughts about various labor unions' push for higher pay and better benefits, most notably right now the United Auto Workers. We've previously written here the last few years about similar stories in the railroad and trucking industries, and others, like farmers racing to keep up with higher costs. Today, subscriber James S. pointed us toward an editorial published in the New York Post (and various other outlets) this week. It was written by Stephen Moore, a senior fellow in economics at the Heritage Foundation, and I found it worth passing along. Moore posits, based on history, that inflation – more than any other reason – is the catalyst for blue-collar workers, like the folks who went on strike at auto factories this month, demanding increasingly better benefits. He wrote... What we are seeing is a replay of what happened in the late 1960s, the 1970s and through the early 1980s. Annual inflation rose under Lyndon Johnson, Richard Nixon, Gerald Ford and Carter from 6% to 8% to even 11% over these years – and the number of union strikes soared. History proves that when inflation runs amok and the dollar loses value, there's more labor unrest. Annual inflation spiked to 7.9% for 1951, and a record 470 strikes occurred the next year. In the late 1960s, inflation rose to 5.4%, and the number of strikes rose above 400. Strike levels remained that high throughout the 1970s and early 1980s as inflation hit a high of more than 10%. But almost magically, when inflation fell from 11% to 3.5% by 1983 in the Reagan/Volcker years and as real wages began to climb, the number of strikes fell. For the next several decades, as the dollar remained stable in value, strikes became rare. Now, Moore says turbulent inflation numbers have only inflamed union-worker angst over the future. He says most workers have become poorer more recently because gas, food, utility, travel, medical, housing, and school tuition have all gotten more expensive while pay hasn't kept up... When prices are predictable, it is much easier for unions and corporate management to negotiate mutually agreeable contracts on wage increases. Given the wild swings in inflation of late, who knows where prices are headed over the next four years? The two sides are negotiating in the dark. The recent spike in gas prices isn't helping assure unions the inflation curse is behind us. On all those happy notes... What does this all mean when trying to make investment decisions?... Well, to me, it means it is wise to account for higher than "normal" inflation and a higher interest-rate environment that lasts longer than many people today may think. The Fed can't do anything about Saudi Arabian princes deciding that cutting global oil supply is best for them. Nor can the seafaring Jerome Powell apparently convince Congress to stop racking up debt on behalf of taxpaying workers. This doesn't mean stocks can't reward you. Those that sell in-demand products or services and can afford to raise their prices (and keep employees happy) can do well. But it does mean that we might see some things in our debt-loaded financial system that may surprise a few folks... Americans aren't accustomed to a world where the cost of money is materially higher, for longer, and high inflation doesn't die as soon as hoped. The first obvious sign of this is what happened with poorly managed regional banks earlier this year. But that might just be the first piece of the fallout. As our Stansberry NewsWire editor Kevin Sanford [wrote today]( global debt reached a record $307 trillion in the second quarter of 2023, led by Japan and the U.S. That's a $10 trillion surge in the first half of 2023 and good for $100 trillion over the past decade, with 80% of the debt buildup coming in developed nations. At the same time, interest rates have moved higher than they've been in 15 years... consumer credit-card balances are also hitting new records... and pandemic stimulus programs have nearly all come to an end... I can't tell you exactly what will happen next, as these financial and cultural stresses come to an inevitable head. U.S. stocks could keep chugging higher in the uptrends the major indexes have been in since last October, but warning signs are certainly flashing about the economy in general. Our friend Joel Litman is particularly concerned today... We've introduced you to Joel before. He's the founder of our corporate affiliate Altimetry. As I've written in the past, he's a world-renowned finance professor and accountant who has made several popular appearances at our annual Stansberry Research conferences. He'll be there again at this year's event in Las Vegas. (By the way, if you are interested, you can [find more information here]( about our conference speaker lineup, what to expect in Las Vegas, and, if you can't make it there, how to catch the event next month via our livestream.) Over the years, Joel has developed a form of "forensic analysis" that neither Wall Street firms nor the U.S. government have been able to duplicate. Often, firms or agencies call on Joel to expose what they can't see... The FBI once hired him to develop a way to see which CEOs mean what they say during their earnings calls... and which ones are lying. And we were pleased to become associated with Joel a few years ago when he decided to bring his expertise to the public, too. Today, Joel is saying that he believes the performance of the stock market this year is a "dangerous illusion." In fact, he hasn't been this terrified for U.S. stocks since 2007... Just a few months before that crisis hit, Joel tried warning a roomful of Wall Street investors what was coming. And since then, he has always promised folks he'd sound the alarm if he ever saw another disaster headed for U.S. stocks. Well, that time has finally come. Right now, every warning sign he sees is flashing red. The better news is that he says you don't need to panic. But you do need to prepare. On September 27, Joel will reveal exactly what's coming... the losses he expects to hit hundreds of stocks... and the lopsided opportunity this crash will create... if you use the strategy he's going to reveal publicly for the first time ever... I can tell you this is the same exact strategy he has used with some of his biggest institutional clients on Wall Street for more than 20 years. And he'll explain exactly how he used it to make incredible returns for his clients when the market crashed in 2008. It's not stocks. It's not real estate. It's none of the usual suspects... But it's an investment opportunity the big dogs on Wall Street have used for years to make money, even – and especially – when the rest of the market is in turmoil. Be sure to check it out. [You can register for the event for free right here](. And when you do, you'll get access to a free tool that you can use to screen thousands of tickers, along with a report that will show you more information about how to use the tool to your advantage. --------------------------------------------------------------- Recommended Links: [Pentagon Consultant: 'I Haven't Been This Worried Since 2007!']( Joel Litman predicted both the 2008 and 2020 market crashes – days before they happened. Now, he's stepping forward with another big warning. He says if you're holding stocks – or chasing the AI rally – you could get decimated in the days ahead. [Click here for Joel's new message](. --------------------------------------------------------------- [Can Kevin Kisner Collect $4,000 in 60 Seconds?]( Today, we're airing a Real Money Demo. A professional athlete will attempt to collect $4,000 in 60 seconds by selling put options. Will he succeed... or lose money? [Watch his transaction on Costco Wholesale (COST) and find out – including how to begin using this strategy yourself](. --------------------------------------------------------------- New 52-week highs (as of 9/19/23): Berkshire Hathaway (BRK-B), CBOE Global Markets (CBOE), and Roper Technologies (ROP). In today's mailbag, a response to a note in [yesterday's mail](... Do you have a comment or question? How do you feel about the "real" economy versus the Federal Reserve's take? As always, e-mail us at feedback@stansberryresearch.com. "Thanks to subscriber H.L. for the link to [the] Thomas Sowell [interview]. Sowell has been a hero of mine for many years, and his new book looks like he still has the genius at 93." – Subscriber Ronald K. All the best, Corey McLaughlin Baltimore, Maryland September 20, 2023 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 1,197.5% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,032.7% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 883.1% Extreme Value Ferris wstETH Wrapped Staked Ethereum 02/21/20 604.3% Stansberry Innovations Report Wade WRB W.R. Berkley 03/16/12 579.7% Stansberry's Investment Advisory Porter NVO Novo Nordisk 12/05/19 566.8% Stansberry's Investment Advisory Gula BRK.B Berkshire Hathaway 04/01/09 556.9% Retirement Millionaire Doc HSY Hershey 12/07/07 507.0% Stansberry's Investment Advisory Porter AFG American Financial 10/12/12 395.7% Stansberry's Investment Advisory Porter TTD The Trade Desk 10/17/19 328.3% Stansberry Innovations Report Engel Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 5 Stansberry's Investment Advisory Porter/Gula 2 Retirement Millionaire Doc 2 Stansberry Innovations Report Engel/Wade 1 Extreme Value Ferris --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst wstETH Wrapped Staked Ethereum 12/07/18 1,456.3% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,048.2% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,025.4% Crypto Capital Wade MATIC/USD Polygon 02/25/21 766.1% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 624.4% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Microsoft^ MSFT 12.74 years 1,185% Retirement Millionaire Doc 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 ^ 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}. 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