This 'Boogeyman' Is Here to Stay... And That's a Good Thing

In today's Masters Series, adapted from the February 9 issue of the Chaikin PowerFeed daily e-letter, Vic compares today's inflation outlook with past market environments... explains why he expects inflation to remain stable moving forward... and details how you can take advantage of the Fed's ongoing battle with inflation... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: We aren't out of the inflationary woods yet... The Federal Reserve has been reluctant to cut interest rates over the past few months, but the central bank is still far from reaching its 2% target rates. That has left many investors unsure about what to do with their money as they ponder where the economy is headed next. Vic Lederman – editorial director of our corporate affiliate Chaikin Analytics – says history holds the key... History tells us the markets will be fine following this drawn-out inflation battle. That's why he believes you must avoid letting inflation fears influence your investment decisions as we navigate 2024. In today's Masters Series, adapted from the February 9 issue of the Chaikin PowerFeed daily e-letter, Vic compares today's inflation outlook with past market environments... explains why he expects inflation to remain stable moving forward... and details how you can take advantage of the Fed's ongoing battle with inflation... --------------------------------------------------------------- This 'Boogeyman' Is Here to Stay... And That's a Good Thing By Vic Lederman, editorial director, Chaikin Analytics Folks, we're still a long way from "normal"... China's slow exit from the pandemic left global supply chains in tatters. That meant limited stock of everything from groceries to semiconductors at the mercy of surging demand from other countries. Then Russia invaded Ukraine – driving up global energy prices almost overnight. And enter the Federal Reserve... The central bank took us on a roller-coaster ride from an era of unprecedented low rates to the steepest, most vicious rate-hike cycle in decades. The Fed approved 11 rate hikes in less than two years for a total of 525 basis points. And since rates were coming from such a low base of 0.25%, the central bank effectively hiked rates 21-fold. By the end of 2023, inflation had been brought down by almost two-thirds from its June 2022 high of 9.1%. It was last recorded at 3.4% for December 2023. But instead of celebrating what is clearly a victory in the fight against inflation, the markets seem constantly on edge. Folks have been traumatized by the dizzying events over the past four years. Investors spook easily at the mere mention of stronger economic data that could lead to a rebound in inflation. It makes no sense at all. The truth is that we've become so used to low inflation that we've forgotten that the average inflation rate for the past 60 years is higher than recent levels. From 1960 to 2022, inflation averaged 3.8% per year. If we go back 100 years, the average inflation rate is a slightly tamer 3.1%. That's still not too far from the most recent figure. My point is that even if inflation stayed where it is today or rose to the level of its 60-year average, it shouldn't be cause for panic. The long-term picture tells us that everything is still OK. And as I'll explain next, we also have reasons to believe inflation will remain stable or come down further from recent levels... --------------------------------------------------------------- Recommended Links: [No. 1 Stock to Buy for the 2024 Election Year]( Marc Chaikin's award-winning Power Gauge system pinpointed the No. 1 stock of the 2016 election year, and the No. 1 stock of the 2020 election year... months before the election in November. Now, it just flashed "buy" on the No. 1 stock to buy ahead of the 2024 presidential election. [Click here for the name and ticker](. --------------------------------------------------------------- # [Proof: 'The Government's Real War Is on YOU']( Stansberry's longest-tenured analyst (who called the Lehman Brothers collapse) just released an uncensored free broadcast... revealing the new trillion-dollar power grab underway in America. INSIDE: What this means for your money... and FREEDOM. [Click here for the full details](. --------------------------------------------------------------- The first reason is China, which is undergoing its slowest period of economic growth since the country joined the World Trade Organization more than 20 years ago. China is dealing with a real estate slowdown unlike any it has experienced before. And this has decimated its stock market. As I mentioned last month, it's a roughly $6 trillion market rout that began back in 2021. Slower growth in China means weaker demand for everything from copper to iron ore by the world's No. 1 consumer of base metals. The next reason is energy prices, which have been stable despite the situation in the Middle East. Recent attacks from the Iran-backed Houthi rebel forces in Yemen have forced oil tankers transporting about 10% of global oil supplies to reroute away from the Red Sea. That has added extra weeks to the tankers' travel time. However, this is being offset by worries about China – the country is the second-largest oil consumer, but its economy is in trouble – and soaring U.S. oil production. Lastly, real interest rates in the U.S. are among the highest levels we've seen in the past 20 years... The real interest rate is the yield on the U.S. Treasury adjusted for inflation. It tells you how much you're left with after taking into account inflation's impact on your yield. A high positive real interest rate, like what we have today, increases the appeal of keeping money in the bank – where it can generate positive real returns without risk to businesses and investors. In the chart below, you can see that while real interest rates are down from the peak last year, they're still much higher than they have been for most of the past couple decades. Take a look... Sure, inflation has been made out to be this "boogeyman" that all of us need to be constantly worried about. I disagree. Of course, overly high inflation isn't good. But inflation in general forces companies and investors to be more careful with how they utilize their capital. It raises the cost of money. And in doing so, it puts pressure on companies and investors to find ways to generate higher returns for every dollar spent. Looking ahead, that should be a good thing for the U.S. economy and the stock market. Good investing, Vic Lederman --------------------------------------------------------------- Editor's note: Rather than stressing about inflation, Chaikin Analytics founder Marc Chaikin believes there's a much more pressing matter looming in the markets right now. Marc believes the volatility of the 2024 presidential election could result in a massive shift that has a 90% chance of hitting stocks around the Super Tuesday primaries... That's why he recently hosted an online presentation to reveal the No. 1 move you need to make with your money right now in order to protect your portfolio. [Click here to catch up on the full details](... 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. 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