October 28, 2021
Vegas is back, baby… in a big way!
I’m writing to you from Las Vegas this week… home of the Stansberry Conference where I’m looking forward to meeting so many of our members.
I’m also taking the opportunity to stroll up and down the Vegas Strip (part of my daily attempt to get in my 10,000 steps). And I’m blown away by the incredible power of the American consumer…
Want to go somewhere for lunch in Vegas? Good luck… Most places had at least an hour wait. The first-come, first-served spots had long lines.
Meanwhile, on my walks, I passed five Chanel stores… nine Louis Vuitton shops… and at least six stores selling high-end Rolex and Patek Philippe watches. Window displays flaunted $10,000 suit jackets and diamond-encrusted high heels…
And just like at the restaurants, customers were lined up outside these high-end retailers, waiting for their chance to get inside. Some even had velvet roping, as though you were about to score the hottest ticket in town – you know, the chance to spend many thousands of dollars on a new purse or a Swiss watch.
One thing is quite clear from this trip: American consumerism is alive and well.
That’s why – despite my concern that we’re about to experience severe inflation – I don’t believe we’re going to enter a recession.
Americans want to spend, and while they may have to pay more to do it in the coming months… as I’ll show you today… they have the capital to do it. And that will keep our economy afloat, regardless of what our politicians do (or don’t do) in Washington.
You can see and hear all the other dynamic speakers from this year’s special event like Doc Eifrig, Dr. Steve Sjuggerud, Porter Stansberry, and Dan Ferris. And you’ll get access to more than 20 specific stock recommendations from these experts.
From the comfort of your own home, you can pick and choose from the presentations, pause and rewind the videos, and have access to the transcripts.
Astounding Wealth Creation
The last year and a half have been a remarkable period for wealth creation, with equity markets delivering nearly 70% of the gains Americans have enjoyed.
Plus, new data from the Federal Reserve this past week showed that the wealthiest U.S. households hold a record 89% of all stocks – an all-time high.
The top 1% gained more than $6.5 trillion in corporate equities and mutual-fund wealth since January 2020, while the bottom 90% added $1.2 trillion in stock market wealth in the same period.
Of course, I’m thrilled that the pie is growing bigger for everyone, but let me remind you… The Fed designed its aggressive easing policy and coupled it with low-interest rates so the economy could function in a time of exorbitant strain. That’s a laudable goal… But it had the unintended consequence of helping one group – the uber-wealthy – much more than the other.
We need to understand that the Fed will use all its tools and power to better position our markets and economy.
Now, the Fed is only supposed to guard against inflation and help achieve strong employment levels, but nonetheless, in today’s environment, the Fed seems intent on ensuring financial stability – which includes a strong equities market.
The Fed’s Role in Inequitable Wealth Creation and the Dangers It Brings
The Fed has printed a lot of dollars… And with so many dollars chasing so few assets, we’re going to see inflation heat up. We already have, and my biggest fear is that it’s only getting started.
Jack Dorsey, founder of Twitter, shares my concerns. He tweeted out this week that he anticipates “hyperinflation.” Now, you’ve heard me say before that I don’t anticipate triple-digit hyperinflation – à la Argentina in the 1980s, Brazil in the ’90s, or Venezuela today. That’s because we have the luxury of controlling the world’s reserve currency, which keeps attracting people to the dollar despite its declining value.
But I do still expect significant inflation and wouldn’t be surprised to see the Consumer Price Index double to 10% in the next year. Wholesale prices have already spiked more than 8%.
The term “hyperinflation” might be a bit relative. Economists will tell you it’s rapid, excessive, and out-of-control price increases in an economy. Going from 2% inflation to 5.4% is more than twice the rate of normal inflation growth. And while that may not qualify as hyperinflation to the academics… if we spike up to 8% from 5.4%, it will certainly feel like hyperinflation to the majority of Americans, regardless of what the economists want to call it.
But whatever the inflation numbers ultimately are, they will suppress the average American’s spending power, which in turn acts as a damper on the economy. Whether it’s enough to send the economy into a kind of recession, I’m growing increasingly doubtful.
A new system shows which stocks could soon rise 100% thanks to a Connecticut couple’s catastrophic 401(k) loss.
The Role of American Consumers in Fueling Eternal Growth
I’m doubtful because consumption is so intrinsic to our American society. Even now, when millions of people are choosing not to work (we have more than 10 million job openings), retail sales grew more than 0.7% for the month of September.
But that tells me there’s still room for growth. Whenever more people go back to work, there will be more spending power in the economy and sales numbers should increase even more.
So how should the average individual balance general market bullishness with smart investments for a period of high inflation? On a personal level, I look to buy and add to my portfolio on days when the market is down. And I prefer stocks and other investment vehicles that will protect me against inflation (like commodities, including oil and gold, as well as real estate).
I don’t think of my investments as liquid. These are long-term plays on the conspicuous consumption that will continue driving the great American economy and a highly active Federal Reserve determined to do its part to juice that consumption.
Ultimately, my intrinsic belief in the power of the American consumer fuels my bullishness on the markets. Every investor should remember: Never bet against the U.S. Even with all our challenges and infighting, we are still the greatest nation – and greatest stock market – on Earth.
Love us? Hate us? Let us know at [email protected].
Publisher, American Consequences
With Editorial Staff
October 28, 2021