One Magic Pill for One Very Big Problem

The Fed makes a slight shift... Inflation still leads the news... It's rising in Europe, too... The good and bad of the Omicron variant... A solution that'll calm the market... Obesity is a significant COVID-19 risk factor... One magic pill for one very big problem...

The Fed is looking to 'taper' faster...

The Federal Reserve's program of buying $120 billion per month of U.S. Treasury bonds and mortgage-backed securities has been a centerpiece of its COVID-19 economic stimulus effort. But today, Fed Chair Jerome Powell confirmed that the program is winding down...

In November, the Fed indicated that it would reduce its purchases each month with the goal of ending them in June 2022...

Then, in early December, Powell said the Fed could accelerate the unwinding of the buying campaign, which is a backdoor way of providing liquidity to the U.S. economy – with an approximate aim of ending repurchases around March...

Today, the Federal Open Market Committee ("FOMC"), which sets the Fed's macroeconomic policies, confirmed the accelerated timeline, among other news. This means that we can expect other tightening as well...

Interest-rate hikes are also likely to happen sooner...

A quicker taper means that the Fed will have scope to move earlier – and perhaps faster – on raising interest rates.

On the FOMC's "dot plots" – which map out the projections of interest-rate hikes for each member of the FOMC – all 18 members suggested they could envision at least one interest-rate hike next year... And most of them expect three interest-rate hikes in 2022.

That's a big change from September, when only half of the committee's members projected higher interest rates before 2023.

Labor market conditions are an important consideration for the Fed, as the Wall Street Journal explained...

Officials in their post-meeting statement described their goal of inflation moderately exceeding their 2% target as being met and said they would keep rates near zero until they were satisfied labor market conditions were consistent with maximum employment.

Of course, all this action is because inflation continues to be a thread in every investment conversation...

And rising inflation, of course, is partly the result of the ongoing pandemic interfering with normal economic activity.

In today's Digest, I (Kim Iskyan) will look not only at how inflation has picked up globally, but how COVID-19 continues to create new problems around the world. I'll also report on a possible cure for one of the virus's most significant risk factors.

Inflation, everyone now acknowledges, is real and not leaving anytime soon...

The Consumer Price Index ("CPI"), released on Friday, showed an inflation rate of 0.8% in November and 6.8% for the past 12 months... That's the highest rate since 1982.

Then on Tuesday, Producer Price Index ("PPI") data for November came in at 9.6%. That marked a record high for PPI, which the U.S. Bureau of Labor Statistics has been tracking since 2009.

PPI is often viewed as a predictor of CPI... When companies experience higher input prices – which is what PPI measures – they usually later pass these higher prices on to consumers (which is reflected in the CPI). So if current trends hold, CPI may continue to rise in the short term.

And, as was confirmed today, higher inflation will push the Fed to raise interest rates. As C. Scott Garliss of the Stansberry NewsWire team explains...

Rising inflation increases pressure on the Federal Reserve to react and raise interest rates. By doing this, it strengthens the buying power of the dollar. The goal is to offset inflation in the process. In other words, when the value of the dollar rises, it takes less tomorrow to buy the same amount of goods as it did today.

The U.S. isn't alone in grappling with inflation...

The European Union ("EU") is, too...

November's inflation number in Europe hit 4.9%, an all-time high since records began in 1997. Since 2013, the euro has been persistently below the 2% target inflation rate of the European Central Bank ("ECB") – and interest rates have been essentially negative for years.

Similar to views expressed by the U.S. Federal Reserve today, the ECB has hinted at raising interest rates in 2022... On Thursday, it's expected to announce the first steps in the process of rolling back its own bond-buying program, which infused capital into the economy.

But just like here in the U.S., it's not so straightforward, as the Financial Times explains...

Complicating [the ECB's] decision is the arrival of the more infectious Omicron coronavirus variant at a time when the COVID infection rate had already risen to new highs in many parts of Europe.

The return to varying levels of lockdown is expected to hit eurozone growth, which had been on track to recover from last year's record postwar recession by the end of this year.

Meanwhile, there's (sort of) good news on the Omicron front...

Preliminary findings suggest that the Omicron variant is significantly more contagious than the Delta variant ‒ but Delta still accounts for virtually all new cases in the U.S... In a small study, British researchers found that Omicron is 3.2 times more likely to spread within a household than the Delta variant.

But so far, it looks like Omicron doesn't make vaccinated people as sick as other COVID-19 variants... And current vaccines seem to be effective against Omicron.

A study in South Africa showed that two doses of the Pfizer (PFE) vaccine are 70% effective at preventing hospitalizations... That's good, though it's lower than the 93% protection that's offered against the Delta variant.

Meanwhile, Pfizer also said that its experimental COVID-19 antiviral pill – under review for approval by the U.S. Food and Drug Administration ("FDA") – reduced the risk of hospitalization for high-risk patients by 89%...

Pfizer reported that there were no deaths in the trial group that took the pills. But in the control group – people not on the pill – the company saw 12 COVID-related deaths... It's also likely to work against the Omicron variant.

Having an answer is a good thing for investors...

Unlike at the inception of the pandemic in March 2020, to some degree, we have a solution to fighting the virus – vaccinations, boosters, and treatments... That helps explain why markets have so far shrugged off the potential for Omicron to derail the ongoing economic recovery.

In addition to the experimental pill mentioned above, the FDA has approved the antiviral drug Veklury for adults and certain children... This is mainly used in serious cases that would otherwise require hospitalization. There are also other emergency-use drugs, plus more likely coming in the future.

And when it comes to vaccines, the Pfizer-BioNTech (BNTX) and Moderna (MRNA) vaccines are the two most popular... each requiring a double dose at first, with a third booster shot now widely available. Pfizer has also been made available for those five years old and older... Johnson & Johnson's (JNJ) one-dose vaccine is also available as a booster.

Still, roughly one out of every three Americans isn't fully vaccinated... and according to data from August and September, infection rates are six to 10 times higher among unvaccinated people. So there's plenty of scope for more people to get sick... After all, six out of every seven people in the U.S. haven't gotten COVID-19.

What's happening in the U.K. right now might be a harbinger of what's coming here...

British Prime Minister Boris Johnson warned over the weekend of a "tidal wave of Omicron," which accounts for around 20% of new COVID-19 cases in the U.K... The country is set to replace South Africa as the global hot spot of the Omicron variant.

The prime minister announced a new target date – by the end of December, rather than the end of January – for when booster shots will be available to adults. The government also rolled out tightened COVID-19 rules, including renewed work-from-home guidance.

But it may not do any good, according to a London friend who said recently...

The streets are packed with Christmas shoppers. People are ignoring the restrictions completely.

Back on this side of the Atlantic... in New York, California, Oregon, and a handful of other states... mask-wearing mandates have been reinstated for all indoor public spaces. And Apple (AAPL) is again requiring that customers at its stores throughout the U.S. wear face masks.

But the difference with these new mandates, compared with when they were first introduced more than a year and a half ago now, is that we are all more comfortable with them... We know how the virus is transmitted, and therefore we know what danger spots to avoid.

And as I mentioned above, investors seem calmed by the fact that we do have solutions... Vaccines and other drugs will likely prevent another severe economic shutdown.

Now there's new – direct – evidence of another risk factor for COVID-19...

Besides advanced age, obesity is by far the most common – and one of the most dangerous – risk factor for COVID-19.

Until a few weeks ago, the official top COVID-19 risk factors were high blood pressure, Type 2 diabetes, and chronic heart conditions – each of which in part stems from obesity...

This makes sense... COVID-19 weakens your lungs, so if infected, you get less oxygen. In response, your heart has to pump faster and your blood pressure rises. Type 2 diabetes throws off your immune system, and a compromised immune system is less able to fight the virus.

But a recent (still unpublished) study from Stanford Medical School shows that fat cells can be the most dangerous reservoir of COVID-19 in your body... The more fat stores you have, the larger the reservoir. That means that the virus being made inside your fat cells can overwhelm your immune defenses.

Therefore, it's not just the fact that obesity can tax your heart and your blood vessels if you have the virus... Rather, the more fat you have, the more virus your body produces.

That helps explain why COVID-19 wards in hospitals are filled with obese patients. The older and heavier these patients are, the more likely they are to end up in intensive care – or to die.

Hospitals in Europe have already figured this out. But here in the U.S., obesity is almost never a "billing code," and thus it is not specifically tracked as a risk factor... So it's drugs for high blood pressure or Type 2 diabetes that have made these conditions stand out.

Of course, COVID-19 is just one downside of obesity...

Being overweight is closely linked to a range of life-shortening chronic diseases... like cancer, heart disease, and Type 2 diabetes.

People who are moderately obese ‒ with a BMI between 30 and 35 ‒ can expect to live three years less than those classified as being of normal weight... While those who are extremely obese ‒ with a BMI above 55 – have a life expectancy that's as much as 14 years less than people of normal weight. Though it's not the final arbiter of your body weight or health, check out your own BMI here.

And the damage of obesity is not just the incalculable loss of years of life... There's a very direct and real economic cost of obesity-related medical care – around $147 billion per year in the U.S., according to the Centers for Disease Control and Prevention.

Why am I going on about obesity?...

Two words... Dave Lashmet.

Dave Lashmet is the editor of Stansberry Venture Technology, an advisory service focused on emerging technologies. Dave's insights into medical innovations and new technologies are responsible for some of the biggest gains in Stansberry history... including a top 10 "Hall of Fame" recommendation, ID Biomedical, with 331% gains.

I vividly remember a conversation I had with Dave in February 2020, just as the vague contours of the coronavirus were coming into focus. He'd already zeroed in on what would become a central deficiency for the treatment of COVID-19... a lack of ventilators. He said...

People will die because we don't have enough ventilators.

At the time, I hardly even knew what a ventilator was, much less its life-saving value in pumping oxygen into the body if the lungs aren't able to do their job. Dave was about five steps ahead... and, of course, he was right.

Within weeks, ventilator shortages were worldwide news... and a key challenge in the treatment of the virus.

So when Dave sees something on the horizon, two things are certain... First, it's something that few other people have thought about. Second, chances are that there's a fantastic opportunity there.

And right now, Dave is excited about a pill that can treat obesity...

Given the many negative consequences of obesity on our economy and society, you'd think that a quick and easy way to tackle it would be front-page news...

But it's not... though partly because the pill is still experimental. Dave has been tracking it closely. And you can bet that the sales potential of a safe and effective pill to treat obesity will be enormous.

According to a 2018 survey, 42% of American adults were clinically obese. That's 100 million people. Add in other parts of the developed world, and we're talking about many more obese people on the planet... As many as 1 billion by some estimates.

But at this point, the details of this pill are buried in secrets... Only the pharmaceutical-company lawyers know its proposed brand name... But it's potentially a solution to a $2 trillion problem.

So you can't look up this information on your own. It's simply not available. But Dave has some insight on this... And you can learn the details right here.

And this will likely be your one and only chance to hear the full story before it goes mainstream in a big way...

This is what comes from being "in the know" when big announcements are made… and connecting the pieces to know what's coming.

You'll definitely be glad to know about it – in advance. And you can get those early details right here.

An Early Christmas Gift for Viewers (and Readers)

Matt McCall is getting in the Christmas spirit with some early gifts for his viewers...

In this latest video podcast, Matt shares the names of four companies valued at less than $2 billion each that are looking strong in the services sector... And he has the charts to back up his claims.

In addition, Matt talks about inflation, which continues to put pressure on growth stocks. But he's not talking about it as a bad thing... Believe it or not, history shows that big spikes in the Producer Price Index foreshadow a huge, long-term move in stocks.

To find out what direction that big move will take, you'll have to tune in to the newest episode of Making Money With Matt McCall...

Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and don't forget to follow us on Facebook, Instagram, LinkedIn, and Twitter.

New 52-week highs (as of 12/14/21): AbbVie (ABBV), Berkshire Hathaway (BRK-B), Quest Diagnostics (DGX), Coca-Cola (KO), Procter & Gamble (PG), and Consumer Staples Select Sector SPDR Fund (XLP).

In today's mailbag, we're sharing praise for Director of Research Matt Weinschenk on his Monday Digest about managing your own money... passing along a few kind notes for our colleague Dan Ferris following his Tuesday Digest on what happened in 2021... and responding to a complaint about "stupid sayings" from our editors. As always, we love to hear your thoughts, comments, and observations – good or bad – at feedback@stansberryresearch.com.

"Thanks Matt, I agree with you. Having been a subscriber and now an Alliance member for around 10 years I can attest to what you have said." – Stansberry Alliance member Jeff S.

"For Dan Ferris, I enjoy your highly creditable eschatological stock market ramblings.

"I joined the investment business in 1972, so I have a decent long-term perspective. I'm not particularly clever, but very cautious.

"I remember as a U.S. institutional stockbroker in London back when Japanese shares were going wild, I calculated on one day of particular excess, the highest Japanese valued company by market cap increased by the total value of several of the highest value U.S. Dow Jones companies.

"That is worth reading again! Now that's a bull market of total drunken folly, and when I rang a few of my institutional clients (such worthies as the Kuwait Investment Office, etc.), the astonishment at the other end of the phone was palpable.

"Strange how such excesses can barely touch the brains of the incredulous uninvolved foreigners. Cheers." Paid-up subscriber Michael Y.

"'Baked your noodle'... I love it! Keep up the free-thinking angle." – Paid-up subscriber Eric A.

"Please someone get Dan Ferris and Porter Stansberry a [expletive deleted] dictionary. Dan is copy-catting Porter with this stupid saying that he does Not Predict but is continuously Predicting.

"Simerly [sic] to Porter's saying that there is no learning only teaching or the other way around, I can't remember." – Paid-up subscriber Arnold E.

Dean Jones Jr. comment: Hmm... OK, thanks for the feedback, Arnold.

And just for the record, Porter's saying was, "There is no teaching, only learning." But in some cases, I guess there's neither.

Good investing,

Kim Iskyan
Ashton, Maryland
December 15, 2021