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Looks like supply-chain problems have caused an oil spill... Ship workers have had enough... Order your Christmas gifts now... A 'stagflation' storm is brewing on land and at sea... The stocks to own now... Video: A crypto billionaire's vision for the future...

A cargo ship probably did it...

Roughly two weeks ago, an oil slick arrived on Huntington Beach, California. It's one of the prettiest stretches of coastline – dotted with palm trees, beautiful homes, and restaurants – that you'll ever see... in normal times.

Not now, though. Last weekend, parts of the sandy beach along the Pacific Ocean, south of Los Angeles, were black. Patches of water were covered in a dark sheen. The air stank. Wildlife covered in oil was starting to wash up on shore.

It didn't take too long to realize a likely source. An oil pipeline was only 4.5 miles offshore... and it was busted and leaking oil. But the cause was unknown...

Turns out that something seemingly unrelated that we've been tracking closely – the world's ongoing supply-chain problems – and a mistaken boat captain are to blame.

Investigators are looking into whether a massive cargo ship that was anchored near the congested Long Beach port – with dozens of others waiting to unload – could have dragged its anchor across the pipeline... bending it like a bow, tearing it, and causing oil to spill.

On Tuesday, Amplify Energy CEO Martyn Willsher (whose Houston-based company operates three offshore oil platforms south of Los Angeles) said divers discovered that a 4,000-foot section of pipeline had been moved 105 feet. They reported that oil had escaped through a slender crack.

Meanwhile, tracking data shows the giant container ship in question – the Rotterdam Express, owned by the German shipping company Hapag-Lloyd (HPGLY) – made a series of unusual moves while parked in the water directly over the pipeline on September 22 and 23...

That sounds like some solid circumstantial evidence... But the shipping company is denying any link to the pipeline spill, and the massive ship left the California coast for Mexico today as the investigation continues.

The point is, chalk this story up as emblematic of the world's supply-chain issues...

And as I (Corey McLaughlin) will explain today, it reminds us that a few important economic stories – namely ones about inflation and supply bottlenecks around the world – aren't ending anytime soon... and you'll want to be prepared for the fallout.

Our colleague Kim Iskyan explained the details of the world's ongoing supply-chain issues in his excellent September 22 Digest, coincidentally the same day the Rotterdam Express arrived near Huntington Beach. As Kim wrote...

The economy-wide labor shortage – also related to the post-pandemic (in the U.S., at least) surge in demand – has slowed operations at ports, in the U.S. and elsewhere.

The Southern California coast is a prime example. The Rotterdam Express was caught in traffic on its way up the coast to Oakland, where it was docked Wednesday night.

It's very reasonable to think that the boat was forced to anchor in unfamiliar water because of traffic congestion at the port of Long Beach (near Huntington Beach) along the way... like being slowed down in New Jersey while driving to New York.

The slowdown was caused by a shortage of workers...

And that was caused by the pandemic... and ongoing frustrations from workers in the shipping industry.

This part of the "pandemic story" hasn't been talked about much. But those working on the boats that have been delivering stuff all pandemic long have not been treated like "essential" workers... not in the least.

Depending on the country they arrive at, like Japan, workers aren't even being allowed on shore. Who wants to sign up for that after weeks at sea? Plus, anyone in the industry is facing a frustrating mix of vaccine and quarantine policies around the world from people on land.

Just last week, the International Chamber of Shipping ('ICS') and other industry groups sounded the alarm...

The groups sent an open letter to the United Nations that warned of a "global transport system collapse" if policies did not change. According to a story from CNN Business...

"Global supply chains are beginning to buckle as two years' worth of strain on transport workers take their toll," the groups wrote. The letter has also been signed by the International Air Transport Association (IATA), the International Road Transport Union (IRU), and the International Transport Workers' Federation (ITF). Together they represent 65 million transport workers globally.

"All transport sectors are also seeing a shortage of workers, and expect more to leave as a result of the poor treatment millions have faced during the pandemic, putting the supply chain under greater threat," it added.

Guy Platten, secretary general of the ICS, said that worker shortages are likely to worsen towards the end of the year because seafarers may not want to commit to new contracts and risk not making it home for Christmas given port shutdowns and constant changes to travel restrictions.

One frustrated worker is 28-year-old Karynn Marchal, who was turned away from the Japanese coast 18 months ago. She told CNN Business in a story published last week, "There are people who have been stuck at sea for over a year."

In that same story, Platten said he knows of at least one seafarer who has received six vaccine doses, or three two-dose regimens, because of a lack of coordination among nations.

We just shake our heads and think about what this all means...

In short, this bout of inflation is not "transitory," as Federal Reserve officials had told us it would be.

We never believed the claim anyway, mostly because any current levels of inflation can't be reversed. But now, Fed Chair Jerome Powell is admitting the inflation-causing supply-chain issues may go on for months...

Of course, it could be a year – and that's not far from what business leaders in various sectors are saying today...

The most notable example is the semiconductor industry, where delays for products are getting longer, not shorter. As our colleague and Stansberry NewsWire analyst Nick Koziol wrote today...

Businesses are having to wait longer than ever for their semiconductor orders...

According to data from Susquehanna Financial, chip "lead times" – the time between order and delivery – now sit at 21.7 weeks. That marks the ninth straight month of increases for lead times and is also a record high since Susquehanna began tracking the data in 2017.

In fact, every month since February has been a record high for chip lead times, based on Susquehanna's data. Not only is it a record, but the previous record before 2021, back in 2018, was "only" about 15 weeks.

That means companies that are ordering chips for products like electronic devices, cars, and other connected technology are waiting about five months to receive the semiconductors. That can be a huge headwind to production.

According to Nick, the chip shortage might be impacting the auto industry the most...

Automakers are ordering more chips than ever, planning to ramp up production. But they won't be receiving these orders anytime soon. The lead times for the chips used in auto manufacturing are even longer than the average 21.7 weeks, Susquehanna said.

Susquehanna noted that multiple auto-focused chipmakers also reported record-high lead times in the month. And that has hurt car production.

Companies like Ford Motor (F) and General Motors (GM) have had to halt production of many vehicles, including some of their highest-margin cars. They are planning to produce fewer cars through 2022.

The auto industry is just one example...

A few of our editors had some interesting comments on the supply-chain problems in an email exchange last week.

NewsWire editor C. Scott Garliss shared an anecdote of a roofing company being told its supplier was no longer guaranteeing the dates – or the prices! – on contracts already signed.

They cited "ghost orders" where contractors are creating inflated demand to receive wanted goods. But the bigger driver is the lack of raw materials needed to make the items they need. They cited blowing agents for making insulation in particular.

Crypto Capital editor Eric Wade shared a story about today's reality, too – from a friend involved in the importing business...

He's said that due to the huge increase in cost of importing, some goods (think tires) that are bulky are seeing bottlenecks in favor of small, high-dollar goods (watches, electronics) because the finite number of tires you can fit in a container can't bear the cost increases. He predicts a tire shortage if this doesn't change.

Restaurants are hurting, and they're struggling to find workers while also facing higher costs. Food and spice company McCormick (MKC) says supply-chain issues and tight supply are posing challenges in the face of strong demand.

One company, at least around here, that seems to be navigating the supply-chain problems fine is Amazon (AMZN)...

Baltimore is home to a major Amazon distribution hub and a port. Packages continue to arrive quickly here... We ordered something from Amazon the other morning and it was at our door by dinner.

And the company is adjusting, too... Black Friday is still six weeks away, but the retailer started "Black Friday-worthy deals" earlier this week because of a holiday season that's expected to be chaotic due to supply-chain issues.

Target (TGT) is doing something similar. It's offering special discounts on thousands of items this weekend... And as Kim wrote last month, Home Depot (HD) and Walmart (WMT) are contracting their own ships to transport goods, rather than relying on middleman shippers.

But as he pointed out...

Their ships will still be subject to the same supply-chain constraints as everyone else... Just because the boss can yell at the internal shipping team, rather than the external shipping team, won't put portable drills or soccer balls on the shelves any more quickly.

Here's what this could mean for Mr. Market...

Two big things stand out, as Kim wrote two weeks ago...

The fatigue caused by weak links of the global supply chain – and higher costs for shipping – is fueling inflation.

It's also leading to scarcity... And if consumers can't buy what they want, it's going to stunt economic growth to some degree – consumer spending accounts for around 70% of total economic output.

On the inflation front, it has to do with a mix of supply across many sectors not keeping up with demand, which has driven up prices. As Scott wrote in an October 1 note...

Right now, we want to keep an eye on supply-chain issues. Due to rising COVID-19 infections in the developing world, many factories are being shut down. Those places produce goods consumed around the world. And with global demand for products rising as economies return to normal, inventories have been depleted...

While demand for many products has been strong throughout the pandemic, there is also a great argument to be made – and I'm sure it has some academic theory attached to it – that people will simply stop buying things if they think they can get them quicker and cheaper in six months or a year.

To be fair, this idea might not apply for Christmas presents. No kid wants an IOU or to hear "Santa didn't come this year." And if we leave you with nothing else today, I suggest you start buying holiday gifts for family and friends soon.

But rising prices – even at places like Dollar Tree (DLTR) – and persistent shipping delays eventually might slow the buying of the "unessential" things... like lumber for a project around the house that could really wait a year... or a new car that you might want, but don't really need.

This dangerous combo really has us worried...

Higher inflation and slower growth...

Specifically, we'll have even worse problems if there continues to be high demand of goods and services in countries like the U.S. with persistent production and sourcing issues in other parts of the world.

Paired with relatively high unemployment (which we also have in the U.S. – 9 million unemployed with 11 million job openings), you get the generally accepted definition of "stagflation."

The most famous case occurred in 1974 and 1975, when U.S. industrial production fell by nearly 13% while the inflation metric used by the Federal Reserve gained 12%. Then, in 1979, production was just about zero while inflation was more than 13%.

We're not anywhere near that... And we're not saying it will get quite that extreme this time – or that these imbalances won't work themselves out eventually. The point is, it could be noticeable enough that it rattles Mr. Market and finally forces the Federal Reserve to hike interest rates to cool inflation...

If the central bank does nothing, or moves too slowly, we are looking at more inflation. Moving too slowly is a decent bet, given that Powell has said the Fed wants to finish "tapering" its massive bond-buying operations before hiking rates – and it hasn't started the taper yet.

So the most likely scenarios are either more inflation now or more inflation later...

This is bad for consumers, but it's a boon to companies that can afford to raise prices...

It's amazing how often money managers advise owning shares of businesses that have "pricing power" over their goods and services.

By that, we mean these companies sell things that will always be in demand (or are even addictive), like Starbucks' (SBUX) coffee... or Alphabet's (GOOGL) Google search engine... or Microsoft's (MSFT) computer software and services.

Companies like these have steady cash flow in basically any conditions. And they can raise prices and not get pushback – be it on coffee, advertising, or cloud services – rewarding their shareholders as a result.

Take Microsoft, which recently announced it will raise its dividend payout by 11% and is buying back $60 billion of shares. The dividend alone will help investors beat inflation, and the buyback move will reduce the number of shares outstanding by 2.5%. That means each remaining share will be worth a bit more in the long run.

As Nick wrote in NewsWire last month after the announcement from Microsoft...

The company has an extremely capital efficient business model and produces loads of free cash flow [FCF]. And the company uses this FCF in order to reward shareholders. Last night's announcement is just another way MSFT is returning capital to shareholders.

The point is, these are stocks you want to own in inflationary times.

If you want to hear more, I suggest you check out our recent 'Bull vs. Bear Summit'...

If you missed it, this was an exclusive roundtable talk with three of the most familiar names in the Stansberry Research family... True Wealth editor Dr. Steve Sjuggerud, Retirement Millionaire editor Dr. David "Doc" Eifrig, and Extreme Value editor Dan Ferris.

Doc, in particular, has been tracking inflation closely. Here's what he says to anyone with money in the market – but especially those in or close to retirement...

Sitting in cash right now is the last thing you want to do if you are worried about inflation. And trust me, I get it... After the crash in stocks we witnessed last March, it might feel better to be sitting in cash, where it seems like you are safe.

But with inflation at 4%-plus, that means you've lost 4% of the purchasing power of any cash you've held over the last year. That's what's keeping me up at night... because I know a lot of folks who are at or near retirement are probably underinvested today.

Doc continued...

In my opinion, the best place to be invested during what I can call "price demand" inflationary times are high quality businesses that can raise their prices as their costs increase... as well as things like real estate or fine art. Things with unique pricing powers.

For more, check out the Bull vs. Bear debate. You'll learn how you can access a basket of stocks that Steve, Doc, and Dan agree will protect and grow your wealth... and they also offer the chance to get a tool that we think is the No. 1 way for you to know when to sell.

Click here to watch and listen to the whole talk. (Doc jumps into the fray around the 25-minute mark.)

Before we go, we must quickly update the debt-ceiling 'debate'...

Congress has punted the discussion until December... no surprise there.

Today, Senate Majority Leader Chuck Schumer announced that he and Senate Minority Leader Mitch McConnell agreed on a deal to increase the debt limit through December... and then get after it again come holiday time.

The agreement reportedly will increase the debt limit by $480 billion through December 3, an amount the Treasury Department estimates it needs to avoid going completely broke.

This will also let Democrats work out their differences in their proposed infrastructure bill, which has been tied to these debt-ceiling talks...

We hate to directly link one piece of news to broad stock-market movement, but hear me out... The U.S. stock markets have not hated that a potential debt default that could have happened in two weeks is off the table for now.

The benchmark S&P 500 Index is up roughly 2.5% in the last two days, and the tech-heavy Nasdaq Composite Index has gained 3% since Wednesday's open... Coincidence?

A Crypto Billionaire's Vision for the Future

Brock Pierce, board chair of the Bitcoin Foundation and a former presidential candidate (and former kid actor in the movie The Mighty Ducks), shares his pioneer-like efforts within the cryptocurrency universe... and where it could go next.

As he put it, "The future is going to happen to you, or with you"...

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 10/6/21): Freehold Royalties (FRU.TO), Formula One Group (FWONA), JPMorgan Chase (JPM), and Telekomunikasi Indonesia (TLK).

In today's mailbag, your feedback on bitcoin and cryptocurrencies... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"I was the biggest non-believer of bitcoin. I would not touch it with a 10-foot pole. Until, I wasn't. I finally convinced myself that it was going somewhere, and I climbed in. Now I have $17,000 in bitcoin and Eth. And most of it is gains. My regret is I didn't do it sooner." – Paid-up subscriber John M.

"I'm glad to hear that the government is not ready to ban cryptocurrencies yet, but I know from experience that nothing is certain until the government denies it. Hold on to your wallets, and good luck!" – Paid-up subscriber Don B.

All the best,

Corey McLaughlin
Baltimore, Maryland
October 7, 2021