We're Running Out of Gas, But Not Job Openings

We're running out of gas, but not job openings... Isn't everything 'transitory'?... The Nasdaq is down 8% from last month's high... Why aren't people looking for work?... Ethereum has gone parabolic... A crypto trade for your brokerage account...

Some gas stations are already out of stock...

We begin today with a follow-up on our report from Monday's Digest about the potential for higher gas prices... or worse, an oil shortage along the U.S. East Coast.

One of my friends shared the following picture this morning on social media. It was taken at a gas station in Atlanta...

In the wake of the cyberattack on Colonial Pipeline, which delivers about 45% of the fuel along the East Coast and has been offline since Friday, this gas station was out of stock... and it isn't the only one.

We've seen the reports and pictures of folks hoarding gas in various locales... which of course, only speeds up the process of sucking America dry of fuel... since Colonial has so far only brought part of its system back online.

The company still doesn't know for sure if its network is safe...

Last night, Colonial said that it has figured out ways to get about 41 million gallons of fuel to various points of its network... But it's not yet back up and running at close to full speed. For context, the company would usually transport 100 million gallons on a regular day.

Colonial also said it has "increased aerial patrols of our pipeline" and "deployed more than 50 personnel to walk and drive about 5,000 miles of pipeline each day" to check on things... And the company is still reportedly working on decrypting its data while having no plans to pay the ransom that the hackers want.

As a result of all this, the national average price for gasoline has already topped $3 as of today, according to the nonprofit member organization AAA. And as we write (and said on Monday), we believe the ripple effects about the economy are just getting started.

We don't need to tell you all of the industries that need oil and are sensitive to price swings... For one example, fuel from Colonial's pipelines typically ends up in airplanes at the Atlanta and Baltimore airports – major hubs – within a matter of days.

But normal business has been disrupted... Supply is stranded on the Gulf Coast, and it's not moving to where demand is growing, a recipe for inflation...

All the while, of course, money supply – another driver, if not the biggest driver, of inflation – has never been higher. And it keeps going up...

This isn't good.

In the meantime, though, don't worry about inflation – so says the Federal Reserve...

As we've come to expect, that was the message from the central bank today... even after one regular "data point" of inflation – the monthly Consumer Price Index ("CPI"), published this morning – beat all analyst expectations by a significant margin.

The number – which measures price changes in a variety of retail goods sold in the U.S. – rose close to 1% in just one month (covering March and April prices)... It was the biggest monthly increase since June 2009.

Ho-hum, says the Fed. It's all "transitory," it says, meaning not permanent. To which we say, isn't everything transitory – all the time? The only constant in life is change... like a cyberattack leading to a gas shortage.

But we digress...

Fed Vice Chair Richard Clarida spoke at a National Association for Business Economics event shortly after this inflation data was reported this morning. And according to Stansberry NewsWire editor C. Scott Garliss, Clarida said that he's not worried about inflation...

During the speech, he said the central bank will remain focused on ensuring a stable economic recovery. He reiterated it's more focused on recovering the jobs lost during the pandemic than on gains in inflation.

It continues to see the recent rise in prices as temporary. It believes many of these are being driven by bottlenecks such as labor shortages that are hurting production. And until those jobs are recovered, demand will likely outpace the supply of all types of goods.

As Scott wrote in his report, Clarida said U.S. employment remains 8.2 million below its pre-pandemic peak. Meanwhile, just this week, the U.S. Bureau of Labor Statistics reported there were a record 8.1 million jobs available in March.

As NewsWire analyst Nick Koziol reported yesterday, job openings are now about 25% above their pre-pandemic level from February 2020...

These job openings translated into a boom in hiring in March. According to the Labor Department, 770,000 jobs were added in March. That was the highest level since last August. But hiring dropped off in April.

That jobs report, released on Friday, said the U.S. added 266,000 jobs in April, compared with an expectation of 1 million. It was a surprising "miss" for many market observers...

Why aren't people looking for jobs?

As Nick also reported, the U.S. Chamber of Commerce – a nongovernmental agency focused on small business – blamed enhanced unemployment benefits for the lack of hiring, not COVID-19, for example...

In response, in recent days, we've seen several states "opt out" of handing out enhanced federal unemployment benefits in an effort to encourage people to... you know, actually work as part of a productive society.

Tennessee became the latest state to do this, joining 10 others... The list includes Alabama, Arkansas, Idaho, Iowa, Mississippi, Missouri, Montana, North Dakota, South Carolina, and Wyoming.

These added federal unemployment benefits ($300 per week on top of typical state benefits) don't expire until September... But the recovery from the pandemic and ensuing shutdowns has clearly happened quicker in many parts of the country than expected.

At the same time, companies like fast-casual restaurant chain Chipotle Mexican Grill (CMG) have recently raised wages and salaries in order to entice more workers to their businesses. And we know plenty of other businesses that are hiring, too.

Other companies like Starbucks (SBUX) raised wages in the throes of the pandemic... That's another reason why it's wise to own shares of capital-efficient companies like these in inflationary times.

With good business models, in-demand products and services, and gobs of free cash flow, they can afford to raise wages – which the government has, in essence, forced them to do.

When you see news of companies raising wages, these are the businesses you want to own in your portfolio if you care about long-term growth. Not all businesses can afford to, of course... especially if they're dealing with a laundry list of other expenses.

None of what's happening today makes business easier...

Not supply-chain worries... folks staying at home rather than working... wacky supply and demand dynamics depending on the sector... and a central bank that thinks this too shall pass.

That's why inflation fears are still reverberating around Wall Street today... as we talked about yesterday.

In other words, enough investors and traders are concerned that inflation is picking up and will squeeze margins and erode corporate profits... despite the Fed's insistence than the rising prices we're seeing today are temporary.

Thus the sell-off in Big Tech stocks recently... and a rise in U.S. Treasury yields today, as well as inflation expectations. The "breakeven" rate on five-year U.S. Treasury Inflation-Protected Securities ("TIPS") hit 2.7% today, its highest number in more than 10 years.

This means the market today sees inflation averaging 2.7% over the next five years.

And along with that, more and more investors are starting to think that the central bank will have to act earlier than it has said to "cool" the economy... by raising its benchmark interest rate, which has knock-on effects. More from Scott on this point...

The thinking on Wall Street is technology companies borrow heavily to invest in future business and fuel growth. So, rising rates imply increased borrowing costs and less profits down the road. That's weighing on the technology-heavy Nasdaq Composite and S&P 500 indexes.

Most everything was down today, with the Nasdaq leading the way... It dropped nearly 3% from yesterday and is now down almost 8% from its April high. The benchmark S&P 500 Index finished today down 2.2%, and the Dow Jones Industrial Average dropped 2%.

At the same time, one key 'anti-central bank' trade is taking off...

We're talking specifically about cryptocurrencies.

Bitcoin, the most popular crypto in the world, is still in the midst of a pullback from an all-time high at more than $60,000 last month. But Ethereum – the second most popular crypto – has gone parabolic lately...

Its price is up nearly 100% to more than $4,000 in the last month alone... and up 2,000% over the past year. Take a look...

Don't get me wrong, when we see a parabolic chart like this, it usually awakens our "euphoria warning" and we start thinking that some kind of sell-off isn't far behind... So please be cautious if you're buying today, and consider "scaling in" if you must.

But the point is, people are getting jazzed about Ethereum...

And briefly, this crypto essentially represents the underlying technology behind bitcoin and a lot of the tokens that will power much of the "decentralized finance" world that we have written to you about before in the Digest...

Our Crypto Capital editor Eric Wade and his research team wrote in the February 9 Digest that decentralized finance, or DeFi, was going to be a real crypto boom to watch in 2021. And that's exactly what has played out so far...

This space is where a lot of the smaller cryptos in the world "live"... And the appetite for an alternative to central bank life – including ways where folks can lend out their crypto at generous interest rates – has been growing exponentially in recent months.

While the Nasdaq and other indexes have been selling off... many cryptos have been taking off. Over the past week, Ethereum is up around 20%, for example. It gained 3% today.

This is all to say – with inflation fears happening right now and not going away anytime soon – if you haven't dipped your toes into the crypto pool yet, it might be a good time.

For one, be sure to check out the work of Eric and the Crypto Capital team. We don't think you will find a better guide in the space. But right now, we also see other smart investors making more and more crypto recommendations...

Take Enrique Abeyta, our friend over at Empire Financial Research and a 25-year Wall Street veteran...

Enrique, among other things, famously grew his hedge fund by 130,000% in just four years. He's also a great user to follow on Twitter, if social media is something you enjoy.

Today, Enrique has uncovered a way to buy into the crypto market inside of your brokerage account... You don't need to open a digital wallet or start an account on a crypto exchange like Coinbase. It's a stock that trades actively on the open market.

Enrique is so bullish on this stock that he calls it "the most obvious 10x opportunity" he has seen in his investing career. In fact, his business partner almost quit his job to buy the stock. (Like our analysts at Stansberry Research, the folks at Empire also don't buy things they recommend for conflict of interest reasons.)

Enrique just published a brand-new report with all the details. Click here for the details.

This is a great opportunity to add crypto exposure to your portfolio if you don't want to go through the "hassle" of buying bitcoin or other smaller cryptos yourself... Though as we've made it clear here in the Digest, it's worth learning how to do that, too.

How Psychedelics Are Shaking Up Wall Street

Psychedelic medicine company MindMed (MNMD) recently made its Nasdaq debut, making it only the second company of its kind to list on the exchange... and it already has a market cap of roughly $1 billion.

Our colleague Daniela Cambone recently spoke with MindMed CEO and cofounder JR Rahn about how the company is shaking things up on Wall Street...

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 5/11/21): Altius Minerals (ALS.TO), Eagle Materials (EXP), Motorola Solutions (MSI), MasTec (MTZ), Novo Nordisk (NVO), and United States Commodity Index Fund (USCI).

In today's mailbag, a question about a recent prediction by our Ten Stock Trader editor Greg Diamond. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"May 10th was supposed to be something major in the stock market. Could you update us on the status of the prediction you posted a month ago or so??" – Paid-up subscriber Bruce W.

Corey McLaughlin comment: Bruce, we actually mentioned this in yesterday's Digest. According to our Ten Stock Trader editor Greg Diamond, who made the call you're talking about, we're seeing this prediction play out this week.

As Greg wrote to his subscribers on Monday, which was May 10...

Today clearly marked an inflection point.

As we've seen of late, some sectors like industrials are rallying/breaking out while technology shares are struggling.

This makes the call for a top or breakout a bit harder, but there are many things we can look at to help us gauge which scenario is set to unfold.

Greg has continued to update subscribers this week, as most notably, the Nasdaq has sold off roughly 6% over the past three trading days amid the inflation concerns we've discussed.

We consider that "something major"... and this behavior is exactly the kind of thing that was on Greg's radar when he made his prediction about May 10 being a likely "inflection point" for the markets.

Today, Greg updated Ten Stock Trader subscribers again about what to watch for in the days ahead, the trades he is considering, and the technical indicators he uses. He wrote...

Big moves and inflection points happen during this time. Again, it can be quite clear when all markets move up or down into these time factors to create a top or bottom in a short period of time or it can drag out between a top or bottom that forms which seems to be the case this week.

Kudos to Greg on nailing this call.

If you want to follow along with his work, including actionable trade recommendations based off his research, Alliance Members and existing Ten Stock Trader subscribers can do so right here.

All the best,

Corey McLaughlin
Baltimore, Maryland
May 12, 2021