Herb Greenberg's latest exposé; The Inflation Hits Just Keep Coming, Raising Stakes for the Fed; Inflation Is Bringing Back the K-Shaped Economy; The Secret to Braving a Wild Market; 'You Murdered My Daughter': Relatives of OxyContin Victims Confront the Sacklers

1) Last year, my longtime friend Herb Greenberg joined the Empire Financial Research team...

Herb boasts a 40-plus-year career as an investigative business journalist, and he's a legend in the investing community. In the buildup to the Internet bubble, Herb uncovered and exposed fraud after fraud... so he has an especially good nose for hype and bullsh*t.

Since joining the Empire team, Herb has contributed to our Empire Stock Investor and Empire Investment Report newsletters, as well as written essays for the free Empire Financial Daily e-letter.

But on Thursday, March 24 at 8 p.m. Eastern time, he's going on camera to reveal his newest exposé...

In short, Herb will explain how the recent huge shakeups in the market have opened a rare "backdoor" that could transfer money from Wall Street's wealthiest investors into your account... on specific stocks... with the chance to double your money.

This is poised to be the biggest untold investment story of 2022, so you won't want to miss it... and even better, this event is completely free to attend. And just for showing up, you'll even get a free recommendation. All you have to do is click here to register in advance.

Mark your calendars... We'll see you on March 24!

2) The rapid spread of COVID-19 in China (which I discussed in my previous two e-mails), leading to lockdowns and further supply chain disruptions, is just the latest factor fueling inflation.

This Wall Street Journal article highlights how difficult it will be for the Fed to raise interest rates to bring inflation down without tipping the economy into a recession: The Inflation Hits Just Keep Coming, Raising Stakes for the Fed. Excerpt:

For the Federal Reserve, the hits driving inflation keep piling up.

Escalating sanctions by the West to punish Russia for its war against Ukraine are driving fears that an episode of increased inflation, already at its highest levels in 40 years, will become harder to wring out of the U.S. economy without a recession.

Before Moscow's invasion three weeks ago, Federal Reserve Chairman Jerome Powell had begun laying the groundwork for a more aggressive series of rate increases, driven by concerns that labor markets were overheating. He and his colleagues were also banking on getting an assist from recovering supply chains later this year, limiting how far rates would have to rise.

Now, the global economy faces the prospect of higher energy and commodity prices, which will raise the costs to transport and manufacture a range of goods, while the conflict further disrupts global shipping networks. "The war makes inflation more intractable," said Steven Blitz, chief U.S. economist at TS Lombard, a research firm.

The threat is unlikely to alter what the Fed does at its meeting this week. Mr. Powell said earlier this month that the central bank wants to avoid adding to volatility at a time when geopolitical uncertainty has already raised the risk of a sharp pullback in risk-taking by investors.

He signaled that the Fed would kick off an expected series of rate rises this week with a quarter-percentage-point increase, rather than a half-point, which a few Fed officials had floated and some investors had said would be appropriate. But he hinted that a series of shocks, including the Russian invasion, could keep inflation uncomfortably high, potentially calling for larger rate rises this summer.

Economists say there's a growing risk that Mr. Powell could feel great pressure to lift rates to levels that ultimately tip the economy into recession. "It's a very difficult path for the Fed to guide inflation back to target without triggering a downturn, and the path got even narrower with this latest supply-side shock we're seeing," said Matthew Luzzetti, chief U.S. economist at Deutsche Bank.

Renewed pandemic lockdowns in China in recent days are adding even more disruptions to the battered supply chain.

The inflation threat for the Fed is twofold. The first risk is that the surge in prices could become intense enough or last long enough to change consumers' and businesses' inflation psychology, making those expectations self-fulling. If workers anticipate a robust inflation rate in a year's time, they will be more likely to push for higher wages now.

The second risk is that a tight labor market, with demand for workers far outstripping the supply, generates wage growth that keeps inflation above the Fed's 2% target.

Those two forces threaten to ignite an inflationary spiral, where workers face higher prices and demand more pay, leading businesses to continue raising prices.

Prior to Russia's invasion of Ukraine and the COVID lockdowns across China, I was quite confident that inflation would decline substantially over the course of this year, perhaps ending the year around 3%.

While I think this scenario is still possible, it's certainly not as likely... which is a major reason why stocks are getting hit, especially high-growth ones valued in expected earnings far into the future.

3) This Bloomberg article captures how inflation hits low- and moderate-income people hardest: Inflation Is Bringing Back the K-Shaped Economy. Excerpt:

Remember back in 2020 when everyone was talking about a K-shaped economic recovery? White-collar workers who could do their jobs from home stayed employed, while lower-income service workers got laid off by the millions with uncertain prospects. Over time, a mix of fiscal relief, vaccines, and other adaptive measures led to a strong rebound and helped close that gap.

Until now. Stagflationary trends in the housing market combined with the energy shock stemming from war in Ukraine has created a new kind of K-shaped economy. Homeowners, who tend to be wealthier to start with, are benefiting from surging home values. They also spend a proportionately smaller part of their incomes on food and energy, insulating them from inflationary shocks.

Low-income renters find themselves in the opposite situation – they spend a larger portion of their incomes on commodities, so their purchasing power is declining as food and energy costs soar. And they get no benefit from growing home equity; They're just paying steeply higher rents...

This is our new K-shaped dynamic – rich homeowners have the means to absorb commodity price increases while the poor get squeezed by rent and commodity inflation.

4) The Wall Street Journal's Jason Zweig has more good advice on navigating these turbulent times: The Secret to Braving a Wild Market. Excerpt:

Investors need not only the courage to act, but the courage not to act – the courage to resist. By the early 1980s, countless investors had given up on stocks, while many others had been hoodwinked by brokers into buying limited partnerships and other "alternative" investments that wiped out their wealth.

If it feels brave to you to rush out and buy energy stocks, you're kidding yourself; that would have been courageous in April 2020, when oil prices hit their all-time low. Now, it's a consensus trade. Courage isn't doing the easy thing; it's doing the hard thing.

Making a courageous investment "gives you that awful feeling you get in the pit of the stomach when you're afraid you're throwing good money after bad," says investor and financial historian William Bernstein of Efficient Frontier Advisors in Eastford, Conn.

You can be pretty sure you're manifesting courage as an investor when you listen to what your gut tells you – and then do the opposite.

5) While it's infuriating that the Sacklers, who fueled the opioid crisis through their company, Purdue Pharma, won't be subject to civil lawsuits and will mostly keep their billions in blood money, I'm glad three of them had to listen to a few of the people whose lives they destroyed: 'You Murdered My Daughter': Relatives of OxyContin Victims Confront the Sacklers. Excerpt:

"You murdered my daughter and destroyed my family," said Donna Mazurek, whose daughter, Paige, was prescribed Purdue Pharma's opioid painkiller OxyContin after a root canal, became addicted, spiraled into heroin and overdosed when she was 22.

Ms. Mazurek, from Michigan, spoke at an extraordinary Zoom session in a federal bankruptcy courtroom in White Plains, N.Y., on Thursday. Her voice quaked as she addressed three members of the billionaire Sackler family, the owners of Purdue Pharma – two expressionless people visible on the video screen and one unseen, Dr. Richard Sackler, a former Purdue president who was watching with his camera off.

The hearing, conducted by Judge Robert Drain, who is overseeing Purdue's bankruptcy, featured 26 people from 19 states. It was a long-sought, galvanizing release of pain, rage and grief, a session the Sackler family agreed to last week, as part of the still-evolving terms of efforts to settle thousands of lawsuits against them and their company. After years of litigation and prolonged settlement talks between state and local governments and the Sacklers and Purdue, Thursday's session was the first time individuals had been allowed to directly address the Sacklers.

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.