New Signs Inflation Is Returning

Your last chance to collect $15,000 or more in 'unclaimed profits'... New signs inflation is returning... Prices are rising in Europe... Deflation could finally be ending... New highs for this elite, capital-efficient business...


We begin tonight's Digest with a special announcement...

As you may have heard, our friend (and former Stansberry Research subscriber) Dr. Richard Smith recently did something he has never done before...

He sat down with real Stansberry Research subscribers to show them exactly how much more money they could have made – on the same investments they already own – with his TradeStops service. And the results were shocking...

Every single subscriber Richard talked with would have made thousands of dollars more... even tens and hundreds of thousands of dollars more – on the same investments they already own, simply by using TradeStops.

Unfortunately, Richard says these folks aren't alone. His research suggests as many as 99% of our readers are unknowingly making the same mistakes... meaning there's a good chance you're leaving thousands of dollars in potential profits on the table, too. Money that should be yours.

But if you haven't had a chance to review Richard's live demonstration, you must do so tonight. Richard will be taking this free presentation offline – along with a special discounted offer to try his TradeStops service – at midnight Eastern time tonight.

Even if you have no interest in trying Richard's TradeStops service today, we urge you to take a few minutes this evening to learn how it works for yourself. Click here now.

The latest data continue to suggest inflation is stirring...

Just before Thanksgiving, we noted that an important measure of inflation had been quietly rising in several of the world's most important economies. As we wrote in the November 23 Digest...

The Producer Price Index ("PPI") is an economic indicator used by the United States and most of the world's developed economies. Previously known as the Wholesale Price Index, this indicator measures the average changes in prices received by producers for their output.

Because rising producer prices often lead to rising consumer prices (which are how most economies measure inflation today), the PPI is considered a "leading" indicator of inflation. For the past several years, producer prices in the most of the world's largest manufacturing and exporting countries have been stagnant or falling. This "deflation" (falling prices) helped keep a lid on consumer prices here in the U.S. and elsewhere.

But suddenly, that could be changing... The PPIs of the world's five most important production economies – China, the U.S., Japan, Germany, and South Korea – have been moving sharply higher. These measures have already turned positive in China and the U.S... They are about to turn positive in Germany and South Korea... And even Japan's PPI – which has been relatively weak of late – appears to have bottomed.

We also noted that if this trend continued, it was likely only a matter of time before consumer prices – what most people recognize as "inflation" – jumped higher, too. Now, data suggest that could already be starting...

Yesterday, Germany – Europe's biggest economy – reported inflation more than doubled in December...

The German Federal Statistical Office said consumer prices rose 1.7% year over year, compared with just 0.7% in November. This is the biggest increase on record, and the strongest rate of inflation since July 2013...

This morning, the broader euro area reported higher-than-expected inflation, too...

Eurostat, the European Union's statistical office, reported consumer prices rose at 1.1% in December, the highest rate in nearly four years...

While this figure trails Germany, and remains well below the European Central Bank's 2% inflation target, it's nearly double November's 0.6% rate.

In a separate report this morning, global informatics firm IHS Markit reported the euro-area economy grew at its fastest pace in more than five-and-a-half years in December. The firm's composite Purchasing Managers' Index rose to 54.4 last month from 53.9 in November, its highest level in 67 months.

In short, consumer prices and economic growth appear to be trending higher across the entire 19-country euro area. And if inflation is finally returning to Europe – which has been one of the world's weakest economies over the past several years – it suggests the global threat of deflation could finally be ending.

Here in the U.S., the prospect of higher inflation has been pushing stocks higher and bonds lower...

As we've discussed, this so-called "Trump Trade" could have much further to run... particularly if the new Trump administration can push through the sweeping policy changes it has promised.

But in the near term, we continue to believe these moves have gone too far, too fast... When virtually everyone is bullish on stocks... and virtually everyone is bearish on bonds... history says a reversal is likely.

Even our colleague Steve Sjuggerud – who has been among the most outspoken bulls over the past several years – believes a short-term pullback in stocks is likely before the rally continues.

Again, this isn't a reason to get bearish on stocks.

But if you're looking to add to long positions, you'll likely find better opportunities in the weeks ahead.

We wrote it. Did you buy it?

From the August issue of Stansberry's Investment Advisory...

Headwinds have led the market to price American Express as if its glory days are behind it... By historical standards, American Express has almost never been cheaper. It's currently trading for around seven times cash earnings (as measured by its earnings before interest, taxes, depreciation, and amortization, or "EBITDA"). That's a lower valuation than during the 2008-2009 credit crisis, when shares traded as low as $13.That's just slightly above its lowest valuation in the last 30 years. If shares simply returned to their 10-year average valuation, that would boost AmEx's share price by about 70%.

American Express is still a great company with impressive numbers. It generates revenue of more than $30 billion each year. That beats the $23 billion generated by Visa and MasterCard combined. Its operating margins are around 25%. And as we explained earlier, it generates around $8 billion of free cash flows each year. Last year was even better, producing $9.6 billion of free cash, or 28% of revenue. Those numbers are a sign of a highly capital-efficient business, with a ton of economic goodwill.

As we explained, the company does have its challenges, which it continues to address. That gives us a rare opportunity today to buy a great company that possesses a huge amount of economic goodwill via its powerful brand at a historically low valuation. It's not often you find bargains this late in a bull market.

American Express (AXP) was trading in the low $60s for much of the summer, giving Stansberry's Investment Advisory subscribers plenty of time to establish a position. We hope you took advantage...

Shares jumped more than 9% in a single trading session following better-than-expected third-quarter earnings in mid-October. As Porter and the Stansberry's Investment Advisory team noted in the November issue following the news...

As we predicted, signs are starting to emerge that the company is moving past its troubles... Revenue in the third quarter increased 5% compared with a year earlier. The company said it added 1.7 million new cardholders... And card members are spending more. As a result, American Express is earning more in fees and interest. At the same time, American Express cut expenses 3%.

AXP has been moving nearly straight up ever since. Shares closed at a fresh 52-week high above $75 per share yesterday, and they are trading higher again today...

Stansberry's Investment Advisory subscribers are up nearly 20% in less than five months so far. Kudos to Porter and his team on another great call.

New 52-week highs (as of 1/3/17): Automatic Data Processing (ADP), Auryn Resources (AUG.TO), American Express (AXP), BP (BP), CONE Midstream Partners (CNNX), BlackRock Floating Rate Income Strategies Fund (FRA), PureFunds ISE Mobile Payments Fund (IPAY), and ProShares Ultra Telecommunications Fund (LTL).

In today's mailbag, more praise for TradeStops... And a subscriber shares how he fared in 2016. Let us know how you did at feedback@stansberryresearch.com.

"Stansberry team, thank you all for everything you've contributed to our investment lives. I have learned so much in the past few years as a Stansberry Alliance Member. Most importantly, thank you for introducing me to TradeStops. It's Magic! Happy New Year! – Paid-up subscriber Matt E.

"Dear Porter and Staff: First of all, I hope you experienced wonderful Christmas and New Year celebrations with family and friends. The past year I saw gains in two accounts of 28.98% and 17.52%, based solely upon your work and my mistakes, which you served to minimize. Much of those gains came through Stansberry's Credit Opportunities, the profits from which have more than paid for the subscription cost in only a year. I love lowering overall portfolio risk with this strategy. I have also placed 15% of the portfolio in your Big Trade publication (in 25 of the 30 positions so far with equal position sizing). Although I am obviously taking on more risk here, the overall risk is nearly unchanged because of the bond mix.

"I plan shortly to banish emotions from my investment decisions using TradeStops, with varying position sizes that are risk-based rather than the simple 4%-per-position rule I've been following with equities and the bonds. That is the only 'missing link' in my strategy as I near 'retirement' in five months. John Hussman recently observed that 'Disciplined investing isn't easy (and whenever it seems like it is, you're about to learn a costly lesson).' After years of investing too often on emotions, I am finally learning. This means that it is possible indeed to teach an old dog new tricks...

"Thanks to you and your talented staff and analysts once again, for the clarity of your analyses and of your writing. You offer value, honesty, and integrity, which are increasingly rare today, and which are cheap at ten times the prices you charge. It will be particularly interesting to see what 2017 has in store for us all." – Paid-up subscriber Stephen K.

Brill comment: Thanks for the note, Stephen. Stories like yours are why we do what we do. As we mentioned earlier, if you're interested in trying TradeStops for yourself, now is a great time to do so... Until midnight tonight, you can claim a full free year of access... and you'll get the next 60 days to "test-drive" it, absolutely risk-free. Click here for all the details on this special offer.

Regards,

Justin Brill
Baltimore, Maryland
January 4, 2017