A once-in-a-lifetime-shift... Take the opportunity to hear about it... Some more about Treasurys... When the bond market could take off... Podcast: Send us your questions... Mailbag: On China and shipping costs...

Did you miss it?...

As our friend, colleague, and regular Friday Digest author Dan Ferris said ahead of his brand-new video presentation today...

I waited my entire career for a market event like this, a once-in-a-lifetime shift that's about to impact nearly every asset you own. Your stocks, bonds, real estate – and most especially, your cash – are all at serious risk right now.

Now, that might sound frightening, but...

Once you see what Dan's talking about, I (Corey McLaughlin) think you'll understand better. You see, what's on his mind right now is as much a big investing opportunity as it is a warning.

Just taking a few minutes to listen could help you navigate today's shifting markets in which stocks are still expensive... bond yields aren't doing enough to protect folks from inflation... and fears of continued higher prices are constant and not going away anytime soon.

Most people I know will overlook this story, or worse...

But the last time a "market event" like this happened, Dan says, you could have made more than 400% on the lowest-risk investment in the space he's talking about... and as much as 1,000 times your money on others.

Without giving too much away, I can tell you these are targeted opportunities that you're unlikely to hear in the mainstream media anytime soon, if ever... But serious, long-term investors can make serious money from them.

Most folks with money in the markets won't hear about these ideas, if at all, until the biggest gains have already been made from them. But we were fortunate to hear this information not only from Dan, but also from another of the smartest investment minds we know. You don't want to miss hearing it, too...

Click here to watch the replay right now.

On a somewhat related note...

The following is not in Dan's new presentation... But it is related, as you'll see.

On Tuesday, we wrote about how U.S. Treasury bills, meaning short-term government bonds, are now offering yields last seen in 2007. Today, a three-month bill has a 4.8% annualized yield, and a six-month bill is offering 5.1%.

This is half of the reason the yield curve remains "inverted," with shorter-duration Treasurys yielding more than longer-term bonds. A 30-year bond has a 4% yield today, and the 10-year/2-year yield spread is hitting new lows at negative 0.88% this week.

This should be old news to you, though. The new news is that all this yield for the taking might actually inspire more investors to change their behaviors. On Tuesday, we wrote...

Stocks and other risk assets definitely have some big competition, which couldn't be said for the past decade-plus. While stocks' possible price appreciation can trounce a T-bill's returns, the S&P 500 Index is yielding only about 1.7% today.

Our colleague Chris Igou went into some additional detail today...

In today's edition of DailyWealth Trader, Chris wrote...

Historically, stocks have a much higher yield than government bonds and Treasury notes. That's because stocks are riskier than short-term bonds. So investors want more money for taking on the extra risk.

Lately, though, the difference in yield between stocks and those nearly risk-free U.S. Treasury notes has leveled out.

Chris then explained that the yield on Treasury notes is straightforward. For example, as we said, a three-month bill is yielding 4.8% right now. For stocks, it's a little more complicated, as he noted...

The best way to get the yield is to flip the price-to-earnings (P/E) ratio for stocks on its head...

Let's take a company that trades at a P/E of 20. When you buy a share of its stock, you're paying for 20 years of its earnings per share. So, each year of earnings per share is 5% of your purchase price (1/20 = 5%). That's the yield of your equity stake in terms of earnings.

You can do this for the entire S&P 500, as Chris continued...

The chart below tracks the difference between stocks' earnings yield and that of three-month Treasury notes. A positive value means the earnings yield of stocks is higher than the yield of these Treasury notes. A negative number means Treasury notes have the higher yield of the two.

As you can see, that difference has fallen close to zero. Take a look...

Today, these notes are paying out just as much as the average stock in the S&P 500. And it's the first time we've seen this yield parity in more than 20 years.

The story isn't finished yet...

As we've suggested this week, the Federal Reserve could be near the end of its rate-hike campaign, or it might not. As such, the bond rout of 2022 could continue further into 2023... Remember, prices trade inversely to yields.

But whenever the Fed rate hikes stop, it will be a tailwind for the entire bond market.

Chris compared today's setup with what happened in the 1980s. At that time, interest rates climbed to a peak, pushing bond yields up until there was virtually no difference from stock yields. The interest-rate peak in the 1980s marked the beginning of a 40-year bond rally.

Now, here's a really important point...

Today, yields could keep going higher – which means bond prices could keep heading lower, as they trade inversely. But eventually, Chris said, "As more bond yields start to compete with stocks, more money will flow into those bonds."

If you have some cash doing nothing right now, it's already a good enough time as any to dabble in some Treasurys... A 5% six-month T-bill in a world of 5% (or more) inflation is better than many alternatives.

Still, if you ask Dan, there are even better options.

We Want Your Questions This Monday marks the 300th episode of our Stansberry Investor Hour podcast. In honor of the occasion, we want to include as many of you, our listeners, as we can on the show. All it takes is a simple e-mail... Anything and everything is on the table. Send your questions, comments, thoughts, or whatever you'd like to feedback@investorhour.com, and Dan and I will try to talk about as many of them as we can...

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In today's mailbag, we respond to a note about yesterday's Digest on the Chinese economy "reopening"... As always, send your comments, questions, praise, or rage to us at feedback@stansberryresearch.com.

"Good morning Corey, I read the daily feed you put out. You make a point of sharing that China's reopening is 10X more intense than ever before. This impacts the world... China's the world's cheap factory to everything.

"If you're closed for business for 1 year, making zero revenue, and then open and sell $10.00 worth of goods netting $2.00 after overhead we have a $10.00 revenue stream, and a net profit of $2.00, or 20%. That is 10X more than nothing. I am not impressed with China at all.

"In fact, there is so much debt, they are in such deep s*** with financing their ghost cities and everyone wants to push our fake stock market up by telling the world and U.S. investors that China is opening up so let's push the market up.

"Corey, Its – BS! – The [yuan] is all made up, and it is not pegged to anything. Not gold, not the U.S. Dollar, nothing. It's almost like an independent economy we are attached to thru our corporations being on the ground there, selling everything from a McDonald's hamburger to a Pepsi cola...

"This is the geopolitical side... When you have 1.2 Billion people (4X the U.S. population), you need more soy beans and everything else to feed China. That does not mean they are as an economy better off. We have the worst unfavorable Balance of Trade Ever with them. We offshored our manufacturing to them.

"COVID hits, and freight for the same container that cost $3,000 is now $25,000. AND NO ONE REPORTS THIS! Why not share that with American investors. Where is all that money going? – ping? – The freight companies?

"COREY – I BRING IN CONTAINERS IN MY BUSINESS!!!! – Why do we not stand up to CHINA and report the truth that freight has gone up 1,000%. This is a HUGE FACTOR IN OUR INFLATIONERY PROBLEM.

"Why not report it Corey? It's the truth!" – Paid-up subscriber Stephen E.

Corey McLaughlin comment: Stephen, thanks for your note here. First off, I love the passion and thanks for reading, as always. Second, I just want to point out I didn't say anything specific yesterday about China's reopening being 10 times more intense than ever before. Also, I'd point out that the U.S. dollar is not pegged to anything.

Nevertheless, I understand and respect your points...

You're right that we haven't talked about freight prices in a while. It was probably worth mentioning yesterday, but we don't run from this topic at all.

We wrote about the high costs of shipping way back in the early days of the supply-chain pandemic messes, most notably in a September 22, 2021 Digest. Admittedly, this was a while ago, but we do not run from the fact at all that shipping rates pass through to the entire U.S. economy.

Here is our reporting from September 2021...

Since the beginning of 2021, the cost of transporting an industry-standard, 40-foot container to the northeast U.S. from northern Europe has more than tripled – from just over $2,000 to nearly $7,000.

From China, the price has quadrupled to $22,000 per container.

Overall, the Freightos Baltic Index (FBX), a container-freight price index that measures global ship freight prices across multiple routes, has risen more than three times since the start of the year. And the share prices of the world's largest publicly traded shipping companies – Denmark's Maersk (AMKBY), Japan's Nippon Yusen Kabushiki Kaisha (NPNYY), and COSCO Shipping in China (CICOF) – are up an average of 310% over the past year.

That means moving TVs, sweaters, and Instant Pots across oceans – from where they're manufactured (mostly Asia) to where they're bought (Europe and the U.S.) – costs a lot more...

And since shipping rates are calculated based on volume – rather than weight – the impact is proportionately greater on bulky items... That "made in China" garden dining set will see a bigger shipping-related price bump than a MacBook Pro. Sending goods by air freight isn't really an option for most things – as it costs anywhere from five to 15 times more than by sea.

And manufacturers and distributors pass those higher costs along to you... As we've written regularly in the Digest, this has been fueling inflation – which is up 5.3% over the past 12 months.

I would say those were the good ol' days... But by some chance, we have a remarkably similar 5.4% inflation rate right now, nearly 18 months later, as measured by the Federal Reserve's preferred personal consumption expenditures ("PCE") price index.

The Baltic Dry Index, the one which measures shipping prices across the world, is also up nearly 80% in the past month. This is looked at by some as a leading indicator of inflation, but it's a trend we haven't heard much about elsewhere yet.

All the best,

Corey McLaughlin
Baltimore, Maryland
March 2, 2023