Investors Are Asleep

Editor's note: As lead editor of a corporate-bond newsletter, our colleague Mike DiBiase pays a lot of attention to debt and the credit market. After spending nearly two decades in the world of finance and accounting, Mike has become an expert at analyzing stunning amounts of data. He understands complex accounting issues and how to […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily Weekend] Editor's note: As lead editor of a corporate-bond newsletter, our colleague Mike DiBiase pays a lot of attention to [debt and the credit market](. After spending nearly two decades in the world of finance and accounting, Mike has become an expert at analyzing stunning amounts of data. He understands complex accounting issues and how to read and interpret SEC documents better than almost anyone we know. In today's essay, Mike discusses something investors are getting wrong... --------------------------------------------------------------- Investors Are Asleep By Mike DiBiase --------------------------------------------------------------- [The 'Chaffee Royalties Program' That Could Return 10 Times]( Doing nothing while collecting royalties has to be one of the best – and easiest – ways to get rich... One investor made 60,000% from a single investment into these kinds of royalties... What might shock you is there actually IS a way for anybody to tap into a pool of "royalties"... and wealth that piles up by itself... The secret is something that Whitney called "Chaffee Royalties" and it’s one his favorite money-makers [(go here to see why)](... --------------------------------------------------------------- The bank crisis is not over... The combination of higher interest rates and record debt has finally begun to "break" things in our economy. Two of the largest bank collapses in U.S. history struck in March. This was one of the first cracks to appear in the proverbial dam. But it won't be the last. The government rushed in and plugged the hole to prevent more bank failures, but other holes will soon appear in other places. The leveraged-loan market may be the next victim. Or the commercial real estate market could collapse. Regional banks hold around three-quarters of the $3.1 trillion in outstanding U.S. commercial real estate loans. This includes loans on apartments, offices, warehouses, hotels, and retail properties. Here's why this is a big problem... Regional banks are already dealing with the flight of deposits to bigger banks and money-market funds. Soon, they'll be forced to deal with commercial-loan defaults. According to Bloomberg, $1.5 trillion of U.S. commercial real estate loans is coming due by the end of 2025. These loans need to be refinanced at much higher interest rates. That makes them much more expensive for borrowers who are already struggling with empty office space. Downtown office-vacancy rates have nearly doubled since the pandemic to almost 20%. It's much higher in some cities like San Francisco. The earnings of these properties determine their value... With higher interest rates and vacancies, commercial real estate earnings and valuations have plunged. The defaults have already started. Columbia Property Trust recently defaulted on $1.7 billion in commercial real estate loans on buildings in New York, San Francisco, Boston, and Jersey City, New Jersey. Regional banks are going to have to raise capital and sell risky assets like commercial real estate loans to meet regulatory capital requirements. They'll continue to tighten credit, especially to risky borrowers, at a time when credit is needed most. Fed Chairman Jerome Powell even admitted this at the Fed's meeting in March. He warned that the banking crisis will likely lead to tighter credit conditions. And that's exactly what has happened. Credit continues to tighten... It is now tighter than at any time since the last financial crisis. That's bad news for the economy. When credit gets tougher to get, weak companies begin to die. Bankruptcies are already rising faster than any time since 2010. The thing is, this is a normal part of the credit cycle. Periods of excess always lead to periods of tightening credit. And tightening credit always leads to recessions, with waves of defaults and bankruptcies. Our economy is contracting. Businesses' sales and profits are falling. Corporate earnings have fallen in each of the past two quarters. Coming into the year, investors were betting corporate profits would rise 7% this year and another 9% in 2024. --------------------------------------------------------------- Recommended Link: ['This could dish out massive profits over the next 12 months']( According to a former hedge fund manager, the banking crisis... the Fed... and the U.S. Gov't have created a pressure cooker that could be extremely lucrative... with one-year gains of 343%, 377%, and 808% if you move your money immediately. [See his full briefing now](. --------------------------------------------------------------- Investors are asleep... During recessions, corporate earnings always fall hard... Over the past five recessions since 1980, corporate earnings fell by an average of 25%. Here's what's even more important to remember: The stock market doesn't bottom before recessions... It bottoms during or after recessions. We're not even in an official recession yet. Most are predicting it won't start until later this year. That means the stock market bottom is still in front of us. Remember, despite all of the investor optimism I'm seeing, I believe we're still in a bear market. And bear markets don't end quickly or without a lot of pain. But there is a silver lining to these dark clouds... You don't have to be a victim. Like I said, credit cycles are normal, but how people respond to them is not... You can use this knowledge I've shared today to make a lot of money when the markets are crashing. I expect the bond market to crash along with the stock market, creating a huge opportunity to make money that most everyday investors will overlook. When the bond market crashes, you'll be able to earn equity-like returns with investments that are far safer than stocks... corporate bonds. That's because these bonds offer bigger returns the cheaper they get. And they come with guaranteed income and legal protections that stocks simply don't have. Here's the thing most people don't understand... In this next crash, the perfectly safe corporate bonds we recommend – which many folks simply don't know about or how to buy – will sell off to absurd, distressed prices. This includes bonds of good companies that will survive a recession. This is the time my colleague Bill McGilton and I have been waiting for in Stansberry's Credit Opportunities. Buying safe corporate bonds when they're cheap in times of crisis is what many of the world's wealthiest and best investors do... And owning corporate bonds is another "tool" every investor should have in his or her toolbox. If you haven't already, I urge you to consider it... There's no reason you can't do it. You just have to know which bonds are safe. In Stansberry's Credit Opportunities, Bill and I do the work and identify these investments for you. And you can buy them much like stocks. The last time the bond market crashed was a brief period following the pandemic. Since then, Bill and I have recommended and closed 24 positions, of which 22 were winners. The average annualized return of the 24 recommendations was 37%. That's nearly three times the return of the high-yield bond market since then. And it even beats the 35% return of the stock market over the same time frames. If you're like me and think a recession is ahead, then the markets are likely in for more trouble. Preparing now is essential so that when the next credit crisis comes, you'll be ready to pounce and scoop up bonds of good companies at the cheapest prices we'll have seen in more than a decade. Regards, Mike DiBiase July 8, 2023 --------------------------------------------------------------- Editor's note: This credit crisis will be brutal for most people, but you don't have to be a victim... Mike says we're still in the early stages of this cycle. And this crisis is the best setup he has seen in more than a decade... Mike believes this crisis could create a slew of buying opportunities with massive upside potential – with gains that have legal protections – for investors who start preparing right now. [Get the details here](. --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2023 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 1125 N. Charles Street, Baltimore, Maryland 21201 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](