Ring: Davos Be Damned

Don’t go clutching your pearls [Morning Reckoning] January 19, 2023 [WEBSITE]( | [UNSUBSCRIBE]( [Editor's Note: Meet Sean Ring! Sean is the pull-no-punches editor of the Rude Awakening. Oh, you already know him? Then skip ahead! If not, we think you'll love his stuff.] [Brian Maher] BRIAN MAHER Hi, Reader, We started the Morning Reckoning to bring you the most insightful and concise market information available right now. We’re looking to cut out the noise… and get right to the meat of what’s going on. To do this, we enlisted the help of some of our best editors. On Tuesday, contributing editor Greg Guenthner gave you the rundown on how trends are bending… and breaking… in the unprecedented market situation we find ourselves in these days. (If you missed that column, we’ve added it to the bottom of today’s email for you to check out.) Today, Sean Ring, from the Rude Awakening, will give you HIS market insight. Sean likes the straightforward, pull-no-punches, clipped road-speak – perfect for the sort of no-nonsense analysis we will be delivering to you in the Morning Reckoning. Sean’s travels took him all over the globe – not just into the deep heart of America, but across the Atlantic to London, then over the Indian Ocean to Singapore, Hong Kong and the Philippines, before bringing him back to southern Europe. And that’s given him a unique perspective on the world. It’s not “unAmerican,” in any sense of the word… but it’s certainly a different outlook than from someone who’s never hopped The Pond. Today, he’s going to give you a look into this whole Davos malarkey… And while you may be feeling the same about the situation, let him tell you why the reasoning behind your negative feelings vs. his may differ… Best, [Brian Maher] Brian Maher Davos Be Damned! - The devil went down to Davos… - Finally, a useful congress… - Watch the hips, not the lips… Asti, Northern Italy January 19, 2023 [Sean Ring] SEAN RING Dear Reader, As I was sitting in my chair steaming over the latest World Economic Forum tweet, one question popped into my head. Why do the Swiss put up with it? Let’s face it: there’s a cartoonish Bond villain sitting in his mountainous lair, just short of a mustache to twirl, plotting to remake the world in his own image. And if that’s not bad enough, the man who taught Klaus Schwab about geopolitics during his days at Harvard is none other than Henry Kissinger. Yes, the Henry Kissinger responsible for giving away all of our technology to China. Yes, the Henry Kissinger responsible for the war crimes of Operation Speedy Express and Operation Menu. Yes, the Henry Kissinger who refused to serve on the 9/11 Commission because he wouldn’t divulge the names of his shady clients. That Henry Kissinger. If Jimmy Carter is a far better ex-President than a President, then Kissinger is a far more influential statesman now than he ever was as Secretary of State. Why? Because his ace student is the Chairman of the World Economic Forum. Eat ze bugs. You’ll own nothing and be happy. Go green or go home. You know, all those things none of us want to do. And yet, every year, Schwab rounds up the world’s leaders and bids them come to his lair in Davos, for a chat. And every year the Swiss government doesn’t just tolerate the World Economic Forum, it encourages the WEF. Maybe that’s because of the enormous economic benefit to the Swiss economy. [The Truth About Our Business [From the Publisher]]( [This Simple Chart]( Our publisher just recorded [THIS important message](. Because we just made a huge change to our business that’s almost certain to impact you next year (and could end up making you a small fortune). I explain everything [>> here <<]( [It’s time you heard the truth – click here now for the full story](. [LEARN MORE]( Finally! A Useful Congress! After all, if you’re a prostitute who charges EUR 700 per hour and EUR 2,300 for the night, who better to hit up than those with unlimited taxpayer funds? Meet Salomé Balthus, a Davos escort. [tweet] Source:[@Salome_herself]( Be careful, Salomé! You don’t want any of those security guards accidentally tripping their triggers… Zero Hedge reported on the “[Dark Side of Davos]( earlier this week. (I suppose their man had to pay extra for that.) And of course, the UK’s The Daily Mail had to pitch in. The Mail is the Official Newspaper of English Housewives™. It’s so wonderfully informative that all those wives now know what their traveling husbands are doing. I’m reminded of a true story a fellow City banker told me. “The City” is London, of course. Not New York. A mutual friend of ours was at a high-end brothel in Chelsea getting his usual… ahem… “services” when a call came through. (Yes, in those days you’d take personal calls on the brothel’s landline without any fear of exposure. Ladies of the night had infinitely more discretion then than they do now. Damn Instagram to hell!) He hastily tightened his robe, slipped on his slippers and opened his door to pick up the phone. But upon opening the door, he shrieked in horror. Across the hallway, an older gentleman had just tightened his robe, slipped on his slippers, and opened his door. My friend gasped and exclaimed… “Dad!?” After the obligatory wincing, he realized the trouble wasn’t so much seeing his father like this. The real trouble was figuring out which one of them the phone call was for. Oh, were our problems that small nowadays! But I digress. [Response Requested]( 1/1000th of an ounce of gold available As a The Daily Reckoning reader, Jim Rickards is offering you 1/1000th of an ounce of gold when you upgrade your account. It will come in the form of a “Gold Back” - a new type of gold currency that’s starting to spread across America ([click here to view](. If you have not responded to Jim’s offer yet, and want to know how to claim yours… Please click the link below for details. [Click here to learn how to claim your new Gold Back Currency<]( Thanks! Amber Anderson Customer Service [LEARN MORE]( The Devil Went Down to Davos Before you clutch your pearls and exclaim, “I can’t believe they do that over there!” one must banish Cotton Mather and Jonathan Edwards from their American Puritan mind. Prostitution in Switzerland is completely legal and regulated. There are over 20,000 sex workers in the country. Hell, they even accept credit cards! That means these politicians can even claim back the cost of their exploits on their expense accounts. It’s incredibly thoughtful and efficient if you ask me. And thanks to a sweet deal with the European Union, an EU sex worker can obtain permission to work for 90 days in Switzerland if they present themselves to the relevant city authorities, undergo a police interview, and provide proof of a health insurance plan. My goodness, they thought of everything! The Mail was so impressed, their article included pictures of Salomé, practically advertising these services in Davos. But, admittedly, I’m making light of a tremendously important forum. The bootlicking Brookings Institution [wrote in one paper]( that “It is appropriate to criticize the World Economic Forum as an elitist gathering of the super-rich.” In the next paragraph – really – the same author wrote, “It is, however, in these precarious times that we need Davos more than ever.” Really? And if so, why are we funding the UN? But these elites – their word, not mine – need to have some good, clean fun. After all, if Klaus Schwab, Ursula von der Leyen, and the second coming herself, Olena Zelenska, can tolerate a bit of Totalitarian Tallywhacker messing about the joint, who are we to object? Anyway, the pollution their private jets are belching into the atmosphere is far worse than a bit of Hide the Bratwurst. Just ask them! At the last WEF gathering, over 1,000 planes arrived to join in the frippery. But Forum President Borge Brende said, “I think what is more important than that is to make sure we have agreements on how we, overall, move and push the envelope when it comes to the green agenda,” he said. As with all things at this glittering party, watch the hips, not the lips. Greg will be writing to you on Tuesday with more market insight, so make sure to keep an eye on your inbox! And like we pointed out earlier, if you didn’t catch his article this week, we included it below. Let me know what you think of today’s article by emailing me at feedback@dailyreckoning.com. Looking forward to your thoughts (and to writing to you next Thursday morning!) All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com [Biden’s “Hush-Hush” Plot Uncovered]( [This Simple Chart]( Right now, Joe Biden – along with 9 of the world’s largest banks – have initiated [a disturbing new experiment with YOUR cash](. It’s called “Project Cedar” – and up to now it’s been kept fairly “hush-hush”… But in [this urgent new exposé]( you’ll discover critical details behind Project Cedar and what Biden’s master plan really is. [Click here to learn the critical details before it impacts your money](. [LEARN MORE]( In Case You Missed It… Greg Guenthner, Contributing Editor Here’s What Happens Next [Greg Guenthner] GREG GUENTHNER This isn’t your nephew’s bull market. You’ve probably figured out as much watching the major averages post their first significant annual losses since the depths of the Great Financial Crisis. The Nasdaq’s 33% skid wasn’t the only pain point, or course. The tech blowout steadily ripped through the other major sectors, dragging the S&P 500 down a cool 20%. Most of the former high-fliers have lost their luster, especially the heroes of the frothy post-Covid era. There are some other key differences, too. The folks hawking bizarre JPEG art have disappeared. Novice traders who made a few bucks blindly buying call options on meme stocks are back to square one. And your cocky young relatives who tried to convince you the crypto token they started mining during quarantine was going to the moon were strangely quiet at Christmas dinner. You’ve seen all this (and more – so much more!) play out in real time, so I’m not going to slog through a full 2022 recap. But since you haven’t heard as much as a peep from me in more than a year, I’ll take a minute to spill some virtual ink on the big, bad bear gnawing on the Nasdaq's carcass. Then, I’ll reveal what opportunities might lie ahead when the dust clears. But first, how did we get here? To quote the incomparable Ed Seykota, the trend is your friend until it bends at the end. Or, to complicate the matter a bit, when something works very well in the markets, it attracts a lot of attention. When everyone finally agrees it's an infallible strategy that will never stop producing gains, that very same thing begins to sputter. That’s when trends begin to bend. Then, they break. Nifty 50. Dot-com. BRICs. Innovation. The names change. People don’t. This market action has been especially painful for anyone stuck using the Covid Bubble playbook. The days when you could mindlessly buy any tech stock and book profits are over. No more wide-eyed speculation in the buzzword sectors. No more meme stocks or message board wonders. Even a handful of household names have been cut in half – or worse. Hindsight bias tricks us into thinking it all happened at once. But it didn’t. There were plenty of hints that the tide was starting to turn more than one year ago. In fact, the speculative retail trading bubble was quietly bursting right under our noses in late 2021. Market leadership told most of the story. The S&P 500 was having a banner year, up more than 25% in 2021. Soaring mega-caps led the way. Everything else? Not so much. The frothiest stocks had peaked in early February and couldn’t seem to find any momentum heading into the holiday season. Meanwhile, a few key groups were beginning to roll over. Remember Cathie Wood’s now infamous ARK Innovation Fund (ARKK)? These tech-growth wonders doubled, tripled, and quadrupled (or more!) as the Covid Bubble inflated. But after many of these stocks peaked in early 2021, whispers about valuations turned to shouts by the fourth quarter. That’s usually a sign that the magic has worn off. You’ll never hear anyone complain about stocks being expensive when they’re seeing their portfolio gain 10% every week. The narrative starts to flip once the fast gains fade. When the quiet selling started, follow-through in many of these momentum names waned into late 2021 and never fully recovered. Investors holding too many tech stocks in their innovation portfolios underperformed as the Nasdaq Composite lagged the S&P 500 for the first time since 2016. But the real pain began as the calendar flipped to 2022. All those growth stocks that couldn’t possibly go any lower did, in fact, continue to fall. After rallying more than 325% off its Covid crash lows, ARKK has now round-tripped, slipping to new five-year lows in late December. [chart] Maybe you’re sick of thinking about the growth-y tech stock. But too many true believers continue to lurk around this space, desperately clinging to these plays in hopes of an unprecedented comeback. Unfortunately for them, it’s going to take much more time before these stocks are viable again on the long side. Some will get bought. Others will go to zero. A handful will need time to create new bases as the market resets expectations. But ARKK won’t see those 2021 highs for a long time – if ever. If you’re a nimble trader, you could take advantage of some snapback moves in tech if and when they materialize. We’ll cross that bridge when we get to it… Meanwhile, you’re going to find plenty of longer-term opportunities far from the tech space in 2023. Industrials and materials are strong. Select consumer staples names are posting new highs. The days of ZIRP are over. Growth is out. Value stocks are back in vogue. Adapt or die! Gold bugs are also making a little noise right now. If you’re searching for momentum, miners are on the cusp of a bigger breakout. Most of these companies aren’t great long-term bets. But they can really get rolling in the right environment… That should get your gears turning. We’ll talk more about how you can profit from these ideas in the weeks ahead. Oh, and maybe you could pass this note to your nephew and his meme stock buddies? Now that the shock of 2022 has settled, planning for the new normal could help him move out of his mom’s basement before the next bull market begins. I hope you enjoyed your first edition of Morning Reckoning. Be sure to use the feedback email address below — good or bad, I want to hear your thoughts! And keep an eye on your inbox this Thursday… Sean Ring will be coming at you bright and early. In fact, you might not need any coffee after reading what he has to say. Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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