Breaking the Yen

The snapback continues... A busy week ahead... Previewing another 'Fed Day' with Jerome Powell... How much will the Treasury borrow this quarter?... Instability in Japan... Our latest Alliance Town Hall... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] The snapback continues... A busy week ahead... Previewing another 'Fed Day' with Jerome Powell... How much will the Treasury borrow this quarter?... Instability in Japan... Our latest Alliance Town Hall... --------------------------------------------------------------- Was that it?... The sell-off we've seen over the second half of April seems to have cooled down. Now, the signs of a healthy correction are afoot – even amid a spate of volatility [on Thursday]( with "surprising" GDP and inflation reports. Today, the major U.S. indexes moved higher, reclaiming some more of the losses from the past few weeks. The small-cap Russell 2000 Index gained the most, up 0.8%. As you can see below, the benchmark S&P 500 Index has snapped back higher and is just below its 50-day moving average. Charts of the tech-heavy Nasdaq Composite Index, Dow Jones Industrial Average, and Russell 2000 are similar... Part of today's market picture was a huge move in Tesla (TSLA) shares, which were up roughly 15% after news that suggested Tesla could roll out its "Full Self-Driving" technology soon in China, the largest market for electric vehicles. The Chinese government reportedly cleared Tesla of "data security" concerns, and it appears beleaguered CEO Elon Musk is more than willing to expand Tesla's footprint in the world's second-largest economy, despite whatever geopolitical concerns may exist. A busy week ahead... I (Corey McLaughlin) wouldn't say the market is out of the volatility woods yet, though. As earnings season continues, the next few days will be significant in the monetary and fiscal-policy world... The Federal Reserve holds its latest two-day meeting on Tuesday and Wednesday, which will be followed by a policy announcement and press conference from Fed Chair Jerome Powell. We suspect the message will sound a lot like the new one Powell debuted during an April 17 forum about the Canadian economy in Washington, D.C. As [we wrote that day](... Powell noted the strong labor market in a panel discussion. Then he said this about inflation... Twelve-month core [personal consumption expenditures] inflation, which is one of the most important things we look at, is estimated to have been little changed in March over February at 2.8% and the three- and six-month measures of inflation are actually above that level... Powell also reminded people what the Fed said at its last policy meeting last month, that the Fed wanted to have "greater confidence" that inflation was on pace for 2% before cutting its fed-funds rate range. Then he said... The recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence... In other words, inflation is too strong to say rate cuts are coming. And at the same time, Powell said, "We have significant space to ease should the labor market unexpectedly weaken." It's a clear message. Yet, fewer people were likely paying attention to a random conference about the Canadian economy than they will this week when Powell speaks from Washington in front of a U.S. government-issued curtain and podium... Plus, as frequently happens, there's a good chance Powell will make some offhand remark that will make analysts question something or cause Wall Street trading algorithms to go wild. So there's a decent chance of some volatility on Wednesday. Also, debt matters... On Wednesday morning, the U.S. Treasury will also publish what for years has been a typically obscure announcement that, in an era of stupidly high debt and higher interest rates, has taken on increasing relevance. I'm talking about the Treasury's quarterly refunding announcement ("QRA"). A preliminary version of this report came out this afternoon, showing the Treasury plans to borrow $243 billion for the current quarter, $41 billion more than expected. On Wednesday, we'll learn more details about what kind of debt it plans to offer (shorter-term bills or longer-term bonds, for instance). What the Treasury decides will influence interest rates because it matters to supply. Fewer 10-year Treasurys on the market, for example, can help put a lid on yields... and more could mean room for higher yields (and knock-on consequences for stocks). When a QRA was released [on November 1 last year]( for instance, the Treasury announced it would borrow $76 billion less than previously expected and sell fewer longer-term bonds than short-term debt. This announcement and a Fed meeting that day coincided with a "peak" in rates and helped cool market fears. Something similar occurred after the Treasury's last funding in late January, when it lowered its forecast for its "operating account" by $10 billion. Will the same happen this time? We'll see. Some combination of an outlook to borrow more short-term debt than longer-term debt would be bullish. The week will end with April's "nonfarm payrolls" report from Uncle Sam on Friday. The report will include an updated unemployment rate, which is widely digested by investors. The unemployment rate for March, and the trailing three-month average, was 3.8%. Meanwhile, things are happening in the global currency markets... Overnight in the U.S. and in morning trading in Asia, the Japanese yen weakened to its lowest level versus the U.S. dollar since 1990. Its exchange rate briefly touched 160 yen against the dollar before "strengthening" to around 155 during the U.S. trading day. So what happened? As interest-rate expectations (stemming from inflation reality) have shifted here in the U.S., the value of the yen relative to the dollar – one of the key currency relationships in the global economy – has deteriorated by more than 10% this year alone. Inflation is back in Japan. The Bank of Japan ("BoJ") expects between a 2.5% and 3% annual rate this year, yet its monetary policy is still brutally loose… with a benchmark bank lending rate between 0% and 0.1%. Following a key BoJ announcement on Friday, it appears that traders and speculators loaded up on bets against the yen versus the dollar during a low-volume period in Japan (with markets in Tokyo closed), causing a sharp move of more than 3%. This is the kind of instability central banks worry about... The yen is down more than 30% versus the dollar since January 2021. Breaking the yen... The Japanese financial authorities likely intervened in the market today. The Wall Street Journal cited people familiar with the matter. While Japan's top currency official, Masato Kanda, said, "no comment for now" when asked if the BoJ had intervened, the fact that the yen "strengthened" from 160 to 155 yen against the dollar within 30 minutes of the sell-off sure suggests it. Kanda also told reporters... We cannot overlook the negative impact that excessive and abnormal FX [foreign exchange] fluctuations driven by speculation are having on the nation's economy. So we will continue to take appropriate measures as necessary. This sounds similar to when Stanley Druckenmiller and George Soros "broke" the Bank of England in 1992. While the circumstances are different, it's another story of a central bank needing to intervene to rescue its weakening currency because of speculation against it. We wrote about that here [in a 2021 Digest](... Soros made a quick $1 billion betting against the British pound on "Black Wednesday," the day speculators forced the British government to pull the pound from the fixed-rate based European Exchange Rate Mechanism ("ERM"). Back then, the Bank of England was looking to cut rates but couldn't because it would have devalued the British pound. Soros stepped in and did the devaluing himself, selling pounds that he borrowed from banks and using the proceeds to buy German marks... If all went right, he could buy back British pounds cheaper to return what he borrowed. Eventually, Soros and his protege, Druckenmiller, built a short position of a massive $10 billion. With a flood of selling hitting the market, the British pound came under tremendous pressure. The Bank of England bought 27 billion pounds on the open market, then later caved to more pressure and left the ERM, allowing the devaluation of the pound. Japan's weakening yen is the other side of its 'new highs' story... [In February]( we told you about a three-decade first... when Japanese stocks finally made a new all-time high after 34 years since the market's bubble peak in late 1989. It sounded like good news... Investors have liked the conditions of the Japanese economy and stock market, despite the BoJ encouraging a weaker currency over the decades to combat deflation. Policies have included negative interest rates from 2016 until this past March, even as some inflation returned to the economy amid the pandemic. As we wrote in February... Japan has also seen notable inflation just above 2% (welcome news for Japan). And, [as we wrote earlier this week]( the Bank of Japan – Japan's equivalent of the Federal Reserve – is weighing continued easy monetary policy in 2024 (i.e., negative interest rates and encouraging banks to lend). That's despite a weakening yen compared with the dollar over the past two years. Many analysts are expecting the Bank of Japan to raise lending rates as soon as April, but the central bank hasn't done it yet – and might not. Last month, the BoJ moved its benchmark lending rate higher for the first time since 2007, but only to around zero. Then, at a key meeting on Friday, the BoJ maintained the rate – saying inflation was on pace for a 2% annual target. And it didn't adjust its asset-purchasing levels for government bonds, even as the yen has continued to weaken... and as the Federal Reserve has started to send a renewed "higher for longer" message. Now, the yen is at its weakest level compared to the dollar since just after the start of the 1989 mega-bubble bursting. When we talk about the consequences of 40-year high inflation and higher interest rates than we've seen in about 15 years, currency volatility and "shocks" are among them. And this rescue in Japan might only be temporary. As Bob Elliott, formerly of Bridgewater Associates and a guest on our Stansberry Investor Hour podcast, wrote on the social platform X today, "Unilateral intervention in large, developed world exchange rate markets is pretty useless without meaningful change in the underlying fundamentals." This story is a reminder of the power of U.S. monetary policy... and inflation. A shift in approach from the Fed and/or expectations has far-reaching consequences. It also has shades of the British "gilt" crisis from [September 2022]( when pension funds faced margin calls because ever-rising interest rates (because of inflation) cratered the value of bonds. The Bank of England bailed these funds out while raising rates, which strengthened the pound versus the value of the U.S. dollar. Our latest Stansberry Alliance Town Hall... This morning, our team published a brand-new quarterly edition of our Stansberry Alliance Town Hall series... In this edition, True Wealth editor Brett Eversole and Stansberry's Investment Advisory lead analyst Alan Gula joined our Director of Research Matt Weinschenk to talk about the updated design of our Total Portfolio offering and the recent bull market in gold. First, as Matt said... What we've done with Total now is break [it] into two philosophical portfolios. There's a "Stay Rich" portfolio and a "Get Rich" portfolio, and then we blend them into The Total Portfolio... Most people think about Get Rich when they think about investing, but Stay Rich is actually – it's a little more difficult and it's a little more interesting the way we can use things here. Alan detailed the changes to the Total Portfolio and our Portfolio Solutions products in general, which offer Alliance members and subscribers actionable portfolios based on our editors' research and recommendations, and they're allocated based on different goals. In short, the former Defensive and Income portfolios have been blended into the new "Stay Rich" portfolio allocation. Alan, Brett, and Matt explained why, what to expect from this new portfolio, and why you might want to give Portfolio Solutions a try if you haven't already. As far as gold... Matt spoke about the potential catalysts for gold's higher price lately, like the simple fact that the price broke above an important "psychological" round number of $2,000 per ounce... and that central banks around the world are buying more gold. As he said... What I saw happen was Russia invaded Ukraine. The U.S. came out with all these sanctions on Russian funds that were all over the world. And now, all the countries started to go, "Well, I don't want that to happen. We need our gold in our safe, in our country, because we don't want to be part of this global financial system where this one country can say what we can do." Since then, geopolitics has only gotten less stable, right, between China, Russia, Iran, and Israel. Everything is a little bit more volatile than it was 10 years ago, and so countries are just stocking up on gold. It's as simple as that, because they want to be able to manage their currency, manage their economy. So unless you think the world is going to get a lot more peaceful and people are going to get along a little bit better in the next five to 10 years – which I mean hopefully is the case – I don't think that these guys are going to reverse their gold holdings anytime soon. [Stansberry Alliance members can listen to or watch the latest quarterly Town Hall event here](. Our team started this exclusive Alliance-only feature after the onset of the pandemic in 2020... and we haven't found a good reason to stop it yet. Two Days Left: Get Your Discounted Early-Bird Ticket The 22nd annual Stansberry Research Conference & Alliance Meeting is in Las Vegas this October. And through May 1, you can get a discounted early-bird ticket and save hundreds of dollars. As longtime subscribers know, this event is a gathering of some of the brightest minds in financial research and beyond... You'll hear from your favorite Stansberry Research editors – Dan Ferris, Eric Wade, Dr. David "Doc" Eifrig, Greg Diamond, and more. And we recently announced some of our 2024 big-name industry speakers, including an ex-CIA spy, an AI expert, and a bestselling author whose books have been made into award-winning films. Our founder, Porter Stansberry, will be there as well. [Click here]( for our full speaker lineup, more event details, and to grab a discounted ticket before this early-bird offer closes on Wednesday. --------------------------------------------------------------- Recommended Links: ['This Is the Gravest Warning of My 25-Year Career']( Hedge funds, Swiss banks, private wealth managers, billionaires, CEOs, and even high-ranking politicians all rely on Porter Stansberry's financial insights. Today, he's stepping forward to give you the same dire warning he has privately shared with them. To get all the details of the shocking economic event Porter is sounding the alarm on today, [click here now before it's too late](. --------------------------------------------------------------- [Your 2024 Election Money Blueprint]( Voters are angrier than ever, and it's likely to keep getting worse. The media and Wall Street keep declaring how great the economy supposedly is... but no one – besides the ultra-rich – seems to feel that way. Protect yourself with this one simple move today. [Find out for free here](. --------------------------------------------------------------- New 52-week highs (as of 4/26/24): ABB (ABBNY), Agnico Eagle Mines (AEM), Grupo Aeroportuario del Sureste (ASR), Alpha Architect 1-3 Month Box Fund (BOXX), Colgate-Palmolive (CL), iMGP DBi Managed Futures Strategy Fund (DBMF), Alphabet (GOOGL), Sprouts Farmers Market (SFM), SilverCrest Metals (SILV), U.S. Silica (SLCA), Teck Resources (TECK), Tyler Technologies (TYL), Veralto (VLTO), Vertiv (VRT), and Wheaton Precious Metals (WPM). Before we get to the mailbag, one quick housekeeping note: Our Diamond's Edge series will return next Monday, as Ten Stock Trader editor Greg Diamond is on the road traveling this week. Ten Stock Trader subscribers and Stansberry Alliance members can find Greg's latest analysis in his Weekly Market Outlook [here](... and if you're interested in subscribing to Greg's trading service, [click here for more information](. Now, in the mail, feedback on [Dan Ferris' latest Friday essay](... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Dan, Thank you for the comments [on Friday]... From 2006 on, I have seen the bubble and converted to all gold, silver, and the miners... It should be obvious to all today that the debt bomb will do great harm to the world but especially to the U.S..." – Stansberry Alliance member Carl H. "Once again, you hit the nail on the head... The biggest question in world finance today is which country [China or the U.S.] will suffer a debt implosion first." – Subscriber Robert B. All the best, Corey McLaughlinBaltimore, MarylandApril 29, 2024 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios Investment Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 1,345.9% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,290.0% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 883.2% Extreme Value Ferris WRB W.R. Berkley 03/16/12 697.9% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 612.9% Retirement Millionaire Doc HSY Hershey 12/07/07 456.9% Stansberry's Investment Advisory Porter AFG American Financial 10/12/12 445.6% Stansberry's Investment Advisory Porter TT Trane Technologies 04/12/18 388.0% Retirement Millionaire Doc NVO Novo Nordisk 12/05/19 359.1% Stansberry's Investment Advisory Gula TTD The Trade Desk 10/17/19 342.4% Stansberry Innovations Report Engel Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 5 Stansberry's Investment Advisory Porter/Gula 3 Retirement Millionaire Doc 1 Extreme Value Ferris 1 Stansberry Innovations Report Engel --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Investment Buy Date Return Publication Analyst wstETH Wrapped Staked Ethereum 12/07/18 2,291.8% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 1,597.6% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,230.8% Crypto Capital Wade MATIC/USD Polygon 02/25/21 809.5% Crypto Capital Wade CVC/USD Civic 01/21/20 446.3% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Microsoft^ MSFT 12.74 years 1,185% Retirement Millionaire Doc Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root Rite Aid 8.5% bond 4.97 years 773% True Income Williams PNC Warrants PNC-WS 6.16 years 706% True Wealth Systems Sjuggerud Maxar Technologies^ MAXR 1.90 years 691% Venture Tech. Lashmet Silvergate Capital SI 1.95 years 681% Amer. Moonshots Root ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. --------------------------------------------------------------- Stansberry Research Crypto Hall of Fame Top 5 highest-returning closed positions in the Crypto Capital model portfolio Investment Symbol Duration Gain Publication Analyst Band Protocol BAND/USD 0.31 years 1,169% Crypto Capital Wade Terra LUNA/USD 0.41 years 1,166% Crypto Capital Wade Polymesh POLYX/USD 3.84 years 1,157% Crypto Capital Wade Frontier FRONT/USD 0.09 years 979% Crypto Capital Wade Binance Coin BNB/USD 1.78 years 963% Crypto Capital Wade You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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