Looking for Value and Finding Reality

More trouble for a major American retailer... A look at the 'real America'... What won't cure higher prices... Closing a gas reserve... A drop in the bucket... Another dose of reality... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] More trouble for a major American retailer... A look at the 'real America'... What won't cure higher prices... Closing a gas reserve... A drop in the bucket... Another dose of reality... --------------------------------------------------------------- Trouble in the food aisles... Today, we can add major retailer Target (TGT) to the list of consumer-facing businesses – like McDonald's (MCD) and Starbucks (SBUX) – that have reported "disappointing" earnings lately... and whose leaders are saying that inflation is the biggest reason why. Target shares fell around 8% today after the company posted quarterly results that missed Wall Street analyst estimates. Target also cut its outlook for the current quarter. As CEO Brian Cornell said, higher prices are putting a "strain on the consumer wallet." Target's same-store sales declined by nearly 5% year over year, and net sales were down 3%. Cornell pointed out that the cost of "food and household essentials" is the biggest concern that Target is hearing about from customers. This is similar to what leadership at McDonald's and Starbucks has said recently. Inflation is impacting people's spending decisions today more than in the past year or two. And that's affecting the bottom line... For example, Starbucks' foot traffic was down 6% last quarter, its net income dropped 15%, and sales projections were cut for the second time this year. The stock fell nearly 16% in a day after its earnings report came out a few weeks ago. Meanwhile, McDonald's missed earnings expectations for the first time since the fourth quarter of 2021. The real America... When you add inflation to higher borrowing costs and current interest rates on things like credit cards (which more and more people are using to buy food), there's reason to believe in a weakening economy now or in the future. Here's one observation from Arie Kotler – the CEO of Arko (ARKO), which operates thousands of convenience stores and fuel stops under names like E-Z Mart and 1-Stop in small towns across America. He told global news service Reuters yesterday... You not only have inflation pressure now but also higher interest rates and fuel prices at $3.59 on average nationally. People are going to drive less and spend less as they have less money in their pockets. Kotler described his customers as representing the "real America," and that they're making fewer trips to stores. Today, many consumers are struggling just to put food on the table. Recent research from the Urban Institute found that last year, nearly 1 in 5 adults reported paying for groceries with savings that they didn't intend to use for routine expenses. You won't find many market analysts or CEOs talking about the "resilient" American consumer anymore. Instead, the buzzwords are "picky" or "choosy." I even heard one – likely highly paid – analyst on Bloomberg Radio the other day describe his first-ever trip to a Walmart (WMT). He spoke about how he was amazed by how many items it had, including food next to items like home goods. Oh, the amazement! He was looking for value and found the reality for most people in America. Walmart, by the way, performed better than its competition in the first quarter, reporting a nearly 4% gain in comparable sales compared with a year ago. Customers clearly see it as the best big retail/grocery place to go for value deals. Its foot traffic was up 4%. Target is playing catch-up, announcing plans on Monday to cut prices on 5,000 items, such as milk, meat, and bread. It doesn't want to miss earnings expectations forever. The short-term fix everyone is banking on... We could be optimistic and say that this scenario is why the folks at the Federal Reserve maintain they're going to cut rates later this year – and that it doesn't have anything to do with potential strain in the banking system, the cost of financing Uncle Sam's debt, or politics. At least some Fed members have noted that consumers are hurting. This afternoon, the central bank published the minutes from its April meeting, which included a report where meeting participants "noted signs that the finances of low- and moderate-income households were increasingly coming under pressure" and saw this as "a downside risk to the outlook for consumption." They also "pointed to increased usage of credit cards and buy-now-pay-later services, as well as increased delinquency rates for some types of consumer loans." But cutting rates would only be a short-term fix for a spending slowdown, and lowering borrowing costs with the pace of inflation running above 4% annualized (using January to March data of the Fed's preferred "core" personal consumption expenditures measure) will likely erode the value of dollars even more over the longer run. Granted, cutting rates could still be precisely what the Fed does to "save" the economy – and end up causing more problems. As we've said before, the central bank is the undisputed king of "fighting the last war." What else won't be a cure for higher prices... Yesterday, the Biden administration said it plans to sell nearly 1 million barrels of gasoline from a government-managed stockpile in the Northeast between Memorial Day and July Fourth to ensure "sufficient supply flows... at a time hardworking Americans need it the most." This may be true... but the move is more for political points than anything else. U.S. refiners can produce millions of barrels per day of gasoline... so selling off this stockpile is literally a drop in the bucket for supply. Of note – and because we've seen this point glossed over elsewhere – this isn't oil from the Strategic Petroleum Reserve, which is an oil stockpile stored at different sites in Texas and Louisiana. This gas stockpile, located at sites in New York Harbor, Boston, and Portland, Maine, was created 10 years ago, after "Superstorm Sandy" left millions of people in the Northeast without fuel. It turns out, the close of this reserve was included in March's government-funding bill and the proceeds from the sale of gas will go to the U.S. Treasury Department, which certainly needs all the money it can get. Though this, too, will be a drop in the bucket. The gas will net maybe around $2.5 million at today's future market prices ($2.50 per gallon). Meanwhile, Uncle Sam's fiscal deficit is growing at around $9 billion per day and is on pace for nearly $2 trillion for the year. So as a practical matter – other than leaving the Northeast without an emergency gasoline reserve – the move makes for a nice headline, but nothing else. In other news, Ethereum ETFs are nearing launch... [Yesterday]( we wrote about the price of Ethereum – the world's second-largest crypto by market cap – jumping 20% in one day on reports that spot Ethereum exchange-traded funds ("ETFs") could be approved by the U.S. Securities and Exchange Commission ("SEC") sometime this week. Crypto Capital analyst Stephen Wooldridge II wrote to Digest readers [back in February]( about the possibility of Ethereum ETFs hitting the market in May... and acting as a catalyst for Ethereum's price, like the launch of spot bitcoin ETFs earlier this year. The approval looks like a formality now, with the first listing possibly coming tomorrow. As crypto news outlet Cointelegraph reports... Amid increasing speculation about the possible approval of a spot Ether ETF in the United States on May 23, global investment manager VanEck's ETF has been listed by the Depository Trust and Clearing Corporation ("DTCC") under the ticker symbol "ETHV." The DTCC is an American financial market infrastructure provider that offers clearing, settlement and transaction reporting services to financial market players. A listing on DTCC is considered a crucial step before final approval from the U.S. SEC. In other words, the SEC just needs to hit the "on" switch. Another dose of reality... Finally, our colleague Mike Barrett, editor of our Select Value Opportunities service (available to Stansberry Alliance members), [wrote today]( about the dangers of going "all in" on stocks right now... Mike gave a powerful reminder to consider your investment timeline... while showing that U.S. stocks haven't always bounced back fast from "violent swoons" like they've been known to do in the past decade. That's why he says today's environment is one to be cautious about... The current state of the market, and the overall economy, is eerily similar to what we saw in late 2021... Evidence continues to mount that the economy is weakening amid persistent inflation. And investors... are mostly ignoring it, in the hopes that further weakness will force the Federal Reserve to cut interest rates. But weakness comes with a price. As Mike explained... If upcoming economic data and earnings results disappoint analysts (which we expect they will), investors will have no choice but to lower their lofty expectations. This will push stock prices much lower, similar to what occurred in late 2021 and 2022. So while you can enjoy the new all-time highs we've been seeing, don't let your guard down, either. In Select Value Opportunities, Mike said he's letting "winning positions ride the market momentum... but we're maintaining tight stops in order to lock in profits." Wise words. --------------------------------------------------------------- Recommended Links: ['This Could Set Off the Biggest Shake-Up of 2024']( Despite a soaring market that has hit 22 new highs in the past three months, the expert who accurately called the 2020 and 2022 crashes is now stepping forward to warn of a "May Surprise" that could set off the biggest market shake-up of 2024. He has already shown his subscribers 33 different ways to double their money in as little as a day. And he says right now is the perfect time to begin using his strategy for a chance to double or triple your money without touching a single stock or crypto. [Get the full details here](. --------------------------------------------------------------- [Urgent Alert: 'This Could Be Worth 20 Times More Than Nvidia']( Whitney Tilson has nailed many of the most famous stocks of the past 25 years – including Netflix, Amazon, and Apple. Now, he's pounding the table on a new technology rolling out across America, which early estimates say could create more wealth than AI, the PC, and the smartphone combined. [Click here to see how it could become the No. 1 investment of the next decade](. --------------------------------------------------------------- New 52-week highs (as of 5/21/24): Alamos Gold (AGI), Altius Minerals (ALS.TO), Amedisys (AMED), American Express (AXP), Alpha Architect 1-3 Month Box Fund (BOXX), Colgate-Palmolive (CL), Costco Wholesale (COST), Alphabet (GOOGL), Intuitive Surgical (ISRG), iShares U.S. Aerospace & Defense Fund (ITA), Kinross Gold (KGC), Liberty Energy (LBRT), Eli Lilly (LLY), Altria (MO), Motorola Solutions (MSI), Procter & Gamble (PG), Sprott Physical Silver Trust (PSLV), ProShares Ultra QQQ (QLD), Regeneron Pharmaceuticals (REGN), Royal Gold (RGLD), Sandstorm Gold (SAND), iShares Silver Trust (SLV), ProShares Ultra S&P 500 (SSO), Teradyne (TER), Trane Technologies (TT), Tyler Technologies (TYL), Veralto (VLTO), Vanguard S&P 500 Fund (VOO), Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP), Advanced Drainage Systems (WMS), Wheaton Precious Metals (WPM), and Utilities Select Sector SPDR Fund (XLU). Another quiet mailbag today... As always, send your comments and questions to feedback@stansberryresearch.com. A reminder about the ground rules: We can't provide individual investment advice or respond publicly to every note, but we do try to read them all. All the best, Corey McLaughlin Baltimore, Maryland May 22, 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 1,389.8% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,366.3% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 912.9% Extreme Value Ferris WRB W.R. Berkley 03/16/12 722.2% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 634.7% Retirement Millionaire Doc HSY Hershey 12/07/07 512.5% Stansberry's Investment Advisory Porter AFG American Financial 10/12/12 459.4% Stansberry's Investment Advisory Porter TT Trane Technologies 04/12/18 435.5% Retirement Millionaire Doc NVO Novo Nordisk 12/05/19 388.2% Stansberry's Investment Advisory Gula TTD The Trade Desk 10/17/19 369.5% 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 1,767.6% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,258.5% Crypto Capital Wade MATIC/USD Polygon 02/25/21 817.0% Crypto Capital Wade AGI/USD Delysium AI 01/16/24 469.4% 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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