The 'Fed Cut' Plus

Another 'softer' jobs report... Why this bad news is good news for stocks... It looks like the 'Fed cut' plus... The Nasdaq and S&P 500 make new all-time highs... Signals from the north and overseas... Portfolio Solutions updates... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] Another 'softer' jobs report... Why this bad news is good news for stocks... It looks like the 'Fed cut' plus... The Nasdaq and S&P 500 make new all-time highs... Signals from the north and overseas... Portfolio Solutions updates... --------------------------------------------------------------- Throw another log on the 'softening labor market' fire... Today's private-sector payroll report for May from payment processor ADP showed the lowest number of jobs added in four months, notably below the past year's monthly average. According to ADP, the U.S. added just 152,000 private payrolls last month, a significant drop from April's (revised) 188,000 and also off the one-year average of around 194,000 private jobs added each month. And it's well below Wall Street's consensus estimate of 175,000. This report adds to the growing pile of "official" evidence that the jobs market is softening... And, perhaps counterintuitively, the market is bullish about it. Combined with another batch of data mid-day showing growth in the services sector – after a contraction last month – the major U.S. indexes were all up today. The benchmark S&P 500 and tech-heavy Nasdaq Composite Index closed at new all-time highs. Chipmaker Nvidia (NVDA) made new highs, too, now trading above $1,200 per share. Today looked like an expression of the "Fed cut" trade – plus... Every major asset class was up: stocks, with the tech sector leading... bonds, as yields dipped again... gold, for those who care about inflation... and oil and bitcoin, too, with the latter trading above $71,000 near an all-time high. Bad news is good news... The services-sector growth, which was the highest in nine months and above expectations, is good news and clearly lifted the markets in the afternoon. But the indexes were already up before that came out, which is what I (Corey McLaughlin) want to talk about. An apparently weakening jobs market might strike you as bad news – and it is for people who are actually interested in working to generate income and keep up with inflation – but the markets are often perverse. That's because investors are always thinking about what comes next... Today, we saw a growing stack of "soft" labor market data, plus second-quarter GDP estimates that recently went below 2% and a central bank that does not seem to care that inflation is still high. This mix suggests a shift in monetary policy to a more encouraging environment for investors ahead. Alternatively, really bad data – like a spike in the unemployment rate – could be bearish for the market in the shorter term. Then the central bank would inevitably intervene to "rescue" things (and cause more inflation in the process, but we digress). But we're not in that scenario right now. As we wrote on Monday... Should any or all of these reports indicate a weakening jobs market, I'll be gauging whether bad news for the economy translates into "bad news" for stocks. Will signs of economic weakness push U.S. stocks lower, given that a weak economy would be worse for businesses than the market had considered? Or will poor economic data be taken more as a sign that the monetary policy environment will indeed "loosen" with lower interest rates – and push stock prices higher on balance? If anything, the market reaction to a series of relatively weaker jobs reports has appeared to lean toward the latter outcome: investors being more excited about looser monetary policy than worried about the economy slumping. Throw in some other encouraging economic data at the same time – today's growth in the services sector – and you get a market making new highs. At the same time, though, people may be getting ahead of themselves again... Many investors have been practically begging for a "Fed pivot" since right after the central bank began raising rates in 2022. Instead, the Federal Reserve raised rates higher than expectations and has held them in the current range for nearly a year. This has been the "Fed pause." And today, while statistics show the labor market weakening, it doesn't look like a disaster based on the data that the Fed follows. This makes it hard (though not impossible) for the central bank to justify cutting rates anytime soon with inflation still above its target. This is why we keep saying, no matter what, prepare for high(er) inflation for longer. Remember, yesterday's Job Openings and Labor Turnover Survey ("JOLTS") report for April painted a picture of "moderation" in the labor market – with the ratio of job openings to available workers – falling to 1.2 to 1. The major U.S. indexes were mixed. Today, after more current data for May in the ADP report showed weaker job growth than in the past several months, most of the major U.S. indexes were up. As our Ten Stock Trader editor Greg Diamond shared earlier this week, from a technical-analysis perspective, the bulls appear to still be in control. Today, Greg recommended a pair of bullish trades (Ten Stock Trader subscribers can find them [here]( noting that Friday's "nonfarm payrolls" report could be a catalyst for higher prices. Should more jobs numbers show signs of relative weakness, this will likely fuel market expectations of lower interest rates ahead. We don't have to go far to see it... Up north and overseas... Just today, the Bank of Canada cut its benchmark lending rate by 25 basis points to 4.75%, marking its first rate cut in four years. Canada is now the first G7 country to see a rate cut in the post-pandemic stimulus/inflation era. Headline inflation is still at 2.7% in Canada as of April... But with first-quarter GDP at a reported 1.7% and with Canadian central-bank officials expecting inflation to continue easing, that's evidently enough to change policy course. "Monetary policy no longer needs to be as restrictive," Bank of Canada Governor Tiff Macklem said today at a press conference after the policy announcement. The Swiss and Swedish central banks have also lowered rates. We expect to hear similar comments from the European Central Bank tomorrow. You might be able to see why investors are increasingly expecting the same in the U.S. Portfolio updates and more... Earlier this week, our Portfolio Solutions team published updates to [The Quant Portfolio]( [The Total Portfolio]( and [Stansberry's Forever Portfolio](. If you're a subscriber or Stansberry Alliance member, be sure to check them out... You'll find detailed updates on the model portfolios... and much more. In The Quant Portfolio update, you'll find a discussion of which stocks led the market higher in May. The team also released allocation adjustments to make if you're following the portfolio, which continues to outperform the broad market. In The Total Portfolio, Stansberry Research senior analyst Brett Eversole makes the case for investing outside the U.S. As Brett explains, U.S. stocks have gotten much more expensive than foreign markets, setting up a buying opportunity in high-quality businesses abroad. And for Forever Portfolio subscribers, our director of research Matt Weinschenk details the lessons you can learn from Amazon's incredible, and still ongoing, growth story and explains why it's the perfect example of a "forever" stock. --------------------------------------------------------------- Recommended Links: [All the Retirement Savings in the World Won't Matter if You Don't Have THIS]( Dr. David Eifrig: "Today I'm sharing the single most important idea of my career. And I promise you it could transform your life in ways that go way, way beyond money. This is about growing your wealth and protecting something that matters far MORE. This is my life's work. I'm deeply grateful for your attention – and I'm saying 'thanks' by re-opening the single best offer EVER, this week only." [Get the full details here](. --------------------------------------------------------------- [Wall Street Legend Who Called 2020 Crash Issues Dire Warning]( "Forget about AI, interest rates, and the election," says this world-renowned financial expert. "This is the real economic nightmare coming to America. And no less than 62 of our nation's elected officials know exactly what's happening." [Get the full story here](. --------------------------------------------------------------- New 52-week highs (as of 6/4/24): Alpha Architect 1-3 Month Box Fund (BOXX), Costco Wholesale (COST), Intuitive Surgical (ISRG), iShares U.S. Aerospace & Defense Fund (ITA), Coca-Cola (KO), Eli Lilly (LLY), Altria (MO), Novo Nordisk (NVO), Spotify Technology (SPOT), Verisk Analytics (VRSK), and Vanguard Short-Term Inflation-Protected Securities (VTIP). A quiet mailbag today... As always, let us know what's on your mind at feedback@stansberryresearch.com. All the best, Corey McLaughlin Baltimore, Maryland June 5, 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 1,365.5% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,324.1% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 891.7% Extreme Value Ferris WRB W.R. Berkley 03/16/12 732.7% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 626.1% Retirement Millionaire Doc HSY Hershey 12/07/07 494.5% Stansberry's Investment Advisory Porter AFG American Financial 10/12/12 447.1% Stansberry's Investment Advisory Porter TT Trane Technologies 04/12/18 410.9% Retirement Millionaire Doc NVO Novo Nordisk 12/05/19 404.9% Stansberry's Investment Advisory Gula TTD The Trade Desk 10/17/19 366.6% 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 1,778.5% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,261.0% Crypto Capital Wade MATIC/USD Polygon 02/25/21 813.0% Crypto Capital Wade AGI/USD Delysium AI 01/16/24 431.1% 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. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberryresearch.com. Please note: The law prohibits us from giving personalized financial advice. © 2024 Stansberry Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Stansberry Research, 1125 N Charles St, Baltimore, MD 21201 or [stansberryresearch.com](. Any brokers mentioned constitute a partial list of available brokers and is for your information only. Stansberry Research does not recommend or endorse any brokers, dealers, or investment advisors. Stansberry Research forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Stansberry Research (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.