A Bear Market Meal

Bear market food and drink... Janet Yellen looks like a lame duck... The Bank of England has 'quantitative confusion'... One billionaire's 'hard landing' warning... A 'bearsteak' with or without?... Look out below... A special invitation... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] Bear market food and drink... Janet Yellen looks like a lame duck... The Bank of England has 'quantitative confusion'... One billionaire's 'hard landing' warning... A 'bearsteak' with or without?... Look out below... A special invitation... --------------------------------------------------------------- Things are moving fast – and starting to 'break'... A picture of doom and pessimism is becoming increasingly clear... Last night, I (Corey McLaughlin) was reading that in the United Kingdom, mortgage lenders such as HSBC and the Bank of Ireland are pulling back loan offers... many other banks there have stopped accepting new customers... and natural gas is suspiciously leaking from pipelines in Europe's Baltic Sea. Here in the U.S., the average 30-year fixed mortgage rate is near 7%, roughly double what it was a year ago. Meanwhile, Federal Reserve officials keep reiterating their plans to attack the inflation they helped create... Meaning that they'll raise lending rates to slow the economy and kill jobs – i.e., a recession. In addition, we learned last night that Janet Yellen will likely be out as U.S. Treasury secretary after the midterm elections. That's not bad news on its own, but it's also an obvious sign of unsteady leadership of the nation's finances when a steady hand is needed most. Interestingly, these reports about her potential ouster next month surfaced on the same day she essentially told reporters that "this is fine." During a trip to a solar-energy company in North Carolina to – we can't make this up – tout the spending and clean-energy incentives in the "Inflation Reduction Act," Yellen said... We haven't seen liquidity problems develop in markets – we're not seeing, to the best of my knowledge, the kind of deleveraging that could signify some financial-stability risks... I think markets are functioning well. Famous last words? Or is the former Fed chair-turned Treasury secretary-turned fresh lame duck right? Either way, we're always skeptical of people who say "to the best of my knowledge" in public. Then this morning, we woke up to more bad news... This morning, the Bank of England acknowledged U.K. markets were in trouble... and a credit crisis was brewing. As we first reported on Monday, the British pound has been crashing amid the financial policies of a new prime minister and a strengthening dollar. Now, the Fed's peer in England has thrown in the towel already and "pivoted" – kind of... Today, the Bank of England announced it would start buying long-term bonds to "restore orderly market conditions" at "whatever scale is necessary." The central bank said a "repricing of U.K. and global financial assets" became significantly worse yesterday, and... Were dysfunction in this market to continue or worsen, there would be a material risk to U.K. financial stability. This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy. In line with its financial stability objective, the Bank of England stands ready to restore market functioning and reduce any risks from contagion to credit conditions for U.K. households and businesses. In other words, "credit crisis." Specifically, certain leveraged pension funds in England were reportedly facing hefty margin calls and were selling long-term bonds to meet them. So now the central bank is buying as much as $69 billion worth of bonds maturing in 20 years or more. Mind you, this is while the Bank of England is also raising interest rates to fight inflation and had plans to sell bonds, or start "quantitative tightening," next week – plans it put on pause today. On Twitter, Bloomberg TV anchor Jonathan Ferro smartly called the new policy "quantitative confusion." Adding bonds to a central bank's balance sheet won't help lower record-high inflation, but it may save some people or businesses from going bankrupt tomorrow. It's another Band-Aid, which contributed to a slightly weaker U.S. dollar today (and the S&P 500 Index popping nearly 2%), but it's certainly not a cure for debt addiction. For now, things are still worse "there" than "here." Had we not been paying attention all year long, this bear market cocktail would come as a surprise to us... Folks are rightfully complaining about high prices... labor shortages or needing multiple jobs to pay the rent... and downtowns feel like shells of their former selves. Yet I still don't sense enough people are aware of the risks for today's economy. It's because this stuff is hard to see or believe, or make sense of... It's numbers and balance sheets and debt... and the value of currencies bouncing around wildly. It's not as obvious as someone stealing a ton of gold, or the financial hit to a restaurant with locked front doors and bills to still pay, but it's in the same ballpark. Certainly few people see the same danger ahead as Stanley Druckenmiller... The 69-year-old billionaire, who managed $12 billion as president of Duquesne Capital until 2010, is considered one of the best investors in the world. Reportedly, he has never had a down year in the markets. He has attributed that to "luck" and the timing of the calendar, but he's being modest. Druckenmiller is a big-picture thinker who trades in stocks, bonds, and currencies. He helped George Soros famously "break the Bank of England" by shorting the pound in 1992, making $1 billion in profit. And, more recently, Druckenmiller has been spot on with his outspoken analysis of the economy and markets in the past two years in particular. We've quoted Druckenmiller before – and we will again... Last year, during an interview with a group of students at the University of Southern California, he [sounded the alarm on the Fed]( going overboard with stimulus and increasing the odds of high inflation. At the time, I called his talk an epic rant that was worth watching. In it, he pointed out that the poor would suffer most in an inevitable bursting of the ongoing asset bubble. Then, [in June of this year]( Druckenmiller was a rare voice in the wilderness... one of few people to point out that when inflation has topped 5%, the Fed has always had to raise rates to a level above the consumer price index ("CPI") to successfully lower it. A few months later, it's finally becoming clear to Mr. Market that this is the Fed's strategy – and that a higher-for-longer interest-rate environment is the likely outcome. As a result, as Druckenmiller said in a conference in New York today, forget about a "soft landing"... Our central case is a hard landing by the end of '23. I will be stunned if we don't have recession in '23. I don't know the timing but certainly by the end of '23. I will not be surprised if it's not larger than the so-called average garden variety. He also said that all of the factors that caused the record-long bull market last decade – near-zero interest rates and central bank support – are "not only stopping, they're reversing every one of them. We are in deep trouble." Of course, he brings up a good point – again... This is something that's been on my mind for a while... So far, you could argue we've seen an "average garden-variety" bear market, even though it might not feel like it. The S&P 500 is down about 20% from previous highs. That has happened before... But so far, enough people don't think we're in or even nearing a recession. It's just not obvious yet, even if we might already be in one, even though inflation is at 40-year highs and the economy has been slowing. And that's because few folks are losing their jobs yet. To that point, consider the Atlanta Fed's GDPNow projection for gross domestic product in the third quarter of 2022. This prediction has been trending downward since last month. Currently, it's showing only 0.3% annualized growth... And it could end up negative when the third quarter ends soon. This brings up a good question: What will people call three straight quarters of declining GDP, if not a recession? But let's get back to Druckenmiller's expectation for a "hard landing" next year... and the idea it kindled for us. There is a difference for stocks between a bear market with a recession and a bear market without one. They don't always happen together... and bear markets with recessions have predictably led to deeper losses over longer periods of time, at least over the past 80 years... An analysis by the Wells Fargo Investment Institute showed that since 1946, the average bear market with a recession lasted 20 months and saw a 35.8% loss... while bear markets without a recession have averaged a 27.9% loss over roughly six months. That's a significant difference, especially in length, even if it might not seem like it on the returns. Still, remember, we're talking about averages. Some instances are much worse than others, and some better. The point is, if you agree with Druckenmiller that a recession is coming, history suggests stocks have lower to go from current levels – and the so-far 10-month bear market of 2022 could extend into 2023. This discussion reminds me of going to Philadelphia and ordering a cheesesteak... The guy behind the counter might ask you: "'Wiz wit' or witout?" He's asking about the toppings, meaning whether you want a cheesesteak with Cheez Whiz and onions or without the onions. (The Whiz, of course, is non-negotiable.) For our purposes, the question of the day is: Do you want your bear market (or "bearsteak," as we're tempted to call it) with or without a recession? My sense is that for most people, after seeing this data, the answer is most likely "without." Today, we're at an important inflection point... U.S. stocks are down about 20% over 10 months. That's close to the average loss for a bear market without a recession, but the length of this downtrend is also heading in the direction of a bear market with a recession. If your head is spinning at this point, don't fret... Here's the thing... If you are prepared for either case (bear market with or without a recession), being "right" doesn't matter as much as it does to the unprepared. Either way, you want to have cash on hand ready to put to work plus a diversified portfolio of high-quality, dividend-paying stocks. Once you have your bases covered, all you can do is look at what you see... position accordingly... and adjust as conditions change. As we've written this week, the U.S. stock indexes have been flirting with new lows for the year. Today, they rose a bit off these technical "support" levels. Meanwhile, some growth-oriented stocks – like tech names Meta Platforms (META) and Nvidia (NVDA) – which notably led the broader market down earlier this year, have already broken lower than their June lows. So has the Global Dow Index, as we showed yesterday. Those are concerning signs... along with a credit crisis in the U.K... the natural gas leaking into the Baltic Sea... the skyrocketing mortgage rates and the slowing real estate market here in the U.S... and the central bankers coordinating the "fix" that is really another problem. In sum, if the U.S. indexes break to new lows, look out below... Alternatively, if these levels hold, that could be a bullish signal... and a sign folks are expecting a "bearsteak without" instead of one with the onions. Lastly, we have a note from a longtime friend of Stansberry Research... Gray Zurbruegg is president of The Atlas 400, an exclusive travel and wealth club of some of the world's most accomplished and interesting people... We also happened to be neighbors several years ago. And today, Gray wants to share a special invitation for folks who will be in Boston next month for our annual Stansberry Conference. He takes things from here, starting with an unexpected question... Have you ever wondered what it's like to land a Gulfstream jet on an ice runway in Antarctica? What about driving Land Cruisers over 100-foot sand dunes in the Omani desert... or racing Ferraris through the Italian countryside en route to lunch? You see, we've done all of that – and much more – with The Atlas 400. ([Click here]( to view our latest highlight video.) And now, I'd like to extend an invitation to Digest readers... The Atlas 400 is hosting a cocktail party for interested candidates following the second day of the annual Stansberry Conference in Boston on October 25. The meeting will take place at On Deck in the Encore hotel at 5:30 p.m. Please, only come if you're really interested in membership. And also know... The Atlas 400 isn't for everyone. The initiation fee to join is substantial ($30,000), and our excursions aren't cheap. But if you're in a position to enjoy the fruits of your labor and successes, I urge you to join us for cocktails and a "peek behind the curtain." It's the only opportunity that prospective candidates will have to speak with current members, ask questions, and briefly experience everything we have to offer. Imagine traveling the world, enjoying new friendships, taking new adventures, discovering tremendous new opportunities... and perhaps seeing your life and yourself in a whole new way. If you'd like to join us at On Deck in Boston's Encore Casino... please contact me via e-mail at gzurbruegg@theatlas400.com or by phone at 410-246-2045. What to Own as the Fed Goes Bigger The strength of the U.S. dollar is holding gold down, "but other commodities are rallying," says Chris Versace, chief investment officer of Tematica Research. He explains the details to our editor-at-large Daniela Cambone... [Click here]( to watch this interview right now. And to catch all of the videos and podcasts from the Stansberry Research team, be sure to [visit our Stansberry Investor platform]( anytime. --------------------------------------------------------------- Recommended Links: # ['SELL THIS POPULAR RUINED STOCK IMMEDIATELY']( Wall Street titan Marc Chaikin and world-renowned forensic accountant Joel Litman just delivered an urgent crisis warning... and shared their No. 1 step to take with your money right now to protect yourself. Plus, Joel reveals his No. 1 stock you should SELL immediately. It's a beloved American retail giant that he says is headed for disaster. [Click here for details before tomorrow's opening bell](. --------------------------------------------------------------- # [When Life Gives You a 'Fat Pitch,' Take It!]( When the setup is so good and so lopsided in your favor... you have to swing. It's the ONE decision that will have the biggest impact on your wealth over decades. And despite this recent market volatility, Dr. David "Doc" Eifrig has found exactly that – the "fat pitch" setup of a lifetime. [Click here for full details](. --------------------------------------------------------------- New 52-week highs (as of 9/27/22): SPDR Bloomberg 1-3 Month T-Bill Fund (BIL) and short positions in iShares Russell 3000 Fund (IWV) and iShares U.S. Real Estate Fund (IYR). In today's mailbag, your thoughts on the Federal Reserve and [yesterday's Digest](... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "All this talk about Jerome Powell fighting inflation and the pain he must inflict upon us (for our own good) reminds me of something ridiculously obvious that Steve Forbes recently pointed out. That the best way to fight inflation is to stabilize the currency (and we all know what that REALLY means). A sound currency would solve inflation without punishing the middle class. "Everyone knew back in 2020 exactly how all this stimulus would have to play out in the end, no surprise really. We've treated every financial crisis with a morphine drip and got hooked. The Federal Reserve must eventually go cold turkey off fiat currency. We can still leverage technology to revolutionize finance but the 'theory' of money has to be based on something of intrinsic and tangible value." – Paid-up subscriber Steve D. "My guess is the Fed chickens out of continued rate increases after 2-4 more, which will leave the real rate still negative. They will chicken out in part because of the huge budget increase higher rates cause. So while inflation will fall, but not to 2% level, unemployment increase will become intolerable politically for the 2024 presidential election, so they will start to ease rates to rein in the recession." – Paid-up subscriber K.M. "And I thought I was angry. Then I read [yesterday's] feedback and realize I was only mildly irritated." – Paid-up subscriber Tim P. All the best, Corey McLaughlin Baltimore, Maryland September 28, 2022 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 844.4% Retirement Millionaire Doc ADP Automatic Data 10/09/08 807.0% Extreme Value Ferris MSFT Microsoft 02/10/12 724.1% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 526.9% Stansberry's Investment Advisory Porter ETH/USD Ethereum 02/21/20 484.6% Stansberry Innovations Report Wade AFG American Financial 10/12/12 392.2% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 370.7% Retirement Millionaire Doc WRB W.R. Berkley 03/16/12 346.6% Stansberry's Investment Advisory Porter NTLA Intellia Therapeutics 12/19/19 283.2% Stansberry Innovations Report Engel TTD The Trade Desk 10/17/19 279.4% 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 2 Retirement Millionaire Doc 1 Extreme Value Ferris 4 Stansberry's Investment Advisory Porter 3 Stansberry Innovations Report Engel/Wade --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst ONE-USD Harmony 12/16/19 1,158.9% Crypto Capital Wade ETH/USD Ethereum 12/07/18 1,154.5% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,089.6% Crypto Capital Wade MATIC/USD Polygon 02/25/21 819.7% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 408.0% 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 Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade 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 ^ 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%. 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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