Making Sense of the Mess

The market is sending mixed signals... A 'dislocation' in the growth outlook... Making sense of the mess... The weaklings will get knocked off eventually... What you can do... Don't miss Marc Chaikin's outlook tomorrow night... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] The market is sending mixed signals... A 'dislocation' in the growth outlook... Making sense of the mess... The weaklings will get knocked off eventually... What you can do... [Don't miss Marc Chaikin's outlook tomorrow night](... --------------------------------------------------------------- The churn continues... As our Ten Stock Trader editor Greg Diamond put it in [his Weekly Market Outlook this morning]( for his paid subscribers... Let's not mince words... The price action across the stock market is a mess right now. Indeed. On the surface, there appear to be a lot of mixed signals – and returns – in the stock market right now... The small-cap Russell 2000 Index – which has a substantial weighting to financial stocks – has been trading near a yearly low and is flat since the start of 2023 after dropping roughly 7% in the days after the Silicon Valley Bank run... Meanwhile, the tech-heavy Nasdaq Composite Index is up 13% since New Year's Day. Enough investors (or speculators) are getting giddy at the thought of potential Federal Reserve rate-hike cuts later this year, which many folks are sure would boost growth prospects. In the middle is the benchmark S&P 500 Index, up roughly 4% year to date and trading just above its 200-day moving average (200-DMA), a technical measure of a long-term trend. Then the Dow Jones Industrial Average's performance makes things even messier, down about 2% for the year and trading just below its 200-DMA. If you're wondering what to make of the markets today, you're in good company... I (Corey McLaughlin) will explore what investors appear to be weighing right now... and what it might mean for your portfolio. Wise words while watching swim class... Over the weekend, David Cervantes – the founder of New York's Pine Brook Capital Management and [a prior guest on our Stansberry Investor Hour]( – typed out a great series of Twitter messages while watching his son's swim class. He discussed a "dislocation" in the markets about economic growth in the rest of the year. It's a topic that speaks to the leading uncertainties in the market today, like whether we'll have a recession and what the Fed will do if that happens. To start, David pointed out that the Atlanta Fed GDPNow forecast is estimating 3.2% annualized growth of U.S. gross domestic product ("GDP") for the first quarter of 2023. Another indicator he looks at suggests 2.4%, so for the rest of his argument's sake, he settled on the market expecting 2.8% GDP growth for the first quarter... Meanwhile, in its projections that it published just last week, the Fed's official forecast for "real" GDP growth for the entire year is 0.4%. This raises a bunch of questions, [as David said](... In order for us to even come close to that Fed forecast number, GDP must come in negative for the remaining 3 quarters of the year. Roughly -.5% GDP. Every quarter. For the next 3 quarters... He said he's not so sure that will happen – particularly because of the slowdown we've already seen from past rate hikes and the state of the labor market today – though it could... We can twist ourselves into knots to say yes it does [happen], but that assumes some pretty crazy stuff. From 2.8% to -.5% in 1 quarter is some borderline sudden stop kind of stuff. With a labor [market] that is white hot. Fine. It can happen. Then ask yourself, what's the Fed's reaction function to a sudden stop kind of event? Is that reaction politically tenable? We can dance around in circles to validate or invalidate the Fed forecast according to our biases. But that doesn't matter. What matters is the disconnect between implied growth and realized growth and the subsequent impact on asset prices. If we don't have a sudden stop, the chances of growth just downshifting as described above are slim. That means growth is under priced. It means the Fed is right regarding no rate hikes in 2023. It means the yield curve is likely to violently reprice if realized growth comes in higher. On the other hand, David wrote, a sudden slowdown would likely "pack a bigger punch" that leaves the U.S. economy with worse than 0.4% real GDP growth for the year. If this is the case... It means the Fed forecast is full of beans and the [market] is over optimistic. It means the Fed needs to be cutting yesterday. Weighing the possible outcomes... There's a camp of investors, which has been growing larger if you look at the bond market, that is betting on rate cuts from the Fed in the second half of the year... These investors think inflation will continue to decelerate and things will get substantially worse for the economy as the lag effect of the central bank's rate hikes hits the real world. These folks don't believe Fed Chair Jerome Powell when he said as recently as last week that the central bank isn't even considering rate cuts right now... They're betting on a Fed "pivot" before the Fed has indicated it will happen. On the other hand, say the Fed does what it says it will do and holds its benchmark lending rate near its "terminal" rate of around 5% for the rest of the year. (That's also what it projected last week.) The Fed will be able to do that because there hasn't been a full-fledged crisis that needs an emergency response of a rate cut... In that case, the Fed's projected economic slowdown probably also won't have materialized, considering the GDP projections for the first quarter we're seeing today. In other words, forget "hard landing" or "soft landing"... This will be like "a landing," and a world of higher interest rates and the consequences that come with that. In sum, David wrote... None of what I am saying is a forecast. I am pointing out a glaring discrepancy between official and market forecasts, and what the biggest macro aggregate (GDP) that is staring us in the face is telling us in real time. This is the sort of thing that many really savvy investors say... They spot a discrepancy in the market, weigh the possible outcomes of it, and evaluate what investments might benefit or suffer in those cases. Then they make bets accordingly, or don't make any bets at all if the reward isn't worth the risk to them. So what should you do?... Well, first, as always, you need to know why you're investing in the markets in the first place, and what your goals and time horizon are. Are you betting money you need in six months or six years from now? You'll probably do things differently depending on your answer. Start there before doing anything else... Only after that can you make appropriate decisions. Aside from that, here's my view as I sit here looking at the market in late-March 2023: It's certainly not a raging bull market, but it's not looking like last year's loud, roaring bear market either, when anything and everything with a dollar sign attached to it was down across the board. There are some signs of optimism, mainly given the continued declining pace of inflation that looks like it's going to continue... As our Stansberry NewsWire editor C. Scott Garliss shared with us today, recent Fed surveys on "prices received" by manufacturing businesses that have been a leading indicator of the consumer price index ("CPI") continue to decelerate from last summer's peak... All in all, this is good news... The backdrop of decelerating inflation has been a constant for months. (Note, I'm not saying that this means there is no inflation. There will be so long as we have fiat currency. But it has been rising slower than it had been for the past two years.) The question, however, is what kind of knock-on damage we might see as a consequence of the Fed fighting the inflation war. There is also a good amount of justifiable fear, too, given the regional banking panic we've just seen... concerns of a credit crunch... and broad weakness in the labor market [potentially ahead](. If you believe the Fed that the economy is going to have little growth this year, it's likely going to happen with a recession in the second half of the year. But as David suggested, if that kind of slowdown doesn't materialize (which it hasn't just yet) and the Fed is wrong (always a decent bet), that means growth may be "underpriced" today. However, some growth and tech stocks have run up recently to even pre-pandemic valuation levels... If that's all enough to make your head spin, here's a suggestion... If you ever needed another reason to own the type of high-quality companies that many of our editors typically recommend, this scenario we're looking at today is one of them. Nobody has a crystal ball. But, in the end, not all companies are going to thrive or even survive in a serious recession or a higher-interest-rate world... even if the type of brutal recession many folks expect never quite arrives. Heck, some banks couldn't even survive the early days of higher rates, even one with a Fed regional board member as its CEO. (That's Silicon Valley Bank, by the way, which we just learned today is being taken over by First Citizens BancShares.) In times like these, there are and will be buying opportunities – if you know where to look – along with sectors and names to avoid. You don't need to be "all out" or "all in." You're not going to go wrong owning shares of companies that generate tons of free cash flow and can reward shareholders and continue to grow their businesses... These are businesses that have strong balance sheets and sell always-in-demand products. On the other end, staying away from the duds of the world can just as much save your portfolio, too, from big losses. If a recession doesn't clip these names first, a higher-rate environment will eventually spoil their fortunes – especially the "zombie" companies of the world that can't even afford to pay the interest on their debt today. One way to separate the winners from the losers... It pays to have help in an environment like this. That might mean heeding the advice of editors and analysts you already follow... or perhaps looking at a valuable tool like the Power Gauge that our friend and Chaikin Analytics founder Marc Chaikin created about a decade ago for individual investors. Marc put together everything he learned from four decades on Wall Street into an easy-to-use tool. The Power Gauge from our corporate affiliate Chaikin Analytics analyzes thousands of stocks, with a simple "Bullish," "Bearish," or "Neutral" rating that can be applied to individual names, sectors, indexes, or exchange-traded funds ("ETFs"). Some niches, Marc says, have quietly turned bullish lately. Marc will share more details in his free presentation at 8 p.m. Eastern time tomorrow. Attendees will also hear his outlook on the markets today and what he thinks about the ideas we discussed today on the Fed, growth versus recession, and the best places he believes to invest in right now. As [I mentioned last week]( Marc predicted the possibility of bank runs four months ago, the only person I saw make that prescient statement. So, if nothing else, you ought to consider what's on his mind today in addition to seeing how he likes to pick winners and stay away from losers. His event tomorrow night is totally free. We just ask that you sign up in advance. [You can do that right here](. Preparing for the Rolling Run-Up Here's a sneak peek of what Marc plans to talk about tomorrow night. In this recent episode of Making Money With Matt McCall, he talks about what he sees going on in the current environment, various sectors, and his recommendations for positioning today... [Click here]( to watch this video right now. For more free video content, [subscribe to our Stansberry Research YouTube channel](... and don't forget to follow us on [Facebook]( [Instagram]( [LinkedIn]( and [Twitter](. --------------------------------------------------------------- Recommended Links: [Tomorrow's Emergency Broadcast: The NEXT Phase of This Banking Crisis]( Another wave of volatility is about to hit U.S. stocks. One Wall Street legend is sharing where the stock market's going next... what it means for your money in 2023... and the ONE and ONLY trade he says you must make this year to protect and grow your wealth. [Click here for the details (including a free recommendation)](. --------------------------------------------------------------- [Pentagon Consultant: Here's How Biden Wins Landslide Reelection]( A forensic accountant who consults for the U.S. Pentagon, FBI, and Marines says a surprising July 25 "twist" could make many Americans vastly wealthier... but also hand Joe Biden a landslide reelection win. The full story, including four steps you can take to protect your money, is [detailed here](. --------------------------------------------------------------- New 52-week highs (as of 3/24/23): Alamos Gold (AGI), Activision Blizzard (ATVI), SPDR Bloomberg 1-3 Month T-Bill Fund (BIL), Copart (CPRT), Hershey (HSY), Novo Nordisk (NVO), and iShares 0-3 Month Treasury Bond Fund (SGOV). Our mailbag is full with your feedback on [Dan Ferris' latest Friday Digest](. We'll share some notes today and continue with more tomorrow... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "I very much agree with the Friday Digest and Dan's prediction for [central bank digital currencies ("CBDCs")]. I have suspected this was the case for the last three years. The main question now (and it is one I have pondered a lot), is what to do about it, knowing this is the direction. "As Dan mentioned, I have started using cash as often as possible, but trying to set up to protect one's wealth under those conditions is a tricky puzzler. I would love to see more coverage in the near future on what ways Dan, and other Stansberry analysts see as the best protections in this type of scenario. "Thanks for all the great coverage." – Paid-up subscriber Amy M. "Thank you Dan Ferris. I am so often completely aligned with your positions. You hit this one out of the park. Keep having the courage to point out the Emperor's lack of apparel. We are in deep trouble and headed for worse. Meanwhile, Nero fiddles." – Paid-up subscriber Chuck P. "At the end you write: 'I don't know that I'll stay in this rabbit hole long enough to think about all the implications of that. But after reading Werner's article, I am now sitting here thinking maybe I should do more business in cash.' "You might add: 'and buy some heavy military hardware.'" – Paid-up subscriber K.M. "Dan, I think you just wrote the most important essay of your career..." – Paid-up subscriber Ransom G. "Dan Ferris is pure genius! I could be his dumber brother. Love following him at Stansberry Research and Twitter. His analysis and understanding of current governments is spot on!" – Paid-up subscriber T.D. "THANK YOU, Dan Ferris. It's about time someone at Stansberry started warning of CBDC... I have wondered more than once if what's been happening from COVID, to money printing, to inflation, to bank problems was all planned. I agree completely with your assumption, it's on purpose. It's part of the plan for total control. "Like you said, it started with COVID. They learned that the public can be controlled like a herd of sheep with the proper scare tactic. It's only a matter of time before the Totalitarian governments of the world take complete control of our lives." – Paid-up subscriber J.L.W. Dan, If your postulation is true, that a crisis is being created, what are the ramifications of this? What can we do to prepare for the possible outcome? Perhaps we will get a CBDC. What else could happen in an economic crisis? Yes, COVID lockdowns are a great example of what people are willing to do in a crisis. (Manmade or not.) "I have noticed that a crisis, particularly natural disasters, can bring out the best in people; people willing to help strangers with whom they have no historical connection and will likely not receive anything in return. As a praxeologist, this runs counter to homo sapiens day to day way of acting. Could this mean there is hope for us sapiens? We certainly are endlessly creative. "Your interviews and writings add a unique and important dimension to Stansberry's material. My best to you." – Paid-up subscriber Chaz B. "Dan, I too read that article and was amazed by what Dr. Werner was saying. There were a number of links, but the most telling was when he referenced Blackrock in the middle of the article. "The following sentence has a link to a Blackrock letter that spills the beans... 'The Fed knew this would create inflation, as Blackrock later confirmed in a [paper which stated]( that 'the Fed is now committing to push inflation above target for some time.' "Put your tinfoil hat back ON!!! It's real!!!" – Paid-up subscriber Don B. All the best, Corey McLaughlin Baltimore, Maryland March 27, 2023 --------------------------------------------------------------- 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 1,013.3% Retirement Millionaire Doc MSFT Microsoft 02/10/12 872.0% Stansberry's Investment Advisory Porter ADP Automatic Data 10/09/08 771.0% Extreme Value Ferris ETH/USD Ethereum 02/21/20 611.9% Stansberry Innovations Report Wade HSY Hershey 12/07/07 597.2% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 527.9% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 430.0% Retirement Millionaire Doc AFG American Financial 10/12/12 401.7% Stansberry's Investment Advisory Porter ALS-T Altius Minerals 02/16/09 318.0% Extreme Value Ferris FSMEX Fidelity Sel Med 09/03/08 306.6% Retirement Millionaire Doc 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 4 Stansberry's Investment Advisory Porter 3 Retirement Millionaire Doc 2 Extreme Value Ferris 1 Stansberry Innovations Report 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 ETH/USD Ethereum 12/07/18 1,388.1% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,169.0% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,052.8% Crypto Capital Wade MATIC/USD Polygon 02/25/21 919.0% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 631.0% 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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