At Least We're Not Argentina

Rates and stocks are trending up... A global story... Why the Fed will keep raising rates... The stock market says, 'At least we're not Argentina'... Under the hood... Send in your questions... Mailbag: It's a kakistocracy... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] Rates and stocks are trending up... A global story... Why the Fed will keep raising rates... The stock market says, 'At least we're not Argentina'... Under the hood... Send in your questions... Mailbag: It's a kakistocracy... --------------------------------------------------------------- The trend is up... I (Corey McLaughlin) explained just yesterday that U.K. inflation was in terrible shape compared with even the still-40-year-high inflation in the U.S. Now, the Bank of England today delivered a "surprise" 50-basis-point increase to its benchmark bank-lending rate... European markets expected a 25-basis-point hike, but the "have fun staying poor"-minded Bank of England saw the need to go a little bit further in its attempt to fight inflation. As the Bank of England's Monetary Policy Committee – the equivalent of the Federal Open Market Committee in the U.S. – said in a statement, it was just a month ago in May that... The market-implied path for Bank Rate averaged just over 4% over the next three years. Since then, gilt [bond] yields have risen materially, particularly at shorter maturities, now suggesting a path for Bank Rate that averages around 5½%. The Bank of England projects gross domestic product ("GDP") to rise by around 0.25 percentage points... reports that indicators of "household spending have tended to strengthen a little"... and says employment increased by 0.8% this spring, higher than expected. In other words, the economy is holding up... inflation is still too high... and the central bank will do what it can to make money more expensive and slow the pace of price increases. So interest rates in the U.K. – and around the world – are trending upward... Central banks are scared of inflation getting way out of control... As Mohamed El-Erian – the noted analyst, Financial Times columnist, and former speaker at our Stansberry Conference – put it, the 50-basis-point move higher by the Bank of England is a signal that the bank is "worried about the dynamics of price increases and, in particular, service sector inflation." We [talked yesterday about that]( being a story in the U.S., too. Federal Reserve Chair Jerome Powell said in testimony before the House of Representatives that a "softening" labor market would be the only thing that could kill those parts of the inflation data, because the "largest cost for most service companies is labor." That may be starting to happen. U.S. job openings have declined since the Fed started raising rates last year... and for the second straight week, new jobless claims in the U.S. came in at their highest level since November 2021 – to 264,000. Fewer folks (1.76 million) filed continuing unemployment claims, though. This suggests that people have been able to find new work, on balance. The scenario is not exclusive to the U.K. and U.S., either... Just today, the central banks of Norway, Switzerland, and even Turkey (which had bizarrely been cutting rates) announced rate hikes in their banking systems. Here is a neat chart from market analyst Charlie Bilello encapsulating the state of global central-bank policy... At least we're not Argentina... where interest rates are near 100% and inflation is above it. I recently met a doctor who left Argentina because of the hyperinflation there. He told me he once got in a taxi agreeing to pay one rate, and by the time he got out of the car, the payment was more expensive – not fun. And so the Fed will keep raising rates... We laid out the case from the central bank last week and mentioned it again yesterday. You can make valid arguments about how interest rates may not matter to certain parts of the economy as much, and you'd be right. And it's also worth pointing out discrepancies in the data about jobs and inflation and analysis used by central banks. But I am here today to tell you what they're talking about doing... what that could mean for the economy and markets... and what you may want to consider doing to prepare your portfolio to withstand or take advantage of whatever comes next. I'm not the only one. My colleague and Ten Stock Trader editor Greg Diamond recently passed along this note he sent to one of his subscribers, who wrote in asking what he thought about a scenario in which the Fed might cut rates later this year. In short, Greg's not buying it. As he wrote and mentioned during a recent in-person event here in Baltimore with Stansberry Alliance members and subscribers... I think it is absurd to think the Fed will cut rates. They screwed up with printing gazillions during/after COVID and didn't pull back the reins fast enough. They got "transitory" wrong and now have capped inflation from getting out of control. They cannot afford to cut rates at the risk of inflation getting out of control again. I don't see how they cut rates for years and the idea of quantitative easing seems strange to me as well. Now, this doesn't necessarily mean 'all bad' news for stocks... As you may remember, Greg notably called a market "bottom" last October. To him, the important thing is thinking differently than you did during the near-zero rate era of the past 15 years. The shock of higher rates happened last year as stocks and bonds and everything priced in dollars sold off. But we've seen the U.S. indexes rise this year as rates have gone up (with popular growth names leading the way), and even as the Fed has signaled the likelihood of two more rate hikes... to a fed-funds target range of 5.5% to 5.75% by the end of the year. That would take the benchmark Fed lending rate above 5.25% for the first time since 2006 and 2007. Two more rate hikes would also mean higher interest rates than each of the two previous rate cycle peaks (the one from '06 and '07 and the 2.5% level from 2019 that the Fed already eclipsed late last year). We've warned for more than a year that the market was overlooking the possibility that rate trends of the past several decades could keep reversing. If this continues, the next previous rate "peak" to take down during this interest-rate path would be a 6.5% fed-funds rate we had back in 2000. This is what a 'higher for longer' era looks like, but... Greg doesn't care about the "why" in his technical trading, but he does have a view about why stocks have been rising in this environment. It has to do with the other end of this monetary policy equation – inflation... What the market action is likely suggesting is that inflation levels are to remain elevated for some time. The COVID low was a generational low so inflation will remain between 2% or 4% or something like that. Yes, the [Fed] will raise their 2% goal and try and claim victory. That doesn't matter, the point is that the market is pricing in a new market environment of inflation coming down from a peak but not getting back to 0% to 2%. If you've been confused about why stocks may be going up against the financial "gravity" of higher interest rates, as the famed investor Warren Buffett once analogized, this is a good idea to consider. In effect, the stock market is saying, "At least we're not Argentina." Looking under the hood... Today was a generally down day for global markets and another "sideways" effort in the U.S. But since a low in March, the S&P 500 Index is up more than 13%... And going back to the October 2022 low – soon after inflation numbers showed a "peak" last summer – the U.S. benchmark has gained about 22%. And we're seeing more bullish indicators than bearish ones. The benchmark S&P 500 continues to trade above its long-term and short-term technical trends (their 200-day and 50-day moving averages, respectively) as it has since March. And about 54% of S&P 500 stocks trade above their long-term trends today. That is well above the 10% or so we saw back during stock market lows in September and October 2022, but well below the 90% or so we saw in late 2020 and the early half of 2021, which were peak bullish times. It's in the middle. As Stansberry Research senior analyst Matt McCall noted last week [in his free Daily Insight newsletter]( the S&P 500 has also recently broken above previous technical "resistance levels at 4,100 and 4,200" – which have been highs over the past year or so. As Matt said... And it has put in a series of higher highs and higher lows. That's the hallmark sign of a new uptrend. I won't get into the definitions of a bull market or bear market. To me, the oft-quoted 20% up or down threshold from previous highs or lows is as arbitrary as 18% or 24.7% or any other number. Plus, like an "official" recession, definition followers can't say for sure when a bull or bear market has begun or ended until after it's well underway. This doesn't do you any good if you're looking to stay ahead of trends. So, more importantly, we'll say this: The trend for U.S. stocks remains up, but it has been more of a drift higher than a rip-roaring charge ahead. That may be because inflation is sticky but generally slowing, as Greg suggests. For now, it seems Mr. Market doesn't care all that much that inflation might stay higher, for longer... and that interest rates will, too... But people living on Main Street surely do and will care as debt costs pile up and keep rising. One more note before we end things today... If you want to ask Dan Ferris or me any specific questions on the markets or anything else and hear your question on our weekly Stansberry Investor Hour podcast, now is your chance. We'll be recording a mailbag episode soon and plan to cover as many reader and listener questions or comments as we can. So, if you have an idea or question you're curious about or would like to see us cover, send a quick note to feedback@investorhour.com. And there are lots of ways that you can hear our answers. You can follow the Stansberry Investor Hour on [the "Media" page of StansberryResearch.com](... subscribe to [the Stansberry Research YouTube page](... visit [InvestorHour.com](... or type "Stansberry Investor Hour" into iTunes, Spotify, or wherever you get your podcasts and subscribe there to hear each episode. However you listen, Dan and I give our take each week on the latest happenings in the markets and welcome a guest from the world of finance and sometimes beyond. Vitaliy Katsenelson, the CEO of Denver-based firm IMA who presented at our Stansberry Conference last October, joined us this week. (Reminder: You can get ticket and presenter information for our 21st annual Stansberry Conference, which will take place in October in Las Vegas, [right here]( Vitaliy was born in Russia and wrote a great book, Soul in the Game, about his life and investing career. On our show, he shared his thoughts on his value-oriented philosophy... reviewed some specific parts of the market, including energy stocks... and also provided insight into his own conference, the vacation-style VALUEx Vail. Dan is attending that conference this week... and you'll hear some of his thoughts from that event on the next episode of the Investor Hour, as I plan to fire a few questions at him to see what he learned. Please send in your questions for us, too. --------------------------------------------------------------- Recommended Links: # [Until Midnight Tonight, Claim Six FREE Months of Marc Chaikin's NEW Release]( You can also claim one free year of his Power Gauge system, as well as FREE access to his new Portfolio Boost ($2,499 value). See where cash is going – BEFORE it gets there – for the chance to double your money over and over again. By midnight, [click here for the full details from a Wall Street legend](. --------------------------------------------------------------- # [Move Your Money Before June 23 (TOMORROW)]( More than 50% of the U.S. stock market is set to move before the market closes tomorrow – including Apple, Amazon, Tesla, Alphabet, and thousands of others. This major Wall Street event will send some stocks soaring... while slashing others up to 90%. Don't get blindsided – see what's coming and how to protect yourself immediately [right here](. --------------------------------------------------------------- New 52-week highs (as of 6/21/23): D.R. Horton (DHI), Dice Therapeutics (DICE), Comfort Systems USA (FIX), Innodata (INOD), iShares U.S. Home Construction Fund (ITB), Lennar (LEN), McCormick (MKC), MSA Safety (MSA), MasTec (MTZ), NVR (NVR), Parker-Hannifin (PH), PulteGroup (PHM), Construction Partners (ROAD), and Verisk Analytics (VRSK). In today's mailbag, thoughts on the Federal Reserve's tactics to "fight" inflation... As always, if you have a comment, question, observation, or anything else to discuss, send an e-mail to feedback@stansberryresearch.com. And, as I mentioned above, if you have anything you'd like to see Dan or me cover in our upcoming mailbag episode of the Stansberry Investor Hour, direct your notes to feedback@investorhour.com. "Somebody should issue a wakeup call to the Fed – and anyone else who believes raising interest rates will have a tremendous effect on unemployment. We do not have the major factory employment numbers we had 40 years ago. Now we count manufacturers as someone who employs more than five people. Really? "The Fed and a lot of people need to stop living in the past. COVID resulted in a lot of businesses being permanently shut down and employee downsizing that has not come back. COVID also resulted in more online ordering and service people needed. Cutting those jobs created would adversely affect businesses. It is no secret, except perhaps to the Fed, that we have a service-based economy – not the manufacturing of days long past. The policy of laying people off and hiring back who you need has long disappeared. "Raising interest rates affects a lot of pocketbook issues that only increase the need for higher wages and more inflation. Automation and digitization have improved quality and reduced the number of jobs that can be downsized. The Fed should stop raising rates and acknowledge the new reality. We have a capitalist system. Let market forces deal with it. Increasing consumer costs will not decrease inflation." – Paid-up subscriber Joe W. "So how does raising rates cool inflation when the cause of that inflation was a supply shock and not a demand surge? The kakistocracy in government and the central bank think the solution is to punish the little guy (kill demand) when the problems were caused by the kakistocracy in the first place with their crazy policies (lockdowns, money printing, green energy, wars, higher taxes etc.)." – Paid-up subscriber S.I. "Aloha, I am sorry to know that it is necessary to announce that a statement within the same paragraph, immediately following the sarcastic barb, is sarcasm. Surely the Stansberry audience is akamai enough to get it, but I realize that it only takes one humorless boob to take things seriously and cancel a subscription. Perhaps my Southeast Pennsylvania roots are betraying my impatience with those who don't enjoy and support sarcasm!" – Paid-up subscriber Karl H. Corey McLaughlin comment: Aloha, Karl. You are speaking my language, except for the Hawaiian part. That's without sarcasm. Not that you needed me to tell you that. All the best, Corey McLaughlin Baltimore, Maryland June 22, 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 1,212.5% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,046.4% Stansberry's Investment Advisory Porter ADP Automatic Data 10/09/08 796.2% Extreme Value Ferris wstETH Wrapped Staked Ethereum 02/21/20 634.1% Stansberry Innovations Report Wade HSY Hershey 12/07/07 627.0% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 517.1% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 500.4% Retirement Millionaire Doc AFG American Financial 10/12/12 398.7% Stansberry's Investment Advisory Porter TTD The Trade Desk 10/17/19 321.9% Stansberry Innovations Report Engel FSMEX Fidelity Sel Med 09/03/08 318.7% 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 Stansberry Innovations Report Engel/Wade 1 Extreme Value Ferris --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst wstETH Wrapped Staked Ethereum 12/07/18 1,500.1% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,076.7% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,022.4% Crypto Capital Wade MATIC/USD Polygon 02/25/21 800.4% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 698.3% 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 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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