[Superharged by Debt Crisis] How the Potential US Default Can Boost These Stocks

Also included inside, is an outlook on US stocks and their valuations. Picks from the Editor SPONSORED (Newsletter Continues Below) Sponsored [A 100% Win Rate In 2022… Over The Past 6 Years...]( The next 10 minutes could change your life. We’ve recorded a special sit-down interview with a reclusive millionaire who details how he’s closed out winning trade after winning trade throughout the volatility of 2022. In fact, he hasn’t closed a single losing trade since 2016. Sounds impossible? It’s not - and he’ll prove it to you. [Click to see this exclusive sit-down interview.]( [Privacy Policy/Disclosures]( U.S. Default Scenario: Windfall for These Stocks  Hi Traders,  In the words of Bob Dylan, "the times they are a-changin'" and no truer words could be spoken about the current state of the global financial landscape. There's a lot to digest, isn't there? And let's be real, it's not all sunshine and daisies. The good news? We're all in this together. And speaking of togetherness, I'd like to mention something that promises to be an incredible opportunity for us to pool our minds, experience, and strategies together in these unpredictable times. Get your calendars ready because I've got a date for you to mark. Starting June 5 at 9:00 AM, we're rolling out the Summer Market Summit, a must-attend event brought to you by the team here on Traders on Trend. This Summit isn’t just any gathering. We've wrangled a stellar lineup of 32 traders and stock market wizards, each bringing their unique perspectives, insights, and expertise to the table. [To join, all you have to is click this link!]( More information will be provided in the coming days, so stay tuned!  Moving on to our dose of daily stock market wisdom, imagine waking up to find your bank account frozen, with the grim realization that paying your bills might be a no-go. That is the state of affairs America finds itself in. Treasury Secretary Janet Yellen has pointed towards a deadline - June 1, which is barreling towards us with alarming speed. Here's the fun part: America's ability to borrow isn't in question if Congress can shake hands on the issuance of new debt to cover the bills that are already overdue. The drama lies in the possibility of reaching an agreement between the White House and the Republican-held House of Representatives. Spoiler alert: it's a nail-biter. The consequences of a default on the cards? Oh, believe me, they'd make a vampire movie look like a romantic comedy. The pain would be felt domestically, and ripples would undoubtedly spread across the globe, potentially redefining the landscape of international finance. Two consequences rise above the fog: a significant blow to foreign demand for U.S. Treasury securities and an enforced austerity on U.S. foreign security commitments. Before you take your hats off and let loose a long sigh, consider this: one potential outcome could be a winning bet on foreign defense stocks. Sure, the initial shock would cause panic, but once that subsides, these shares could be sporting a fresh glow. Over the past two decades, a series of tumultuous events – the 2008 financial crisis, the Treasury rating downgrade in 2011, the trade war with China, the Covid-19 pandemic – have rattled the world. Yet, through all this, foreign demand for Treasurys has stayed resilient. The reasoning is sound: the U.S. economy has outperformed most advanced economies, and crucially, the U.S. has consistently paid its bills. The scenery behind the scenes, however, has changed. China, formerly the primary foreign holder of Treasury securities, has pared down its holdings significantly. In its stead, countries like Japan, the U.K., and European nations have stepped up. Now, the U.S. finds itself in a unique position. While it previously profited from avoiding self-sabotage, the tables are threatening to turn. A potential outcome includes tighter restrictions on both defense and nondefense spending due to an unfriendly recession and a heavier burden on Washington, as investors worldwide would demand a higher premium to back Uncle Sam. U.S. allies, such as Japan and Germany, who've relaxed under the U.S. defense umbrella, might find themselves in a mad scramble. This could further boost a trend already set in motion by the recent Ukraine conflict. Take, for instance, major Japanese and European defense-related stocks like Mitsubishi Heavy Industries, the U.K.'s BAE Systems, and Italy's Leonardo S.p.A. These have already significantly outpaced U.S. defense bigwigs like Lockheed Martin, Raytheon Technologies, and Northrop Grumman over the last two years. A genuine U.S. default could cause palpitations in volatile regions in Asia and Europe, and joint European-Japanese projects, such as the Global Combat Air Program jet fighter, might find a gust of wind in their sails. In the meantime, the U.S. is playing a high-stakes game against the clock to negotiate a deal. This week, the markets could step in and influence the direction. But if that fails to happen, brace yourselves. A lot could change, both domestically and internationally. The coming days will definitely be nothing short of a financial cliffhanger.  Keep on keeping up!  John @ Traders on Trend  (In the next article: Stocks have risen much this year. Are they overpriced by now? Find out below! 👇) Sponsored [How To Extract Profits From Uncertain Markets]( The news wants to scream “doom and gloom” about the current market. Conditions feel uncertain – that’s the prevailing sentiment. But guess what? There’s NEVER any real certainty in the market. Reveal how you can take advantage of this current market.[The #1 Strategy For Uncertain Market Conditions]( By clicking link you are subscribing to The Investing Ideas Daily Newsletter and may receive up to 2 additional free bonus subscriptions. Unsubscribing is easy. [Privacy Policy/Disclosures]( Check the Free Presentation Today ☝ SPONSORED Price Check: Is the Stock Market Overpriced?  Alright folks, here's the deal. All signs are pointing towards a recession, but it seems like the stock market missed the memo. The Traders on Trend US Market Index is showing a cheeky 8.6% rise so far in 2023, and it’s gained a whopping 16.2% from the bear market low last October. That’s right, amidst a sea of doubt and the probability of a recession looming, our good old friend inflation is still dancing high. Now, Jim Masturzo, the maestro of multi-asset strategies at Research Affiliates, has something to say about this. He reckons that the U.S. equity market is like that fancy wine you’ve been eyeing at the store: looks great, but definitely overpriced. And in his opinion, this market hasn't gotten any cheaper since the year kicked off. Yet, somehow, it's holding up rather well, all things considered. There's no denying that some tech giants rebounding in 2023 have played their part in this. The likes of Apple and Alphabet have seen their stocks surge 35% and 39% respectively, and these increases have left a large footprint on the growth stocks. It’s a bit like watching your favorite superhero movie; they take the spotlight, leaving the rest to play catch-up. But plot twist! By our fair value estimate, stocks seem undervalued by around 9%, with value stocks looking like an absolute steal. It's almost as if the market is running a clearance sale on some items. Now, let's look at P/E Measures – that's price-to-earnings ratio for the uninitiated. It's a neat way to gauge investor confidence in companies, their willingness to shell out for earnings, and the risk they're ready to stomach.  (article continues below) Sponsored [How He Bagged One Of The Top Trading Records…]( A reclusive millionaire has been quietly racking up winning trade after winning trade. Despite avoiding most headlines, he’s become one of the most successful traders around - over the last 8 years, he’s banked a 97% win rate. How does he do it? He sat down for a rare interview where he revealed it all. [Click HERE to see how he’s done it…]( [Privacy Policy/Disclosures]( SPONSORED  🔼 Pay attention, this is worth your time! ☝  (article continues)  The P/E on the S&P 500, according to our friends at the Leuthold Group, is about 18 times earnings. This is a drop from a peak of 21 times back in January 2022, and is above the 15 times at the October 2022 lows. Now, if the October low does hold, it could be a historical moment as the priciest bear market low in the books. But Doug Ramsey, Leuthold’s chief investment officer, has a bit of a bone to pick with large-cap stocks. No bubbles here, but they're historically high, and aren't really prepared for even a mild recession. He's got this nifty little calculation that suggests the overall market is undervalued at a 9.3% discount to intrinsic valuations. And the ones who've tumbled from their pedestals, the mega-cap tech names, he believes it's time to scoop them up. Tech giants such as Microsoft, Apple, Meta Platforms, Alphabet, Amazon.com, and Nvidia have been outperforming, almost like they're the popular kids at school. But caution: their revenue growth has been slowing, and they aren’t immune to downturns. Now let's talk about value stocks. According to Sekera, they're like the last piece of cake at the party - severely underestimated and at a 15% discount, they are still deserving of some love. Same goes for the small-caps at a 27% discount. The stocks that have a bit of growth and value in them, are now underweighted. Lastly, let's take a peek outside the U.S. According to Masturzo, emerging markets are trading at a 50% discount to the U.S., and developed markets are trading at a 30% discount. So, there might be some global bargains up for grabs if you're willing to broaden your horizons. Amidst all the financial banter, one thing is clear: the markets are a mixed bag. Despite the gloomy prospect of a recession, the market is hanging on. Is this the calm before the storm or the dawn of an unexpected surge? Only time will tell. Until then, we keep an eye on the figures, grab the popcorn, and enjoy the show.  Disclaimer:  The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein.  Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.  Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, be equal to any corresponding indicated historical performance levels or be suitable for your portfolio.  Any investment results set forth in this document are not net of expenses and execution costs, nor do they account for other relevant trading or investment fees. 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