Recapping Jerome Powell's Jackson Hole speech... The Fed is going to cut rates... Remember the 'why'... Volatility fuel... The central bank is already wrong... Be careful buying a ticket for this ship...
 Today was 'mixed,' at best, for stocks...
The benchmark S&P 500 Index was down 0.3% and the tech-heavy Nasdaq Composite Index finished roughly 1% lower. The Dow Jones Industrial Average was a touch higher, and the small-cap Russell 2000 Index was nearly flat. But there's little room for market bulls to complain about today's performance after Friday... After Federal Reserve Chair Jerome Powell's policy speech in Jackson Hole, Wyoming, the S&P 500 moved more than 1% higher, reclaimed all of its losses from a down session the day before, and finished the week positive. As most investors suspected, Powell set the stage for the central bank to start "cutting rates" at its next meeting in September. The 'juice' is coming back... Powell used nearly the exact words I (Corey McLaughlin) wrote in last Thursday's edition about what investors were expecting... The time has come for policy to adjust. It has been a while. The last time the Fed made a policy move was when it raised rates to current levels in July 2023. The last time the central bank lowered rates was in 2020. It started hiking rates in March 2022. Now, Fed "juice" – a lower cost of borrowing – is returning to the U.S. economy for better or worse. Practically, this means the Fed is about to lower its target federal-funds rate range for overnight lending between banks. The central bank doesn't raise or lower rates with a switch, but suggests a rate range to banks that make up the "system." This move then trickles through the economy via changes to heavily rate-sensitive things like mortgages, credit cards, or corporate bonds... usually spurring economic activity. This all sounds good to many investors, for now. But don't forget about the 'why'... The open question now – and what could move markets in the months ahead and into 2025 – is how large the rate cuts will be. As Powell said on Friday... The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks. Specifically, Mr. Market is wondering if the Fed will cut rates by a relatively small 25 basis-point amount at its upcoming meeting, or by a larger 50 basis-point amount. Whether you think the Fed will cut rates by a smaller or larger amount likely depends on whether you think the economy is still due for a "hard" or "soft" landing following everything we've seen over the past few years. I'm talking about the 2020 pandemic and response... 40-year-high inflation... interest rates going from near zero to above 5% in a relatively short time to "fight" inflation... to today's struggling economy. Investors are now closely monitoring the unemployment rate and other economic indicators, with signs of recession flashing lately. The most recent unemployment rate, covering July, was 4.3%, up from 3.5% in July 2023. 'Bad news' could be more bad news for stocks… A quicker or greater pace of job market weakening could lead to more significant Fed rate cuts, but also jolt the stock market. As we just saw a few weeks ago, after the last jobs number, unexpected "bad news" for the economy was viewed as bad news for stocks. This scenario is unlike the market environment over much of the past two years, when weakening in the economy (what the Fed wanted to "fight" inflation) was viewed as a "good" thing by Wall Street because it meant the Fed would be more likely to cut rates. Now, we're there. Powell, right or wrong, says inflation has been licked and the Fed will now do "everything we can to support a strong labor market as we make further progress toward price stability." We're going to have it all, he says. So what's next? Barring a completely stunning unemployment rate for this month (which will be published on September 6), probably a 25 basis-point cut. Fed-funds futures traders have put 70% odds on it versus the 50 basis-point alternative. An 'emergency' consideration... Here's one plausible – although unlikely – scenario... The economic data – namely the unemployment rate – could deteriorate to a point where Powell & co. feel pressure to announce an "emergency" rate cut in between one of its regularly scheduled meetings in September, November, and December. If such an "emergency" move happened, stocks would likely tumble, since it would signal an economy in more trouble than previously thought. We last saw something similar in March 2020 when many investors panicked about all the uncertainties over the onset of the COVID-19 pandemic. After the Fed announced rate cuts to near zero in early March 2020, the market plummeted before finally bottoming around mid-March when the Fed came up with a laundry list of new "lending facilities" to stop the credit market – and market in general – from freezing up. But we could see volatility either way... Even an economy "just" worsening more than previously expected could have a similar effect. Wavering expectations and a "data dependent" Fed could cause volatility in the months ahead... the kind that our friend and colleague, Ten Stock Trader editor Greg Diamond, is talking about right now. That's why Greg is sharing a free presentation tomorrow with more details about his market outlook heading into November's election, the potential "surprise" he sees, and how he plans to trade through this period. Click here to register now and make sure you don't miss anything. And don't forget recession and labor-market worries... You might remember folks on CNBC and elsewhere panicked a few weeks ago over a potential recession. They were calling for immediate interest-rate cuts after Uncle Sam's latest "nonfarm payrolls" report for July was published. The reading triggered the so-called Sahm rule, a measure of employment-rate change linked to past recessions. The next monthly jobs report covering August comes out next Friday. Take note of the date, because "everyone" seems to have forgotten the mini panic of a few weeks ago. Or, if they're like Powell, they're just ignoring it... Much of Powell's speech on Friday sounded like a mix of a misguided victory lap and a hollow eulogy for inflation. He said everything but "mission accomplished" and apparently thinks there's little risk for high inflation to continue while cheering that unemployment hasn't spiked. Among other things, Powell said... How did inflation fall without a sharp rise in unemployment...? He is also sending mixed messages about unemployment. Has he not seen the unemployment rate rising uninterrupted for the past four months and trending higher since the summer of 2023? Clearly, he has. Or does he think unemployment will just stop rising now that the Fed said it will "lower rates"? Doesn't he still believe in "long and variable lags" of policy? Surely, he does. Otherwise, why is the Fed willing to do "everything we can" to support the job market? Why do that if you're not concerned? This smells like the Fed trying to spin another story... or Powell is ignorant of central-bank history, which is precisely why it has repeated itself for decades. As we've written several times, the Fed has historically grossly underestimated how high unemployment can rise when recessions occur. And the unemployment rate is already greater than what the Fed members projected just two months ago. In its most recent quarterly economic projections in June, the Fed said the unemployment rate by the end of 2024 would be 4%, and it projected a 4.2% rate by the end of 2025. With unemployment at 4.3%, it already undershot... Powell is saying "it's fine" when a greasy fire is burning in the basement. Maybe he thinks we can put it out with some water. "Don't fight the Fed" is a saying for good reason, but you also don't want to get unintentionally burned by the Fed either. When it comes to rate cuts, it might be worth thinking about whether we're in a "buy the rumor, sell the news" moment... until the central bank adjusts to reality. We've seen this story before... The worst part of Powell's whole speech may be the fact that he didn't even come close to acknowledging the central bank and Congress' role in creating the 40-year high inflation rate in the first place amid the pandemic. In fact, he did the opposite... justifying the Fed's horrible "transitory" take on inflation back in 2021, which we said was wrong for nearly a year before the central bank adjusted to reality. Powell said... The good ship Transitory was a crowded one, with most mainstream analysts and advanced-economy central bankers on board. So be careful – and skeptical – of following the Fed. The good ship "Transitory" is somewhere at the bottom of the Atlantic Ocean and many lives were lost, but somehow the captain and crew got very well-paying jobs from the same operator of a new boat: the "Soft Landing." It could reach its next port, but think for yourself before buying a ticket, especially without insurance. | | | | Three Technical Signals to Watch In this week's Diamond's Edge video, Greg Diamond details three technical signals he's watching right now, discusses Nvidia's upcoming earnings report, the Fed's decisions, and more... As a Digest reader, you get the first look at Greg's new Diamond's Edge video each Monday.
For more free videos, check out our YouTube page... And if you're interested in more research and analysis from Greg, click here to catch a free presentation from him tomorrow on the "surprise" that could be in store for the market this election season... | | | | | New 52-week highs (as of 8/23/24): AbbVie (ABBV), Automatic Data Processing (ADP), Agnico Eagle Mines (AEM), Altius Minerals (ALS.TO), Berkshire Hathaway (BRK-B), Colgate-Palmolive (CL), Compass (COMP), Cintas (CTAS), Dimensional International Small Cap Value Fund (DISV), Direxion Daily Real Estate Bull 3X Shares (DRN), Fidelity National Financial (FNF), Intercontinental Exchange (ICE), iShares U.S. Aerospace & Defense Fund (ITA), Nuveen Preferred & Income Opportunities Fund (JPC), JPMorgan Chase (JPM), Kellanova (K), Coca-Cola (KO), London Stock Exchange Group (LNSTY), Medtronic (MDT), MainStay CBRE Global Infrastructure Megatrends Term Fund (MEGI), Altria (MO), VanEck Morningstar Wide Moat Fund (MOAT), Motorola Solutions (MSI), Newmont (NEM), NVR (NVR), Novartis (NVS), Omega Healthcare Investors (OHI), Pembina Pipeline (PBA), Planet Fitness (PLNT), Ryder System (R), Regeneron Pharmaceuticals (REGN), Royal Gold (RGLD), RenaissanceRe (RNR), Construction Partners (ROAD), Sherwin-Williams (SHW), iShares 1-3 Year Treasury Bond Fund (SHY), S&P Global (SPGI), SPDR Portfolio S&P 500 Value Fund (SPYV), Torex Gold Resources (TORXF), Texas Pacific Land (TPL), Trane Technologies (TT), The Trade Desk (TTD), Texas Instruments (TXN), ProShares Ultra Financials (UYG), Victory Capital (VCTR), Veralto (VLTO), Vanguard Short-Term Inflation-Protected Securities (VTIP), Consumer Staples Select Sector SPDR Fund (XLP), Utilities Select Sector SPDR Fund (XLU), Health Care Select Sector SPDR Fund (XLV), and Zebra Technologies (ZBRA). In today's mailbag, more feedback on the upcoming election, the economy, and the Fed... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "To think that ANY politician is going to institute some miracle policy to reduce inflation is laughable. And if that is the sole reason someone is going to vote, they are going to be sadly mistaken about the outcome. For example, price caps and controls on anything never works and giving $25K to prospective home buyers is a disguise in a different way to what happened in the early 2000's, placing people into homes that they can't afford to keep in the first place leading to massive foreclosures. "Voters should vote for their respective candidate on how they are going to resolve issues of which they have some meaningful control of the outcome, otherwise stop wasting their energy on a candidate that thinks they have all the answers and focus on, like you say, protecting your wealth and ignoring all of the white noise." – Subscriber Larry H. "'Ruh-roh'. Nice line, Corey! I think that describes the Fed quite well. We have a group of Scooby Doo's running the Fed and the government!" – Subscriber Larry N. Corey McLaughlin comment: Larry, funny, thanks. That was an unintentional connection, but probably subconscious. All the best, Corey McLaughlin
Baltimore, Maryland
August 26, 2024
Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios. Returns represent the total return from the initial recommendation. | Investment | Buy Date | Return | Publication | Analyst | MSFT
Microsoft | 11/11/10 | 1,368.3% | Retirement Millionaire | Doc | MSFT
Microsoft | 02/10/12 | 1,328.9% | Stansberry's Investment Advisory | Porter | ADP
Automatic Data Processing | 10/09/08 | 974.6% | Extreme Value | Ferris | WRB
W.R. Berkley | 03/16/12 | 804.3% | Stansberry's Investment Advisory | Porter | BRK.B
Berkshire Hathaway | 04/01/09 | 703.9% | Retirement Millionaire | Doc | HSY
Hershey | 12/07/07 | 488.7% | Stansberry's Investment Advisory | Porter | TT
Trane Technologies | 04/12/18 | 463.3% | Retirement Millionaire | Doc | AFG
American Financial | 10/12/12 | 458.6% | Stansberry's Investment Advisory | Porter | NVO
Novo Nordisk | 12/05/19 | 396.3% | Stansberry's Investment Advisory | Gula | TTD
The Trade Desk | 10/17/19 | 392.7% | 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 | 1,604.2% | Crypto Capital | Wade | ONE/USD
Harmony | 12/16/19 | 1,143.5% | Crypto Capital | Wade | MATIC/USD
Polygon | 02/25/21 | 764.2% | Crypto Capital | Wade | AGI/USD
Delysium AI | 01/16/24 | 283.0% | 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 | | 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 | | 
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