The Market Likes Inflation (For Now)

Prices keep rising... Mr. Market likes it... We've seen this before... A big bitcoin bet... Some MicroStrategy insiders are selling... No one's buying... Beware a 'meme stock' revival... Apparently, most investors aren't all that concerned with high(er) inflation these days... That's what I (Corey McLaughlin) can take today from the market's reaction to the latest […]

Delivering World-Class Financial Research Since 1999 Prices keep rising... Mr. Market likes it... We've seen this before... A big bitcoin bet... Some MicroStrategy insiders are selling... No one's buying... Beware a 'meme stock' revival... Apparently, most investors aren't all that concerned with high(er) inflation these days... That's what I (Corey McLaughlin) can take today from the market's reaction to the latest inflation report from Uncle Sam this morning... The consumer price index ("CPI") for November increased 0.3% for the month, its highest pace since April, and 2.7% year over year. That's well above pace for the Federal Reserve's supposed 2% goal for an annual inflation rate. This data, combined with other stats from October that we've discussed in previous editions, shows inflation has most recently been on a pace closer to 4% than 2%. The mainstream view, though, is that this trend will somehow resolve itself. Here's CNBC today... Much of the November increase in the CPI came from shelter costs, which rose 0.3% and have been one of the most stubborn components of inflation. Fed officials and many economists expect housing-related inflation to ease as new rental leases are negotiated, but the item has continued to increase each month. We've heard this story before... I will start back in 2020. That's when policymakers didn't seem to give a second thought about how "unprecedented" trillions of dollars in monetary and fiscal stimulus in response to the pandemic just might lead to higher prices in the economy... In 2021, even as inflation numbers were rising, Fed Chair Jerome Powell declared the trend "transitory"... In 2022, it was widely believed that a rapid pace of rate increases was going kill 40-year-high inflation relatively quickly and lead to a Fed "pivot" – which never came. All we got were several bear market rallies that went bust until that October... Finally, the pace of inflation started slowing down. But then, by this summer, Powell was acknowledging that in the best-case scenario, inflation would likely settle "between 2% and 2.5%" by 2025. We hope inflation doesn't get totally out of hand again. But hope isn't a strategy. Rents and home prices have soared over the past four years. And, most recently, mortgage rates have increased since the Fed started cutting interest rates in September. Yet the central bank has remained steadfast in its rate-cutting plans to find a "neutral" policy stance. You could also describe that as juicing the economy. After today's report, federal-funds futures traders boosted their odds of another 25-basis-point rate cut this year to around 95%. And enough investors believe this is good... We've got high(er) inflation again and the market expects more help from the Fed. Is this 2021 all over again – the days of a blistering pandemic bull run... before all the fun ended in 2022 once the central bank finally acknowledged inflation was a problem (and raised rates in an effort to cool it)? Perhaps. Fed-funds futures traders are pricing in fewer rate cuts in 2025 than they did previously, though they still expect multiple rounds of cuts next year. As we wrote about last week, the Fed's stance might (or should) change from "easing" to at least something considered "neutral." And if or when it does, it could lead to a shift in market sentiment. Until then, though, Mr. Market says all's well – on the surface at least. Today, the major U.S. indexes were mostly higher. The tech-heavy Nasdaq Composite Index led the way, up 1.8% to a new all-time high. The benchmark S&P 500 Index closed 0.8% higher, and the Russell 2000 Index was up 0.5%, though the Dow Jones Industrial Average was down 0.2%. Gold also rose... And bitcoin, after trading below $100,000 for the past few days, cracked above the psychological milestone once again as cryptocurrency sentiment remains at "greedy" historical values. Speaking of that... One company's big bitcoin bet is paying off (for insiders)... We've mentioned MicroStrategy (MSTR) a couple times in the Digest this year... This is a software company that converted itself into a bitcoin play. Michael Saylor, the software company's chairman and co-founder, famously began adding bitcoin to its balance sheet in 2020. By now, it owns more than 400,000 bitcoin. That puts it as the third-largest single owner, behind only bitcoin creator Satoshi Nakamoto and crypto-trading platform Binance, according to Bloomberg. As a result, the stock has turned into a proxy for bitcoin. And it's now a favorite among retail investors and traders. Saylor even went on a livestream with Barstool Sports founder Dave "Davey Day Trader" Portnoy to explain the bitcoin thesis. Saylor talked about why MicroStrategy is such an important "bridge" between capital markets and the crypto economy. From the livestream... So, there's a lot of investors in the world that aren't allowed to buy bitcoin. Like in the U.K., they won't let you buy bitcoin in your retirement account. So, you need to buy a company, a security... There's hundreds of trillions of dollars of money, some of it with professional money managers. They're not allowed to buy bitcoin. They're allowed to buy a bitcoin company. So MicroStrategy, through its own purchase of bitcoin, opens itself up as an avenue for these investors to gain crypto exposure. And it's working... The two assets have been tightly correlated over the past few years. But MicroStrategy has far outperformed bitcoin since it began buying bitcoin in July 2020. Just look at how the two have traded (noting that we've plotted the two assets on different scales)... And now, the company's largest shareholders are taking profits off the table... In November, insiders sold more than $61 million worth of MicroStrategy shares. That came at a time when the stock more than doubled from November 4 to its peak on November 20. It's not the only time we've seen MicroStrategy insiders take advantage of retail interest in the company's stock. In the first four months of the year, with shares jumping nearly 70% through the end of April, insiders sold more than $480 million in stock (the red bars in the chart)... Insiders can sell stock for a variety of reasons. That can be things like tax planning, pre-scheduled sales, and even personal expenses. So it's not always a perfect predictor of insider sentiment and the stock outlook, or the "top." But it still shows that the folks who know MicroStrategy's business better than everyone are taking profits when the stock soars. Insider sales, but no buys... As our colleague Dan Ferris wrote in the October 18 Digest, insider buying can be a much better indicator of how insiders feel about the company... [Government] filings about insider buying are a bullish sign. It means insiders believe the business is a great investment and that the stock price will rise. And they're not just saying it on a rosy conference call... but putting their own wealth on the line. While MicroStrategy insiders have racked up $578 million in share sales this year, they have made zero purchases, according to data from FinViz. Zero. They're not even taking advantage of stock dips. It's another sign that insiders are willing to pass on the risk to retail investors with many stocks running rampant... and a reminder to be careful about taking outsized short-term risks in today's market. Checking in on another retail favorite... Here's another example of the current atmosphere... GameStop (GME) is back in the news. Last week, meme-stock trader Roaring Kitty posted on his X social media account for the first time in months. Roaring Kitty, whose real name is Keith Gill, gained a following for his bullish case on the video-game retailer during the meme-stock bubble in 2021. In this latest post, Gill didn't even mention GameStop. He simply shared a picture resembling a Time magazine cover from 2006 with a computer screen. But that was still enough to send GME shares shooting higher and get them halted on volatility last Thursday. Last night, GameStop actually reported that it flipped to a profit in the third quarter, though its revenue dropped 20%. The stock was up almost 8% today. But don't fall for another meme-stock rally... As we've said, a lot of stocks are already trading at expensive valuations, and certain ones are showing signs of speculative froth that's disjoined from reality and their quality... GameStop's revenue has been in a steep downtrend since peaking back in 2012. The underlying business is in decline. There are a lot of better places you could put new money to work. For example, yesterday, I talked more about the "Mar-a-Lago man" – Brad Thomas, the founder of our corporate affiliate Wide Moat Research... And I discussed that while he's an expert in real estate, he also uses the insights he has learned over the years (about which companies make good tenants) to pick the stocks of great businesses, too. And just a few days ago, he told his readers to stay far away from a company like GameStop. In his free daily e-letter on Monday, Brad wrote that the company is "not worth your time or money." If you're looking for a good one, for starters, our Stansberry's Investment Advisory team just published a comprehensive portfolio review of key positions in the model portfolio, including a number of recommendations that are still attractive buys today. And stay tuned, as always, to your other favorite publications from our editors and analysts for more recommendations and insight. As we've discussed here the past few days, Brad also recently went live with a new free presentation. He shared an opportunity in an overlooked group of stocks that he says represents "the most wildly asymmetrical market opportunity today." Today is the last day you can view Brad's presentation with the full details and get access to a free bonus that he has been sharing. So if you haven't already, we urge you to check it out right here. Charitable Giving, the Efficient Way The holiday season inspires generosity, but are you giving in a way that aligns with your financial goals? Our friends at Stansberry Asset Management ("SAM") are hosting a webinar on Thursday about exactly that: how to charitably give in the most tax-efficient way. Join Certified Financial Planner Chris Gilmor, senior wealth manager at SAM, as he shares practical strategies for giving, from appreciated assets to donor-advised funds... ways to maximize the impact of your contributions... and how to build a legacy while supporting the causes you care about. The webinar begins at 1 p.m. Eastern time tomorrow, December 12. Don't miss this opportunity to turn giving into a meaningful part of your financial journey. Register here now. Even if you can't join live, SAM will send you the recording. SAM is a U.S. Securities and Exchange Commission-registered investment adviser that is completely separate from our Stansberry Research publishing business. But it uses our research, plus other sources, to help manage individual client's portfolios. Recommended Links: 'The No. 1 Opportunity of My Life: 500% Upside as a Landlord to Billionaires' He's an investor and former economic adviser to the president-elect who lost everything 17 years ago, then rebuilt an eight-figure fortune far faster than he ever imagined possible. Along the way, he developed a network of multimillionaires and billionaires like the late Sam Zell, Kyle Bass, and more. Today, he'll show you the strange places billionaires keep some of their most prized assets. Plus, he'll share the ONE move to make before 2025 that could set your wealth up to benefit as a new administration takes office. Click here to learn more (expires at midnight tonight). What Are These Billionaire Investors Afraid Of? Billionaires Warren Buffett, Stanley Druckenmiller, George Soros, and David Tepper have all sold off massive U.S. stock positions, including shares of Nvidia, Apple, and Bank of America. Billionaire Ray Dalio, who runs one of the world's most successful hedge funds, says, "Things are going to get worse for our economy." What are these billionaires so worried about? Click here to see why experts and insiders may be preparing for the biggest financial crisis of the last 200 years. New 52-week highs (as of 12/10/24): AutoZone (AZO), Alpha Architect 1-3 Month Box Fund (BOXX), Costco Wholesale (COST), United States Commodity Index Fund (USCI), and Westlake Chemical Partners (WLKP). A quiet mailbag today... As always, send your comments and questions to feedback@stansberryresearch.com. All the best, Corey McLaughlin and Nick Koziol Baltimore, Maryland December 11, 2024 Disclosure: Stansberry Asset Management ("SAM") is a Registered Investment Adviser with the United States Securities and Exchange Commission. File number: 801-107061. Such registration does not imply any level of skill or training. Under no circumstances should this report or any information herein be construed as investment advice, or as an offer to sell or the solicitation of an offer to buy any securities or other financial instruments. For more information on SAM, please visit here. Stansberry & Associates Investment Research, LLC ("Stansberry Research") is not a current client or investor of SAM. SAM provides cash compensation to Stansberry Research for Stansberry Research's advisory client solicitation services for the benefit of SAM. Material conflicts of interest may exist due to Stansberry Research's economic interest in soliciting clients for SAM. Certain Stansberry Research personnel may also have limited rights and interests relating to one or more parent entities of SAM. For important information about Stansberry Research's relationship with SAM, click here. 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 1,419.6% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,417.8% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 1,086.1% Extreme Value Ferris BRK.B Berkshire Hathaway 04/01/09 720.0% Retirement Millionaire Doc WRB W.R. Berkley 03/15/12 544.3% Stansberry's Investment Advisory Porter TT Trane Technologies 04/12/18 533.9% Retirement Millionaire Doc AFG American Financial 10/11/12 491.2% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 469.5% Stansberry's Investment Advisory Porter SFM Sprouts Farmers Market 04/08/21 465.5% Extreme Value Ferris TTD The Trade Desk 10/17/19 461.4% 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 4 Stansberry's Investment Advisory Porter 3 Retirement Millionaire Doc 2 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 BTC/USD Bitcoin 11/27/18 2,471.6% Crypto Capital Wade wstETH Wrapped Staked Ethereum 12/07/18 2,291.8% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,395.9% Crypto Capital Wade POL/USD Polygon 02/25/21 775.5% Crypto Capital Wade VET/USD VeChain 05/17/19 496.0% 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 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 edwardlorilla1986.paxforex@blogger.com. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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