The Best Treatment for Negative 'Real' Yields

'Operation Warp Speed' moves in fits and starts... Expect more choppiness through November... The trend in stocks is up... What 'fake' money does to 'real' yields... The best treatment for negative 'real' yields...

'The vaccine is the thing'...

That was one of the key takeaways in Bank of America's latest monthly survey of hundreds of money managers and investors around the world.

Of course, this is just one set of Wall Street sentiment data... But we like to check in on this survey from time to time because it often provides a good glimpse into what institutional investors are thinking.

And right now, they're focused on a COVID-19 vaccine... Just over 41% of the 244 investors and Bank of America clients polled earlier this month say a "credible" vaccine will be the likely trigger for a return to a kind of economic "normal."

Specifically, these survey respondents said the world having a credible COVID-19 vaccine would lead to higher bond yields... you know, higher than zero. (Because right now, as we'll get into below, we're seeing negative "real" yields.)

The key word, though, in the question posed to these money managers is credible...

We've noted the concerning, to say the least, conflicts of interest and questions involved in this mixture of politics and science in this ongoing, rapid race for a vaccine.

We wrote how Moderna's (MRNA) role in "Operation Warp Speed" was a "double nightmare," in the August 31 Digest. And we raised the point that the candidate with the least amount of side effects would end up being the "winner" in the long run.

Trials are still ongoing, and the fact that the word "credible" needs to be attached to the question about a vaccine says something in itself.

But as Stansberry NewsWire editor and former Wall Street veteran C. Scott Garliss says all the time... This is the sort of stuff money managers watch and try to project six or nine months ahead. As a result, their buying and selling decisions show up in stock prices.

Today, depending on who you want to believe, we'll know if one or more vaccine candidates "work" by October or November... or sometime in the first quarter of 2021... or even later.

Just today, NewsWire analyst Nick Koziol noted that Moderna CEO Stéphane Bancel said in an interview on CNBC that the company could know whether its mRNA vaccine works by December in a "worst-case scenario." And as Nick continued...

This comes after Pfizer (PFE) CEO Albert Bourla confirmed that the company could have enough data from its late-stage trials by the end of October to prove its COVID-19 vaccine's effectiveness.

But if you ask us, the bigger point – and the one Wall Street investors are watching, which would influence stock prices – is when a vaccine could be widely available to most Americans... It will almost certainly take longer than a few months.

Our experts who track these things closely, like Stansberry Venture Technology editor Dave Lashmet and Retirement Millionaire and Income Intelligence editor Dr. David "Doc" Eifrig, expect a vaccine on Main Street much later in 2021, if not even longer than that.

In other words, we're still a long way from "normal."

In the very short term, we can expect more choppiness in the markets...

After a big August for the major U.S. indexes, we saw a pullback sandwiched around Labor Day. And as we wrote yesterday, it looks like key technical "support" levels are holding... suggesting the start of a new uptrend.

But that doesn't mean we should see a straight line up anytime soon...

Short-term concerns are still hanging over the market – from the uncertain timeline for a credible vaccine to the fast-approaching presidential election on November 3. And in a lot of cases, these issues are intertwined.

Because of all the uncertainty out there, our colleague and Ten Stock Trader editor Greg Diamond detailed to his subscribers this morning that his "biggest concern is a drawn-out correction/choppy price action into the election." As Greg wrote...

In other words, a drop into next week, rally, another drop, etc. What this means is to take short-term trades when you get them and not get too aggressive in either direction.

Greg doesn't believe the market is likely to make a huge move up or down before the election. But as he continued...

That doesn't mean we can't make money. We'll worry about a bigger correction later. In the short term, I'm going to focus on spots to buy.

Looking at a longer-term outlook, as we've said here over the past few months and as DailyWealth editor Steve Sjuggerud said earlier today, it's similarly a good time to own stocks. From this morning's DailyWealth...

The trend is in our favor. The Federal Reserve is pumping trillions of dollars into the system. And investors are excited.

That's a recipe for a boom in stock prices. It's already happening... And if you don't get on board now, the opportunity will pass you by.

The Fed backstop – you could call it the "Powell Asset Bubble" – is still in play. That's good for stock prices today. But at the same time, it's "bad" for other types of investments...

'Real' yields continue to nosedive...

We wrote yesterday that the Fed is bent on keeping its benchmark federal-funds rate near zero for "the foreseeable future." That could mean up to a few years or more... Coming out of the last recession of 2008 and 2009, the Fed kept rates at zero for seven years.

The circumstances of this recession are different – for one, we have a clear catalyst for this recession with the COVID-19 pandemic – but the effects of an economic slowdown are still the same of "easy money" policy. And in short, "real" yields continue to plummet today...

Real yields take inflation into consideration. The real yield on the 10-year U.S. Treasury note sits around -1% today. That means if you buy today, your money won't maintain its purchasing power over the next decade.

And this reality – as the Fed says it's OK with inflation riding north of 2% in the months and years ahead – can eat away significantly at any safe, cash or cash-like investments. As Doc wrote to Income Intelligence subscribers in his latest issue today...

Many retirees rely on the safety of government bonds. They typically won't return as much as stocks or corporate bonds, but they're safe. And late in your retirement, you want safe, plus a little income. If you're a retiree and you're relying on government bonds, it may be time to rethink your strategy.

The Fed already signaled that it doesn't plan on raising rates any time soon. And it also said it wouldn't step in to stop inflation. That means it may be time to move your money out of government bonds and into an asset that can, at the very least, beat inflation.

As Doc wrote to subscribers...

We've been concerned about the possibility of inflation lately, given the zero-rate world we're in and with central banks printing money at an alarming rate. It makes sense that hard assets like gold and silver would do well...

Personal income continues to rise and the unemployment picture is slowly getting better. You need to own something to hedge inflation.

We've suggested allocating to "hard assets" like real estate, gold, and bitcoin (which is the "hardest asset," our colleague Dan Ferris says) in the Digest over the past several months.

You're doing yourself and your money a disservice if you're not seeking out investments that can help your portfolio beat inflation.

Last week, we pointed out the little-known opportunities to make 8% in interest on so-called "stablecoins" in the cryptocurrency space. You can read more about that right here.

And it goes without saying (to us) that the income-producing investments that Doc recommends to his Income Intelligence subscribers – designed to outperform regular old low-yield assets – should also be considered by every investor today who might otherwise park money in cash.

I (Corey McLaughlin) am fortunate to work closely on Doc's products in my role at Stansberry Research... And over the past several months, Doc and his research team have brought subscribers a variety of interesting and income-producing assets that are fit for an inflationary market.

They've recommended a pair of specialty real estate investment trusts that fall into the category of "hidden gems right under our noses"... And this month, Doc turned his attention to a luxury retailer that's a perfect fit for a post-recession world.

If you don't already subscribe to Doc's Income Intelligence newsletter, we urge you to give it a try... especially if you're concerned about the value of your nest egg keeping up with rising inflation today. Learn how you can get started with a 30-day trial right here.

The Cost of a 'Trade Divorce'

After President Trump declared it's time to end American reliance on foreign trading partners, True Wealth Opportunities: China analyst Brian Tycangco discusses the potential cost of a divorce...

Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and follow us on Facebook, Instagram, and Twitter.

Speaking of China... if you haven't done so already, don't forget to check out Brian's brand-new presentation about the "Next Chinas" of the investing world.

Brian believes the unstoppable opportunity in these emerging markets could lead to potential quadruple-digit gains in the next three to five years. And he has identified three investments you can make today to catch the biggest upside. Get started right here.

New 52-week highs (as of 9/16/20): Almaden Minerals (AAU), Autohome (ATHM), Fortuna Silver Mines (FSM), Gravity (GRVY), Innovative Industrial Properties (IIPR), McDonald's (MCD), New Pacific Metals (NUPMF), Osisko Gold Royalties (OR), and Belo Sun Mining (VNNHF).

In today's mailbag, we accept a "dare" based off Tuesday's Digest. As always, we welcome your thoughts and comments. Let us know what you think with an e-mail to feedback@stansberryresearch.com.

"Here's some feedback for you guys. First, I'd like to say that your Digest has gone substantially downhill ever since Porter no longer writes them. (Dan Ferris is the only exception.)

"I am sick and tired if your constant support of investment in China. F*#% China. The CCP is responsible for the current global pandemic and are complicit in forced labor, forced sterilization and organ harvesting of its citizens without anesthesia. I wouldn't be surprised if you f*#kers would have recommended investment in Nazi art collections during WW2. I dare you a*#holes to print this email in its entirety." – Paid-up subscriber Vince W.

Corey McLaughlin comment: Challenge accepted, Vince!

You may be surprised to learn that we love this note. It's one of our favorite e-mails we've received all year. It raises an important idea about our business...

We're not going to go through all your thoughts on China point by point. We'll stipulate that the Chinese Communist Party is not stacked with a bunch of sweethearts... You could add the internment of the Uyghurs and incursions into Hong Kong's autonomy to your list. (And we're not going anywhere near your Nazi analogy.)

Here's the thing, though... If your view of China's government makes holding these stocks abhorrent to you – don't do it.

We share investment ideas to give you all the information we believe you need to make informed decisions about your wealth. But that's the key... they are your own decisions.

It's not our job to make moral decisions for you or any other subscriber.

No two subscribers share exactly the same values and priorities. You can find plenty of readers who were turned off by our recommendations of cigarette companies... gun makers... sport-betting stocks... oil companies... and big global liquor providers.

We've taken flak for recommending Walmart (WMT) because it's "destroying Main Street"... and McDonald's (MCD) because it's "making kids obese." Our recommendation of Monsanto – whose products included genetically modified seeds – generated more critical feedback than almost any other idea of ours.

If we tried to avoid recommendations that raised the moral objections of our subscribers, half of the S&P 500 Index would be off our list.

Our job is to identify the best opportunities for individual investors and give you the best research available on those ideas. Period.

And today, China represents a huge opportunity...

It's the second-largest economy in the world, growing at a breakneck pace. And its companies are spreading their reach and finding eager customers across the globe.

We're proud to say, no one has done more work ferreting out the best Chinese stocks than our colleague Dr. Steve Sjuggerud.

His results in True Wealth Opportunities: China speak for themselves... It's been among our best-performing newsletters since its 2016 inception. It has gotten an A+ (or better) in every Report Card since we launched it. As of the last Report Card, the stocks Steve has recommended had produced an average gain of more than 20%... One open position in the model portfolio is currently up more than 220%, while another is up 164%.

We wouldn't be doing our jobs if we simply ignored these opportunities because some subscribers object to China's geopolitical behavior.

But again, if investments in China are off the table for you... that's your choice.

We wouldn't try to talk you out of that position. You don't have to use – or even agree with – everything we write. We have plenty of other investment ideas that will help you profit. (And remember, the majority of these companies are based here in the U.S.)

The floor, as always, is open to all. Let us know what you think at feedback@stansberryresearch.com.

All the best,

Corey McLaughlin
Baltimore, Maryland
September 17, 2020