Time for a Pause in the 'Death of Retail'
Time for a pause in the 'death of retail'... Investors are shorting 'brick-and-mortar' like never before... More good news for Bristol-Myers and its blockbuster cancer drug... How to profit from the rise of the global middle class... Your chance to become a charter member of International Capitalist ends soon...
Time for a pause in the 'death of retail'...
Regular Digest readers know we believe the demise of traditional retail – and the continued rise of e-commerce – is one of the surest trends in the world today. As Porter explained in the August 18 Digest...
I have no doubt that within 10 years, more than half of the retail space in America will no longer exist. And that's probably too conservative an estimate. The destruction in retail is likely to be far worse and occur far faster, like a 75% decline within five years.
My family doesn't shop in stores anymore at all...
We buy everything – groceries, clothes, cars, toys, tools, services – absolutely everything online. I won't go into stores anymore. Not even for a pack of gum. Wegmans will bring me gum along with all my groceries within hours, and the workers stack them all neatly for me in my garage. They even put the food and drinks into my fridge for me.
The rest of the country is right behind me, walking away from the mall and from Target (TGT), too. Nevertheless, most people don't understand just how big of a change this will be for the U.S. economy.
But even the strongest trends don't follow a straight-line path...
They move in fits and starts... and they experience brief pauses and often violent corrections. We could be approaching one of these periods in the brick-and-mortar retail sector now.
As you can see in the following chart, multi-line retailers – the most troubled of the bunch, including department stores and other non-specialty retailers – have been a one-way bet of late. They've plunged nearly 50% over the last few years, and more than 30% this year alone...
But notice the light blue line...
It shows short interest, a measure of how bearish investors are toward these stocks. It is expressed as a percentage of "float," or how many shares are actually available for trading in the market.
As you can see, short interest has more than doubled, from around 12% of float early this year to more than 25% today. This is higher than the previous peak of a little more than 20% in late 2008.
In other words, investors are more bearish on retailers today than they were during the peak of the financial crisis.
Of course, this doesn't mean a retail rally is imminent...
Rather, it simply indicates that conditions are ripe for a reversal. High short interest is akin to dumping gasoline on an unlit campfire... Even the smallest spark could start a blaze.
Investors are betting heavily on a continued decline in these stocks... So even the slightest hint of good news could send them rushing to cover their shorts and push prices higher.
Again, we expect the death of retail to continue to push these stocks lower for years to come. But don't be surprised to see a sharp rally in the near term... And if you're heavily short the sector, consider lightening up today.
We wrote it, did you buy it?
In the July issue of Stansberry's Investment Advisory, Porter and his team shared a remarkable story of survival...
Seven years ago, Ariella Chivil was a 20-year-old college student with a "gnarly cough" that wouldn't go away. She went to see the doctor, not expecting anything serious...
Instead, a chest X-ray revealed a giant tumor growing outside her right lung. This wasn't a "normal" case of lung cancer. Ariella didn't smoke. No one in her family smoked. Ariella had a rare form of cancer known as Hodgkin's lymphoma.
For most people, that would be (relatively) good news. Hodgkin's lymphoma is usually treatable. Ariella was not so lucky.
She had a "refractory" cancer. It didn't respond to chemotherapy or radiation. She tried 14 different combinations of treatment over three years... with no luck.
Meanwhile, her cancer spread to her liver and abdomen. She even joined experimental clinical trials – trying two drugs that had never been tested – to no effect.
Worse, she couldn't keep food down. She lost weight, then lost her hair. She was growing gray and weak. By the time she was 23, her latest doctors had never seen her stand, and she was on a last-ditch "salvage therapy."
As they explained, it was at this point she tried a relatively new drug. And suddenly, everything changed...
After a week of treatment, she felt a bit better. After a few more weeks, she was walking on her own. Her side effects were mild: fatigue, but no nausea. She could eat, exercise, and heal...
Most important, this drug was shrinking her tumors. After six months, they were disappearing. Ariella got her life back on track. She finished college, got a job, and became a patient advocate.
Today, at age 27, Ariella Chivil has a normal life. She's off the drug – and yet, as we'll explain... it's still working for her.
Stories like Ariella's are amazing. Even better, they are becoming more common. A new trend is under way in cancer treatment. The heavy investments in developing these new drugs are starting to pay off. They are saving lives... and becoming multibillion-dollar blockbuster drugs for the companies that own them.
This drug was one of a brand-new class of cancer treatments known as "immunotherapy." And as Porter and his team explained, one Big Pharma firm – Bristol-Myers Squibb (BMY) – already has "first mover" advantage in this area. It's the maker of several immunotherapy drugs, including the current best-of-class drug – called Opdivo – that saved Ariella's life. More from the issue...
Opdivo may sound familiar to longtime subscribers. We first recommended Bristol-Myers for Opdivo back in 2014. That's even before the FDA had approved Opdivo to start commercial sales. And what a drug it has become...
Opdivo was approved by the FDA during the Christmas season in 2014. It racked up $6 million in sales before year-end. In its first full quarter of sales, Opdivo had $40 million in sales. By the second quarter, it broke $120 million.
Over the last half year, it booked almost $2.5 billion in sales, and it's just starting to gain traction in Europe. That's a high barrier to cross because Opdivo is an expensive drug: $150,000 per patient per year. Yet even at that price, countries with socialized medicine are using Opdivo on more and more patients.
As they noted, Opdivo is already approved to treat six different cancers. But they believed it was likely that the drug – in combination with other immunotherapies – could show similar promise for other types of cancer.
New data reported last week suggest they're exactly right...
On Thursday, Bristol-Myers announced it was halting a trial for late-stage renal cancer earlier than planned. The combination of Opdivo and another of its immunotherapy drugs – Yervoy – had already proven to be more effective than chemotherapy in this disease. As news service Reuters reported...
A combination of two Bristol-Myers Squibb immunotherapy drugs cut the risk of death by 37% in a key group of kidney cancer patients, data from a closely watched clinical trial showed Sunday. The news confirms the cocktail's utility in a hard-to-treat disease...
The U.S. drugmaker reported... it was ending the trial well ahead of schedule due to its early success in improving overall survival, despite earlier mixed results.
Now the scale of the benefit provided by the two immune system-boosting drugs has been disclosed to experts attending the European Society for Medical Oncology (ESMO) congress in Madrid...
The latest result is important for doctors and investors alike, not only because it opens up a new option for treating kidney cancer but also because it helps validate the idea of combining two different kinds of immunotherapy.
Bristol shares jumped 5% to a fresh 52-week high following the news. Stansberry's Investment Advisory subscribers are already up 13% in less than three months.
Dave Lashmet – Stansberry Research senior technology analyst, and editor of our elite Stansberry Venture Technology advisory – shared his thoughts on the news with us in a private e-mail last night...
Bristol succeeded in this kidney cancer trial with a combination of two of its top three drugs, Opdivo and Yervoy. This is the same combination of immune therapy drugs currently FDA-approved for advanced skin cancer. More important, it's not a combination that rivals like Merck can easily replicate. Like we covered in the issue, most of Bristol's competitors are simply copying Opdivo, and that runs afoul of Bristol's patents.
In short, Bristol has a global commercial monopoly on this particular cancer target. We knew it mattered for skin cancer, and now we know it matters for kidney cancer, too. From here, adding additional drugs might help with other cancers, which is a treatment revolution...
The reason is that these immune therapy drugs have minimal side effects. So, people with cancer aren't getting sicker from the medicines they take. Instead, Bristol's drugs and similar knock-offs wake up your immune system to make your body fight back against cancer. So you heal naturally – sometimes rapidly – and the cancer does not come back.
That's why Bristol's combination had a better overall survival in first-line kidney cancer patients. And, head to head versus a chemotherapy, 41% of patients on Bristol's drug combination responded, versus 26% on standard chemotherapy. That's why the trial stopped early, for success... and why this new combination is a shoe-in for FDA approval.
How to profit from the rise of the 'global middle class'...
Yesterday, we introduced you to the brand-new project from our friend and colleague Kim Iskyan: International Capitalist.
International Capitalist is unlike any other advisory you've likely ever seen...
Its aim is to introduce you to some of the most lucrative investment ideas in the world – opportunities to make 500%-1,000% or more – in "off the radar" places most Americans have never even considered.
As Kim explained in this morning's edition of our free DailyWealth e-letter, one of the biggest drivers of these explosive opportunities in far-off places is the rise of the global middle class...
All over the world, populations are earning more money. This is increasing disposable incomes and consumer spending... and improving living conditions in these countries...
We've talked a lot about this trend in China. But it's also creating plenty of investment opportunities elsewhere... The gap between developed markets and emerging markets is closing. This growth means millions of people will be joining the middle class over the next 30 years...
The Brookings Institute – a non-partisan think tank – suggests that by 2030, two-thirds of the global middle class will be living in Asia...
What do people do when they suddenly get more money?
They spend more on leisure, health care, and looking good. One of the biggest things they spend on is travel...
As the world's middle class grows – along with their disposable incomes – consumers will buy things at a rate never seen before. And smart investors know that if they invest properly, this is the type of trend that can make them life-changing amounts of money.
Kim has assembled an entire research team in Asia, both in Singapore and Hong Kong, to focus on these kinds of opportunities in developing economies around the world.
In fact, he has just completed research on a little-known stock – one you can buy in the U.S. on the Nasdaq for less than $5 per share – which operates in one of the fastest-growing industries in the world. Kim believes shares could rise as much as 700% or more from here. In fact, it has happened before with this stock in the early 2000s... and he says it could happen again soon.
Again, as you'll see from Kim's presentation, this kind of investing isn't for everyone. But if you're interested, you can take advantage of a special limited-time charter offer for Stansberry subscribers. But please note, this offer is only good until Sunday. Click here to learn more about International Capitalist now.
New 52-week highs (as of 9/13/17): AbbVie (ABBV), AMETEK (AME), Alibaba (BABA), CME Group (CME), WisdomTree Japan Hedged Equity Fund (DXJ), WisdomTree Japan Hedged SmallCap Equity Fund (DXJS), Emerging Markets Internet & Ecommerce Fund (EMQQ), Coca-Cola (KO), KraneShares CSI China Internet Fund (KWEB), iShares MSCI China Index Fund (MCHI), Microsoft (MSFT), ProShares Ultra Technology Fund (ROM), and ProShares Ultra S&P 500 Fund (SSO).
In today's mailbag, a new subscriber wants to know what to do when the "Melt Up" ends. What's on your mind? Let us know at feedback@stansberryresearch.com.
"Greetings: We are novices to investing, but learning so much from all the newsletters and recommendations and enjoying the process. Becoming members of TradeStops has also helped in monitoring our finances; we sleep better at night (which was a different experience when we tried the stock market in the early 2000's). Our gain in just the few months reinforces being on the right track.
"But we would like to clarify actions to take when the 'Melt Up' ends. Do we sell off our entire portfolio which includes foreign stocks + recommendations from Stansberry? Or just the U.S. Stocks? Or do we sell off specific stocks that will be recommended by Stansberry Research? Look forward to your response. Thank you." – Paid-up subscribers C & D Lubeck
Brill comment: We're prohibited from providing individual investment advice, so unfortunately, we can't tell you how to manage your portfolio. However, all of our editors provide clear entry and exit instructions for every recommendation they make. And if (or when) those instructions change, you can rest assured they will let all subscribers know immediately via e-mail.
In other words, unless you hear otherwise, we recommend you continue to follow the trailing stop losses or other exit instructions provided in our original recommendations.
Regards,
Justin Brill
Baltimore, Maryland
September 14, 2017