A notable intraday swing... A taste of what could come... No cuts this year?... Jobs numbers coming tomorrow... One way to invest in AI... The catalyst for the next crypto mania... Don't miss Eric Wade's new crypto briefing...
The tide might be turning...
To start this week, the benchmark S&P 500 Index closed lower for at least two consecutive days for the 10th time in 2024. Yet, like each time before, the leading U.S. index followed those down days with a move higher.
Yesterday, stocks were up slightly. For much of today, it looked like the trend would continue. The S&P 500 was up nearly 1% in the early afternoon and traded within a fraction of a new all-time high. But it gave back those gains and then some in the last two hours of trading to finish down 1.2%.
That catalyst appeared to be comments from Federal Reserve Bank of Minneapolis President Neel Kashkari. During an online event hosted by job-seeking/networking platform LinkedIn, he raised the idea that the Fed might not cut rates at all this year...
In March, I had jotted down two rate cuts this year if inflation continues to fall back towards our 2% target. [But] if we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all.
There's a lot of momentum in the economy right now. It raises questions... about what is the neutral rate of interest and where are we relative to neutral? That is something I'm trying to assess with my colleagues.
By "neutral rate of interest," he means a theoretical rate, often referred to as "R-star," that is considered neither restrictive nor stimulative to the labor market or inflation.
The central bank has never stated this rate specifically, but the Fed is believed to have recently considered this figure to be around 2% per year... However, I (Corey McLaughlin) have heard growing discussion among investors that this rate could be higher today.
Thus, perhaps rates might need to go higher to keep pressure on inflation. Kashkari said...
The question is: Is [inflation] going to continue to fall? And/or is it really going to be monetary policy's job to bring inflation all the way to our 2% target right now?... The last couple months of inflation data has been a little bit concerning, more moving sideways than continuing to fall.
The market turned lower as he spoke... At the same time, though, it should be pointed out that Kashkari is not a voting member of the Fed right now. But he is in the room for his colleagues' discussions.
So maybe more folks are grasping the concerns about higher inflation that we've talked about recently, including yesterday... and this is a taste of what it will look like if or when they are reflected in the market.
Keep in mind, stocks have slumped only for a matter of hours. Longer-term trends for U.S. stocks are still up, up, up. The market is still mostly banking on a "Fed pause" with a promise of rate cuts... even as a bump in inflation (at the very least) has appeared and threatened to upend the status quo.
But the story could be changing.
Setting up tomorrow...
Tomorrow brings the latest "nonfarm payrolls" update from Uncle Sam, complete with a fresh unemployment rate. The market will scrutinize these numbers.
An uptick in unemployment could change some investors' views on if or when the Fed might cut rates this year. Alternatively, an unemployment rate of 3.9% again or lower would support the growing idea of a cut happening later than expected (again).
As our Ten Stock Trader editor Greg Diamond wrote to his subscribers this morning...
We got a nice bounce in stocks today. But the question is can it last with the jobs number coming out tomorrow?
Friday will be an important data point for investors. And more inflation numbers are on deck early next week.
Greg told his subscribers the price action tomorrow following the March jobs report "will be critical in determining our next set of trades." Subscribers and Alliance members can find all the details here, as always.
Next week, the consumer price index ("CPI") report for March comes out Wednesday morning. This isn't the Federal Reserve's purported preferred inflation measure, but it is widely followed by investors looking for clues about the path of inflation.
The Cleveland Fed's inflation "Nowcast" projects CPI growth of around 0.3% in March – again, greater than a 2% annualized pace, just as we saw in January (0.3%) and February (0.4%) already.
Switching gears to AI...
We've said before that while the buzz around all things AI for the past year or so has shades of bubble-like behavior, we don't doubt that there will be real winners in the AI boom. How can we separate them from the losers?
Well, one way is to do what our Dr. David "Doc" Eifrig and Stansberry Research analyst John Engel just showed Prosperity Investor subscribers in their latest issue, published yesterday.
They didn't just look for the best "AI company" they could find (whatever that is, anyway, is hard to define). Instead, they recommended buying shares of a 43-year-old company that they see benefiting from adding AI technology to what it's already doing.
In short, Doc and John combined thinking about one of the biggest demographic trends in the U.S. today (the aging of the Baby Boomers) and a big medical need associated with that (diagnostic testing) – and explained how AI could help. As they wrote...
Medical imaging and AI advancements are transforming health care diagnostics. Combining digital imaging technologies with AI is revolutionizing how diseases are detected, diagnosed, and treated.
The detailed pictures from CT scans, MRIs, and PET scans generate vast amounts of data. AI – especially "deep learning" algorithms – can analyze this data efficiently. It can uncover insights that a radiologist might miss.
You see, AI algorithms are trained on large datasets to recognize complex patterns. This improves the accuracy and speed of disease diagnosis.
You can think of an algorithm as a set of instructions. As it relates to imaging, it might recognize an abnormality in the breast or the heart. It uses existing information (the data) to understand these abnormalities.
Ultimately, it helps health care professionals make informed decisions and give better care to patients.
Add it all up, and Doc and John say the company they recommended to Prosperity Investor subscribers, and its industry in general, has huge tailwinds behind it... "particularly within the next three to five years."
This business is already a leader in its field in the U.S. with a huge amount of room to grow, and it has been positioning itself in recent years to benefit from the advent of AI tools. And looking at its balance sheet, "you won't find many blemishes," Doc and John wrote.
To put it plainly, the company has focused more on steady growth lately, rather than on ramping up its profits. But given the recent investments it has made, especially with AI, we know this company will be a lot more profitable in a few years.
Again, this is one way to act on the AI boom without buying, for instance, a certain chipmaker that already trades at sky-high valuations. Prosperity Investor subscribers and Alliance members can find all the details, including specific buy-up-to and stop-loss instructions on this stock, right here.
Last but not least, a 'reboot' is coming for bitcoin...
Bitcoin, the world's most popular cryptocurrency, continues to trade near all-time highs as well. In the past 24 hours, it's up about 4% to above $68,000... not far from a new high of roughly $73,000 that it set on March 14.
According to our Crypto Capital editor Eric Wade, the price could go much higher... and relatively soon.
As we mentioned yesterday, Eric says a "reboot" that will happen later this month could be the next catalyst for a remarkable, ongoing bull market in bitcoin and cryptos generally. This development "will spark crypto's last and biggest true mania," Eric says.
It could send bitcoin to $100,000 and three of his favorite "altcoins" up 5,000% in a "Melt Up" in cryptos that could reach shocking heights.
Eric will explain all the details on camera Tuesday in a free presentation...
We urge you to tune in.
He plans to tell you precisely what this "reboot" is... what to expect from bitcoin and other cryptos after it happens... and how best to position yourself for the "mania" that he expects to come soon to make potentially life-changing gains.
That's not an exaggeration. Eric has booked more 1,000% gains than any other Stansberry Research analyst – solely on cryptocurrency recommendations. He has done the research and stayed ahead of cutting-edge developments for years... and used his insights to guide subscribers to incredible gains.
There's a reason we had to carve out a crypto-only "Top Open Positions" at the bottom of our daily e-mail for his picks – because they would crowd out our editors' best stock recommendations.
Back in January, Eric told all Stansberry Research readers that he believed a bull market would unfold in cryptos in 2024, which has proven right. Even earlier than that, last summer, he urged folks to buy bitcoin... The price has roughly tripled since then.
But he says these returns are only the beginning of what people can expect from cryptos ahead. In short, a once-in-four-years event is coming within a few weeks that you will want to know all about if you have any interest in the incredible gains still available in the cryptocurrency sector.
Eric's event on Tuesday is 100% free. He's also giving away a free crypto recommendation as part of the presentation. We just ask that you register in advance so you don't miss anything. Click here to sign up now.
New 52-week highs (as of 4/3/24): Agnico Eagle Mines (AEM), Amazon (AMZN), Ascot Resources (AOTVF), Grupo Aeroportuario del Sureste (ASR), Chord Energy (CHRD), Cencora (COR), Dell Technologies (DELL), Dimensional International Small Cap Value Fund (DISV), Dorchester Minerals (DMLP), Denison Mines (DNN), iShares MSCI Emerging Markets ex China Fund (EMXC), Enterprise Products Partners (EPD), Equinox Gold (EQX), Enerplus (ERF), Diamondback Energy (FANG), First Trust Natural Gas Fund (FCG), Freeport-McMoRan (FCX), SPDR Gold Shares (GLD), KraneShares MSCI Emerging Markets ex China Index Fund (KEMX), Kinross Gold (KGC), Kinder Morgan (KMI), Liberty Energy (LBRT), LyondellBasell (LYB), Micron Technology (MU), Nucor (NUE), Occidental Petroleum (OXY), Sprott Physical Gold Trust (PHYS), Sprott Physical Silver Trust (PSLV), Phillips 66 (PSX), Pioneer Natural Resources (PXD), Construction Partners (ROAD), Seabridge Gold (SA), Sprott (SII), iShares Silver Trust (SLV), Spotify Technology (SPOT), Tenaris (TS), ProShares Ultra Gold (UGL), United States Commodity Index Fund (USCI), Energy Select Sector SPDR Fund (XLE), and SPDR S&P Oil & Gas Exploration & Production Fund (XOP).
In today's mailbag, more thoughts about the Key Bridge collapse here in Baltimore... and another point about inflation... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Some very wise words from Scott M. and Don B. [in yesterday's mail]. If you can, please pass along to them my admiration for their viewpoints. While we would all like to see the ship owner and insurance bear the cost for rebuilding the bridge, maritime law will have something to say about that, so purely criticizing the government is pointless. And as Scott points out, the true cost of this disaster may be far greater than just the cost to rebuild the bridge." – Subscriber Sherwin R.
"Hi Corey, How can one expect inflation to be anything other than sticky when the federal government is pumping, via deficit spending, an extra trillion dollars into the economy once or twice a year?" – Subscriber Steven M.
"What if the Fed lowers rates 25 [basis points] and Mr. Market ignores that? i.e. Treasury rates stay where they are as borrowing for debt service grows $1 trillion higher every 100 days... and debt service becomes larger than defense!" – Subscriber Dana G.
Corey McLaughlin comment: That's entirely possible, and I think it is actually part of what we've seen already from the market (and GDP numbers, a good amount which is tied to government spending). Also, of course, the "$1 trillion in interest payments every 100 days" will only compound as time goes on.
All the best,
Corey McLaughlin
Baltimore, Maryland
April 4, 2024
Join for free. See how over a million people are taking control of their wealth…
