Crisis Mode – Again

Getting close to another government shutdown... Another tough day for stocks... A glimmer of hope from Greg Diamond... A very special speaker at next month's Stansberry Research conference... Porter live on stage in Vegas... A warning for the next few years... What the world's best investors will do...

It didn't have to be this way...

We saw this headline from the Associated Press this afternoon...

Congress is moving into crisis mode as time runs short to avoid a government shutdown

Forget for a moment that you may consider Congress always in "crisis mode." The acute point today is that Washington, D.C., is suddenly nearing a government shutdown "that was never supposed to happen," according to another headline from NPR today.

Congress was supposed to have taken care of a potential government shutdown with the "debt-ceiling debate" resolution earlier this year that passed the House and Senate.

I (Corey McLaughlin) described that agreement back in May. As we shared at the time, it greenlit the Treasury Department to take on more debt to finance previously agreed upon Congressional spending – and also set supposed top-line spending levels for the year ahead... with some cuts to the federal budget.

The devil is in the details, though.

While that bill passed, some Republicans immediately sounded their displeasure that the spending cuts weren't deep enough... and several in the House of Representatives started talking about ousting Speaker Kevin McCarthy. For the past four months, they have held their ground. Now, agreements on 12 regular spending bills haven't been voted on as we near a September 30 deadline to avoid a lapse in federal government funding.

For example, says Florida Republican Rep. Byron Donalds...

We're running a $2 trillion deficit. We're not fighting a war. We're not in a pandemic. That hurts everybody. That is crazy and our members recognize that. So we have members who want to do more, and spending cuts makes total sense to me.

Another factor also contributes to this last-minute scramble... Since the debt-ceiling agreement, the Senate also decided to add in an additional $8 billion for defense spending, plus nearly $6 billion for "non-defense emergency spending" in proposed legislation for the year. That's just a casual $14 billion without many people noticing, they hoped.

Negotiations are entirely reasonable. Our country's debt load stands at more than 100% of GDP, and inflation remains a problem. McCarthy is trying to broker some kind of deal, which may cost him his job. Meanwhile, the Senate is reportedly working on its own stopgap agreement.

Odds are something will get done. These days, things only happen in D.C. when deadlines are near.

But do you see how it goes when just a few people in Congress say no to more spending? The whole thing goes off the rails, and the government is on the verge of its fourth shutdown in the past decade.

It was another gloomy day for stocks...

The benchmark S&P 500 Index finished down 1.5%, as each of the major U.S. indexes were off by more than 1%. I'm not going to chalk it all up solely to the threat of a government shutdown, though...

Today also marked an update on a few key economic data points that pointed to a sour reality and outlook.

For instance, government figures show that new-home sales in August decreased 8.7% from a month earlier. Also, a widely followed measure of consumer "expectations" from the Conference Board fell to a level this month that some associate with recessions.

Also today, JPMorgan Chase CEO Jamie "the Hurricane" Dimon sounded a bearish message, saying the Federal Reserve may need to raise interest rates further to fight inflation. It's an idea that appeared to be reflected in market behavior over the past few weeks with higher bond yields and a stronger dollar.

Overall, it has been a rough stretch for stocks since midsummer... save for a rally toward the end of August.

All in all, the tech-heavy Nasdaq Composite Index is down more than 6% in September and 8% since its most recent closing high on July 19, and the S&P 500 is off close to 5% this month and more than 6% since its most recent close on July 31.

In technical-trading terms, these indexes are now in a no-man's land below their short-term, 50-day moving averages and longer-term, 200-day trends... joining the small-cap Russell 2000 and Dow Jones Industrial Average that had already dropped below both levels.

Is the worst over?...

We shall see, but our Ten Stock Trader editor Greg Diamond said today he thinks a "bottom" of this correction may be close. Greg brings compelling evidence to the table. Greg's subscribers and Stansberry Alliance members can find his updates here and here.

I'll also note this correction we've seen the past two months, if that's all it is, is consistent with the similar sizes of sell-offs around similar periods of high-inflation history. I'm looking at other times when the yield curve started to revert at the start of what is eventually called an "official" recession, like it may be doing again now.

Remember that pair of instances I've mentioned before in the high-inflation days of 1980 and 1981. Stocks sold off around 13% once yields started to "return to normal," which is when longer-term yields began moving steadily toward higher levels than shorter-term yields.

Regular readers may remember this was the last of my "the bottom is (probably) in" indicators that we tracked last year. As I wrote in the August 17 Digest...

In other words, a 10% drop in stocks would be completely "normal" in today's circumstances. Whether that happens within the next few weeks or months from now, we can't be sure.

But it may be ongoing... and near its end.

Moving on, we have some exciting news to report...

As you should know by now, our annual Stansberry Research Conference & Alliance Meeting is just around the corner...

Our editors, special guest speakers, and many subscribers will gather in Las Vegas from October 16 to 18. They'll talk about the biggest topics in finance, including their favorite investing ideas and stock picks for the coming months.

And we've just added a very important speaker to our 2023 lineup: Stansberry Research founder Porter Stansberry.

I've seen many messages in our feedback inbox from longtime subscribers who have been looking to hear from Porter. Well, we're pleased to report he will speak live on stage at the Encore at Wynn Las Vegas next month.

In-person tickets to the event are now sold out, but good news: You'll be able to watch Porter's presentation and everything else from our conference remotely with a livestream ticket. Click here for more information on how to grab a discounted ticket today.

Our speaker lineup also includes your favorite Stansberry Research editors like Dr. David "Doc" Eifrig, Dan Ferris, Eric Wade, Greg Diamond, and Brett Eversole... and invited guests like Morgan Housel, Danielle DiMartino Booth, Josh Brown, Meb Faber, Ben Mezrich, and Lance Armstrong (yes, that Lance Armstrong).

On the livestream, you can hear all the same speakers in Vegas in real time, catch all of the information and insight from the comfort of your own home, and have post-event access to on-demand video replays and transcripts of all the presentations.

It's a nice setup. Again, click here for more details.

One more order of business before we go...

Don't forget... Tomorrow night, our friend Joel Litman – founder of our corporate affiliate Altimetry – goes live at 8 p.m. Eastern time with a brand-new video presentation that we suggest you check out.

As I've mentioned, Joel is a world-renowned finance professor and accountant – who incidentally has made several popular appearances at our annual Stansberry Research conferences and will again next month in Vegas.

Over the years, he has developed a form of "forensic analysis" that neither Wall Street firms nor the U.S. government have been able to duplicate. In fact, companies and government agencies often call on Joel and his team to expose what they can't see.

What Joel is saying now...

Joel also joined me and Dan Ferris on the latest episode of the Stansberry Investor Hour, released just yesterday. In our free show, he shared how he even developed a system that gauges whether Federal Reserve Chair Jerome Powell believes in what he's saying or not during speeches...

That was interesting on its own.

More importantly, though, Joel sounded alarm bells...

He said he's seeing market indicators that are terrifying him today and lead him to believe the stock market's performance so far this year is all a "dangerous illusion." He's very concerned about the markets over the next two or three years...

When Joel says things like this, we take note. After all, he warned investors about trouble ahead before the 2008 financial crisis and 2020 COVID-19 crash...

Without giving too much away, I can tell you that he's saying he expects losses to hit hundreds of stocks... but also that prepared investors don't need to panic. There are protections to take, but Joel says that what's coming next to the markets will create a lopsided opportunity for triple-digit gains in some cases.

In fact, some of the world's top investors will likely be using this strategy to make a lot of money during the next crisis. This is a strategy Joel has used with some of his biggest institutional clients on Wall Street for more than 20 years.

Tomorrow night, he's going to explain all the details, including exactly how he used this strategy to make incredible returns for clients when the market crashed in 2008.

This is a totally free event. We just ask that you sign up in advance so you don't miss anything. Just for registering today, you'll also get free access to an investing tool that Joel has developed – which you can use to screen thousands of tickers – along with a special report that will tell you more about how to use it.

Click here to sign up right now.

New 52-week highs (as of 9/25/23): Activision Blizzard (ATVI), Cameco (CCJ), Denison Mines (DNN), Enterprise Products Partners (EPD), Omega Healthcare Investors (OHI), Ryder System (R), Construction Partners (ROAD), Sprouts Farmers Market (SFM), Sprott Physical Uranium Trust (U-U.TO), Global X Uranium Fund (URA), Sprott Uranium Miners Fund (URNM), and Energy Fuels (UUUU).

In today's mailbag, feedback on yesterday's Digest, which talked about student-loan repayments restarting in a matter of days... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"The predictions regarding student loan repayments hurting the economy are based on a very big assumption – that people actually make repayments.

"People walked away from mortgages in 2008/2009 – they may do the same with student loans..." – Subscriber Dustin S.

"Hey, guys! Let me see if I get this right... an 'adult' enters into a legally binding contract (a loan) and then wants someone (the government) to bail them out when they see the pending outcome... lots [of] bucks owed that they can't afford (especially on the jobs they got for their Liberal Arts degrees).

"A more logical direction... go to a JC/CC [junior college or community college] for the first two years for all the basic classes (same quality as at the BIG expensive schools, think English 101 at Michigan, Harvard, Yale, etc., what a waste!), then transfer the credits (assuming you do well enough to do that) and your expenses are much reduced. Hell, you can stay at home and reduce your (or your parents') costs even more.

"My wife did that... I should have." – Subscriber Barry W.

All the best,

Corey McLaughlin
Baltimore, Maryland
September 26, 2023