An Astonishing Fact About the U.S. Military

More bad news for the Fed... Inflation is still falling... Retail sales disappoint... New research from Doc Eifrig... An astonishing fact about the U.S. military... Protect yourself – and profit – from this inevitable trend.

Still no pickup in inflation...

This morning, the Federal Reserve got more disappointing news...

The U.S. Department of Labor reported inflation – as measured by its consumer price index ("CPI") – fell again last month. Inflation slowed to a 1.6% annualized rate in June. This is down from 1.9% in May, and a five-year high of 2.7% in February...

If the report had a bright spot, it was that "core" CPI – which excludes food and energy prices – was unchanged in June from the previous month. But it, too, remains weak at a 1.7% annualized rate, down from a multiyear peak of 2.3% in January.

The Fed cannot be pleased. And just as we've been predicting, we're already seeing signs the central bank is beginning to rethink its plans to raise rates further. As financial-news site MarketWatch reported following the news...

Most senior Fed officials had believed the slowdown in inflation was temporary, but now they have been forced to reassess their views. Although the Fed had been expected to raise rates once more this year, a closely followed Wall Street forecasting site now puts the odds at close to zero.

The latest data on the U.S. economy probably didn't make Fed officials feel any better...

This morning, the government also reported that retail sales were down again last month.

Sales fell 0.2% in June, for the second consecutive monthly decline. Economists had expected an increase of 0.1%.

The data showed sales fell almost across the board, including at gas stations, grocers, restaurants, and department stores, among other segments. Auto sales did post a small monthly increase, but they remain well below last year's pace.

The lone bright spot – as regular readers can likely guess – was online sales. So-called "nonstore" retail sales rose 0.4% again in June.

Again, as we discussed yesterday, these reports are no reason to panic. Growth and inflation could begin to move higher again.

But if the weakness continues, we expect the Fed will have no choice but to reverse course and begin easing again.

We'll be keeping a close eye on these trends.

'You're in for a shocking revelation...'

Elsewhere in the market, our colleague Dr. David "Doc" Eifrig has spotted another trend that he believes every American needs to be aware of: the sharp decline in U.S. military spending.

If you're like most folks, this comes as a surprise. After all, for years we've heard about the billions of dollars spent on various defense projects, and how the U.S. spends more on its military than any other country.

Doc says the reality isn't so simple. As he explained in a new special report for his Retirement Millionaire subscribers...

If you think, like most Americans do, that we've got an insurmountable military advantage, you're in for a shocking revelation.

National defense has declined sharply since 2010.

As Doc explained, this decline is a result of both Obama-era decisions to slow military spending, along with "sequestration" cuts forced by the Republican-led Congress following arguments about the debt ceiling. But he says even those figures don't tell the whole story...

As a percentage of the economy, our spending is at its lowest point in more than 70 years.

And the number of military personnel hasn't been this low since the troops came back from WWII.

The threats have multiplied...

Meanwhile, Doc noted that the potential threats the military faces are changing again...

For decades, an army was an army: Troops, guns, ships, and planes. Whomever you fought, you'd send the same men, vehicles, and artillery to destroy the enemy. The biggest change between our Vietnam forces and the First Gulf War was the change from jungle to desert camouflage.

That's changed. It started after the 9/11 attacks. In Iraq and Afghanistan, U.S. troops didn't fight large armies. Rather, they fought small insurgent forces embedded deep in cities among civilians.

We still had military superiority, but all our bombers and aircraft carriers offered no advantage. This was a different war. We needed small, highly trained forces with lots of intel. And we needed special outreach programs to win the "hearts and minds" of the local populations, as they say.

In other words, fighting China or fighting Al-Qaeda required different training, different hierarchy, different weapons and different technology. The military largely shifted focus, building itself around the new threats of terrorism.

Today, those threats remain. But the "superpowers" have now returned. Countries like Russia, China, and North Korea increasingly represent a threat. And Doc noted that our "insurgent focused" military simply isn't prepared to deal with them...

If you compare our 1.3 million active duty troops with China's 2.8 million or even Russia's 1.5 million, our dominance doesn't look so assured. In fact, there's a term for our current status: The 1.5 Standard.

After the Cold War, the U.S. military adopted a standard that it should be prepared to handle two "major regional contingency" military situations. In other words, the military should be able to handle at least two large engagements at any time to prevent an adversary from taking advantage of one war to start another.

That level of protection is gone. By 2012, the standard had changed. Now the goal is to handle one conflict, while still being able to "impose unacceptable costs" on another... or the 1.5 Standard.

I don't like the sound of that. And these are really only plans for small, regional conflicts. Independent analysis has determined that the U.S. could not deter a Russian assault on a Baltic nation. And if China wanted to capture Taiwan today, it could completely dominate the South China Sea.

To Doc, all this adds up to one big certainty...

U.S. military spending will rise significantly in the coming years.

You see, while most folks aren't aware of these problems, those at the top levels of the military are... And they're determined to fix them. More from Doc...

The military brass is pushing back. The Department of Defense's budget request for 2018 included a $52 billion increase in the budget – an increase of nearly 10%. It's fully backed by Trump.

Senator John McCain has proposed a spending increase of $50 billion per year, taking on 8,000 new troops, 59 new navy ships, and 93 more F-35 fighter jets.

We think that's the low estimate. Even a shift to average levels of 4.5% to 5% of GDP spending would be an increase of $90 billion to $200 billion per year.

Now, don't take this as an endorsement of war...

We certainly hope the U.S. avoids a major new conflict. And longtime readers know we aren't fans of unnecessary government spending.

But as Doc noted, even if the government chooses to take a smaller role on the "world stage," better technology is needed to keep pace with China and other growing powers.

Either way, more spending is virtually guaranteed. And a handful of companies will be the biggest beneficiaries...

With the defense industry so consolidated, those billions flow very quickly into the pockets of a small group of companies and their shareholders. Even big, established businesses can get pushed very quickly by waves of cash that big – even though it's a minor increase from the government's perspective.

Doc's special report details his five favorite stocks to profit from this trend...

As you'd expect from Doc, they're all high-quality companies that treat their shareholders well. These stocks should continue to do well even if spending doesn't rise as expected. But if Doc is right, they could absolutely soar over the next few years. And should a new conflict break out, the sky is truly the limit.

In short, buying these stocks is as close to a "no-lose" proposition as you'll likely find in the markets today.

Of course, if you're familiar with Doc's Retirement Millionaire advisory, you know it's about much more than building your wealth. It's also about protecting the health and well-being of those you love.

That's why folks who agree to try Retirement Millionaire today won't just get his special report on the best ways to profit from this trend...

You'll also get Doc's no-nonsense book on preparedness, called The Doctor's Protocol Field Manual. Unlike any other book we've seen on the subject, Doc's is based on facts, science, and real medicine, rather than hype.

Doc has also partnered with renowned geopolitical expert Richard Maybury to show you exactly how to prepare for the growing risks of war and global conflict. You'll get Richard's new research report – How to Survive and Flourish During America's Next Episode of Great Wealth Destruction – and one full year of his must-read U.S. & World Early Warning Report.

Best of all, for a limited time, you can get it all for less than the usual cost of a Retirement Millionaire subscription. And as always, it comes with Doc's 30-day, 100% money-back guarantee.

If you're not already reading Retirement Millionaire, there has never been a better time to give it a try. Click here to sign up now.

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In today's mailbag, another note from a happy lifetime subscriber, and more kudos for Steve Sjuggerud's True Wealth China Opportunities research. We're not used to this much praise... Where are all of the complaints, the insults, and the wild accusations? Let us have it at feedback@stansberryresearch.com.

"I hope you can publish this for other Digest readers. I just wanted to give some quick feedback on my experience overall with Stansberry Research recommendations over the past 9 months. I'm a lifetime Stansberry Flex and Venture member using TradeStops. My IRA portfolio is diversified between Steve's [True Wealth China Opportunities] recommendations, Porter's Stansberry's Credit Opportunities bonds, Doc's [Income Intelligence], Lashmet's [Stansberry Venture Technology] stocks, and some of Bill Bonner's Portfolio stocks (other Agora lifetime membership).

"I now only place $3K – $5K positions on the recommendations I see are a good value and I don't keep anything that goes down more than 10%. So I try to pick wisely. In fact, I did not plunge into Steve's China Opportunities until January of this year which was around the bottom for most of these recommendations. Because my brokerage account cannot buy foreign stocks, I only chose 6 of the ETFs and one pink sheet stock. All have gone up over 20% and I cashed out on the 2 slowest movers recently to pick up other Agora recommendations I saw were at a good risk/reward setup. My remaining 5 Chinese positions are each up between 23%-63%, with a total return of 33% for this group.

"The entire portfolio is up 19.5% this year and I've had a couple Venture doubles. Even if things go bad and I stop out on the riskier stocks, they will go into cash before I lose too much value. And the remaining income plays will provide plenty of dividends. Thanks for helping me to invest in a much better way. I know I have a lot more to learn. But I think the changes you have incorporated over the past few months have finally helped me to invest my IRA much more successfully than before. Thanks again." – Paid-up subscriber Juventino

"Very happy with our China investments... We bought in big time to Steve's recommendations in China beginning April 28 and of our five investments the lowest yield is 2.9% and highest is 11.1% for an average of 6.3%. Certainly happy with those numbers thus far and optimistic about Melt Up growth in China. Thanks Steve!" – Paid-up subscribers Buck and Christine W.

"You asked for feedback on [True Wealth China Opportunities] holdings. My China portfolio includes [five positions]. The total 7/13/17 value is up 20.4 percent. All five are up in value." – Paid-up Stansberry Alliance member John Lampe

Regards,

Justin Brill
Baltimore, Maryland
July 14, 2017