Armed Cops at the Hospital and Thugs in Chinatown
Armed cops at the hospital and thugs in Chinatown... Common sense is more important than ever... The panic is real... Oil tanks to a key level... Russia and Saudi Arabia are locked in a power struggle... More triple-digit portfolio 'insurance' payoffs...
Editor's note: We received an unusual phone call this morning from Retirement Millionaire editor Dr. David "Doc" Eifrig...
It's rare that Doc will track us down before the normal start of business with a message he wants to share in that day's Digest. So when Doc calls us that early... we listen.
In this case, Doc felt so passionately about the message he wanted to send that we decided to publish his follow-up e-mail just as he sent it. Then, we'll pick up with our regular Digest content...
Armed cops at the hospital and thugs in Chinatown... But what about the jerk on my flight?
I (Doc) recently sat in a cramped Delta flight heading home from a relaxing time during our Stansberry Immersion Week, held at the Canyon Ranch health and wellness resort in Tucson, Arizona. I was trying my best to hold onto that last bit of meditative stillness.
Then, I felt a guy sneeze two rows behind me.
He sneezed once, twice... then several more times... and never covered his nose and mouth. It was infuriating... He was spreading whatever germs he had all over the plane.
Look, I'm the first person to tell you that the panic surrounding the coronavirus is out of hand...
For instance, I was planning to visit a doctor friend of mine this morning as she attended her institute's regular Friday morning "grand rounds"...
These grand rounds go on all over the world, in hospitals and medical schools, as a way for folks to come and listen to experts in the field share and discuss ideas for the future of science and medicine. This is something I enjoy and it keeps me up on how medical science and health care are evolving.
But today, I was stopped at the door by three cops, revolvers holstered at their hips. The hospital was holding a general meeting about the new coronavirus – officially known as COVID-19 – and no one other than hospital employees were allowed in the building.
This is nuts...
What were folks afraid of? If ever there's a time you want information to get out to as many people as possible, it's during a public health scare.
Even worse, later today, I went for a haircut... And the guys at the barbershop were sharing stories they had heard about people on the streets in New York's Chinatown shoving Asian folks who they felt had walked "too close."
If that's not just idle barbershop gossip... and I've read other similar reports... then it's appalling and inexcusable.
There's a difference between caution and hysteria. And that brings me back to the guy on my flight...
This one bug is not going to bring Western civilization to its knees...
Lots of infectious diseases are out there in the world... sickening and killing many more people than this new bug. Malaria, the flu, whooping cough, and the measles are all serious diseases that cause far more suffering and death... But they don't grind the world's economy to a standstill.
Still, that doesn't mean we should ignore common-sense advice about hand-washing and other steps for combating the spread of disease.
Remember, what's good for COVID-19 is also good for the flu... the common cold... and whatever the jerk on my flight was spewing all over the cabin.
So here's a refresher...
Sneezing sends fluid into the air in a sort of moist cloud. That cloud contains aerosol droplets... And these droplets contain bacteria and viruses. A study from the University of Bristol found that about 100,000 germs release every time you cough or sneeze.
And a group from MIT found that larger droplets can spread about two meters – roughly six and a half feet (about two rows on an airplane). Smaller droplets travel as far as eight meters – or 26 feet. That's a good nine to 10 rows on a plane.
No wonder I felt like I was trapped on a flying petri dish...
These germs stay in the air for at least 10 minutes, which is plenty of time to infect everyone around you.
With all this fear over the coronavirus, common sense is more important than ever...
We're delving into this topic in greater detail this weekend in my FREE e-letter, Health & Wealth Bulletin. If you'd like to sign up to receive more of our advice, please click here.
In the meantime... please cover your nose and mouth when you sneeze or cough. Catching it in a tissue is best, but sneeze into your elbow if you don't have one. Or do what I do and sneeze into the inside of your shirt to avoid spreading germs.
And of course, wash your hands and avoid touching your face at all when out in public.
Another good tip: Change your clothes after traveling. Get rid of that feeling of airport "grime" as soon as you can.
And finally, please don't get sucked into the fearmongering and hysteria that's getting worse by the day...
The panic is real...
I (Corey McLaughlin) have observed similar scenes. For instance, on the way home from our annual Spring Editors' Conference this week, in the boarding line at the Tampa airport...
A woman mentioned she was thinking about wearing rubber gloves... to which the guy behind her – who used to work in a nuclear power plant and said he knew a thing or two about keeping clean – said the gloves wouldn't do much if you still touched your face.
Today, my infant daughter's daycare facility sent out its fourth e-mail to parents in two days. This one clarified that the children didn't need to be tested for the coronavirus to come to school... and noted that they were adding extra cleaning measures to the rooms.
I wish they would have done that a few months ago under "regular" circumstances... when we first put our daughter in daycare and everyone in our house started getting sick for long stretches at a time almost instantaneously.
This virus is contributing to all kinds of wild swings...
For example... prices of Brent crude oil, the international benchmark, fell about 9% today to a two-and-a-half-year low of around $45.50 per barrel. West Texas Intermediate ("WTI") crude oil, the U.S. benchmark, dropped more than 9% to roughly $41.50 per barrel.
And there are two big reasons why...
First, the coronavirus outbreak and the associated fear-driven impacts (like less people traveling) have lowered oil demand across an already oversupplied-with-oil world... (Stansberry's Big Trade editor Bill McGilton wrote about this last month in the Digest.)
Second – and the more pertinent catalyst – Saudi Arabia and Russia, two of the three largest oil producers in the world, are locked in a negotiation standoff that reached a significant boiling point yesterday.
To paint the full picture, here's the 'oil cartel' backstory...
The Saudi-led, 14-member Organization of the Petroleum Exporting Countries ("OPEC") has been pushing for a joint oil-supply cut with its "allies" from the Russia-led OPEC+ alliance, a group of more than 20 other nations that started working with OPEC back in 2016.
The Saudis' proposal said that OPEC countries would cut more than 1 million barrels per day and OPEC+ nations would cut 500,000 barrels per day through the end of 2020. In total, it would amount to a 4% cut in global supply.
But yesterday, Russian officials told the Saudi-led oil cartel that they wouldn't do the deal, upending expectations and throwing more uncertainty into a virus-jittery global market.
With no deal in place, as of today, any of the roughly three dozen countries involved will have no supply restrictions on them starting April 1.
Commodity Supercycles editor Bill Shaw weighed in on the news and price action today...
He told our Stansberry NewsWire colleagues that Russia has leverage over the Saudis in negotiations based on the economics. As Bill said...
Saudi Arabia is more desperate for higher prices. It needs oil above $60 per barrel to cover its national spending. Meanwhile, Russia has said it's satisfied with prices around $50 per barrel.
Of course, neither country can afford a total price collapse. It wouldn't surprise me if Russia eventually agrees to more cuts. At this point they're simply showing OPEC that they won't be pushed around.
If you're following along, $42 per barrel is the key level for oil prices...
That's what Stansberry NewsWire contributor and chartered market technician Mark Putrino wrote earlier today...
That price – $42 a barrel – is the estimated breakeven price for onshore production in the Middle East.
And it is about to be tested...
Oil prices found support at that level in December 2018, after falling from its $76 peak in October 2018. The commodity quickly rebounded and broke $65 a barrel in April 2019.
Mark wrote that what happens now depends on what the Saudis and OPEC nations want to do next...
Nobody knows yet if prices will rebound off of the $42 a barrel level like they did in December 2018.
However, the Saudis and their OPEC colleagues hope that it does and will do whatever they can to see that happen.
Finally, we want to talk once again about portfolio 'insurance'...
As we wrote to you earlier this week, every asset (well, besides bonds) has been taking big hits recently. And yet, Bill McGilton closed out a 230% gain for his Big Trade subscribers.
Well, after yesterday, Bill's subscribers have now bagged a third triple-digit gain over the last two weeks...
In addition to the winner on cruise-line operator Royal Caribbean (RCL) we reported on Tuesday, Bill's subscribers made 119% on subprime lender and retailer Conn's (CONN) on February 25. And on Thursday, he recommended that subscribers bag a 132% gain on restaurant chain Cheesecake Factory (CAKE).
CAKE might be a great and creative stock ticker, but it's a bad time if you want to make money in the restaurant stock.
The hysteria and fear around the coronavirus is reaching all-time highs. (We just saw a headline that said people are stealing face masks and other medical equipment from New York hospitals.) But the market doesn't necessarily care what we think...
The point is, the recent gains Bill has banked speaks to a critical investing principle...
In volatile times like these, owning some properly allocated portfolio "insurance" – like the defensive hedge plays Bill recommends in Big Trade – can make a huge difference in preserving and even growing your wealth.
These positions might take some time to pay up. But just like your car or health insurance, you don't want to try to buy them after you get in an accident or get sick... from someone sneezing on you or otherwise.
New 52-week highs (as of 3/5/20): DB Gold Double Long ETN (DGP), Quest Diagnostics (DGX), Franco-Nevada (FNV), SPDR Gold Shares (GLD), iRhythm Technologies (IRTC), JD.com (JD), Sea Limited (SE), iShares 1-3 Year Treasury Bond Fund (SHY), ProShares Ultra 20+ Year Treasury Fund (UBT), Vanguard Inflation-Protected Securities Fund (VIPSX), and Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP).
In today's mailbag, one subscriber raises a great question about corporate debt in response to Mike DiBiase's Thursday Digest... while another details "some pretty powerful historic events" that happened on this date throughout history. Do you have a question or comment? Send it to feedback@stansberryresearch.com.
"Thanks for the timely reminder of Porter's sage words. Certainly there are more Big Trades ahead, and distressed debt investment opportunities that will subsequently emerge.
"The $64,000 question is how likely is the economic drag of coronavirus to impact corporate cash flows sufficiently to start the dominoes of credit defaults?
"I think many of your subscribers are of two minds at this juncture – we either move through this fear-driven blip and ricochet to new highs on the back of Jerry's largess, or fear becomes a self-fulfilling prophecy and sparks the great credit unwinding of our lifetime.
"I trust you guys are 'on it' and will be revisiting this topic regularly, looking for the early warning signs. Thanks for all you do! Spectacular and timely content as usual." – Paid-up subscriber Wayne D.
"On this day, March 6, over the last two centuries were some pretty powerful historic events such as:
"1836 – The Alamo in San Antonio, Texas fell as Mexican forces stormed the fortress killing all 200 defenders including Davy Crockett.
"1882 – The Homestead Mill of the Pittsburgh Bessemer Steel Co. had its first strike when millworkers refused to sign 'yellow dog' contracts. And we all know what that led to.
"1933 – A national bank holiday declared by President Franklin D. Roosevelt aimed at calming depositors went into effect. And we all know what that inflection point led to.
"I bring these historic dates up because they all led to inflection points in American history and they all occurred on March 6.
"I know from being a former subscriber to Greg Diamond's Ten Stock Trader that he considers inflection points in the stock markets along with inflection points in history...
"So with today's wild ride in the NYSE (which it seems to be at this point) remember March 6 because it may be an inflection point of historic proportions no matter which way the market goes.
"Maybe I should re-consider my decision to cancel my Ten Stock Trader subscription?" – Paid-up subscriber K.S.
All the best,
Dr. David Eifrig and Corey McLaughlin
Buffalo, New York and Baltimore, Maryland
March 6, 2020