Debt deal imminent...

 The deadline for the debt-ceiling debacle is tomorrow... The government claims it's close to completing a deal to increase our nation's borrowing ability by $2.1 trillion and cut spending by at least $2.4 trillion. If the White House and Congress reach an agreement – which we believe they will – it'll accomplish two goals. First, the U.S. avoids imminent default. With an extra $2.1 trillion, the government can continue paying interest, covering salaries, and funding bloated entitlement programs... for a while.

Second, the U.S. avoids an imminent credit downgrade. The ability to fund its debt should deter Moody's and S&P from downgrading the U.S.' triple-A status... for now.

As Porter posed in Friday's Digest, we'd argue the U.S. has already lost its triple-A credit rating. There's no question the U.S. can't afford its current debt (much less an additional $2.1 trillion). But rating agencies aren't worried about an entity's ability to repay its debt (most countries could never repay their debt). They're worried about an entity's ability to roll that debt over... to dupe creditors into lending even more money.

 Raising our debt ceiling doesn't resolve our nation's lingering issues, namely too much debt and too little growth. On the contrary, raising the debt ceiling impedes both (not to mention, this entire fiasco has exposed how absurd our government really is). The government is driving our nation into what PIMCO, the world's largest bond manager, refers to as the "new normal": a period of slow growth, high unemployment, and broke government.

In an interview with CNBC this morning, PIMCO co-CEO Mohamed El-Erian said, "The key issue... is that we simply cannot generate enough growth to get us over all these issues. Therefore, we have these structural headwinds that continue to slow us down. Until we see structural solutions, we're going to be stuck on the bumpy road to a new normal."

 We believed an agreement to raise the debt ceiling would send gold tumbling and the market soaring (reversing the trend leading up to the decision). We have one more day to prove our thesis – and we were right in today's early trading – but the prevailing trend continues...

 Over the weekend, with news of an imminent debt deal, gold dropped from its record high to less than $1,610 an ounce. It opened today around $1,615, dropped to $1,610, then soared to more than $1,630. Stocks opened today up more than 1%, then dropped an equal amount.

 The reversal in part reflects uncertainty that a deal will be finalized... and the equivocal nature of the proposed deal. Also, the Institute for Supply Management, a trade group of purchasing executives, said today that its index of manufacturing activity fell to 50.9% in July from 55.3% in June – the lowest reading since July 2009 (one month after the recession officially ended). Any reading above 50 shows growth.

 HSBC today said it would cut 30,000 jobs (more than 10% of its workforce) by 2013 and sell nearly half its retail bank branches in the U.S. (HSBC already announced a deal to sell 195 U.S. branches to First Niagara Bank for $1 billion). The bank wouldn't disclose where layoffs were coming from, but said it would continue hiring in Brazil and Mexico. To put HSBC's announcement in plainspeak... The bank is giving up on the U.S. and shifting its focus to Latin America.

 We expect this trend to continue. And as we've said in the past, it should be bullish for Miami real estate. We think Miami real estate will boom because of an influx of wealthy Latinos and (more important) gambling. In the June 22 Digest, we noted the latter trend is beginning…

Last Friday, real estate research firm DQNews released bullish numbers for Miami. June home sales surpassed the year-ago level for the seventh consecutive month. And the median home price there fell slightly, down 10% from June 2010, marking the 45th consecutive month in which the median price has fallen year-over-year.

In June, 9,857 new and resale houses and condos closed escrow (including Miami-Dade, Palm Beach, and Broward counties). June sales rose 1.4% from the prior month and 6% from a year ago.

 But the biggest increase comes in the high-end market... 103 houses and condos sold for $2 million or more last month, up 21.2% from May and 27.2% from a year earlier. Also, in the second quarter of 2011, buyers purchased 10,500 square feet of livable space for $13.2 million in the Continuum on South Beach – one of the beach's best buildings. That's an average of $1,257 per square foot.

Miami real estate prices are currently down around 50% from the 2007 peak. And it looks like the area is finding a bottom.

 New 52-week highs (as of 7/29/11): SPDR Gold Trust (GLD), EV Energy Partners (EVEP).

 Lots of positive feedback in the mailbag... Must be all the sunshine. Send your notes to feedback@stansberryresearch.com.

 "A note of thanks for your excellent Digest and Newsletters. We look so forward to receiving them daily & monthly – and have learned so much over these past months – the value of your information & insight – amazing. Thanks again & again & again for terrific work." – Paid-up subscribers Irena and Matt

 "You have never heard from and probably we will never even meet face-to-face. I am a long time subscriber and reader that prefers to stay on the sidelines. Have read your articles on the coming demise of our dollar since 2008. Things are coming into focus now such that a novice like me can truly appreciate the implications of what you have been telling us. Wanted to let you know how much I appreciate your newsletter and recommendations. Especially the teaching of such complex subjects such that an average guy like me can understand. Keep up the good work and have yourself a SPARKLING week." – Paid-up subscriber T.S. Bhat

 "If your predictions on the market come to fruition, I am hopeful that you will again activate your Put Strategy letter. I followed it the last time and found it to be a very valuable asset. Please give it your utmost consideration." – Paid-up subscriber Ron Ceurvels

Goldsmith comment: While Porter's performance with the Put Strategy Report was incredible, we likely won't "reactivate" it. Why? Because we have something even better – an advisory written by the guy who taught Porter about the safest options strategies in the world. (Porter says so himself here.) It's called Retirement Trader, and it's written by Dr. David Eifrig, a former Goldman Sachs proprietary trader.

He's used the trading secrets he learned working on Wall Street to produce an incredible 100% win rate since his newsletter launched in April 2010. He's closed 28 winning trades in a row. The reason for Doc's success is simple... He doesn't trade options like most people. He goes for modest gains in safe stocks.

The best part is, Doc's trading strategies work best when there's a lot of volatility in the market. And we believe we're about to see a huge spike in volatility.

Ron, as an Alliance member, you already receive Retirement Trader. For everyone else, we urge you to try this incredible trading service. And today is your last day to enroll at a huge discount. To learn more, click here...

Sean Goldsmith

Baltimore, Maryland

August 1, 2011

Debt deal imminent... Accelerating toward the 'new normal'... HSBC cutting jobs and exiting the U.S... Still bullish on Miami... A nation of renters... Last chance for a perfect trading record...