High yield is finally in the red...

High yield is finally in the red... It's still not time to buy... This tech powerhouse just hit a new low... A billionaire's largest position... Swiss rates go negative... Swiss bank accounts and Rolexes... Tonight's emergency briefing with Dan Ferris...

 

 High-yield (aka "junk") bonds turned negative for the year yesterday...

 

We've written plenty about how falling energy prices have killed junk-bond funds... And we've written even more about why it's crazy to buy the riskiest corporate credits at record-low yields.

 

Still, money poured into junk-bond funds, pushing the sector up 6% through the middle of the year.

 

But as of yesterday, the Barclays U.S. Corporate High Yield Index was down 0.3% for the year – its first time in the red since 2011.

 

 If high yield stays in the red, it will be the first down year since 2008, when risk-averse investors pushed the market down 26% in the midst of the subprime crisis.

 

The high-yield market yields 7.1% today, according to Barclays. That's a "spread" of 4.9% over Treasurys – its highest level since late 2012 – and up from a 3.2% spread in June.

 

So even though high-yield bonds are moving lower (as yields correspondingly move higher), the situation is far from crisis conditions. Consider that back in December 2008, during the subprime crisis, the spread reached more than 20%.

 

As you can see from the following chart, the spread just broke out to a new two-year high... but it's still a far cry from levels we've seen in the past 10 years...

 

 

 Still, Porter says a good rule of thumb is to not buy high yield until it yields at least 10%... and to never buy a junk bond unless it's trading at a discount to par (100).

 

The average price on junk bonds has fallen from $1.03 in September to par two weeks ago and down to 96.4 cents on the dollar today.

 

 We're still not touching high yield... But another asset in negative territory this year looks attractive...

 

The Nasdaq 100 – an index of the 100 largest Nasdaq-listed companies – is up nearly 20% this year. But even with today's bounce higher, tech giant Google is still down around 9% in 2014...

 

 

Below is a table of the 10 largest holdings in the Nasdaq 100 and their year-to-date returns...

 

Stock	YTD Return
Facebook (FB)	42%
Intel (INTC)	41%
Apple (AAPL)	41%
Gilead Sciences (GILD)	39%
Microsoft (MSFT)	25%
Cisco (CSCO)	21%
Comcast (CMCSA)	8%
Qualcomm (QCOM)	-2%
Google (GOOGL)	-9%
Amazon (AMZN)	-26%

 

 Google is the dominant search engine... It's one of the gatekeepers to the Internet. And it's one of the best-known brands on Earth.

 

The company makes a fortune selling online ad space. It houses an incredible amount of data (everything from books to maps). And in addition to its core business, it's always investing in cutting-edge technology – like self-driving cars, for instance.

 

There aren't many other businesses with as sustainable a competitive advantage as Google has. It's one of the few companies you can buy and hold safely for a very long time. And today, it's trading at a forward price-to-earnings ratio of less than 17.

 

 Last year, billionaire hedge-fund manager Stanley Druckenmiller told CNBC Google was his largest position. As we wrote in the October 30, 2013 Digest...

 

Druckenmiller said Google has the "greatest business model in American business." The majority of Google's revenues comes from selling targeted ads to users of its many services. Druckenmiller also touted Larry Page, the company's cofounder and CEO, as "this generation's Thomas Edison."

 

 In a surprise decision, the Swiss National Bank ("SNB") announced today it will start charging customers 0.25% for the privilege of holding cash in Swiss banks – a concept called negative interest rates.

 

It's the first time Switzerland has had negative interest rates since the 1970s.

 

Additionally, according to the New York Times, "the target range for Libor, the franc's three-month London interbank offered rate, is now between -0.75% and 0.25%, compared to its previous level of between 0.00% and 0.25%." As of today, it has fallen to -0.05%.

 

 According to SNB President Thomas Jordan, the main factor in the bank's decision was to slow down the inflow of Russian money into Switzerland. Because of the ongoing crisis in Russia, wealthy Russians are sending money to Switzerland because of its "safe haven" status.

 

Switzerland may have to lower interest rates again and go into further negative territory to preserve its cap of 1.2 Swiss francs per euro.

 

Jordan said the SNB already intervened in the currency market in the past two days to purchase euros to maintain the cap. It was the first time in two years the SNB had to directly intervene in the currency markets.

 

According to the SNB...

 

The introduction of negative interest rates makes it less attractive to hold Swiss franc investments, and thereby supports the minimum exchange rate. The SNB is prepared to purchase foreign currency in unlimited quantities and to take further measures, if required.

 

We expect the SNB will require those "further measures" it hinted at.

 

In addition to the ongoing crisis in Russia, European Central Bank head Mario Draghi is looking to launch a new round of quantitative easing. That will lower the euro's value and will put more pressure on the 1.2 euro-to-Swiss franc floor. It looks like more intervention is in the SNB's future.

 

 On the topic, The Atlas 400 is visiting Switzerland next June...

 

One of our members is a high-ranking financial executive. He's a Swiss native with strong connections. And he's taking the group on an investment tour around the country...

 

This Atlas member has arranged meetings with the CEOs of three major banks. A lot of U.S. money fled Switzerland after the country caved to the U.S. government's requests for more information. But according to our insider, that money is returning. The Swiss banks are stronger – and more private – than ever before.

 

In addition to opening bank accounts and storing gold, Atlas will also look at some investments in the country. Our member there said there's a special way for foreigners to buy real estate in Switzerland (much of the real estate is only for locals). If wealthy foreigners knew about this loophole, cash would pour into the sector.

 

Of course, there will be time for fun, too... Atlas will visit the factories for watchmakers Rolex and Patek Philippe... and participate in other activities that are off-limits to most folks in the country.

 

 There's still time to sign up for the Switzerland trip, and we invite you to apply for membership to Atlas. Keep in mind that it's expensive to join... $25,000. If that's a stretch for you, we'd urge you not to apply.

 

But for the right folks, Atlas can be an incredibly rewarding experience... opening up doors around the world and introducing you to some of the most interesting and powerful people in the world.

 

To learn more about The Atlas 400 and how to apply, click here.

 

 We'll close today's Digest with another invitation...

 

Tonight at 8 p.m. Eastern time, Extreme Value editor is hosting his first live webinar. As we've written many times in the Digest, Dan is super-bullish on commodities today.

 

Regular Digest readers know that commodity stocks have gotten crushed. Dan thinks buying certain high-quality small-cap commodity companies today could generate five to 10 times your money.

 

In this webinar, Dan will explain "tax-loss selling" – why investors always dump shares toward the end of the year. He wrote about it in today's DailyWealth...

 

Investors who lose money in small-cap mining stocks often sell their shares late in the year, so they can write off the losses on their taxes. They wait until late in the year because they remain hopeful the stocks will bounce back.   To exit as quickly as possible, desperate resource investors start accepting lower and lower bids on their shares. That pushes resource-stock prices down. After the first of the year, the selling stops and the share prices spring back to life.   The general idea is you can buy when everybody is selling in November and December and sell when they're buying early the next year. Buy low, sell high.

 

 These investors have taken huge losses in commodity stocks... And this tax-loss selling will lead to even bigger drops in some high-quality stocks, creating an even better entry point for investment.

 

Dan will tell you everything to know... and explain where you should be looking to put your capital to work in the commodity sector. You just have to watch live at 8 p.m. Eastern time tonight at StansberryTraining.com. It's completely free. You can also sign up for a reminder by clicking here.

 

 New 52-week highs (as of 12/17/14): Deutsche X-trackers Harvest China A-Shares Fund (ASHR), Cempra (CEMP), CME Group (CME), CVS Health (CVS), Dollar General (DG), and TC Pipelines (TCP).

 

 Another quiet day for the mailbag as folks gear up for the holidays. What Stansberry Research recommendation has been your biggest winner in 2014? Let us know at feedback@stansberryresearch.com.

 

 "Just wanted to drop a line to say thanks, I really enjoy the work and information you give us in True Wealth Systems Market Extremes, I have profited from both 3M and also buying Hershey @ $91.00, as of yesterday it is now at $99.00. Thanks again I think it's time for some more KO. Keep it coming. One very happy life time member, Alliance and Stansberry Venture." – Paid-up subscriber Don W.

 

Regards,

 

Sean Goldsmith

December 18, 2014