It Looks Like Christmas in March

Forgetting what 'should' happen... An honest look at today's market... The reopening of Main Street... Lines at the mall and no reservations... It looks like Christmas in March... The 'Melt Up' rolls on... The market's 'fear gauge' hits a pandemic low...

What 'should' happen very often isn't what 'does' happen...

No matter how many times this idea is proven true before our eyes, we still need to constantly remind our brains about it.

Maybe we were just born too optimistic for the real world – or "reasonable," as paid-up subscriber Jim H. put it so well in Friday's Digest mailbag. Talking about our expectations for the American Rescue Plan, he said...

One of the greatest problems with reasonable people is that they expect reasonable behavior from everyone – even those that are unreasonable.

For now, we're willing to die on this "reasonable" hill.

But Jim is right... thinking this way does have its drawbacks. We get angry. And if we get too emotional, we can miss what's right in front of us.

We don't need to go far to find examples...

This is where we are in today's market...

When you think the government doesn't need to throw quite as much as $1.9 trillion into the economy... it does.

When you think a better way must exist than to "shotgun" money all over, as one of our paid-up subscribers puts it so well in today's mailbag... nobody in a position to do anything about it seems to really care.

This is all to say... we may have opinions about capitalism on fire, but we're not too big-headed to believe that our solutions or opinions would make a difference for the direction of stocks today, for instance.

When it comes down to it, all the forward-looking stock market cares about and all the backward-looking economic data tend to show is what everybody thinks and does with their money.

In other words, since we have money invested in stocks and want to make the most of it, we would be ignorant to ignore what is happening right now, too... despite what we think about the long-term consequences.

We're talking about the 'reopening' of the U.S. economy...

We briefly mentioned this idea in yesterday's Digest.

The federal government has taken it upon itself to mortgage the future and put down 5% of U.S. gross domestic product ("GDP") into the current economy through this September.

All the while, more people are getting COVID-19 vaccines and venturing out into the "wild" again, which boosts the economy on its own anyway.

And judging from reports over the past few days from some of our editors around the country, it's already happening. Stansberry NewsWire editor C. Scott Garliss, for example, is with his family in Key West, Florida. Earlier this week, he reported the place is packed...

We've been coming here for 20 years. We've never seen it this busy. It's very hard to get a reservation at a restaurant. One we like to go to doesn't have availability until May for lunch or dinner. You can get an 8 a.m. [reservation] for breakfast.

All of the merchants are [saying] business suddenly turned about a month ago. Prior to that it was horrible. The timing seems very interesting considering momentum on the inoculation front. I would think stimulus checks will only boost it.

Others on our editorial staff reported big crowds at malls over the weekend, almost like a "Black Friday" atmosphere. It looks like Christmas in March. Go figure.

We've said since last spring that the COVID-19 pandemic was a Main Street event...

In the April 22, 2020 Digest, we wrote that the pandemic was a reminder that "we the people" actually matter to the U.S. economy, as 70% of it is driven by consumer spending...

When you add up all the incremental decisions we make every day, they turn into big results...

There's a reason 22 million more Americans are unemployed today than a month ago... and that many more folks are looking for jobs now than during the financial crisis.

The pandemic has touched literally every part of our economy.

That week's example was the price of oil, which had briefly traded for negative $37 per barrel. The price action was stunning, but "reasonable" when you broke down why it was happening...

A year ago, with drastically fewer people traveling outside their homes by car, truck, or plane... demand for oil plunged. It reached the point where speculative traders and asset managers trading monthly oil-futures contracts felt it was worth it to instead pay buyers to take the responsibility of holding physical barrels of oil off their hands.

One futures contract of West Texas Intermediate ("WTI") crude oil, the U.S. benchmark, equals 1,000 barrels... That's an often-forgotten fact of market speculation meeting the "real economy."

Traders didn't want to be stuck with literally thousands of barrels of oil. (This is another reminder that you should always understand what you buy before you do it.)

But today, roughly 11 months later, the price of oil is back at new highs...

This uptrend has been in the making for several months. In fact, Chris Igou of our True Wealth research team wrote about it in the February 16 Digest...

"Following the trend" is an extremely powerful investing tool. That's because trends can last longer than you imagine. And they can go much higher than many people realize.

This holds true when we look at three decades of data in the oil market. New highs often mean even higher highs are on the way. The trend is your friend, after all.

Again, oil prices just hit a new high earlier this month. Take a look...

Around the same time, when freezing weather temporarily shut down oil production and refineries in Texas and cut into supply, prices of WTI and Brent crude oil – the international benchmark – topped $60 per barrel for the first time in more than a year.

The weather is a short-term catalyst. But in addition to that, increased demand over 2021 as the economy reopens, and capped supply from the countries in the OPEC cartel, are reasons for the expected uptrend. As Chris wrote last month...

COVID-19 is not a permanent hit to the oil market. The short-term headwinds for demand are going away in the coming months and years...

The world will once again travel for work, take vacations, and stay in hotels. Ultimately, that means oil use should hit new highs again within a few years... if not sooner...

Even more, OPEC continues to limit daily oil production to help reduce supply on the market. Saudi Arabia has promised to cut 1 million bpd in both February and March.

Altogether, OPEC has been cutting production for more than six months now... greatly reducing the amount of oil in storage containers.

In his essay, Chris also recommended a "one click" way to take advantage of higher oil prices – the Energy Select Sector SPDR Fund (XLE). It holds the exact kinds of companies that profit from higher oil prices.

And his suggestion has paid off... Since February 16, when the essay was published, XLE is up more than 12%.

Rising oil prices are an indicator of a 'real economy' rebound...

For most of the last year, the focus has been on tech, tech, and more tech... and for good reason.

The virtual part of our "two economies" system, as we've described it, was still functioning – and strengthening, in some ways – over the past 12 months.

Now, over the next few months at least, it looks like it's the real economy's turn... Investment bank Goldman Sachs now forecasts Brent crude to reach $75 per barrel by the third quarter.

And according to Chris, historic indicators suggest that we could see more upside in oil ahead... After similar extreme rebounds in oil prices to what we've seen in recent months, they experienced another 10% jump over the following year.

Commodities like oil and copper are hitting new highs – and so are beaten-down, hated bank stocks, which benefit from higher interest rates and a functioning economy.

Plus, we're seeing other hallmarks of a bull market – like "sector rotation" in the major U.S. indexes from growth stocks to value plays. It's credited to inflation fears, which could continue, depending on what we learn from the Federal Reserve meetings this week.

As Alan Gula of our flagship Stansberry's Investment Advisory team pointed out in a private e-mail over the weekend...

Over the past six months, there's been a rotation from growth to value. Sector wise, it's been tech/consumer discretionary to energy/materials/financials/industrials. That rotation has picked up steam over the past month with the big tech/momentum drawdown.

The S&P 500 Energy Index rose roughly 20% from February 12 to March 12, for instance, while the S&P 500 Information Technology Index was down 5%. As Alan explained...

I view this as a healthy rotation. Tech has led the S&P 500 higher for too long. It's great to see other sectors power higher rather than act like a lead weight around the index's leg.

Moreover, Alan said we've been seeing trademark signs of the "Melt Up" at work, as our colleague Steve Sjuggerud describes it. Since June 2020, the benchmark S&P 500 Index has had drawdowns (intraday high to low) of 8.3%, 10.6%, 8.9%, 4.6%, and now 5.8%.

Anyone who has followed Steve's Melt Up thesis over the years knows two things...

1. The idea is fueled by previously unthinkable government stimulus.

2. Corrections like we've seen over the past nine months are part of the action that investors should expect on the way to the ultimate euphoric top in stocks.

But we're not there yet...

We're reminded today of an idea that our Director of Research Austin Root has shared with Stansberry Portfolio Solutions subscribers before...

The major difference between our "future normal" and where we were before COVID-19 are that the economy and stock market will be supported by even more stimulus going forward.

As Austin wrote in December 2020 to subscribers...

The U.S. Federal Reserve and Treasury have made it clear that they plan to continue stimulating the economy for much longer than we previously expected.

And along the same lines, he said earlier this month...

The Fed is still extremely accommodative, new fiscal stimulus support will likely come in the trillions of dollars, and the economy should show strong year-over-year growth.

So despite how we may feel about excess stimulus thrown on top of an already rebounding economy, how expensive stocks might be, and the long-term impact of how we got here, we've arrived at a time where we can say we're closer to "normal" than we've been in a year.

The market is reflecting that today. Here's one more telling signal...

Longtime Digest readers know we like to track the CBOE Volatility Index ("VIX"), which is often called the market's "fear gauge." It measures the prices that people are willing to pay for stock options...

Today, the VIX closed below 20 for the second time in roughly a month (the last instance was on February 12). This is significant because, historically speaking, we consider "volatility" to be high when the VIX is greater than 20...

As our DailyWealth Trader editors Ben Morris and Drew McConnell explain for their subscribers in "The Volatile Markets Report"... in a typical calm year for stocks, "the VIX may jump above 20 a bunch of times. But it doesn't stay there for long."

In 2020, the VIX was above 20 every day after the middle of February and peaked at an all-time high of almost 83 exactly one year ago today. That's a sign of a scared market.

Since then, though – despite a few spikes along the way during broader market sell-offs and wild GameStop (GME) trading days – this indicator of fear seems to have been trending slowly downward... but not surely.

As always, we'll keep you posted on what we see...

Tomorrow, Federal Reserve Chair Jerome "Cash Bazooka" Powell will have another press conference. We'll learn more about the central bank's public stance on its "easy money" policy as the economy reopens.

What Powell says (or doesn't) could perhaps calm or stoke inflation fears again... and that could keep the sector rotation that we talked about earlier – from growth to value – going. Or his words could put wind behind the high-flying tech stocks again.

Stay tuned to our NewsWire team for up-to-the-minute coverage of the Fed's meeting tomorrow. Here in the Digest, you'll hear from Steve... He wants to share an idea about the one asset you must own when the "Melt Down" does arrive. You won't want to miss it...

After all, the time to prepare for that is right now.

Bitcoin Is the 'Future of Money'

If you focus on the daily price moves, you'll miss the more profound truth that bitcoin is more than just a systemically important financial asset... That's according to Alex Tapscott of Ninepoint Partners, a firm that recently launched a bitcoin trust in Canada. "Bitcoin is strengthening its case as the future of money itself," he tells our colleague Daniela Cambone...

Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and don't forget to follow us on Facebook, Instagram, LinkedIn, and Twitter.

New 52-week highs (as of 3/15/21): ABB (ABB), Automatic Data Processing (ADP), American Homes 4 Rent (AMH), AutoZone (AZO), Brunswick (BC), Blackstone Mortgage Trust (BXMT), CBRE Group (CBRE), Comcast (CMCSA), Dropbox (DBX), Eagle Materials (EXP), Expeditors International of Washington (EXPD), Forum Energy Technologies (FET), Formula One Group (FWONA), Invitation Homes (INVH), Ingersoll Rand (IR), iShares U.S. Home Construction Fund (ITB), LGI Homes (LGIH), Cheniere Energy (LNG), Liberty SiriusXM Group (LSXMA), 3M (MMM), MakeMyTrip (MMYT), Altria (MO), Annaly Capital (NLY), Oshkosh (OSK), Invesco S&P 500 BuyWrite Fund (PBP), Flutter Entertainment (PDYPY), Invesco High Yield Equity Dividend Achievers Fund (PEY), PowerFleet (PWFL), VanEck Vectors Russia Fund (RSX), Starbucks (SBUX), Sprott (SII), ProShares Ultra S&P 500 Fund (SSO), Trulieve Cannabis (TCNNF), Trip.com (TCOM), Texas Pacific Land Trust (TPL), Travelers (TRV), Trane Technologies (TT), Vanguard S&P 500 Fund (VOO), and W.R. Berkley (WRB).

In today's mailbag, a thought for a new non-fungible token ("NFT"), which our colleague Dan Ferris wrote about in Friday's Digest... and many more of your comments on the "American Rescue Plan." What's on your mind today? Tell us at feedback@stansberryresearch.com.

"I have a 4X8 piece of plywood on which I spilled some paint of various colors. My dog also walked through some parts. Any takers? Bids open at $1 million." – Paid-up subscriber John N.

"After reading [Monday's] Digest, I wanted to let you know where I spent my 'stimulus.' My favorite bartender was struggling from Governor Tom Wolf's shutdown in December before Christmas arrival. When things opened up again in January, I stopped in to see how she was doing, she was visibly upset. Normally she's not an emotional person. I knew she was in trouble. She was going to lose her apartment so I decided to give her the $600.00. She said I was amazing and the smile on her face made it all worth it.

"And with the next round $1,400, I will be using to pay my Dad's overdue 2020 School Tax. Just got off the phone with the appointed Lawyer earlier today, and they are willing to accept installment plan with $1,400 as down payment. This will prevent a lien being filed and my Dad can stay in the house longer.

"I still have lots of credit cards (approx. $10,000) but was able to finance at lower costs. Plus I was able to get a better rate on my home mortgage (2.375% for 30 years) and will be settling soon." – Stansberry Alliance member Dave K.

"Thanks to the sale of a very successful business and investment advice from Stansberry, my wife and I are living quite comfortably in retirement. When we got a stimulus check I was taken aback at first. Then I remembered that in 2019 I had a large noncash loss in a limited partnership that lowered our taxable income.

"We know there are many people out there who lost their jobs in the pandemic lockdown and could really use the funds, so we donated our check to a charity that will help folks that need the money more than we do.

"It is very disheartening to see borrowed money handed out with so little regard for means testing or actual need. This doesn't bode well for the future." – Paid-up subscriber Lloyd V.

"My wife and I are 77-78 years old and living comfortably with a total gross annual income of a bit less than $100,000. We refinanced our house last year at a rate of 2.875%, have a new car loan at 1.9% for 5 years, and within the past two months had to buy a new refrigerator and range (the old ones went belly up), along with having an emergency dental bill for $5,300.

"We are fortunate. When we go out for a meal, I normally tip in the range of 100% of the total bill. Those folks need our 'Monopoly Money' far more than we do." – Paid-up subscriber Bob R.

"Years ago I heard a wise man say that anytime you throw money at a problem, you can count on it getting worse. We have certainly endorsed that concept with a total shotgun approach to helping our citizens, especially those that don't need it.

"A good example is my nephew's construction company in Florida that had more sales than they could handle. COVID strikes, unchallenged unemployment claims were filed by employees that decided receiving $22.75/hour and getting to stay home watching TV (or doing side jobs with pay under the table) was way better than having to get up early each day and do physical work in the hot sun at $15/hour.

"So much waste!!" – Paid-up subscriber Bob P.

"Some will judge me to be a heartless, greedy SOB for the following... There is not enough money in the world to help some people. It breaks my heart to confess that some of these people are family members. Some are spendthrifts, homeless, drug addicts, and unproductive, single 30- to 40-year-olds with average-to-high IQs living with parents and working dead-end minimum-wage jobs by choice. They LOVE stimmy checks! Two of our young families with children are legitimate recipients.

"But here's the problem: Government schools have failed over the past 50 years to transfer economic and Constitutional fundamentals of American Exceptionalism from one generation to the next. Consequently, younger Americans are ceding their birthright and historically superior inheritance to the government – from which our Founding Fathers risked everything to break free so they could pursue life, liberty and happiness (work and family).

"Today's American citizens are losing this birthright and don't even know it – because the government schools strategically didn't teach it. These younger citizens think the government has all the answers. The problem is that the government now has too much power, and its answer to everything is spending and more spending, and placing that debt on the 'Toddlers.'

"So what's the answer? Twofold: 1a) Americans must take back power from all government levels and do this by personal involvement. 1b) Take back our schools via school choice; the money follows the student and the parent decides what school their kid will go to. Let schools compete and teach how a free people govern themselves and work productive lives. 2) Don't feed the bears. If you give your stimmy check to a drug addict, what do you think will happen? Are you helping? No. You are now part of the problem. Debt-aholics will also not get a penny from me. That's gas on the flames.

"Do not waste your stimmy checks on losing causes. Support disciplined family members to get out of debt. And in our family, we have two adopted teenagers whose IQs are in the low 80s because they suffered fetal-alcohol damage and unspeakable abuses. They, I will help. In short, be discerning. And in the long run, work at 1 and 2 above. The only American Rescue we need is to be rescued from the clutches of our own government." – Stansberry Alliance member Bill W.

"I am a paid-up subscriber who loves your research but sometimes I get annoyed with you guys. I really don't need the stimulus check either but it's coming my way and I will use it in a number of ways. Part will go to charity to my local food bank. Part of it will go to pay down credit card debt. Part of that stimulus will help me pay my income taxes. And despite what many members believe, this money is needed by millions of Americans today.

"I do think it could have been more targeted to the most needy but that did not happen. I have asked myself often during the pandemic what the function of our government should be to our citizens. What is the government's responsibility to help those damaged by an event that was not their fault? Maybe some of your well-off subscribers feel that our government should not be in the business of doing this. However, if our citizens are being dragged down by unemployment, poverty, illness, etc. from this pandemic, then I believe that drags our whole country down.

"I'm probably in the minority to feel this way but in drastic times people need a boost up. It's too bad everything but the kitchen sink was thrown into this package, but both parties have taken a turn at crafting bills that included much waste. I hope everything turns out alright but not expecting it will." – Paid-up subscriber Betsy C.

"Thank you for everything you do, and for allowing this dialogue. Our country is starving for meaningful dialogues.

"Regarding the negative remarks about Trump's tax cuts: just before COVID, we started to reduce the deficit. So many people thought they weren't positively impacted by having to pay less taxes, that was not the truth. Most everyone paid less in taxes; there were just so many more paying at the same time, hence reduction in deficit.

"As to my thoughts about this frightening stimulus... it seems extremely wasteful, because most recipients don't need the money, including individuals, states, labor unions, schools, etc. Not only that, but for those who do need it, having a real job, helps much more than a one-time present.

"This free spending seems prone to encourage actual inflation by reducing the value of the dollar. If Congress really wanted to help our country, they would have given small businesses and low-paid individuals a tax free year or two to help them back on their feet. As things stand, people running this country seem unable to help our country." – Paid-up subscriber Tzila R.

"We are certainly told to trust the science in regards to the pandemic, but there seems to be no science to rely on in the economic world. Economics is of course a dismal science since the totality of the variables can never be determined with surety. But we are a capitalistic-based economy, and we must believe in it. The only way out is to keep going up.

"Few know how to handle a downturn, while everyone knows how to rise with the upturn. What we do with our less fortunate is a moral conviction. We do have some people smart enough to make it all monetarily work, but we would never listen to them. This is what government officials have figured out so they do for themselves in the pretense of doing for all...

"If hard work led to wealth, I would be one of the wealthy. It leads to tired. Not retired. When you spend your wealth on things, recall the tired hands that made those things. Invest in companies that are proud of what they make and the less fortunate will get their share. Invest in the next big thing just to increase your wealth, and then look for the cheapest price for your goods, and there will be more less fortunate.

"The world is complicated by those who want to be in power and simplified by those who seek to empower. Capitalism will never fix its own faults and socialism is there to make sure we don't forget them. The wealthy life is judged by what we attained, the good life is judged by what we did for others." – Paid-up subscriber Bill M.

"Feel like the wise thing to do with it is hold to pay taxes as I'm sure they are going to be out of sight." – Paid-up subscriber Janice E.

"I don't know if I'll end up getting any Biden Money or not, but if I do I'll be applying it against my real estate taxes, which I've just received notice will be going up another 5% this year. They went up 5% last year, too and something like 20%+ the year before that. Curiously, the quantity of land I own has not increased during this time, the size of the structure on it has not increased, and the quality of the structure has not increased. In fact, it's actually become more decrepit. My porch is literally about to fall off. I was about to replace it a couple of years ago before I received that 20%+ tax increase. That convinced me to let it collapse on its own lest the county decide to steal even more money out of my pocket. With any luck, it will collapse while the county treasurer is standing on it." – Paid-up subscriber David H.

"Almost all who save money are betting, even if they do not think of themselves as betting, that value of money will remain relatively constant over time. Therefore, when government dilutes value of money by fabricating vast amounts of new money, they are knowingly cheating all those citizens relying on government to maintain value of money, which represents real hard work in most cases.

"More and more, government is using monetary and fiscal policy... essentially, full power of government... to reward persons without working, and to penalize persons who save money. For those who continue to use United States money, they should think long and hard about whether they should figure out some other way of storing value." – Paid-up subscriber John M.

"SO... To all who think I should consider giving away my $1,400 check, you've been standing in the sun too long. There was a time I might agree with doing that BUT NO MORE. Mine is going into Bitcoin.

"If it becomes worthless I will have had the enjoyment of losing it honestly and not have to watch helplessly as the government creates some welfare program to distribute it to some cause I don't agree with.

"I hope all you bleeding hearts have fun trying to shame me into feeling sorry... Lots of luck with that!!!!" – Paid-up subscriber Sheldon S.

"Having recently subscribed to a lifetime of Crypto Capital, Stansberry will get my family's entire check! Plus a bit of my own money.

"Absolutely worth the price. Thank you, Eric, Fred and company!" – Paid-up subscriber James S.

"This one can be summed up in a single word. Crypto." – Paid-up subscriber Terry G.

All the best,

Corey McLaughlin
Baltimore, Maryland
March 16, 2021