Your editor celebrated his birthday in New York last Friday with 80 friends from The Atlas 400, the travel and networking club Porter and I founded... We gathered for dinner at the Four Seasons restaurant the day before our meeting. Unbeknownst to me, someone tipped the staff off to the occasion... And a giant, pink blob approached my head from behind. The Four Seasons, it seems, doesn't waste time with traditional birthday cakes. It serves cotton candy with a candle. It was delicious... and easy to share. Almost every guest tore off a chunk for himself.
As the club's main asset is its network, we ask our members to share business ideas and opportunities at the meeting... This year, we learned about some incredible opportunities... One of the country's top hedge-fund managers told us about the few assets you can safely buy to protect yourself from global crisis. One member, who started a Spanish private-equity firm, discussed the opportunities he sees in that country. And a super-successful oilman discussed a new, giant oilfield in the U.S. He said a $640,000 investment here could feasibly return $73 million.
But it's not all business. The club members also discuss adventures we want to take in the future. Porter proposed a trip to Tuscany, an Italian locale he's visited almost every year for the past decade. We're going to rent one of the best properties in Tuscany and have private tours and tastings at the region's top wineries. And we'll be driving from locale to locale in Italy's finest automobiles. (We're still deciding between horses or bulls.) We're working on a few other surprises to make the trip even better. We have a mandate... We only provide experiences that are off-limits to most individuals. And our jaunt to Tuscany promises to be extraordinary.
If you're interested in applying to The Atlas 400 and joining us in Tuscany, you can fill out an application here or e-mail Karen Campbell at info@theatlas400.com for more information.
Friday was an important day for gold. While the S&P 500 fell nearly 2.5%, gold rallied 3%. And gold stocks, which have been destroyed this year, soared... The Market Vectors Gold Miners exchange-traded fund (GDX), a basket of major gold stocks, was up 6.4%.
Bad job numbers spooked the market Friday... U.S. unemployment rose to 8.2% in May. And the economy added only 69,000 jobs (against expectations of 158,000). The message was clear... The U.S. economy hasn't recovered yet. This realization (along with continuing problems in Europe) led market participants to believe more quantitative easing (QE) is on the way...
After the jobs numbers, CNBC sent a "snap Fed survey" to its contacts in the financial world... Of the 60 financial professionals who responded, 58% expect the Fed to launch another QE round in the next year. That's up from 33% of respondents from the survey six weeks ago.
And of those expecting more QE, 42% believe the Fed will move at its June meeting. Another 47% believe it'll wait until July.
Goldman Sachs chief economist Jan Hatzius recently wrote to clients...
|
Our confidence that the [Federal Reserve's Open Market Committee] will ease policy once more at the June 19-20 meeting has also grown. At a time when Fed officials are far short of their dual mandate of maximum employment and 2% inflation, financial conditions should be accommodative and GDP growth should be well above trend in order to re-employ displaced workers and avoid a gradual transformation of cyclical into structural unemployment. |
|
Instead, financial conditions are only roughly at average levels... and GDP growth is below its long-term trend. Moreover, both financial conditions and growth have been moving in the wrong direction, to a degree that we think warrants action. |
The worries of a global slowdown pushed oil prices to less than $82 a barrel today... highlighting Porter's outlook of lower oil prices and higher natural gas prices. A global slowdown plays into Porter's belief... But he's more focused on the huge shift in the energy markets that's being driven by the incredible amount of oil being found in the United States. (For example, the oilfield we learned about at the Atlas meeting could be the second-biggest in U.S. history.) We wrote extensively about this phenomenon here.
Falling oil and low natural gas prices have destroyed the coal market... Coal – which fuels roughly half the electricity generated in the U.S. – competes directly with natural gas in the power market. But coal is much dirtier than clean-burning natural gas (which makes it unpopular with politicians). So with natural gas prices near record lows, the market is avoiding coal. You can see the result in the following chart of Peabody Coal (BTU)... the largest U.S. coal miner by volume...
The market uncertainty has pushed the Volatility Index (aka the VIX), the market's fear gauge, to above 27 today – its highest point this year. When the VIX rises, option premiums fatten. And that's the best time to sell calls and puts. We'll talk about this more in tomorrow's Digest.
We, along with the rest of the financial media, have been following the trading debut of Facebook... Digest readers know we advise you avoid initial public offerings. Individual investors who jump into the initial rush usually live to regret their decision. And with Facebook down another 3% today, shares are trading for less than $27. That's down 40% from the high of $45 on their May 18 debut.
New 52-week highs (as of 6/1/2012): Vanguard Inflation-Protected Securities Fund (VIPSX).
The weather must have been nice this weekend... We had lots of positive feedback in the mailbag. Send your notes, good or bad, to feedback@stansberryresearch.com.
"I am a subscriber to the Digest, 12% letter, Daily Wealth Trader and, from the deal I got by being a subscriber to you, The Palm Beach Letter. I do not have the subscriptions because I have the capital to take advantage of all of the trade recommendation's, although I am building a portfolio. I have all my subscriptions because I actually believe that learning from the best is the best investment I can make and will lead to me being financially independent.
"Another reason is because you and your team are great at marketing and understand that through volume you can make an incredible amount of money. I hope your business is growing every month. I am reading and learning as much as I can from all of the resources I know have access to thanks to my subscriptions, the info on the Training Center is amazing.
"I appreciate how honest you are even if you know that you will lose subscriptions over you not pulling any punches.
"When I got out of college at the end of 2009 I was hired as a Financial Adviser by Edward Jones. I thought that I would be helping people understand what investment options they had and help them achieve financial freedom. I quickly realized that once you get your series 7 and 66, your position is just being a sales person and I was not comfortable with that at all. I quit my job as an FA and now work on the service side for the company, have to pay the bills.
"That's one of the reason I think you actually want to help people because you explain that investments like options, for one example, are not just a dark cloud that should never be talked about." – Paid-up subscriber Daniel Creech
"I too have had similar results as JT since implementing most of the recomendations of the Private Wealth Alliance. I am not a retired engineer so called truth deciple or any other stuffed shirt, just a retired telephone technician. I have been investing for my own account for 40+ years and have used some of the strategies put forth in many of the Stansberry publications but I have never been as successful nor as confident as I have been since my Stansberry subscription. I for one get a great education from your free publications as well as the paid subscriptions." Paid-up subscriber Steve Jochimsen
Regards,
Sean Goldsmith
New York, New York
June 4, 2012
Join Porter in Tuscany... An important day for gold... The market expects more quantitative easing... Coal stocks crushed... Volatility soars... New low for Facebook...