New All-Time Highs Are Here

New all-time highs are here... U.S. stocks and bonds hit new records together for the first time in history... The world is running out of yield... Japan plans new stimulus... Europe could soon follow... Corporate bonds are 'the only game in town'... Doc's advice for income investors...

Today, the benchmark S&P 500 Index set a new all-time closing high of 2,137. That's 0.3% above the previous high of 2,131 set on May 21, 2015.

But U.S. stocks aren't alone in record territory...

Last Friday, the yield on the benchmark 10-year U.S. Treasury closed at a new all-time low of 1.366%.

This isn't just unusual – it has never happened before. As Bloomberg reported Friday evening...

It isn't supposed to happen that way – in fact, it never has. At no time in history have government bonds and U.S. equities, generally viewed as risk-on/risk-off complements, ended the same trading session this close to their respective records, according to data compiled by Bloomberg...

"The stock market and bond market are expressing very different opinions," said Jack Ablin, the Chicago-based chief investment officer of BMO Private Bank, which oversees about $66 billion. "It seems, at least on the surface, to be incongruous. Obviously I'm happy for the bulls, but I get the sense that there's something dysfunctional going on."

Of course, regular Digest readers know we believe that "something dysfunctional" is rampant central-bank manipulation...

Central banks in Europe and Japan have pushed short-term interest rates into negative territory. Meanwhile, their massive quantitative-easing ("QE") programs have been buying up trillions of dollars of government and corporate bonds (and even stocks, in some cases).

Together, these efforts have pushed bond yields to record lows – and bond prices to record highs – across a huge part of the global economy. (Remember, bond prices move inversely to yields... Prices rise when yields fall, and vice versa.)

According to Bank of America Merrill Lynch, there is now $13 trillion of global negative-yielding debt. That's an increase of $2 trillion just since the "Brexit" vote a few weeks ago. As Shyam Rajan, head of U.S. rates strategy research, told the Wall Street Journal last week, "The world is running out of positive-yielding safe-haven bonds."

This growing pile of negative-yielding debt makes U.S. Treasurys relatively attractive. Foreign investors who are being charged to own their government's debt may find even the historically low yields on U.S. assets too irresistible to ignore.

Meanwhile, negative rates and unprecedented easing have done little to boost the economies or major stock markets of Europe or Japan.

Here too, the U.S. may look "less bad" to foreign investors.

The U.S. economy isn't booming, but it's relatively better off than others today. And the Federal Reserve has called off additional interest-rate increases, and has not (yet, at least) seriously considered cutting them further.

This trend is virtually certain to end in disaster... Sooner or later, the Fed will have no choice but to join the rest of the major world economies using negative interest rates.

But until it does, the rally in U.S. assets could continue as foreign capital flees to any yield it can find. In fact, if today's news is any indication, this trend could soon accelerate.

Just as we predicted, the Japanese government is set to "do more"...

Following an election win over the weekend, Japanese Prime Minister Shinzo Abe ordered a new fiscal stimulus package. He didn't share details on its size, but news service Reuters reports it will be more than 10 trillion yen (about $100 billion).

In addition, current Bank of Japan ("BoJ") Governor Haruhiko Kuroda met with former Fed Chair Ben Bernanke over lunch in Tokyo this morning.

Bloomberg reports the BoJ did not issue a statement on the substance of the talks, but it's believed that Bernanke was there to discuss "monetary-financed fiscal programs." These are a form of so-called "helicopter money," where the central bank prints new money out of thin air and gives it to the government to spend directly.

But Japan may not be alone in seeking new stimulus measures for long...

A separate report from Bloomberg shows Europe may soon have to expand its QE program.

Because of eurozone rules, German bonds must make up the largest percentage of the European Central Bank's ("ECB") QE bond purchases.

Unfortunately, nearly 70% of Germany's $1.1 trillion in sovereign debt is no longer eligible to be purchased today. This is because the yields on these bonds have plunged below the ECB's short-term rate of -0.4%.

Said another way, the ECB is literally running out of bonds to buy.

Don't be surprised if the ECB soon follows Japan... and begins buying stocks as well.

Finally, we should note Treasury bonds aren't the only "safe" U.S. bonds that are garnering interest today. Yield-starved investors have also been pouring billions into investment-grade U.S. corporate bonds.

Who can blame them?

According to the Wall Street Journal, U.S. corporate bonds account for just 12% of all global investment-grade debt, but now represent 33% of all investment-grade yield income.

Investors in seven- to 10-year investment-grade corporate bonds can still collect an average of 3.14%. That's more than twice what you can earn in 10-year Treasurys.

But our colleague Dr. David "Doc" Eifrig says these folks are making a big mistake.

Even with the relatively big yields, Doc says corporate-bond investors aren't being properly compensated for the risks they're taking today.

Instead, Doc recommends taking a look at areas of the income market that haven't soared yet. For example, while folks have flocked to "safe" bonds, they've ignored real estate.

Doc says real estate used to be considered one of the safest income investments in the world, before the last financial crisis taught folks that housing prices can go down as well as up.

Many investors fled the sector and still haven't returned. And Doc says this has set up a fantastic opportunity in real estate investment trusts ("REITs") today...

As we discussed in the June 29 Digest, REITs are one of the few sectors that aren't struggling today.

Despite the "profits recession" for many U.S. businesses, REITs are still growing earnings.

Yet unlike most other income investments today, REITs are reasonably priced and offer a solid average yield of 4.4%, as tracked by the MSCI U.S. REIT Index.

Doc says REITs are a "clear buy" today for anyone looking for safe, reliable income streams. Even better, there's a kicker that is virtually guaranteed to give the sector a BIG boost before the end of the summer. As Doc explained in that Digest...

Mutual funds have rules that dictate their sector allocations. They need to match the market. So if tech stocks make up 20% of the market, the fund should have about 20% of its money in tech stocks.

REITs currently get folded into the "financials" category, along with banks and insurance companies. But that's changing at the end of summer. On August 31, REITs will split into their own "real estate" category. This is the first major change to the classification system since it was launched in 1999. Right now, the average mutual-fund manager in the U.S. is underweight REITs by 3.3% relative to their market benchmarks, according to investment bank Jefferies. When REITs split out on their own, these fund managers will be forced to up their REIT allocation.

Goldman Sachs expects this will generate about $19 billion worth of buying pressure for REITs. JPMorgan estimates it'll be closer to $100 billion. Whoever is right, REITs will be getting some extra support and buying come fall. Pair that with the strong fundamentals for REITs and it looks like a great time to get invested.

Doc shared all the details on his two favorite REIT investments in the June issue of his excellent Income Intelligence service.

If you're an investor who needs more safe, consistent income streams today, you owe it to yourself to learn more. Click here to try Doc's Income Intelligence for yourself, absolutely risk-free.

New 52-week highs (as of 7/8/16): Automatic Data Processing (ADP), First Majestic Silver (AG), Alamos Gold (AGI), AutoZone (AZO), Becton Dickinson (BDX), Bristol-Myers Squibb (BMY), Central Fund of Canada (CEF), Ciner Resources (CINR), Cross Timbers Royalty Trust (CRT), Direxion Daily Real Estate Bull 3X Fund (DRN), Western Asset Emerging Markets Debt Fund (ESD), Fidelity Select Medical Equipment and Systems Fund (FSMEX), VanEck Vectors Junior Gold Miners Fund (GDXJ), SPDR Gold Shares Trust (GLD), Johnson & Johnson (JNJ), Nuveen Preferred Securities Income Fund (JPS), Medtronic (MDT), 3M (MMM), Altria Group (MO), Nuveen AMT-Free Municipal Income Fund (NEA), Nuveen Premium Income Municipal Fund 2 (NPM), Nvidia (NVDA), Osisko Gold Royalties (OR.TO), Procter & Gamble (PG), ETFS Physical Platinum Shares Fund (PPLT), Ritchie Bros. Auctioneers (RBA), Regions Financial – Series B (RF-PB), iShares Silver Fund (SLV), Silver Wheaton (SLW), Sysco (SYY), Vanguard REIT Fund (VNQ), Wells Fargo – Series W (WFC-PW), Consumer Staples Select Sector SPDR Fund (XLP), and PIMCO 25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ).

In today's mailbag, several subscribers tell us how they're doing with our gold recommendations. We'd love to hear from you. Send your notes to feedback@stansberryresearch.com.

"I've been reading Stansberry for quite some time, and it didn't really take me long to see that [Stansberry Gold Investor] was just what I was looking for. I know what gold and silver can do in unstable times, having ridden the last tsunami to its top in 2011... I'm currently up over $21k on my $50k initial investment. Keep up the good work guys!" – Paid-up subscriber Dan

"Thanks Porter and staff. I am up $91,000 in 2 months." – Paid-up subscriber George M.

"Thanks to the advice of Porter (and others), I feel as if I am set for the upcoming rise in gold prices. In 2 months, my gold investments are up over 75%. Due to what Porter and others have taught me over the years, I was able to catch the bottom of gold prices in December and January. Those investments are up over 125% since that time. There is no doubt in my mind that my 4 kids' college educations will be financed as a result of my investments in gold... and then some. I have talked to my friends and co-workers about buying gold and they all laugh. They remind me of those who mocked and laughed at Noah before the great flood. The sad thing is, the 'great flood' in currency collapse is on its way, and they and their portfolios will be wiped out. Thank you Porter et al for helping me see clearly what the future holds and helping me to prepare for it!! Forever grateful." – Paid-up subscriber Craig M.

"You asked about our recent gold investments, but I thought you might enjoy hearing about my entire Stansberry experience. Feel free to apply any endorsement fees to my subscription obligations! I've been a Private Wealth Alliance member for years, and have a core position in WDDG's, dividends re-invested, of course. The worst of the bunch is Coke, I'm only up 40% plus dividends. The best has been Altria, the return to date is 170% and it's still climbing.

"I'm also a DailyWealth Trader Lifetime subscriber. While I consider everything I've learned from the folks at Stansberry about investing to be invaluable, learning to sell puts is the single most important skill I've acquired. I usually keep about 30% to 40% of my portfolio in cash. I use that cash to pick up stocks when they go on sale. In the meantime, I sell cash-secured puts. I've been generating on average $1,500/month for a couple of years selling puts. When it's time to hang it up and retire, I'll do this exclusively for income.

"Arriving at the topic on hand, I bought some gold and silver stocks back in April. [I'm up an average of] 42% in less than 90 days. I'll wait for a serious correction, then pick up a few more positions. I'm very pleased with the outcomes described above, but I consider the best investment I've made in the last 90 days to be the OneBlade. I've been looking for a decent shave my entire adult life. Finally, at 54, I found it. The OneBlade gives me a close, comfortable shave. Even in the tough areas, like where the chin turns under and becomes neck. I've always had a problem cutting myself there. The OneBlade just floats right over that area, taking all the hair with it. Sweet! I've thrown away my styptic pencil. My last desperate attempt to buy a decent shave was a Norelco triple head electric shaver. $275. What a supreme waste of money. I think I'll short Norelco to get my $275 back." – Paid-up subscriber Terry G.

Regards,

Justin Brill
Baltimore, Maryland
July 11, 2016