One of the biggest trends today... Food inflation... Google says to stop working so much... Wal-Mart shoppers are hurting... Ignore Puerto Rico and collect 10% dividends... Record high for Apple... Steve Sjuggerud: The dollar is going higher (for now)... Your last chance at early bird tickets...
One of the biggest themes we're covering right now is what we call the "disappearing middle class."
As we've noted numerous times, the Federal Reserve's easy monetary policies help the rich (those with assets). They're able to borrow money cheaply and buy high-quality assets that rise in time with inflation (like real estate, farmland, and operating companies).
We recently told you about record ground beef prices... The average price of ground beef at grocery stores is up 76% since 2009 to $3.81 a pound.
Pork chop prices were up 12.7% in May from a year ago. Fresh fruit and oranges are up 7.3% and 17.1%, respectively, over the same time frame.
The U.S. Department of Agriculture predicts food prices will rise between 2.5% and 3.5% this year after a 1.4% increase in 2013.
At the same time, technology will replace human capital. Yesterday, we wrote about self-driving cars eliminating the need for truck drivers. Robots and technology could also replace workers in fast food, call centers, retail, and other sectors.
In a fireside chat with venture capitalist Vinod Khosla, Google cofounders Larry Page and Sergey Brin argued that less work wouldn't be a bad thing. (You can watch the full discussion here.)
Page notes that 90% of U.S. jobs used to be farming... But technology has reduced that to around 2% of jobs. And he sees a similar shift on the horizon...
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Also, technology has allowed us to achieve tasks in shorter periods of time (with Google searches, e-mail, online shopping, and countless other benefits). Still, people need something to fill their time... And they need a sense of worth.
Page spoke with fellow billionaire and Virgin Group founder Richard Branson, about Branson's efforts to fight unemployment in Great Britain. Branson is urging companies to hire two part-time employees instead of one full-time employee to reduce work time and unemployment.
Of course, the Google guys are talking their book... Their company is developing the robots that will eventually replace humans in the workforce. As we noted yesterday, Google is testing out its self-driving car. The search-engine giant bought at least eight robotics companies in the past year. And it has said that one of its big goals is to use robots to streamline manufacturing.
And keep in mind... Page and Brin are two of the richest men in the world. They obviously worked hard to build one of the most valuable companies in history... But it's fair to say they're out of touch with the everyman and his need to "frantically work."
But Wal-Mart CEO Bill Simon knows something about the middle class. He employs hundreds of thousands of Americans... and sells goods to even more. And Simon says the middle class is hurting today, despite a drop in U.S. unemployment to 6.1%.
As Simon told news service Reuters, "It's really hard to see in our business today that it's gotten any better... We've reached a point where it's not getting any better but it's not getting any worse – at least for the middle (class) and down."
Google aside, Porter and his team of analysts have been loading the Stansberry's Investment Advisory portfolio with companies that cater to the idea of the disappearing middle class – like rent-to-own, landlords, and discount retailers.
One of our favorite sectors is under fire again, but we're not worried... In fact, we're used to the naysayers.
In 2010, Wall Street analyst Meredith Whitney – who earned fame for her pre-crisis bearish call on Citigroup – said the municipal-bond market would collapse.
Municipal (or "muni") bonds are loans to local governments. When you buy a muni bond, you're giving a municipality money to build roads, schools, and other public projects. In return, the municipality pays you regular interest (which is tax-free) and eventually returns your initial principal.
Traditionally, muni bonds have been one of the safest sectors in the market... Over the past 40 years, investment-grade muni bonds had a default rate of only 0.017%.
So when Whitney was sounding the alarm, we took advantage of the hype to buy municipal-bond funds below their net asset value and collect double-digit yields.
At the time, Detroit was making headlines for its default on $18 billion in bonds... And investors were starting to worry Puerto Rico may default on some of its $70 billion in debt.
And Puerto Rico is back in the headlines... The Caribbean territory may allow some utilities to restructure $20 billion in debt... Puerto Rico's governor Alejandro Garcia Padilla signed a bill saying certain utilities could negotiate with bondholders over the next several months.
Following the news, credit-ratings agency Moody's downgraded Puerto Rico debt further into "junk" territory and said the legislation showed "a clear path to default" for companies. Standard & Poor's also said it may cut Puerto Rico's rating within the next 60 to 90 days.
Many pensions and mutual funds hold Puerto Rico debt, which is causing the muni market to sell off on the fears...
Our own Dr. David "Doc" Eifrig says the Puerto Rico fears are overblown... Municipal bonds are a $3.7 trillion market. And if Puerto Rico collapses, it would only affect a small portion of that market – fractions of a percent.
Today, you can buy shares of the Nuveen Municipal Opportunity Fund (NIO) for a 10%-plus discount to its net asset value (the face value of the bonds in the portfolio). And it has a tax-equivalent yield of 9.8%.
Shares of World Dominator Apple (AAPL) hit a record high yesterday in anticipation of the iWatch – the company's smart watch – and the coming release of the iPhone 6 smartphone.
Extreme Value editor Dan Ferris urged subscribers to buy shares last year. In the July 2013 issue of Extreme Value, he wrote...
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In the second quarter, Apple sold 43.7 million iPhones, besting expectations of 36.5 million. In total, the iPhone accounted for $26.1 billion – about 55% of total revenues.
Apple's strong sales are partly aided by a recent deal with China... Late last year, Apple made a partnership with China Mobile, the world's largest telecom company with 780 million subscribers. Apple shipped 1.4 million units to handle demand in China for January alone.
And with Apple's new designs expected to hit the market in the next six months, investors think we'll see even better results in the future.
In the meantime, we're getting paid plenty of cash to wait... In April, Apple announced it would increase its dividend nearly 8%, from $3.05 per share to $3.29 per share. That's an additional $827 million Apple will pay shareholders... And it makes Apple the largest dividend-payer in the S&P 500 in terms of dollars.
The company also increased its share-repurchase plan from the $60 billion it announced last year to $90 billion. In total, Apple plans to return more than $130 billion to investors by the end of 2015... well above its $100 billion projection. And Dan expects the rewards to increase...
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Apple traded for a split-adjusted $62.64 when Dan first recommended buying shares in April 2013. Today, shares are $95... and Extreme Value subscribers are up 56%, including dividends.
Steve Sjuggerud followed up his wildly popular essay series in today's DailyWealth...
To recap, Steve recently read one of the most enlightening books of his career – The Death of Money by Jim Rickards.
Rickards is a financial expert with experience on Wall Street and government consulting... He understands currencies and what happens when countries pile on too much debt. In short, Rickards is bearish on the long-term prospects of the dollar.
Over the past week, Steve has been writing DailyWealth essays discussing some of the lessons and examples Rickards outlines in his new book, like inflation versus deflation... the dollar's demise... and what to buy when the dollar "dies."
And in today's DailyWealth, Steve wrote why he thinks the U.S. dollar could actually strengthen in the short term. Still, he admits, the dollar faces major headwinds in the future.
If you're worried about the state of our economy and the future of the dollar, Rickards' new book is a must-read. And we're giving away free copies (you just pay the $5 in shipping). Make sure you pick up a copy before we run out. You can learn more about this offer by clicking here.
We still have a handful of "early bird" tickets left for our Stansberry Society event taking place August 23 in Los Angeles. We expect to sell out of these low-priced tickets this week... then we're raising prices.
If you join us in LA, you'll hear from Porter and Steve as well as master speculator Doug Casey. We've also invited one of the greatest social and economic satirists of our day, P.J. O'Rourke.
Plus, we recently added a mystery speaker to our roster... This gentleman founded two cutting-edge technology firms. He's the author of two New York Times bestselling books. In 2007, he was named to the "Time 100," the magazine's list of the 100 most influential people in the world. Last year, he was named among both Time's "Tech 40 – The Most Influential Minds in Technology" and Foreign Policy's "Top 100 Global Thinkers." Our mystery speaker agreed to demo one of his products – one of the hottest innovations around right now – live, on stage.
Again, we expect to sell out of our low-priced early bird tickets this week. To make sure you don't miss out, click here.
New 52-week highs (as of 7/7/14): Apple (AAPL), ProShares Ultra MSCI Emerging Markets Fund (EET), Freeport-McMoRan (FCX), Johnson & Johnson (JNJ), Mandalay Resources (MND.TO), and Southern Copper (SCCO).
Have you seen signs of technology replacing human capital around the world? Let us know here at feedback@stansberryresearch.com.
"The story about automated autos and trucks will proliferate to other areas. One I would like to see, and could easily be done, is automated Board of Directors. And, after that Automated CEO's. Then, investors would have a chance at fair treatment. In all sincerity." – Paid-up subscriber Wayne
Goldsmith comment: I know you're joking, Wayne... But a Japanese venture capital firm added a robot to its board of directors in May. Seriously. It was the first-ever software program to be appointed as a board member.
Regards,
Sean Goldsmith
July 8, 2014
Why billionaire investors are buying into Greece...
Stansberry International editor Brett Aitken is bullish on Greece... And so are a host of billionaire investors. In today's Digest Premium, he explains why...
To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.
Why billionaire investors are buying into Greece...
Editor's note: Yesterday, Brett Aitken discussed European Central Bank President Mario Draghi's decision to cut interest rates... and how it will cause European markets to rise. In today's Digest Premium – excerpted from the June issue of Stansberry International – Brett explains why it's particularly beneficial for Greece...
Confidence continues its return to Greece as we saw investors pile into a €500 million unsecured three-year bond issue from Alpha Bank with a 3.5% yield in mid-June. Investors put more than €2 billion up for a piece of the action, and the bank confirmed it received interest from more than 15 countries.
Those are extraordinary numbers, considering that the country couldn't even access the credit markets only a couple years ago. But we expect this is just the beginning.
Most investors still run scared when we talk about buying into Greece.
But the smart investors – like Fairfax Financial chief Prem Watsa – are snapping up Greek assets right and left. Billionaire investor Wilbur Ross joined Watsa in the Eurobank deal. Celebrated hedge-fund manager John Paulson is another investor making substantial investments in the Hellenic nation, with about a 6.6% stake in Piraeus Bank and a 9.9% interest in the Athens Water Supply and Sewerage Company, according to data compiled by Bloomberg.
And with Greece relegated to "emerging market" status last year, it has prompted additional fund managers to look a little closer. The reclassification may help Greece. While it might sound counterintuitive, Greece is arguably more attractive than many of the other countries in the emerging-market fund. Previously in developed-market funds, it had to compete with the likes of the U.S., Canada, and Australia for investment dollars.
A number of companies we spoke with on the ground have said the same. They report fielding more inquiries from investors and are giving more presentations. The point is, more cash is finding its way toward Greece.
That's why we believe we've still got plenty more room to run in this market. And Draghi's efforts will help as he puts more fuel on the fire.
We believe a number of underlying activities going on in Greece will convert opportunity into profits for those investors who get in now.
– Brett Aitken
Why billionaire investors are buying into Greece...
Stansberry International editor Brett Aitken is bullish on Greece... And so are a host of billionaire investors. In today's Digest Premium, he explains why...
To continue reading, scroll down or click here.