The Federal Reserve recently announced it would continue to buy $85 billion a month in bonds. The markets surged, then steadied. But what are the longer-term implications of this move?
We're seeing more and more instability around the world...
These events aren't market-related... and they aren't connected. But they serve as a strong reminder that you have to be prepared. You never know when one of these events will affect you.
In the past couple weeks, we've seen Pakistan and India rocked by a 7.7-magnitude earthquake... The death toll sits at 271, according to the New York Times.
We also saw a deranged man shoot and kill 12 people at the Navy Yard in Washington, D.C.
Meanwhile, in southern China, a powerful typhoon killed 20 people. And 70 or so folks died after a terrorist attack took place at a mall in Nairobi, Kenya.
It's disasters like these – both natural and manmade – that prompted Dr. David Eifrig to produce a 96-page "Field Manual" to make sure his Retirement Millionaire readers are prepared in times of crisis.
Despite what you may think, during times of chaos, most people don't panic and run amok... They freeze. As Doc explains...
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In this book, Doc explains how to prepare for panic. He teaches you everything, including a special breathing technique used by the military and FBI that will help you calm down and make better decisions during a crisis.
He also shares other tips, like:
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The ingenious item that could have prevented hundreds of thousands of people in Westin, Massachusetts from wasting dozens of hours of their time... fighting at the local grocery store... and potentially drinking toxic water.
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The four prescription drugs you should absolutely have at home in case of a serious emergency. (They are not expensive, and you can legally buy and store them easily.)
- How to prepare a first-aid and emergency-preparedness kit list that includes a few surprising items.
Doc's Field Manual is already available to Retirement Millionaire subscribers. We're also giving away this valuable book with a subscription to Retirement Millionaire. To learn how you can receive yours, click here.
In the past 11 trading days, the most important number in finance – the yield on 10-year Treasury bonds – has fallen from nearly 3% to 2.63% today.
Of course, we have the Fed's unwillingness to cut back on its $85 billion-a-month bond purchases to thank for that. Most of the run up in yield was due to expectations that the Fed would "taper." And then, last week, Fed Chairman Ben Bernanke said he would not begin "tapering" those purchases.
In other words, get ready for more of the same... Interest rates are falling, credit is still expanding, and stocks will continue to march higher.
I spoke with Steve Sjuggerud this morning to see if the failure to taper changed his Bernanke Asset Bubble thesis. He said, if anything, Bernanke's actions will only accelerate his viewpoint...
Over the summer, Bernanke even said "a highly accommodative monetary policy will remain appropriate for the foreseeable future."
Following the latest development, more people are jumping on board with Steve's thesis... They understand the Fed is going to keep printing money, so they're continuing to buy stocks.
Steve says the game isn't over yet. He believes there's still triple-digit upside from here. But people are growing more bullish. And you have to watch out when everyone is on the same side of the fence.
True Wealth holding and private-equity giant Blackstone Group hit a new high today. Blackstone is perfectly positioned to profit from the inflation resulting from Bernanke's easy-money policies.
Blackstone is the largest owner of single-family homes in the U.S., having invested around $5 billion. Falling interest rates mean more people can afford to buy a house, which bolsters prices and gives Blackstone a solid exit plan.
Blackstone also holds a portfolio of stocks and companies, both of which rise with inflation.
Finally, private-equity firms are "asset gatherers"... The more money they manage, the more money they make. And with easy-flowing credit, you can bet more of that capital will find its way to Blackstone.
Steve recommended Blackstone in the December issue of True Wealth. He said it was a great way to play the housing boom through the stock market... And he was right. Subscribers are up 90% in less than 10 months.
Yesterday, we updated you on the situation with troubled retailer J.C. Penney. The company borrowed more than $2 billion from investment bank Goldman Sachs. And Penney reportedly needs more funds.
Shares of J.C. Penney fell 4% yesterday. They're down another 14% today. Shares are trading at their lowest level since late 2000.
Today, Goldman downgraded the retailer to "underperform." Goldman also performed a "waterfall analysis," estimating the recovery rates for creditors in case Penney goes bankrupt.
The investment bank said J.C. Penney's unsecured bonds – those which aren't backed by assets or revenue – are "impaired"... meaning bondholders could reclaim anywhere between 13% and 65% in case of bankruptcy.
Goldman says the retailer's bank loan and secured creditors (which includes Goldman) will recover 100%.
And Goldman is urging clients to buy credit default swaps, which are essentially insurance contracts that pay out in case Penney defaults.
Goldman revealed it owns at least a 1% equity position in J.C. Penney. It also still expects to receive investment banking fees from the retailer. Clearly, Goldman, which has lent billions of dollars to J.C. Penney, thinks it will have the upper hand in a bankruptcy.
Following bullish news surrounding the new iPhone, Goldman upped its price target for Apple today... The bank says shares are worth $560, up from its previous estimation of $530. The new price target is more than 15% higher than where shares trade today (around $483).
New 52-week highs (as of 9/24/13): Blackstone Group (BX), Integrated Device Technology (IDTI), short position in J.C. Penney (JCP), and Sturm, Ruger (RGR).
Another happy reader in today's mailbag... This can't last for much longer. Send your e-mails to feedback@stansberryresearch.com.
"About the 12th of this month (Sept) one of your investment letters recommended going long on Sears and short on JCP. Not being as bold as I should have been, I 'shorted' JCP by buying December puts on the 12th. Today twelve days later, (9/24) I sold for a 37% gain including commissions in and out. Not too bad for a 'call' player who has up to now shied away from puts. Thanks for the tip. I'm a little bolder, now." – Paid-up subscriber Don Stalter
Regards,
Sean Goldsmith
Miami Beach, Florida
September 25, 2013