Something Not Seen Since 'Black Monday'

A potential sign of 'peak rates'... Something not seen since 1987... Our latest Stansberry Alliance Town Hall... Talkin' banks... Weak spots in the system... 'Two drunks holding each other up'... A final reminder...

If you're looking for a sign of 'peak interest rates'...

The market may have recently given it to you...

So says Stansberry Research senior analyst Brett Eversole. In a recent True Wealth Systems update, Brett wrote that the bond market behavior we just saw amid the recent banking turmoil could suggest the end of the Federal Reserve's rate-hike plans is near...

And that marker, in turn, could be good for stocks over the long run.

I (Corey McLaughlin) have talked over the past few weeks about how safe-haven assets like bond prices and gold have gotten a boost in the fallout from the run on Silicon Valley Bank. In the True Wealth Systems Review of Market Extremes last week, Brett showed precisely just how much of a boost.

A recent crash in short-term yields...

Remember, higher bond prices coincide with lower yields, and vice versa. Earlier this month, amid the start of the bank-crisis news, the two-year Treasury bond yield fell from more than 5% to less than 4% over just three trading days as investors bought bonds. As Brett showed...

The severity of this decline can't be overstated. U.S. Treasury bonds are supposed to be "boring," slow-moving assets... especially short-term two-year bonds.

But the two-year yield plunged 109 basis points in just three short days. And that's one of the most extreme three-day drops on record.

This was a flee to safety, which certainly reflects the current investing climates and is likely to get the attention of those at the Fed. It's a move not seen since the period after one of the most infamous days in Wall Street history...

Last seen after 'Black Monday'...

The last time a three-day move like this happened was in October 1987, following "Black Monday," when the benchmark S&P 500 fell 20% in its worst day ever. From October 19 of that year to October 22, the two-year yield fell 117 basis points (1.17 percentage points).

Before that, the last time the Treasury market saw a move like this was the early 1980s.

Both instances marked short-term highs for yields, which tend to lead peaks in the Fed's benchmark fed-funds rate. (In the early '80s, yields were much higher, but remember this rate-hike cycle began near zero and has risen to 5%.)

As Brett showed...

It's rare for two-year yields to fall this far, this fast. But according to history, when they do, it's a sign that the overall trend in interest rates is reversing.

Today, interest rates are higher than they've been in 15 years. And as we've been saying since back in September, they have eclipsed their precious cycle peak for the first time since before the dot-com bubble. That's notable. As Brett posits...

That means we could see a big decline [in rates] from here.

Plus, any additional market turmoil could push more investors to safe-haven assets. That would mean buying Treasury bonds... which would lead to further declines in interest rates.

Sure, that would be bad news for riskier assets like stocks in the short term. But lower rates are a boon for the stock market in the long term.

True Wealth Systems subscribers and Stansberry Alliance members can find the full analysis from Brett here in the publication's recent Review of Market Extremes, which also covers extremely bearish sentiment among mom-and-pop investors today.

We'll keep watching the trend in short-term Treasury yields closely from here before making any proclamations. But this move certainly suggests that the peak in rates may be close... or even in the rearview mirror.

Tomorrow, I will also share some thoughts on what this action in short-term yields means in the context of the yield curve, which has also been showing some important, potentially trend-shifting signals lately.

Moving on, we just published our latest quarterly Town Hall event...

This is a special added benefit for Stansberry Alliance members that we began a few years ago...

For this edition, available here, our Director of Research Matt Weinschenk recently sat down with regular Friday Digest essayist and Extreme Value editor Dan Ferris, as well as Stansberry NewsWire editor C. Scott Garliss.

The trio had a candid, 37-minute conversation about the recent news that stirred up a dose of panic in the global financial system. And they covered a lot of ground, including...

• The recent run on Silicon Valley Bank

• What's really wrong with the core of our banking system, and

• If "contagion" fears in the banking system are overblown...

Matt leans toward the idea that the Silicon Valley Bank run could be more of an isolated incident in the long run, given that not a lot of other U.S. banks have the same level of uninsured deposits that the tech-centered bank did.

Yet he, Dan, and Scott all shared concerns about banks in general...

Talkin' banks...

Dan explained why he believes they are essentially "leveraged hedge funds"... and Scott reminded viewers that the recent turmoil really dates back to the unprecedented economic stimulus of 2020 and the knock-on consequences of high inflation.

Scott also pointed to some potential areas of weakness in the banking sector...

Low-quality lenders, he said, may be in trouble when the consumer credit bubble that has been growing ultimately bursts. As Scott said, high inflation has caused millions of Americans to put an increasing amount of expenses on credit cards...

At some point that's going to pop. There's going to be an increase in write-downs and delinquent payments. People are going to bail on their credit cards.

He sees similar troubling setups with car loans and in the commercial real estate market. Alliance members can get all of the details in the video right here.

You'll get to enjoy the entire unscripted conversation full of interesting nuggets, including Dan's assessment of why the recent government-forced merger of the embattled bank Credit Suisse (CS) with UBS (UBS) is the equivalent of "two drunks holding each other up" and what Matt believes could be the ultimate cure for all of the banking ills.

Lastly today, a final reminder...

Wall Street veteran Marc Chaikin, our friend and founder of our corporate affiliate Chaikin Analytics, is going live in less than two hours with his latest free market briefing. We urge you to tune in at 8 p.m. Eastern time.

Back in November, Marc predicted a run on U.S. banks – yes, really. He's not happy he was right, but the 320,000 people who heard him make that call four months ago sure are...

Now, Marc is using his five decades of professional experience and the tools he has developed over the years, including his Power Gauge, to again share a brand-new prediction you won't want to miss.

Without giving too much away, Marc's going to reveal a powerful indicator triggered by recent volatility – which has predicted a particular stock market move with 100% accuracy going back to 1950. Ignoring this signal will likely cost everyday investors...

He doesn't want you to be one of them.

If you haven't signed up already for the event tonight, register here to make sure you don't miss a minute. The event is totally free... and, just for tuning in, he's giving away one of his favorite stock ideas... and he will also share his thoughts on the recent bank crisis.

Marc Chaikin: Don't Get Caught in the News Cycle

In this week's episode of the Stansberry Investor Hour, Chaikin Analytics founder Marc Chaikin joined Dan and I to talk about his latest outlook on the markets and his event coming up tonight.

Among other nuggets of wisdom, Marc encouraged folks not to get caught up labeling the market as a "bull," "bear," or anything else you might hear in the mainstream financial media...

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 3/27/23): Alamos Gold (AGI), CBOE Global Markets (CBOE), Copart (CPRT), Hershey (HSY), Motorola Solutions (MSI), Novo Nordisk (NVO), and Torex Gold Resources (TORXF).

In today's mailbag, more feedback on Dan's Friday Digest... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Hi! I read Dan's report on the Fed's this afternoon. My wife and I have had this conversation a lot lately. Dan put it together a little better... Thanks for an interesting, albeit a scary, thought of the government is purposely screwing us over." – Paid-up subscriber Arnljot T.

"Dan is right that 'it's not supposed to be like this'...

"Our (schizophrenic – I'm being generous – I am afraid Dan is right that this is intentional and not reckless) government now has Biden and Congress hammering down (with sadly too many Republican votes) the spending pedal to the metal on the one hand, and Powell's foot pressing harder and harder down on the rate hike brake AT THE SAME TIME.

"We all know the motor has much more horsepower than the brake stopping power. [And you get] worn down brake pads that no longer slow down the vehicle, blown out tires, [or run] a red light and get t-boned because you didn't stop in time.

"When you own your own car and have to spend your own money to fix it when it is broken, you don't do these things. These are the kinds of things that people do when they don't plan on fixing the car. (Yes, think the Bluesmobile falling apart scene in The Blues Brothers). I can't help but arrive at Dan's conclusion that this is intentional." – Paid-up subscriber Scott P.

"Dan, you hit the nail on the head in Friday's Digest. I couldn't agree more. An excellent read for anyone looking for more proof on this subject should check out Stephen Goodson's book, A History of Central Banking and the Enslavement of Mankind, and keep in mind Goodson has some credentials for writing this book. He worked at South Africa's Central Bank for 9 years.

"I could write a book on this subject but Henry Ford said it best and I quote, 'It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.'

"Thanks for keeping it real!" – Paid-up subscriber Brian V.

All the best,

Corey McLaughlin
Baltimore, Maryland
March 28, 2023