The S&P 500 is up 150% since the market bottomed following the 2008/2009 financial crisis. Today, it's about 1% away from a new all-time high.
The reason for this – why stocks have soared since our financial system came close to total collapse – seems obvious to us...
Our government brought interest rates near zero percent and printed trillions of new dollars. The low interest rates forced people to flock to riskier, higher-yielding assets. The trillions of new dollars ensured an even greater wave of cash flooded into assets.
Put another way, quantitative easing (QE) boosted markets.
But has QE done anything other than boost paper asset prices? Has it generated real demand from consumers or boosted GDP and reduced unemployment by any meaningful amount?
We've long been wary of QE... We don't believe the way to cure debt is with more debt. Now, it seems, the Federal Reserve – the government agency responsible for QE – agrees with us. A research piece published yesterday by the Federal Reserve Bank of San Francisco says the effects of QE on economic growth are minimal. The piece concludes...
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You can read the full paper here.
Of course, whenever the Fed starts to wind down its asset purchases, these findings will prove to be convenient... According to the Fed, the money printing isn't the important part. What really matters is keeping a low federal funds rate – the rate banks charge each other to borrow money deposited at the Fed...
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We'd argue the market has already adjusted for a near-zero federal funds rate. We can't go any lower. And according to the Fed, money printing doesn't grow the economy, either... So what's left?
That question is one reason we've seen recent strength in the gold markets. And our colleague Jeff Clark, who's been anticipating a bounce in the oversold precious-metals market, said prices could go even higher.
And in today's Growth Stock Wire, he encouraged readers to pay attention to another commodities market that's been booming...
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As you can see from the chart below, coal stocks have been crushed...
Jeff says a bottom may be forming... and we could see 15% more upside from here.
S&A Resource Report editor Matt Badiali needs your help...
Matt constantly travels the world, looking for the best natural-resource opportunities for his readers... He's been to Africa, Papua New Guinea, Canada, and across the U.S. researching and "kicking rocks," as geologists call it.
And now, Matt is going to kick rocks in Iraq. He says it's one of the last places in the world where you can find enormous conventional oil deposits. But he needs contacts in the area. From Matt:
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New 52-week highs (as of 8/12/13): Cisco (CSCO), Fission Uranium (FCU.V), Fluidigm (FLDM), Fuel Systems Solutions (FSYS), Qlik Technologies (QLIK), ProShares Ultra Technology Fund (ROM), RPM International (RPM), and Steel Dynamics (STLD).
Two more subscribers who didn't cancel after last Friday's Digest... It's been a good week so far. Send your e-mails to feedback@stansberryresearch.com.
"Dear Porter, Please cancel all my subscriptions. Just kidding! Your insight and research on stop losses in a counter intuitive insight that is very actionable. I must admit I have been slow to change my mind on this, but the Friday digest was a brilliant piece of research. Thanks for your work and doing the right thing by your customers and publishing the hard to hear insights." – Paid-up subscriber Paul Vallejo
"The only reason I'd cancel is if you stopped writing the Friday Digests! Keep up the good work." – Paid-up subscriber Danny D
"Porter is dead right, unfortunately, on not giving any information to the police without talking to counsel first. Having been a cop in one of the highest crime districts in the US, and then moving on to 'policing the police' as an Internal Affairs detective, I've seen ubiquitous abuse of power which continue to escalate. As a crime analyst, I have seen how stats of teenage gang shootings are lumped in with shootings of children to 'juice the numbers' for supporters of gun control. I could go on, but you get the idea.
"The majority of the police are good people just trying to make a living (this does vary dramatically by city) but the days of 'officer discretion' are gone. The policies of the top brass, which are no longer insulated from politics, drive the behavior of the cops on the street and drive politically motivated arrest agendas.
"Searches and seizures, for instance, have become big money machines used to subsidize budgets for all major police departments. That explains why we are still fighting a 'War on Drugs' that for over 40 years has been a complete failure. There is no intent to win, only seize assets so they can buy the latest crime toys. We can't even stop drugs and guns from getting into our prisons, let alone on our streets. Yes, I am for legalization but that is for another discussion.
"Another example of this politically driven agenda is the portrayal of police 'brass' always standing behind the President when he is touting gun control. Many of these 'Chiefs' have budgets that are affected by getting federal funds, or not. Best to play along and show your support for gun control and of course make sure the cops on the street are seizing as many guns as possible even if it is not a constitutionally valid seizure. Most street cops are not for gun control for law abiding citizens as they know it is a true deterrent to crime.
"Yes, the days of telling your children that the police are your friends are long gone thanks to the increasing influence of politics in policing. 'Anything you say can and will be used against you!' is all you need to remember." – Paid-up subscriber John P.
Goldsmith comment: John is referring to yesterday's Digest Premium, where Porter shared his thoughts on speaking with police officers. Digest Premium subscribers can read it here. If you'd like to sign up for Digest Premium and receive daily insights from Porter, click here.
Regards,
Sean Goldsmith
Miami Beach, Florida
August 13, 2013
Facebook recently announced earnings that crushed Wall Street estimates... The company posted revenues of $1.8 billion and earnings per share of $0.19, which was $0.05 per share more than expectations.
Facebook is one of the greatest companies on earth. It has 1 billion users. To put that in perspective, video-streaming website Netflix has 40 million subscribers... cable provider Comcast has 50 million... and satellite-TV provider DirecTV has 38 million. That's 130 million users... while Facebook has 1 billion people using its site. That's nearly 15% of the world's population.