What can you do when you're stuck at home?... The home biz is booming... A time to invest in 'hard assets'... Homebuying is on the rise... Mortgage rates are near all-time lows... Bitcoin is fighting for the soul of money...
When you're mostly stuck at home with nothing else to do...
Why not finally tackle that home-improvement project that you've put off for days, months, or even years?
Sure, honey, I'll get right on fixing that broken light...
Yup, let's just redo the basement floor, too...
Of course, I can paint that entire room by myself.
As we've written over the past few months, the COVID-19 pandemic has widely exposed the existing problems and issues of many industries – as well as those of our government...
And a global economic shutdown also accelerated virus-proof, recession-proof persistent trends that were already in place, too – like online ordering and cloud-based software companies that don't totally rely on the "physical" world or "old economy" to do business.
For instance, doesn't e-commerce giant Amazon (AMZN) feel basically like a utility? And at the same time, it's one of the few big companies hiring hourly workers to keep up with demand. No résumé required for $15 per hour.
Fellow tech giants Apple (AAPL) and Google (GOOGL) have finally unveiled their COVID-19 tracking technology. Call it "contact tracing" in the cloud.
But things are still happening in the "real world," too. On the ground, oil demand is picking back up. In the air, people are starting to buy airline tickets again.
And in our homes, all along the way, a lot of people are looking around their own properties and saying, "Let's do that."
Based on the latest earnings reports this week from the two leading home-improvement retailers in the U.S. – Home Depot (HD) and Lowe's (LOW) – business is booming...
Home Depot and Lowe's each posted quarterly numbers that indicated strong demand for their services...
As Stansberry NewsWire analyst Nick Koziol reported earlier this week about Home Depot's first-quarter report...
Revenue in the quarter came in at $28.26 billion, beating the $27.56 billion expectation.
Average ticket (total sales divided by the number of customers) rose 11% in the first quarter, despite fewer customer trips because of the COVID-19 lockdowns. This shows that HD's customers spent more per trip in the quarter...
With people stuck at home because of coronavirus lockdowns, they're turning to home projects they've been putting off.
HD's strong sales results confirm this. And we could see the same when LOW reports its quarterly results [on Wednesday] morning.
That's exactly what we saw yesterday from the home-improvement industry's longtime No. 2 big-box store...
Lowe's beat Wall Street analysts' expectations for the first quarter, generating $1.77 a share on revenue of $19.68 billion... And in an example of the perfect blend of "real world" needs and the "online economy," the company said website orders surged 80%.
Home Depot experienced a similar trend, and reported nearly identical numbers... Sales from its digital platforms jumped about 80% in the quarter. And most customers picked up their goods in stores, which were deemed "essential" and stayed open in most states.
A time for investing in 'hard assets'...
A pandemic-induced home-improvement boom fits in with a lot of what we've discussed in the Digest over the past month or so...
This is a good time to invest in so-called hard assets whose real value won't fluctuate if and when the U.S. dollar loses value as the trillions of central bank stimulus we've seen eventually filters through the economy...
These are things like gold... or bitcoin, as some of our editors suggest... or art (big-time museums are actually selling their works to get through the pandemic)... and real estate.
In theory, making home improvements is making an investment in the value of the home, which is the biggest source of net worth for most Americans.
And since lockdowns were put in place, people in every corner of the country have become more interested in that odd job or project they've been delaying for whatever reason...
As Nick from our NewsWire team shared with readers earlier this month, Arbor Research & Trading recently published some Google search data on home improvement...
What's more, homebuying is picking up, too...
As our colleague C. Scott Garliss wrote in the NewsWire earlier this week...
COVID-19 shutdowns aren't keeping people from re-entering the housing market...
The Mortgage Bankers Association ("MBA") continues to see a recovery in home purchase applications. In the week ending May 8, the MBA's Purchases Index rose 11% from the week prior. This marked the fourth-straight week of increases for the index.
According to Joel Kan, the MBA's associate vice president of economic and industry forecasting, the Purchases Index has seen a "stark recovery" in recent weeks.
He noted that purchase activity saw double-digit growth in multiple states – Illinois, Florida, Georgia, California, and North Carolina. In New York, the U.S. epicenter of the COVID-19 outbreak purchase applications jumped 14%.
Mortgage rates remain near record lows...
And that has incentivized prospective buyers to apply for loans.
If you haven't already looked into doing this yourself, or into refinancing an existing mortgage, now is a great time to consider doing it.
According to Freddie Mac, the average U.S. rate for a 30-year fixed mortgage dropped from 3.28% to 3.24% last week, close to the 3.23% all-time low reached during the final week of April of this year.
And that benchmark interest rate, which tends to correlate strongly with 10-year U.S. Treasury yields, may head lower – below 3% – in the weeks and months ahead, according to industry projections.
One of the nation's largest home lenders has already announced that it will offer mortgage borrowers a 2.5% interest rate. And the Federal Reserve has already indicated it doesn't plan on raising its benchmark federal funds rate anytime soon.
So allow us to reintroduce this article, "The Time to Buy or Refinance Is NOW" by our colleague and DailyWealth editor Dr. Steve Sjuggerud. It is as relevant today as when he first published it last August.
Steve wrote that times like these are incredible opportunities to trim your monthly expenses, refinance, and perhaps even buy U.S. residential real estate...
Again, don't look at the price by itself... Look at the value. The value in housing today is all about interest rates. They're at near-record lows... And that's giving us our extraordinary opportunity today.
So please, talk with your bank. Or go online. Do what it takes to at least find out how much money you could save by refinancing today. (Make sure you ask about how long it takes before you "pay off" the closing costs... That basically tells you when refinancing starts to be profitable for you. And if it's in five years or less, it's a no-brainer.)
Maybe it shouldn't be that surprising... In a "stay-at-home" world where we're looking at the same walls for much longer than we ever imagined we would, the home biz is booming.
The Essential Ingredient in a COVID-19 Treatment
In an interview with our colleague Jessica Stone earlier this week, Stansberry Innovations Report editor John Engel explains what you should know about the drug and vaccine manufacturing process – especially in the race for a COVID-19 treatment. And more important, he details how to make a smart investment in the space...
Click here to watch this video right now. And for more original video content like this throughout the week, be sure to subscribe to our YouTube page right here.
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In today's mailbag, Crypto Capital editor Eric Wade answers a question about cryptocurrency's "largest existential threat." As a reminder, you can watch Eric's bitcoin and cryptocurrency Masterclass for free right here. Do you have a comment or question? As always, send it to feedback@stansberryresearch.com.
"Why the assumption that Bitcoin is impervious to government intervention? Can't governments around the world decide to ban its use and confiscate it similar to gold in the past? Again, I agree with the general thought process but are you also looking at the unknowns?" – Paid-up subscriber Kal V.
Eric Wade comment: What a great question because, yes, when you are assessing threats, you have to consider even extreme possibilities...
You've hit on the single largest existential threat to bitcoin. Governments could come out tomorrow and say owning bitcoin is illegal. So let's consider what that would mean because this idea raises a lot of pertinent questions that I've thought about before...
How far would the governments be willing to go to enforce the illegality of bitcoin? Would they pass laws? Would they conduct house-to-house searches? Would they scour all Internet traffic looking for signs of cryptocurrency usage?
But let's say governments crack down on cryptocurrencies anyway. What happens next? Prices would become extremely volatile in countries where that happened, but bitcoin has a few things going for it that make us optimistic...
First, governments have had more than a decade to ban bitcoin. And yet, most haven't.
Second, a government can ban the ownership of bitcoin, but there's simply no way for them to shut down the network. That would require coordination with every government on the planet. Attempting to seize your bitcoin or force you to "turn it in" would take an army.
The simple move of making bitcoin illegal would certainly be enough to discourage a lot of people and companies from owning it... but not everyone. Banning bitcoin would simply push it into the shadows similar to the bootleggers running bottles of booze during Prohibition.
Third, the countries that didn't ban bitcoin would attract all of the industry's entrepreneurs, businesses, and tax revenue. They would also accumulate the vast majority of what could become the world's largest and most valuable asset.
Beyond the practical concerns, we have to get philosophical for a moment...
We believe bitcoin is fighting for the soul of money. Just like people fought for centuries to separate church and state, there is now a battle to separate money and state. The impacts will be just as far-reaching, and will impact humanity for generations to come.
Central banks have done a fabulous P.R. job convincing the world that inflation is "good" for society. In reality, the fiat banking system is corrupt. The burden of inflation falls squarely on the shoulders of the poorest and most vulnerable (the ones making minimum wage who don't get annual pay increases). Inflation is perhaps the single biggest contributor to the growing wealth gap in the U.S. We've given the state free reign over the printing presses for too long. Bitcoin is simply a fairer and more equitable form of money.
Lastly, we would never call bitcoin a "surefire bet." It's a radical technological innovation and a hedge against the collapse of a creaking, rickety fiat system. It will either become a historical footnote in manias and crashes, or it will be the greatest evolution in money since the birth of paper money. With the advent of blockchains, it's already ignited a renaissance in technology that's impacting almost every industry on the planet. In our minds, the opportunities are so big that they dwarf any risk of a ban.
Be sure to listen and watch my Masterclass for much more. And these are precisely the sort of discussions I have with subscribers in my Crypto Capital service. Thanks for the question.
All the best,
Corey McLaughlin
Baltimore, Maryland
May 21, 2020