The Odds of a Serious Decline Are Rising
Did you tune in for last night's event?... White House confirms: 'Miles and miles' from a trade deal... The odds of a serious decline are rising... Signs of a slowdown in housing... A market legend buys gold for the first time...
Editor's note: We've received several notes from folks who weren't able to attend Dr. David Eifrig's online briefing last night. Because he believes this message is so important, "Doc" has asked us to provide access to a full replay of this event for a limited time. Click here to view it now.
We've been saying it for months...
Despite plenty of market-pumping media headlines and presidential tweets to the contrary, we've told you again and again that a legitimate trade deal with China was unlikely anytime soon.
This morning, U.S. Commerce Secretary Wilbur Ross finally admitted the obvious. As financial-news service CNBC reported...
"Frankly, that shouldn't be too surprising," Ross said in a Squawk Box interview. The U.S. and China have "lots and lots of issues," he continued, and the Trump administration will need to create "structural reforms" and "penalties" in order to resume normal trade relations with Beijing.
"We would like to make a deal but it has to be a deal that will work for both parties," he said. "We're miles and miles from getting a resolution."
Of course, in what has become a common theme with this administration, Ross later tried to walk back those comments. In an interview with Bloomberg TV, he said that both the U.S. and China "want to make a deal."
We're still not holding our breath. Expect this major headwind for stocks and the global economy to continue.
Meanwhile, neither trade tensions nor the government shutdown is slowing the U.S. jobs market so far...
This morning, the U.S. Department of Labor reported that filings for unemployment declined by 13,000 to just 199,000 last week, a level not seen since November 1969. This figure likely would've been even lower if not for the government shutdown, as more than 25,000 claims were made by federal employees.
That's the good news.
However, we'll also remind you that unemployment is already near the lowest levels on record. And as Doc pointed out during last night's briefing, extreme lows in unemployment have historically been a bearish sign for stocks...
Now, this doesn't mean the bull market can't continue a while longer. But it does suggest the odds of a serious decline are rising.
In addition, not all of the economic data are quite so rosy today...
Earlier this week, the National Association of Realtors said that the U.S. housing market slowed significantly last month. As the Wall Street Journal reported on Tuesday...
Home sales tumbled in December to their weakest level since 2015, ending a difficult year at a new low and offering fresh evidence that the housing market could be in for a bumpy ride in 2019...
December capped the weakest year for home sales in three years. Existing-home sales fell 6.4% in December from the previous month to a seasonally adjusted annual rate of 4.99 million, the National Association of Realtors said Tuesday. Compared with a year earlier, sales in December declined 10.3%...
Meanwhile, home-price growth has also slowed significantly, a sign that many owners struggling to sell their homes are starting to cut prices or ask for a more conservative number. The median sale price for an existing home in December grew 2.9% from a year earlier – the smallest increase since March 2012, when the market was still depressed from the housing crash.
To be clear, these are not yet recessionary levels... But the rate of home sales peaked at roughly 5.7 million in late 2017, and has now been trending lower for more than a year.
This is concerning. And like the recent warnings from several corporate bellwethers, we'll be watching this trend closely.
Finally, we'll end on a relatively bright note...
Regular Digest readers know several Stansberry Research analysts – including Steve Sjuggerud, Doc Eifrig, and the Stansberry's Investment Advisory team – have recently become bullish on gold again for the first time in years. But they're not alone...
A market legend has now joined them. In an interview with Bloomberg TV late last week, billionaire real estate investor Sam Zell disclosed that he was buying gold for the first time. As Bloomberg reported...
"For the first time in my life, I bought gold because it is a good hedge," [Zell] said in a Bloomberg TV interview. "Supply is shrinking and that is going to have a positive impact on the price."
Spending on new mines began to dry up after prices of the metal tumbled from a record in 2011, clouding the outlook for production. With gold still down by almost a third from its peak, the biggest miners are just looking at buying their competitors in a bid to bolster their output pipeline.
"The amount of capital being put into new gold mines is a most nonexistent," Zell said. "All of the money is being used to buy up rivals."
If you're not familiar, Zell is among the most successful real estate investors in history. He's made billions of dollars buying up distressed assets when no one else is interested, earning him the nickname "Grave Dancer."
But he also knows when to sell... Among several notable feats, Zell famously sold his firm Equity Office Properties – the largest owner of office buildings in the U.S. – for $39 billion in 2007. Unlike so many other real estate investors, he managed to completely avoid the housing bust altogether.
In short, Zell knows value. And he clearly believes gold is a great value today.
If You've Ever Wanted to Make a Living Reading, Writing, and Thinking, We Want to Hear From You
Stansberry Research is hiring an assistant editor for the Stansberry Digest. We're looking for someone with an eye for quality content and a passion for investing.
This is an opportunity to communicate daily with one of the largest lists of financial readers in the world and work closely with Digest editor Justin Brill and the rest of the Stansberry editorial team.
The ideal candidate lives and breathes the world's markets, is a voracious consumer of financial news and analysis, and can think and write clearly. Formal experience is preferred, but may not matter, depending on the candidate.
Please note... We're located in Baltimore, Maryland, and this position will be full-time and on-site. If you're not hardworking and curious, don't apply. If you don't love finance and investing, don't apply.
If you're interested, please send us an e-mail at digesteditor@stansberryresearch.com. The subject line should read, "I'd like to join the Digest team." In the e-mail, please include the following:
- A basic resume. Tell us what you've done before. We admire people who aren't afraid of hard work or odd jobs.
- A writing sample. Tell us about an investment or trading opportunity you like today. Please note, we're interested in the fundamentals of your best idea, not something that's based solely on charts. Macro ideas are welcome.
No other information is necessary. And if someone you know would be a great addition to the Digest team, please feel free to forward this posting.
New 52-week highs (as of 1/23/19): none.
In today's mailbag: Some early feedback on last night's event... and a reader is dubious about the risks of a "debt jubilee." What's on your mind? Let us know at feedback@stansberryresearch.com.
"As usual and expected, Doc was GREAT!! He knows how to interest us on the topic and knows how to explain to make things understandable. Thanks to Doc, Jared, and Stansberry Research." – Paid-up subscriber H.Q.
"Hi Stansberry, I missed last night's webinar by Dr Eifrig due to having to work late. Is there a recording available?" – Paid-up subscriber Gord C.
"Ladies/Gentlemen, it's not often I try to ween myself off the computer and get away from the dangerous 'Blue Light' it emits. Unfortunately when Dr. Eifrig's presentation was in progress my attention was elsewhere. Will there be a recording of that presentation or transcript available soon? I'm very interested in the Doc's words and reasons, but my sick wife needed my attention." – Paid-up subscriber Richard S.
Brill comment: Don't worry... As we mentioned earlier, you can access a full video replay for a limited time right here.
"Several of you at Stansberry Research have referred to a 'Debt Jubilee' over the last year, most recently in the Jan 23, 2019 Stansberry Digest. Please tell me why neither my extremely reputable broker nor equally reputable banker profess to have no knowledge of such a thing? That this has actually happened in the past, per Stansberry Research, why does no one that I ask in business in any capacity have any knowledge about this? I can't get anyone to say they have any insight as to this specter. Please explain this to us all." – Paid-up subscriber E.K.
Brill comment: As Porter detailed in his book (which is available for free to all Stansberry's Investment Advisory subscribers right here), the U.S. government has carried out similar measures a number of times over the years, including 1841, 1933, and most recently 1971.
As to why neither your broker nor banker appear to have any knowledge of these events, we can't say. In our experience, most folks who work in the financial industry have no better grasp of history than the general public. But frankly, even if they were aware of these risks, they likely have little incentive to tell you about them.
Regards,
Justin Brill
Baltimore, Maryland
January 24, 2019