The Recovery Will Happen When We Say It Will

Stores are packed and the virus is lurking... Time for science and policy to get on the same page... The will and the way... The recovery will happen when we say it will... Swimming pools and golf accessories are booming... A 'second depression' is on the table... How to bet on inflation...

I (Corey McLaughlin) braved a local Costco Wholesale (COST) store on Saturday morning...

The trip was not "Operation: Toilet Paper," though the store had several brands in stock and available in large quantities. Primarily, I headed to Costco – one of Warren Buffett's and Charlie Munger's favorite investments – for a long-overdue appointment to get four new tires installed.

And as I strolled through the store while waiting for the work to be done, I realized that I had never seen more people in the place.

Later in the day, I drove to a local grocery store to pick up an online order. About a dozen people wearing masks and standing six feet apart were lined up outside waiting to get in.

The same story could be told about the neighborhood bagel store on Mother's Day...

People did the little "jump out of the way" move if they thought they got too close to you, or vice versa... The scene was different compared to past weeks. I've usually been one of two or three customers there on a weekend morning.

Then, bam, on the way home, the "fuel low" light on my dashboard went on for the first time in months...

Mind you, barely any of the government orders here in Maryland have changed since last week...

We've only gotten small changes to guidance in our home state.

People are now "allowed" to go outside to golf, play tennis, fish, hunt, and camp again... And elective surgeries at hospitals are now permitted on operating room schedules.

That's it.

So this begs the question... What does green-lighting outdoor activities and elective surgeries have to do with long lines at Costco or the grocery store?

Well, it has to do with the signals that are sent to us. And it reminds me again of the big factors driving the economy during this once-in-a-century (hopefully) pandemic...

The power of public opinion... the will of 'we the people'... and consumer behavior...

We've mentioned this oft-forgotten idea before... 70% of the American economy comes from consumer spending. In 2019, that was $13.28 trillion.

So when a pandemic – and the government's response – essentially shuts down the U.S. economy, 30 million people lose their jobs, and everyday spending grinds to a halt... well, we should not be surprised that "bad" things happen.

Do you think oil prices would go negative in a wild one-day futures trading swing without us?

But this isn't "2008 financial crisis" bad because the banks have money... And it isn't "regular bear market or recession" bad, either.

This is 'pandemic' bad. It's a bit different, like 'Great Depression' different...

Today's stories include the same big plot lines as back then...

Income inequality... Today's food bank lines are the 1930s' bread lines.

Tariffs... The "trade war" between the U.S. and China was just here and might be on its way back.

War debts... About $3 trillion and counting spent to fight the "invisible enemy."

And economic "contagion" – one part infecting another... commodity overproduction... and dangerous complacency from a long bull market run.

Extreme Value analyst Mike Barrett was spot-on about this topic in January, in what he said would be the "most important Digest I'll probably write this year." As Mike warned on January 2...

In late 1929, the stock market was at new all-time highs and had been climbing relentlessly for almost a decade. The colossal destruction lying ahead was unimaginable...

The U.S. banking system was clearly the weakest link. But there were other serious problems as well...

Why am I bringing this to your attention today, some 90 years later?...

History is providing an important lesson, and your future financial well-being just might depend on if you're willing to consider it and how well you grasp the situation.

During the Great Depression, the U.S. lost a decade's worth of stock gains and plunged millions of Americans into poverty.

In just a few weeks, we haven't wiped out as much of the stock gains, but we have already wiped out all the jobs growth of the entire 21st century. The pandemic has already caused major damage.

Today, people want to go back to 'normal,' but the catalyst for this contagion isn't simply going away...

The coronavirus is still out there... and so is the cascade of economic impacts.

We'll wait on the scientists, epidemiologists, and vaccine developers as they continue to work. But in the meantime, people are still getting infected and dying...

In the U.S., daily deaths appear to have plateaued in the media capital of the world – New York – so not as many people seem as obsessed with the numbers anymore. But in reality, as our friend and Empire Financial Research founder Whitney Tilson points out, the death toll is still rising in 47 other states.

And elsewhere, Stansberry NewsWire editor C. Scott Garliss pointed out to us today that new concerns have emerged abroad...

Russia is just starting to experience what most of Europe did months ago. And South Korea is experiencing a "flare up" after reopening its bars and restaurants recently. The country is now trying to track down and "contact trace" 5,500 people.

So at the least, it should be clear that waves of the virus, particularly in densely populated areas, will happen whether most people want them to or not... We're not wiping the world clean of COVID-19 tomorrow.

We did "flatten the curve." Hooray. But now what?

It feels like we're in a car called "Economy," idling in a parking lot with no direction.

It's long overdue that the scientists, the policymakers, and 'We the People' get on the same page...

Or at least reach a mutual understanding on the facts as they can be known.

We don't need much agreement... We only need just a little to move on with our lives, make decisions, and take our own risks.

Everyone has their own stories... their own experiences... and their own legitimate opinions on the risks involved with going out in public during the pandemic – and on the suppression of our freedoms.

For instance, I took a risk by going to Costco to get tires installed and buying food and a tablet for video-chatting with my mother-in-law in her assisted living facility. I wore a mask as mandated by the store and the state (even though scientific studies are inconclusive on if they work!), washed my hands when I got home, and here we are.

At the same time, who knows if anyone at any of the locations I visited over the weekend had COVID-19, or had spread it on something in the store? Some people are better at this "social distancing" and washing-your-hands thing than others.

Swimming pools and golf accessories are booming...

According to Google's "rising retail" trends data, the greatest increases in consumer interest are in with "swimming pools," and "golf bag accessories," given the fact that social distancing might continue through the summer. (As in, policies that mandate no swimming in groups and one person per golf cart.)

This behavior alone will not pull the economy through in the long haul.

How much longer can we go on like this... with 30-plus million unemployed, with large swaths of the economy running at slim capacity, with people still getting sick... without plunging into a depression?

We need more.

Some people are frightened to near death, and might not want to go back to normal life until zero COVID-19 cases are reported anywhere. Some don't care at all. Most folks are probably somewhere in the middle, but the mainstream media doesn't like to hear from those people. They don't make for click-bait headlines and emotional stories.

Yet collectively, each and every American – whether they are interviewed by the national news or not... will determine precisely if or when the economy recovers with the decisions they make and how their outlook changes over the next day, week, month, or year.

As global consulting firm Bain & Company put it in a note to clients recently...

Returning to work is a moment of truth for leaders and will be defined by trust.

For employees, trust starts with both being safe and feeling safe – perception will be important along with the mitigation of real risks.

In workplaces that include customers, this will be equally true for them.

Until then, all we seem to know for sure is that the Federal Reserve will print an unlimited supply of trillion-dollar Band-Aids at rock-bottom rates, and keep increasing the U.S. Treasury's balance sheet, just to get us through the short term.

Negative interest rates might be on the way, too. The futures markets seem to think so.

Noted macro investor Paul Tudor Jones sounded a loud alarm for a 'second depression' today...

The hedge-fund billionaire said the country faces a "second depression" if the coronavirus pandemic doesn't get contained within a year...

The reason, he said during an interview with CNBC, is about us. By that, he means the number of people getting sick and infected and how societies like ours respond...

Are we cool with doing things like handing over our health information to Alphabet (GOOGL) and Apple (AAPL) as is being proposed?

Does anyone want to hand over more information to a government that barely anyone trusts? (Or laughs at... Did you hear the Supreme Court flush yet?)

Back in the February 27 Digest, we suggested most Americans would not be all right with the sort of lockdown policies going on in China and other Asian countries...

We can't imagine quarantine orders going over very well should they happen in the U.S.

Today, Jones said the same when arguing that an economic depression is squarely on the table. (The common description of a depression is three or more years of a 10% gross domestic product decline each year.) As Jones said on CNBC today...

Americans are too different. I don't think we would be able to come together and do that. I think America's biggest strength is individualism, its love of freedom. In the case of the pandemic, it's also our biggest weakness.

If you look at the Asian countries that are succeeding and beating this, they are doing it because they place a much greater emphasis on society values than they do on individual rights.

We're quoting Jones in part because we know he has the ear of President Donald Trump... Jones was one of a select few Wall Street investors who joined the president and Vice President Mike Pence on an "advisory" phone call back in mid-March.

Ten Stock Trader editor Greg Diamond is also a student of Jones...

Greg's first boss in the investment business worked directly for Jones... And Greg says Jones was the first person who piqued his interest in "analogs" between two markets and the time-cycle analysis that he regularly shares with his Ten Stock Trader subscribers.

You may remember these two must-see charts from Greg in the April 22 Digest, comparing the striking similarity between the Dow Jones Industrial Average's performance between 1930 and today...

This entire year, and even before that, Greg was talking about the "90-year cycle" and the similarities between today and the Great Depression era. Today, Greg told us in a private note about Jones' comments...

Tudor is the only one on Wall Street I actually listen to.

I'm nearly 100% certain he is well aware of the long-term cycles in play I've been highlighting along with the outrageous fiscal and monetary policies being unleashed in the global economy.

It's madness. And he's right. A 'Second Depression' is coming if we don't open up the economy.

What's more, Jones seems to be as concerned with central-bank money printing as many of our editors.

Inflation is coming...

Last week, Jones wrote in a market outlook note to clients that he bought bitcoin as a hedge against inflation that will come from all the money-printing.

Jones said his Tudor BVI Global Fund may hold as much as a low-single-digit percentage of its assets in bitcoin futures.

He made the allocation after watching entities like the Fed and other central banks, by his calculation, print $3.9 trillion – the equivalent of 6.6% of global economic output – since February. As Jones wrote to his clients...

It has happened globally with such speed that even a market veteran like myself was left speechless.

We are witnessing the Great Monetary Inflation – an unprecedented expansion of every form of money unlike anything the developed world has ever seen.

Jones said he also considered positions in gold as an inflation hedge... an idea we've suggested via Gold Stock Analyst editor John Doody in the Digest in recent weeks.

Click here for more of John's – and his business partner Garrett Goggin's – thoughts on that. (And don't delay... Their presentation will go offline tonight at midnight Eastern time.)

Because the Fed can print all it wants.

But to what end? We the people matter more than "fake money." The recovery will happen when we say it will.

New 52-week highs (as of 5/8/20): Agnico Eagle Mines (AEM), Calibre Mining (CXB.TO), KraneShares MSCI All China Health Care Fund (KURE), Lonza (LZAGY), MarketAxess (MKTX), Rollins (ROL), Sea Limited (SE), and Scotts Miracle-Gro (SMG).

In today's mailbag, feedback on last Thursday's "tech stocks" Digest, kudos for our Stansberry NewsWire team and Director of Research Austin Root, and a story for Porter. Do you have a comment or question? Send it to feedback@stansberryresearch.com.

"[Corey and Scott's Digest on Thursday was the] best thing I've read in a long time. I'm a tech heavy guy – for obvious reasons that you touched on – but, how is tech interacting with the shutdown, and peoples' circumstances now? How has this event become a catalyst for certain tech stocks? What companies are benefiting and why (you know, beyond Zoom)?

"Your report on all that was the best I've read, thank you. I can only add that it would've been even more appreciated had I received it 2-3 weeks earlier, to give me a better understanding at an even more crucial time. But you can't have everything! Keep it up on work like that." – Paid-up subscriber Bryce S.

Corey McLaughlin comment: Thanks, Bryce. Glad you found what we had to say useful. The analysis was mostly Scott's. I can take more responsibility for the two-to-three-week delay. We'll try to do better next time!

"Hi team, I am an Alliance Member, just wanted to say how valuable having the NewsWire open during my work day has been. Getting quick snippets of important news around the world is very helpful. Thank you! – Stansberry Alliance member Steve B.

McLaughlin comment: Thanks so much, Steve. There is more information available to us than ever before in history, but having a trusted team on your side to filter through all the noise is rare... and we believe tremendously valuable, too.

It sounds like you're using the Stansberry NewsWire a lot like we do. For anyone who hasn't already, you can sign up for the NewsWire for free right here.

"Porter, your brilliant and impassioned analysis of the pandemic impact shows how authorities around the word fail the test of the trolley dilemma on the grand scale. But, as many times in the past, your efforts remind me of St. Antony preaching to fish. As a token of appreciation for your work here is a very appropriate Arabic tale for you...

"Once a merchant met the Plague on the road and asked where it was going. On Baghdad, it answered. The merchant asked, 'How many people will you take?' 'Not much, just five thousand,' said Plague, and turned away. Then the merchant heard that 60,000 died there, and when he met the Plague again on his way back he was very angry, accusing Plague with murders and lies.

"'I did not lie to you,' Plague told him, 'I killed 5,000; the rest died from fear.'" – Paid-up subscriber Michael B.

"Hi Porter and team, Just wanted to let you know what a fabulous job you are doing. I have to say Austin Root has to be your best hire ever. I can't believe what a fabulous capital allocator he truly is.

"[I'm] also really enjoying the new Forever Portfolio and am utilizing it very well. Wish Porter was more active in the business and hope he can be very soon." – Paid-up subscriber Paul M.

All the best,

Corey McLaughlin
Baltimore, Maryland
May 11, 2020