The stock market rise no one's talking about... Quick results from the 'Great Red Stimulus'... A sign of what's to come?... Our bottom-watching continues... The most extraordinary success story we've ever heard...
 Let's talk about stocks rebounding – but not in the U.S...
The past two years have been a triple whammy of pandemic, inflation, and war... And the part of the world I (Corey McLaughlin) am about to talk about might be the last place you'd look for early signs of a global economic recovery. And to be fair, it might be too early to make much of these signs. But I at least want to make you aware of one group of stocks that has been rising the last several months... That's longer than any "bear market bounce" we've seen in U.S. stocks this year. I'm talking about Chinese stocks... In the past two months, the Shanghai Composite Index – China's equivalent of the U.S. benchmark S&P 500 Index – is up 17%. The S&P 500 is down 8% in the same span. If you look at more isolated groups of Chinese stocks, the returns can be even better... China's leading tech stocks, as measured by the KraneShares CSI China Internet Fund (KWEB), are up 35% in the last month alone... The top holdings of this exchange-traded fund ("ETF") are companies like Alibaba (BABA), Tencent (TCEHY), and JD.com (JD). As our colleague Chris Igou shared on Friday in DailyWealth Trader... After a brutal 2021 and early 2022 campaign, things are looking up [for Chinese tech stocks]. Check it out...
KWEB hit a peak in early 2021 above $100 a share. It fell below $25 a share in March. But as you can see above, a short-term rally is underway. KWEB is above its 50-DMA for the first time in months. And that trend line is finally turning higher. First off, I understand this chart might not look like much besides a textbook two-year example of a boom-and-bust chart, but look at the behavior at the very right... Chinese tech stocks are starting to trend higher again, breaking above their short-term trend, the 50-day moving average (50-DMA). Plus, look at the timeline for the move... Considering pretty much the entire rest of the world's major stock indexes were losing value at the same time – and Chinese tech stocks had fallen as much as 70% from their 2021 highs – this trend reversal is significant enough to talk about today. Now, I also know many of you might want to send us notes saying something along the lines of, to put it kindly, "Why do you recommend Chinese stocks when their government is so bad?" (To that point, we're not going to discourage you from saying this – you're free to do it.) But we're talking about investments here. So, this is a worthwhile question to ask: When most everything else is losing value, why are Chinese stocks gaining? And is this a sign of things to come in the rest of the world? I won't keep you in suspense... The answer to the second question is no – at least not yet – for reasons that will become obvious. But let's start with the first question. Why China? Why now? The answer is straightforward... Hello, old friend: Economic stimulus... We were among those to report over the past year or so about the economic concerns emanating from China. There were the Chinese government crackdowns on various sectors, like for-profit tutoring and video games... worries about Chinese shares being de-listed in the U.S... the Evergrande real estate blowup... and, most recently, China's continued devastating "Zero COVID" policy... All of those stories are enough to make most people want to stay away from investing in China... or at least consider somewhere else. As we wrote in the March 16 Digest, sentiment around Chinese stocks had hit levels worse than the 2008 financial crisis. Shares of KWEB had fallen 43% in a month. But as we also wrote that day, it appeared that the leading Chinese stocks may have hit a "bottom." We wrote that Mr. Market had lost his mind again, with extreme fear turning into a good buying opportunity. The reason: Some of the questions around China's regulatory issues were being answered. But, more importantly, amid a new round of COVID-19 lockdowns, government officials were putting out word to expect support for the economy in the months ahead... because they were in a position to do so. On March 16, we quoted our colleague and True Wealth Opportunities: China editor Brian Tycangco... There's a good chance the events of the past few days have marked the bottom for Chinese stocks. And we continue to believe that this is going to be a corner of the market that will deliver outsized gains for investors in 2022. Since then, that's exactly what has been playing out... But not many people have been paying attention. The world's second-largest economy has been largely ignored amid inflation debates and high oil prices. This goes back to early 2020... and before... We could begin with the COVID-19 pandemic, but the story of China's economic picture starts well before then. Much as COVID-19 sprang from China first, the country's recovery from the pandemic lockdowns started first... and China's central bank didn't go as big as the U.S. in providing stimulus. The People's Bank of China ("PBOC") cut interest rates, but by less. As Brian pointed out to his subscribers in the latest True Wealth Opportunities: China issue in May, China was the only major economy to post positive growth in 2020. And last year, the Chinese economy grew by another 8%. Those facts, combined with policy decisions by its central bank, put the country in a much better position to inject financial stimulus today than the rest of the world. While the Federal Reserve has to raise interest rates to fight inflation in the U.S., the PBOC can boost the economy by cutting rates. As Brian shared in last month's issue, while the Fed primarily uses its target federal-funds rate to guide monetary policy, the PBOC uses multiple rates to control money in the economy... Perhaps the most important is the PBOC's one-year loan prime rate ("LPR")... It's China's de facto benchmark lending rate and the one most similar to the federal-funds rate (and other countries' benchmarks). The difference here between China and the rest of the world is night and day... China's prevailing interest rate has been the highest among major economies, checking in at 3.7% as of a month ago compared with the Fed's current 1.75% (and likely rising) benchmark lending rate. As Brian continued... This tells us that the PBOC has plenty of room to cut rates to juice the economy. But that's not all. The PBOC also controls the amount its commercial banks can lend out through the reserve requirement ratio ("RRR"). It's the amount of money that banks must hold as reserves with the PBOC. Right now, China's RRR stands at 11.25%. That's incredibly high, considering that India's RRR is 4% and Indonesia's is 5%. The U.S. doesn't even have reserve requirements as of 2020. Since China has $36.8 trillion in bank deposits – the largest in the world – every 25-basis-point cut in the PBOC's RRR effectively frees up $92 billion of liquidity to lend out to businesses and consumers. The last time the PBOC aggressively cut both its benchmark interest rate and RRR was in 2015, Brian wrote. At the time, it kept China's economic growth from falling below its target. As Brian said... It slashed rates from 5.6% to 4.35% in less than one year. China also cut its RRR by 300 basis points, which freed up an estimated $1.1 trillion. This had one important effect... It boosted household consumption in China by 15.4% in 2015 compared with the prior year – more than double the growth rate of the overall economy. That kicked off a bull market in Chinese stocks... The Shanghai Composite Index soared 60% in less than six months. That could very well happen again in 2022. In fact, it has already begun... A month ago, Brian mentioned the PBOC had already been trimming interest rates, but said much more was to come, as much as $2.6 trillion for the year. Brian called it a potential "Great Red Stimulus." A few days after publishing this May 26 issue, the Chinese central bank announced 33 new measures to boost its economy, including tax breaks, more flexible loan arrangements, and policies designed to support real estate and other important markets. A quick outcome from the 'Great Red Stimulus'... For all these reasons, a month ago, Brian recommended subscribers buy a pair of leading companies in some of the most in-demand markets across China – food service and consumer goods. One of these picks gave subscribers exposure to some of the biggest companies central to China's growth over the past decade, which will continue to grow as they serve the country's growing middle class. The other company operates well-known fast-food brands in China... was undervalued... and would benefit from the government's stimulus measures. Subscribers who followed Brian's advice are up nearly 30% and 8%, respectively, in these positions in just over a month. And Brian and others on our team expect more upside ahead. In April, our colleague Brett Eversole recommended a Chinese investment in True Wealth – a position that's up 35% in two months. In the June issue of True Wealth, Brett recommended two more Chinese stock opportunities. If you're itching to put new money to work today, consider the sector. As for whether this is a sign of things to come elsewhere around the world, it's unlikely – at least just yet. But it could be a sign of what could happen if inflation eases at least somewhat. Remember, the world's other leading central banks are making financial conditions tougher, not easier, in an effort to cool inflation. And prevailing interest rates around the world – central bankers' main policy tool – are lower elsewhere than in China. That's why China can stimulate the economy... while in the U.S., the Fed isn't saying it will lower rates anytime soon, but raise them. Eventually (and sooner if we get a recession), we'll get to the opposite point, but we're not there yet. For now with U.S. stocks, we're still 'bottom watching'... As I described in the June 16 Digest, we're going to keep "bottom watching" over the next several weeks and months... That means looking for real signs of stock prices or other risk assets falling to levels where they might be less likely to fall further. This exercise accomplishes two things... First, it helps inform decisions to protect existing capital. And second, it can tell us when it's time to get bullish again – like what we see in Chinese stocks' recent behavior, for example. As I wrote two weeks ago, we're near a bottom, but we're likely not all the way there yet. More stocks are still declining than rising, based on the advance-decline line I shared in that June 16 issue. And a strong majority of stocks are trading below their longer-term averages... Even with the rally the U.S. markets have had in recent days, just 20% of stocks on the New York Stock Exchange trade above their 200-day moving average (200-DMA) – a good, simple measure of a long-term trend. During the most recent bear market bottoms of the COVID-19 panic and 2008 financial crisis, fewer than 10% of stocks were above their 200-DMAs at their bottoms. Notably, though, the more garden-variety corrections have ended when the number of stocks trading above their 200-DMA was somewhere between 10% and 20%. So we've reached that historical marker already, at least. I'll keep you posted on what these "market breadth" indicators are telling us. In the meantime, the bulls of the past year have turned around lately... I take a couple of days away from writing, and suddenly the biggest gainers of 2021 and 2022 have given back a lot of their recent gains. Energy stocks – the only of the major U.S. sectors that is in the green since the start of the year (up nearly 40%) – is off nearly 19% from its most recent high on June 8, as measured by the Energy Select Sector SPDR Fund (XLE). As of Friday, this index – of which Exxon Mobil (XOM) and Chevron (CVX) make up roughly 40% of the allocation – actually hit mainstream "20% down" bear market territory. Since its most recent high, also on June 8, the price of a barrel of West Texas Intermediate ("WTI") crude has fallen from $122 to near $109 today. That's an 11% drop. And gas prices have moderated, at least for the moment... My local station was even selling regular for less than $5 over the weekend. Similarly, other major commodities are down big in the past month. Natural gas and cotton futures are 27% lower and wheat is off 21%, though they're all still up double digits for the past year. In the context of the stock market, if this is the start of a "rotation" out of the leaders of the past 12 or 18 months and into other sectors, that would be a bullish sign. Sector rotation goes hand-in-hand with a bull market. On the other hand, the past few weeks of selling off in energy and commodities may prove to be more of a short-lived pullback. In that case, the trend of these areas being one of the few places to make money this year isn't over yet. That's why one day, or a week or two, doesn't make a long-term trend. Today, for example, the energy sector led again by a wide margin, up almost 3% while most of the other 10 big U.S. sectors were closer to even... and consumer discretionary stocks fell by more than 1%. Finally, one of the best success stories we've ever heard... You've likely already seen a few e-mails from us about this story... At last year's Stansberry Conference in Las Vegas, one of our subscribers shared an anonymous, seven-page handwritten letter describing how following just one of our editors' recommendations completely changed his life. This man, a self-described semi-retired "old country boy," turned $50,000 – all the money he had – into $54 million in less than two years by following our work... and he wanted to thank us. He also wanted to keep his identity a secret. The letter has blown away everyone who has seen it... In all my time at Stansberry Research, I've never heard a story like this one before. We hear plenty of success stories, of course, but turning $50,000 into $54 million is not typical. You might think this could never happen to you... or that it was a fluke... I'd encourage you to think of it another way. This story is proof of what is possible when you take your finances into your own hands – and follow a good guide who does the work for you. This subscriber from rural America is not the only one who has enjoyed similar success from us. The editor "who has made me the most money," as he described in the letter, last year made 25 recommendations that would have tripled or quadrupled your money... In other words, while the result that was shared with us is extraordinary, the path to get there is not. In this new video we just released, we'll explain how you can apply this subscriber's secret for the chance to make your own extraordinary gains this year. Click here for more details now. | | | | Investing in the 'New Normal' Our editor-at-large Daniela Cambone recently hosted a panel discussion with noted investors Rick Rule and Frank Holmes at the Swiss Mining Institute Conference in Zurich... and they shared wisdom about investing in the "new normal" market environment. "My thesis has always been that bear markets are the cause of bull markets, and bull markets are the cause of bear markets," Rule says. And according to Holmes, "It's a new world when it comes to investing." Don't miss this conversation...
Click here to watch this video right now. And to catch all of our shows and more videos and podcasts from the Stansberry Research team, be sure to visit our Stansberry Investor platform anytime. | | | | |
| Recommended Links: | |  $54 Million Secret Revealed A handwritten letter given to an analyst at Stansberry Research left us speechless. And for the first time ever, we're sharing all the details of this incredible true story with you. The best part is, a similar opportunity is on the table once again. And it doesn't require you to place huge bets (or take on a lot of risk) to see 50-bagger upside potential in as little as 12 to 24 months. Click here to get this expert's trading secret revealed. | |
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New 52-week highs (as of 6/24/22): Bristol-Myers Squibb (BMY). In today's mailbag, feedback on Dan Ferris' Friday Digest... Let us know what's on your mind, praise or rage, with an e-mail to feedback@stansberryresearch.com. "Hey Dan! Love the podcast and your input on Friday emails! This one rang a bell for me... To understand any problem better, learn to flip it upside down. Often, that means starting at the end, then working your way backward to see how you got there... It's a simple, effective mental model for gaining a fresh perspective. "I'm a senior master technician and always tell my guys at the shop, 'If you know how it works, you can fix anything.' The market however is a different animal! Prepare don't predict! "Love the flip it upside-down comment! Thanks Dan! Long time listener and subscriber!" – Paid-up subscriber Jeff T. "Dan: Friday's 'The End of the World as We've Known It' was an outstanding article! So well written and so full of wisdom! It's a keeper for me!" – Paid-up subscriber Paul E. "You're known to write essays that 'hit the spot.' But Friday's essay was your best one ever, by far. It thoroughly explained your 'prepare, do not predict' policy using not only your vast knowledge but also that of other 'super thinkers.' "A real eye opener for those who were not convinced before! Thanks a million." – Paid-up subscriber Gil M. "Dan, This is the finest work you have ever written, and I've been reading your work a long while. Well done sir." – Paid-up subscriber John H. "Dan, Using homebuilders' stock prices as a proxy for home prices is very faulty. We're still 8 million units shy of what should have been built for the last 10+ years. Their stock prices are going down because they were over-valued just like the rest of the market. As a REI, I can tell you that the driver of housing prices is what we're forced to pay to build. You have to build houses that most people can afford when 30-year rates are 3% and can't afford when rates 6%. People want to buy, but they can't. So the demand hasn't evaporated, just the ability to actually purchase. Most prices won't rise much, but they won't fall. "The idiots in control have no idea what they're doing. They still believe Keynes was right and the Austrians wrong. The idiocy of PhD's knows no bounds. I know. I was in grad school with them. They tell each other that they're the smartest people in the room. They're dangerous because they have no idea what they don't know." – Paid-up subscriber Tim P. Dan Ferris comment: I hear you, but you could have said all the same stuff at the peak of the last housing bubble. All the comments about how it'll be just fine will eventually wind up in a list of things people said at the top. Also, remember all the folks in the housing industry who sailed through the 2006 to 2012 price drawdown because they saw it coming a mile away? Yeah, me neither. But the stock market did see it coming a mile away... The SPDR S&P Homebuilders Fund (XHB) peaked in April 2006, about four months before the Case-Shiller U.S. National Home price data hit its top, and a year and a half before the S&P 500 started to fall. Be careful out there... All the best,
Corey McLaughlin
Baltimore, Maryland
June 27, 2022
Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios | Stock | Buy Date | Return | Publication | Analyst | MSFT
Microsoft | 11/11/10 | 958.2% | Retirement Millionaire | Doc | MSFT
Microsoft | 02/10/12 | 823.8% | Stansberry's Investment Advisory | Porter | ADP
Automatic Data | 10/09/08 | 774.7% | Extreme Value | Ferris | HSY
Hershey | 12/07/07 | 523.2% | Stansberry's Investment Advisory | Porter | ETH/USD
Ethereum | 02/21/20 | 454.3% | Stansberry Innovations Report | Wade | AFG
American Financial | 10/12/12 | 432.4% | Stansberry's Investment Advisory | Porter | BRK.B
Berkshire Hathaway | 04/01/09 | 393.4% | Retirement Millionaire | Doc | FSMEX
Fidelity Sel Med | 09/03/08 | 283.5% | Retirement Millionaire | Doc | NTLA
Intellia Therapeutics | 12/19/19 | 274.8% | Stansberry Innovations Report | Engel | TTD
The Trade Desk | 10/17/19 | 255.0% | Stansberry Innovations Report | Engel | Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
| Top 10 Totals | | 3 | Retirement Millionaire | Doc | | 3 | Stansberry's Investment Advisory | Porter | | 1 | Extreme Value | Ferris | | 3 | Stansberry Innovations Report | Engel/Wade |
Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio | Stock | Buy Date | Return | Publication | Analyst | ONE-USD
Harmony | 12/16/19 | 1,233.7% | Crypto Capital | Wade | ETH/USD
Ethereum | 12/07/18 | 1,098.8% | Crypto Capital | Wade | POLY/USD
Polymath | 05/19/20 | 1,065.0% | Crypto Capital | Wade | MATIC/USD
Polygon | 02/25/21 | 784.1% | Crypto Capital | Wade | BTC/USD
Bitcoin | 11/27/18 | 465.6% | Crypto Capital | Wade | Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio.
Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios | Investment | Symbol | Duration | Gain | Publication | Analyst | | Nvidia^* | NVDA | 5.96 years | 1,466% | Venture Tech. | Lashmet | | Band Protocol crypto | | 0.32 years | 1,169% | Crypto Capital | Wade | | Terra crypto | | 0.41 years | 1,164% | Crypto Capital | Wade | | Inovio Pharma.^ | INO | 1.01 years | 1,139% | Venture Tech. | Lashmet | | Seabridge Gold^ | SA | 4.20 years | 995% | Sjug Conf. | Sjuggerud | | Frontier crypto | | 0.08 years | 978% | Crypto Capital | Wade | | Binance Coin crypto | | 1.78 years | 963% | Crypto Capital | Wade | | Nvidia^* | NVDA | 4.12 years | 777% | Venture Tech. | Lashmet | | Intellia Therapeutics | NTLA | 1.95 years | 775% | Amer. Moonshots | Root | | Rite Aid 8.5% bond | | 4.97 years | 773% | True Income | Williams | ^ These gains occurred with a partial position in the respective stocks.
* The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. | 
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