Peak Rates?
Is the Fed signaling a desire to "slow and stop" its hikes already?
Joel Bowman, checking in today from Buenos Aires, Argentina...
Yippee!!
Recession... record inflation... an energy crisis... the threat of nuclear war... even trouble in Twitlandia... it seems nothing could sour market euphoria yesterday as stocks capped off their best week since June, rallying hard into Friday’s close.
The Dow piled on 750 points, or 2.5%, Friday to settle above the 31k mark. The S&P 500 added 2.4% and the Nasdaq finished higher by 2.1%.
The three indices were up 4.9%, 4.7% and 5.2%, respectively, for the week... though they remain down 15%, 22% and 31% year to date.
The proximate motivation for the rally seems to be optimism that the Fed may be within sight of “peak rates.”
Here’s The Wall Street Journal:
Fed Set to Raise Rates by 0.75 Point and Debate Size of Future Hikes
Some officials are signaling greater unease with big rate rises to fight inflation
Federal Reserve officials are barreling toward another interest-rate rise of 0.75 percentage point at their meeting Nov. 1-2 and are likely to debate then whether and how to signal plans to approve a smaller increase in December.
According to the Journal, some Fed officials are “signaling their desire both to slow down the pace of increases soon and to stop raising rates early next year to see how their moves this year are slowing the economy.”
Things in the real economy are getting so bad, in other words, that the rank and file at the Fed are beginning to get a little skittish. Is this Fed for turning? Not quite yet... but the murmurs are beginning...
Remember the mantra: Cash now… Gold later.
The Great Escape
Meanwhile, a little further from home (for some), Bonner Private Research readers received a couple of bolt hole reports from our friends over at International Living this week. Here’s Dan with the initial announcement (the first report dropped on Wednesday, the second with Tom’s weekly market note on Friday)...
I’m happy to report that the first of two contributions to our ‘bolt hole’ project from our friends at International Living is now live on the website. You’ll find the report in the Research Reports section of the website. The Overseas Escape Index introduces you to no less than three retirement destinations outside America that you should consider. Why should you consider them?
International Living was Bill Bonner’s first newsletter. He founded it in 1978–a time when conditions in America (high inflation, high crime, high energy prices, a declining quality of life) were much the same. The goal was to find places where you could retire (on a fixed income) and lower your cost of living while improving your quality of life.
International Living is still going strong today. They’ve provided us with two reports we think you’ll find useful as you search your ideal ‘paradise bolt hole.’ In the coming weeks, I’ll have more to say about the ideal places right here in America. Going overseas is not everyone’s cup of tea–foreign languages, far from the children or grandchildren, concerns about safety. But in the spectrum of options you have for making a change, it might be right for you.
If it’s not for you, that’s fine too. We occasionally get emails from readers who consider it unpatriotic or un-American to leave the country–or even have a second passport–when we should be trying to ‘fix all the problems’ instead. That’s a bunch of ‘horse hockey’ as Colonel Potter used to say on Mash.
The original European settlers to North America had no problem leaving an un-free place for a freer one. They took the risk to improve their lives and fortunes by leaving ‘the homeland.’ And later, going West always meant pushing the frontier to find a better life, no matter where it took you.
There’s nothing ‘un-American’ about looking for better opportunities and a better future for you and your family–whether that’s in Uruguay or Utah, Panama or Pennsylvania.
Survive… and Thrive
As Dan said, these special reports won’t be for every reader... but they will be for some readers. And that’s important. Part of what we’re trying to do at Bonner Private Research is offer a comprehensive tool kit to help you survive and thrive during what Bill has called “The Greatest Financial Experiment in History.”
There are times when things go topsy-turvy... think revolutions, currency debasements, sovereign defaults, periods of geopolitical strife and civil unrest. We’re not quite there... yet. But we want to be prepared for the worst, just in case.
Part of that preparedness is financial... like safeguarding your capital through what has proven a wicked bear market this year, for example. Part of it is (unavoidably) political... as in limiting your exposure to tyrannical governments which might seize your assets, either through excessive taxation, inflation or outright confiscation. And part of it is geographical. You want to spend your precious time in a place – whether Stateside or abroad... or a mixture of both! – where you can enjoy your most precious resource (your time) with those you hold dear.
We’ll be adding more and more resources that help you do just that as our humble project grows. Speaking of which, it’s almost been a year since our first ever Bonner Private Research Investment Summit. Members will recall our inaugural confab from back in December, 2021, ominously – presciently – titled: The Winter Catastrophe. (In case you missed the event, you can review the entire transcript here.)
Our original panelists, Messrs. Rick Rule and Byron King, have kindly agreed to join us again for the redux session, which we hope to schedule sometime in the first two weeks of this December... just as General Winter is entering the fray. Watch this space for details...
Take the Money and Run
And finally, just on the investment front, congratulations to Bonner Private Research members who followed along with Tom’s latest tactical trade. From Tom’s market note to members yesterday...
We added Continental to our Official List in June after the majority owner – Harold Hamm – offered to buy the remaining 17% of the stock he didn’t already own at $70 a share. At the time, Continental was trading at $65.15. We saw a nearly risk-free arbitrage to buy the stock at $65 and get bought out at $70, or possibly even higher if the board of directors could negotiate a higher price.
On Monday, the company reported that Harold Hamm had agreed to pay $74.28 for the remaining stock. The board of directors has agreed to the deal and the transaction will close sometime before December 31, 2022.
CLR closed at $74 tonight. At this price, there’s almost no upside left in CLR. Rather than keep our capital tied up in this stock for another two months, let’s take our 14% profit today and move on.
If you’re not already a member, but would like to access all our paid research, choose a plan that’s right for you here...
And now for Bill Bonner’s missives from the past week...
And that’s about it for today’s somewhat bumper weekly wrap. We’ll be back tomorrow with your regular Sunday Session… and a gripping tale of daring and intrigue that moves at the “speed of science.”
Until then...
Cheers,
Joel Bowman
Hi Joel, great article today. My wife and I are just back from 2.5 weeks in Europe and In spite of the record inflation, energy crisis and threat of nuclear attack, there seems to be no impact on tourism or the economy as hundreds of thousands crowd the most famous landmarks. Cafes and restaurants are over-run with guests, and in Spain, Italy and Greece, a meal is still cheaper than most places in the US (if you can find a seat). You probably have a few less miles on the odometer than many of us, but I can tell you, the world today is not the world of the late 70´s. In the mid-late 70´s place like New York, Philadelphia and Baltimore were run by thugs, organized crime, corrupt police and governments, e.g. Frank Rizzo. Each of these cities were one match stick away from burning to the ground and none of them had two nickles to rub together. We all felt Armageddon was around the corner - literally. That led to excess in lots of things like drug use and other even more reckless life styles signaling resignation by many. Forget the pandemic, we discovered AIDS and were immediately afraid to use public toilets. Interest rates on things like mortgages climbed as high as 18% and many more folks were without jobs. Highways were obstacle courses of potholes and the cars we drove, death traps. Those who ventured out in cities at night risked mugging or worse. No, today´s world is like being on a Carnival Cruise compared to that of the late 70´s. Everyone who wants one has a job, the restaurants are full and everything is delivered to our door. We don´t even know what cash looks like anymore. Oh and that biddy 3 cent exchange rate over the Euro we got on vacation did save a few bucks on the big ticket items, but the bigger kick is the tax free return on GST. In the mid 80´s the US dollar was 3 or 4 to 1 over most European currencies. We had good fun back then. I look at today´s world and see a lot of well to do folks out having the time of their life. If the end is near, none of then have received the news. By the end of the 70´s it was either us, Russia or Iran who would end the world. And then thankfully we found Mr. Reagan who by the way was the first president to push the national deficit over 1 trillion. The rest have just pushed the cart along. Reagan, when commenting on the horrid state of our infrastructure, famously said, ¨if drivers would just slow down, the bumps would not be so bad¨. How would that sound today? Enjoy the Recession Guys
"Part of that preparedness is financial... Part of it is (unavoidably) political...part of it is geographical."
I suggest that the most important part of preparedness for the coming years is spiritual.
Are my goals aligned with those of the God of truth and love? Am I receiving information from that source?
If not, I'm just part of the problem -- no?
* How it looks from the rock this frog is sitting on. *