Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Among the many most promising technologies is something called deep learning. A simple definition of deep learning is the use of artificial intelligence (AI) to carry out a form of advanced pattern recognition or advanced analytics. Deep learning has become the hottest subsector within AI thanks to technological breakthroughs in both image and language recognition that is approaching human levels of comprehension.

The potential scale of deep learning’s impact on business was laid out last month in a report from McKinsey Global Institute called Notes from the AI Frontier: Insight from Hundreds of Use Cases. The study from McKinsey found that, for some industries, deep learning has the potential to create value equivalent to as much as 9% of a company’s revenues.

One of the most promising areas for the use of deep learning, according to McKinsey, is marketing and sales for consumer-facing industries. Examples would include customer service management, creating individualized offers, acquiring customers and honing prices and promotions. Frequent interactions with customers generate the huge amount of data needed to feed the AI systems. The winners will be the companies that can sweat the largest amount of data the hardest.

Airlines Go ‘Deep’

One consumer-facing industry that is turning to big data and deep learning to improve its profitability is the airline industry. Profit margins are already narrow because of the intense competition between the airlines and now rising fuel prices are adding even more pressure.

So the industry is seeking to personalize experiences for as many travelers as possible by using the vast amount of data the airlines have on their passengers. And think about it – the airlines do have a lot of data about you – name, address, phone numbers, birth date, credit cards, favorite seating assignment, how often you visited their website, etc. In fact, some researchers say that an average transatlantic flight generates about 1,000 gigabytes of data!

Two of the airlines moving down the technology path are American Airlines Group (Nasdaq: AAL) and United Continental Holdings (NYSE: UAL).

Earlier this year, American Airlines came out with an app that allows its flight attendants to offer passengers “a gesture of goodwill”, such as air miles, when there are any sort of minor problems (such as the flight entertainment system not working). That instant customer service is a lot better than having flight attendants telling passengers (that probably have a million other things to do) to contact a customer relations representative when the flight lands. As the airline said when it rolled out the app, “Our goal is to improve the customer experience, particularly when things don’t go as planned, to make it a little bit less painful for them.”

Poor United Airlines has had a number of customer relations nightmares, such as a passenger being dragged off a plane or a dog dying. So it definitely needs to step up its customer relations game. Its flight attendants have handheld devices that give them access to customer details, such as when they last flew with the airline, whether they have a tight connection and if they have dietary requirements. And like American, United offers customers a bag-tracking service to alert them if their luggage is lost or delayed.

And United employees’ “in the moment” app will allow United personnel to compensate passengers immediately for things like flight delays or spilled drinks. Hopefully, United employees will make use of this data and technology to make passengers’ flights as easy and comfortable as possible and repair the company’s image.

Even overseas-based airlines are going ‘all in’ on big data and deep learning. Ryanair Holdings PLC (OTC: RYAAY) wants to become the “Amazon for travel” by using its customers’ data to cross-sell items, such as hotel rooms, from a one-stop-shop platform.

I expect more airlines to follow the route Ryanair is taking. Think about it – shopping an online store, while still in flight, filled with everything from ground transport options to tours to other destination-related activities. Passengers returning home could even do their grocery shopping while in-flight to have the groceries delivered when they arrive home. The possibilities are almost endless.

A study conducted by the London School of Economics and Inmarsat said that in-flight broadband – offering streaming and online shopping to passengers could create a $130 billion global market within the next 20 years.

Related: Buy These 3 Stocks Warren Buffett Used to Hate

The study estimated that the airlines’ share of that total could amount to $30 billion in 2035. That’s quite a jump from the forecast $900 million in 2018 and is just what this profit-squeezed industry needs.

Warren Buffett said famously in 2002, “If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money.” And indeed the industry has been a chronic money-loser.

But even Buffett bought stakes in the four major U.S. airlines in 2017 – American and United as well as Delta Air Lines (NYSE: DAL) and Southwest Airlines (NYSE: LUV). With airlines adopting technology and using deep learning, their profitability longer-term should become more stable. That makes them an interesting investment, good enough even for Buffett.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

You can work your tail off, live below your means, save like a miser, invest like the experts, build a great retirement nest egg – and still end up with virtually nothing!

Don’t take the bait!

The hypocrisy of some financial professionals isn’t funny when you are talking about your life savings.

When I have discussions with licensed financial professionals, one of the first questions I ask is if they believe in diversification. The answer is emphatically “Yes!” Next question – “Why?”

I normally get an education about investing in non-correlated assets for protection. “Protection from what?”, I ask. The common answer is, “To protect from a catastrophic loss in your portfolio.” OK, so far….

I then ask about stop losses. I’d urge all readers to ask these questions to your financial advisor. While the answers vary; all too often they tell me not to worry, the market always comes back. They may produce graphs to prove their point, and the market does come back – eventually!

I’ll then ask, “If the market suffers a 40% drop or more, can you guarantee it will come back in my lifetime?” No, they can’t!

Here is what they leave out

NASDAQ.com tells us that on March 9, 2000 the NASDAQ set a new record – $5,046.86. The next time it set a new record was on May 27, 2015. In real numbers it took 15 years to come back.

How much buying power was lost to inflation over that 15-year period?

The US Inflation Calculator gives us a better picture:

When adjusting for inflation, the buying power of NASDAQ recovered on January 11, 2018. On 3/31/2018 the NASDAQ closed at $7,063.44. While the NASDAQ briefly passed the previous (inflation-adjusted) high, today it has less buying power than 18 years ago.

The S&P 500 fared a little better. Reuters reports:

• “March 24, 2000: The S&P 500 index reaches an all-time intraday high of $1,552.87”

• “March 9, 2009: S&P 500 closes at $676.53.”

Once again, let’s factor inflation into the picture:

When adjusted for inflation, it took almost 17 years (Dec. 2016), and a wild ride, for the S&P to recover the same buying power.

Some believe diversification, coupled with a commitment to buy and hold, is the ultimate protection. How many baby boomers would have the willpower to hang on while their portfolio drops almost 60% between 2000-2009? Can you afford to have your life savings remain stagnant for almost two decades?

Stop losses protect against a catastrophic loss resulting from a market crash. Instead of riding the market all the way down, and hoping/praying for it to return, you sell and limit your losses. Baby boomers have a shorter time frame and may not be able to patiently wait for the market to come back.

Another danger seldom discussed

A market crash isn’t the only threat to your life savings. Ask your financial advisor about how you are protected against inflation like we experienced during the Carter years – or perhaps worse.

You’ll likely get a variety of responses. Don’t be fooled with Treasury Inflation Protected Securities (TIPS). By design, they do not offer any “portfolio” protection; they only protect the money you have invested in them. The rest of your portfolio is still at risk.

Ask about gold and precious metals. Many financial professionals warn me gold is much too risky and pays no interest or dividends. I know of only one financial advisor that strongly recommends gold.

Many will point to quotes like this:

“These are people who believe that gold is, to use John Maynard Keynes’s famous description, a “barbarous relic”. Many world-class investors (such as Warren Buffett) believe that gold is just a shiny rock that has little or no intrinsic value.”

Which is it, a great inflation hedge or “a shiny rock with little or no intrinsic value”?

In 2008, when the market tanked, interest rates set historic lows. Investors were inundated with pundits predicting inflation spiraling out of control while gold and silver prices skyrocketed. I also felt it was just a matter of time before our currency collapsed. The Fed is continuing to print money hand over fist, yet somehow, the inevitable collapse has not happened.

Should gold be looked upon as a stop loss – another form of insurance protecting from a catastrophic loss? Should investors be glad we’ve not seen high inflation, despite holding a percentage of their portfolio in gold?

In this article, “Inflation Is Quietly Poisoning Your Retirement Nest Egg”, I outlined a difficult truth:

THE DIFFICULT TRUTHSaving a lot of money to supplement your social security/retirement income is merely a start. Investing wisely and protecting your buying power are major factors in allowing you to retire comfortably.

I looked at inflation of several items over the last 50 years; Federal spending, a gallon of gas, a dozen eggs, a gallon of milk, a loaf of bread, an ounce of gold and the S&P 500.

The first two columns show what each item cost in 1967 and in 2017. Column 3 (Cost-inflation adjusted) calculates what each item would cost if they rose at the government reported inflation rate. Column 4 is the difference between the actual cost and the inflation-adjusted cost. It was an eye-opener.

Federal government spending increased by approximately 146% above the inflation rate. Gas prices followed inflation. Eggs, milk, and bread are actually lower. Gold rose approximately 300% above the rate of inflation. The S&P was up approximately 175% over the 50-year period.

I’d be speculating why the inflation-adjusted price of food declined. I was surprised; particularly because of the high cost of federal regulations piled upon American businesses. Perhaps it is through efficiency and market competition. If that’s the case, free market capitalism appears to be alive and well.

The “Great Society” was launched by President Johnson in the mid-1960’s. At the time, I said the government was incentivizing out of wedlock birth and the welfare population would rise. Regardless of the cause, government spending has far surpassed the inflation rate and is doing so on borrowed money.

The stock market has outpaced inflation. A conservative investor will have a portion in the market for that reason; just keep your stop losses current.

When comparing the buying power of an ounce of gold versus gas, eggs, milk and bread over the last 50 years, gold has performed very well.

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What does this mean?

In the aforementioned article, we looked at the Carter years. Inflation between 1977 & 1982 was 59.9%.

The S&P 500 increased from $96.86 to $133.00 (37%) and gold rose from $133.77 to $400.00 (300%). Unfortunately, many diligent savers and investors lost a lot of buying power in a five-year period due to inadequate inflation protection. In many cases, the buying power was lost forever!

Stocks and gold have historically performed well. I’m sure investment artwork, farmland, and other collectibles also have a history of keeping up with inflation.

While no one can predict the future, a well-diversified portfolio should provide adequate income, protect the investor against long and short-term market corrections, and adequately hedge against inflation.

Following is a list of questions you should ask yourself, your broker and financial advisor:

• Is your portfolio diversified offering realistic protection against catastrophic losses?

• After a major market drop, are you comfortable that it will return to its previous inflation-adjusted high in your lifetime?

• Do you have stop losses in place to protect from a significant market downturn?

• Do you feel that runaway government spending will inevitably cause high inflation?

• If we experience 60% inflation like we did during the Carter years, is the buying power of your life saving adequately protected?

Vague answers and “trust me” won’t cut it, get the facts and make sure you are totally comfortable!

I’ve come to the conclusion that gold serves the same role as a stop loss – helping to insure and protect my life savings from the most catastrophic threat of all – runaway inflation.

With government spending and debt exploding as it has, I’m surprised we haven’t already experienced Carter type inflation once again. The Federal Reserve has magically managed to keep the market levitated and inflation reasonable. How much longer can this continue? No one knows; it’s uncharted territory.

I hope to never experience the horrible Carter year type of inflation again; however, I’m not selling any of my metals. Inevitably the dollar will lose a great deal of value in a short period of time. If not in my lifetime – our heirs will find their precious metal coins to be quite valuable.

Help keep us on the air!I’m committed to keeping our weekly letters FREE. I was humbled when readers suggested we add a donations button to help us offset the cost of our publication. We are grateful for all the help we can get. It’s strictly voluntary – no pressure – no hassle! Click here if you’d like to help. You do not have to sign up for PayPal to use your credit card. And thank you all!

The old way of providing healthcare in the United States is fast disappearing and being replaced by new technologies, which is changing the way healthcare is dispensed. And many of these new providers of healthcare are not your traditional healthcare companies. These are among the findings of the latest research from PricewaterhouseCoopers (PwC).

Some interesting data garnered by PwC illustrates the changes occurring. PwC found that only 17% of doctors used EHRs (electronic health records) and 11% of people in the U.S. had a smartphone in 2008. But now those percentages have risen to 87% and 79%, respectively. That essentially opens the door for technology firms to step through and deliver what patients want and need, faster and more effectively than traditional healthcare providers.

No wonder then that PwC said it found that the U.S. healthcare system is undergoing “seismic change”.

This seismic shift in how healthcare is provided is being led by very familiar technology names – Apple, Google, Microsoft, IBM and, of course, Amazon.com (Nasdaq: AMZN).

Amazon AI and Healthcare

I have written about the latter’s forays into the healthcare field several times and for good reason. A recent survey (2018 Healthcare Prognosis Survey) from the venture capital firm affiliated with the Rockefellers, Venrock, found that 51% of participants thought Amazon would have the biggest impact on the healthcare industry in 2018 among the technology firms. The next closest was Apple at 26%.

Among the healthcare initiatives coming from the company are Amazon, JPMorgan and Berkshire Hathawayannouncing (in December 2017) the formation of a new healthcare company which would use technology to provide high-quality healthcare to patients and families more simply, and at a more reasonable cost. The initial focus of this company would be the employees of the three companies.

This move and just the rumor of Amazon’s entry into pharmaceutical and medical supplies distribution sent the stock prices for more established healthcare companies and pharmacy chains tumbling a few months ago.

Amazon is well-known as a disruptor into whatever industry it gets into, so it is intriguing because the U.S. healthcare industry is so ripe for disruption. Just consider this…

In 2016, U.S. per-person healthcare expenses were $10,348. That was more than double that of other first-world countries that offer universal health coverage. Here are some examples from other developed countries: $4,752 in Canada, $4,600 in France, $4,708 in Australia, and $4,192 in the U.K. And for all that money here in the U.S. in many ways our healthcare below that of other advanced nations. For example, medical errors kill more Americans annually than motor vehicle accidents.

Much of what Amazon (and others) are likely to do will center around the use of artificial intelligence (AI). This is the model followed by the Chinese tech giants, Alibaba and Tencent, which have been experimenting with employee healthcare software for years now.

The New York Times reports that over 130 Chinese tech firms were using AI to increase efficiency and accuracy (right diagnoses) in the overburdened Chinese health system. The Amazon venture with JPMorgan and Berkshire Hathaway will likely go down the same path, perhaps using AI to forecast patients’ needs based on data collected from patients with a similar health history.

Alexa, How Am I Feeling Today?

If Amazon does go down the AI path, a big part of that will involve its smart assistant, Alexa. There are lots of rumors around that Amazon is building a “health & wellness” team within its Alexa division.

Alexa is already being used in a number of healthcare-related ways. Here are just a few…

In September, Amazon announced that basic health information and advice provided by the Mayo Clinic would be available on Alexa. Users can download the Mayo Clinic First Aid skill on their device and then voice their concerns to the machine, which will give answers to dozens of everyday health issues or other self-care instructions. In a similarly vein, in March 2017, people looking for quick answers to care questions could also integrate the WebMD skill on any Alexa-enabled device. Next on Amazon’s list for Alexa may be diabetes care. Last autumn, the winner of the Alexa Diabetes Challenge was a voice-enabled diabetes support platform called Sugarpod.

The ultimate goal is to make Alexa more “useful in the healthcare field” with information on health for expectant mothers, newborn infants, people with disabilities, people with chronic diseases and tools for our aging population.

The main obstacle may be the government’s HIPAA requirements to ensure users’ data remains private. But I suspect Amazon will work through this and become HIPAA compliant. After all, they are not Facebook.

Investment Implications

Besides investing in Amazon, what are the investment implications of this upcoming change in how healthcare will be delivered?

Some on Wall Street say that Amazon has lost all interest in the distribution of drugs and medical supplies to hospitals and other healthcare facilities. I think these are just hopeful wishes coming from people that own the traditional healthcare supplies provider stocks.

Related: Sell These Healthcare Middlemen About to Get Amazoned

In other words, the companies that I told you before that are vulnerable to disruption from Amazon still are. Some of these I’ve mentioned before including drug distributors Cardinal Health (NYSE: CAH) and McKesson (NYSE: MCK). But it also includes companies that move basic supplies to doctors, dentists and veterinarians such as Henry Schein (Nasdaq: HSIC) and Owens & Minor (NYSE: OMI). Just a few months ago, the CEO of Owens & Minor, Paul Cody Phipps, said on a conference call that Amazon was talking to many large hospital systems, “including our customers.”

Two ETFs that are loaded with middlemen stocks, the iShares U.S. Healthcare Providers ETF (NYSE: IHF) and the SPDR S&P Health Care Services ETF (NYSE: XHS), should also be avoided.

Amazon will make it a tough environment for the middlemen that have fed at the healthcare trough for many years. And even President Trump’s recent speech on healthcare took aim the middlemen, and he vowed to eliminate them. These companies will be at the epicenter of the seismic change in the U.S. healthcare system and should be avoided.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley 

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With Chinese trade war turmoil rocking Chinese stocks on American markets, many investors are wondering if they should still consider buying Alibaba Group Holding Ltd.‘s (NYSE: BABA) stock.

If Wall Street is to be believed, investors should stay far away – between January and May, Alibaba’s stock dropped 18% as the White House pushed for aggressive trade restrictions on Chinese firms.

But Wall Street is overreacting…

As the company’s recent earnings report illustrated, Alibaba’s growth potential has only gotten stronger over the last year. Earnings increased 44.4% year over year, while revenue increased 61% to $9.87 billion.

According to Money Morning Executive Editor Bill Patalon, Alibaba is “one of those rare companies that is so well-positioned, and that has such a great management team, and that has the benefit of serendipitous timing with a powerful, transformational trend” that even something as significant as a trade war can’t stop it.

Here’s why now is a great time to buy China’s best retail stock…

Alibaba Is Trade War-Proof

Alibaba’s key to success is China’s immense middle class.

According to Forbes, China has more than 500 million middle-class consumers – twice the population of the entire United States.

And analysts estimate that this number will balloon to well over 600 million by 2022.

This demographic growth has turned China’s retail industry into a $6 trillion dollar business – a 400% increase from 2010 and a 900% from 2000.

A New Age of Easy Money Has Arrived: In today’s chaotic market, this could be the perfect way to collect enormous profits, each and every week – without touching a single disappointing stock ever again. Read more…

This growth is expected to continue as China’s middle class does an increasing amount of shopping online.

In the last three months of 2017, online retail sales in China soared 35.4%. By the end of the decade, China is expected to account for 60% of all global e-commerce.

Last year, Chinese shoppers spent more than $1 trillion online for the first time ever. For context, the United States spent $455 billion – less than half of China.

Alibaba, already China’s largest digital retailor, is raking in profits from this explosion in digital commerce.

The company controls over 50% of the Chinese online retail market, and its competitors aren’t even close to matching it.

That’s why we’re not sweating the threat of a trade war or Wall Street’s overreaction.

As Bill puts it, “these issues are really just ‘speed bumps’ when viewed from the context of a stock that will create generational wealth in the decades to come.”

This company is simply too dominant in a massive, and growing, e-commerce market.

With such tremendous tailwinds behind it, Bill has an easy trade strategy for Alibaba that promises huge returns…

For years now, Alibaba has one of Bill’s favorite stocks to buy.

That’s why when Alibaba was trading for $69 shortly after going public in January 2016, Bill recommended the stock as a “strong buy.”

Even when shares soared to $180, Bill still recommended the stock as a “strong buy” despite it having already returned 162%.

Today, with trading back at $180, Bill sees Alibaba as the perfect “on sale” buy.

Bill recommends what he calls an “accumulate” strategy when it comes to Alibaba.

“Buy a stake now, and add to that stake on pullbacks – or even when you have some ‘spare change,'” he says.

In other words, because Alibaba’s growth potential is still undervalued by the market, buying shares at any near-term price decline is a steal.

Alibaba is currently trading around $183. However, Wall Street sees the stock heading to a 12-month high of $259 – a gain of 41%.

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Source: Money Morning 

The numbers on the US Debt Clock are spinning at a dazzling pace. US government debt is now over $21 trillion, $174 thousand per taxpayer. Add another $3 trillion for debts of state and local government on the stack.

Unfunded federal government promises are almost $113 trillion, $900,000 per taxpayer, not including another $6 trillion in state unfunded pension liabilities.

It’s fiscally impossible for the debts to be repaid. Governments borrow money and make political promises on the backs of future generations. If the numbers were double (or triple) what they are today; would our lives be any different? We can’t pay it back, why not just continue frivolously spending as long as people are fool enough to lend us money?

“The Budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest Rome will become bankrupt.”Cicero, 55 B.C.

Does anyone really care?

Ignore the political class and their allies. Here is an example.

Nobel Prize winning economist Paul Krugman has an impressive educational pedigree – on paper. While he may be an economics professor at Princeton and the London School of Economics, he tarnishes the reputation of all economists, putting politics ahead of common sense.

In October 2016, anticipating the election of Hillary Clinton, he wrote, “Debt, Diversion, Distraction”.

“Are debt scolds demanding that we slash spending and raise taxes right away? Actually, no: the economy is still weak, interest rates still low…and as a matter of macroeconomic prudence we should probably be running bigger, not smaller deficits in the medium term. (Emphasis mine)

…. So my message to the deficit scolds is this: yes, we may face some hard choices a couple of decades from now. But we might not, and in any case, there aren’t any choices that must be made now.”

After the election, Mr. Krugman reversed his position writing, “Deficits Matter Again”.

“…. Eight years ago, with the economy in free fall, I wrote that we had entered an era of “depression economics,” in which the usual rules of economic policy no longer applied…deficit spending was essential to support the economy, and attempts to balance the budget would be destructive.

…. But these predictions were always conditional, applying only to an economy far from full employment. That was the kind of economy President Obama inherited; but the Trump-Putin administration will, instead, come into power at a time when full employment has been more or less restored.”

In October 2016 the economy was “still weak” and we shouldn’t worry about deficits or debt for a couple of decades. Less than 80 days later the economy magically changed and now deficits matter?

It’s political crap! When the party in power implements their financial agenda, whether it’s more spending or tax cuts, the minority party screams about unsustainable debt. When the process reverses, the charade continues and the new minority party screams about the debt.

The Undeniable TruthWith few exceptions, the political class doesn’t give a damn about the debt. The politicos use the tax system and government spending to buy votes to keep them in power. They kick the can down the road; secretly hoping any negative consequences happen when they are out of power, enabling them to make political hay and convince the public they should rule forever! Their behavior won’t change; they will continue to pile up debt until the citizens revolt!

If the politicians don’t care, should we?

Prior to the recent tax cut, The Chicago Tribune reported:

“If the House GOP tax plan becomes law, nearly 81 million Americans – 47.5 percent of all tax filers – would pay nothing in federal income taxes next year.”

Those who pay no taxes (particularly when receiving government handouts) probably don’t care about the deficit.

What about the remaining 52.5% that are working their tails off, seeing their hard-earned tax dollars (and more) being spent by an irresponsible government?

Can something bad really happen?

Common sense economics would indicate, governments creating money out of thin air might temporarily prop up the economy, but eventually it would create a large debt bubble. When it pops, expect catastrophic consequences.

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In 2008, when the government started bailing out the banks, many urged caution, suggesting high inflation and our unsustainable debts would finally come home to roost. It hasn’t happened – yet.

Pundit Bill Bonner looked at the stock market and took a critical view of “Trump’s Quack Economists”:

“Markets don’t like uncertainty. …. Presidential advisors Peter Navarro and Larry Kudlow – wrong about just about everything for just about forever – could be right this time.

Maybe the economy really is as strong as an ox. And maybe stocks will go up from here to eternity. But it’s not what we see….

Not that we are always right. ….

Yes…our error was that we misjudged the power of wrongheaded claptrap. Fake money talks louder…and BS walks further than we thought! (Emphasis mine)

We thought the fake money-pumping scheme had reached its end back in 2009.

We were wrong.”

When economists criticize and advise the government; it makes little difference; elected lawmakers show zero fiscal responsibility. The train continues down the track, full speed ahead….

Yes, we should care, and yes bad things can happen. Count on the predictability of the political class. Anyone with wealth or income becomes a target to finance their political spending. We need to protect ourselves.

What economists should we listen to?

I prefer economists with no political agenda – genuinely concerned about helping average hard-working citizens navigate the current and future potential challenges ahead.

Good friend, Dr. Lacy Hunt is tops on my list. He “calls them like he sees them” without any bias. He’s an excellent educator helping us navigate some difficult economic waters.

I recommend his company’s recent Hoisington Investment Management Quarterly Review and Outlook, it’s a primer.

It begins with a discussion of the Fed’s policies over the last decade:

“Nearly nine years into the current economic expansion, Federal Reserve policy actions appear to be benign…. Changes in the reserve, monetary and credit aggregates, which have always been the most important Fed levers…indicate however that central bank policy has turned highly restrictive. These conditions put the economy’s growth at risk over the short run, while sizable increases in federal debt will serve to diminish, not enhance, economic growth over the long run.” (Emphasis mine)

It’s not just a US problem:

“No matter how U.S., Japanese, Chinese, European or emerging market debt is financed or owned, and regardless of the economic system, the path is stagnation and then decline. Even central bank funding of debt will not negate diminishing returns.”

Might the historical cure make things worse?

“While many believe that surging debt will boost economic growth, the law of diminishing returns indicates that extreme indebtedness will impede economic growth and ultimately result in economic decline. …. The standard of living cannot be raised without increasing output.” (Emphasis mine)

Increased debt equates to increased spending and economic output – theoretically! While debt, both government and private, has reached historic levels, they question the premise over the long term.

Talk about diminishing returns…. In 2007, each $1.00 of global public and private debt increased gross domestic product (GDP) by $.36. In 2017 it dropped almost 14%, to $.31. The US dropped about 11%, from $.45 to $.40.

Where are we headed?

“As debt continues to increase, real GDP starts to fall. At this point, debt has reached the point of negative returns, resulting in the end game of extreme indebtedness.” (Emphasis mine)

What is the end game?

When Dr. Lacy Hunt uses the term “end game” we should all take heed; he chooses his words carefully.

Their current newsletter reinforces what we intuitively believed a decade ago, you don’t cure a debt problem with more debt.

How much longer can we borrow and spend before we see the inevitable economic decline? Might we face another great depression?

Might the end game be controlled by others? When creditors lose confidence in the US, the economy and the dollar, they’ll start unloading dollars, causing interest rates to rise – negatively impacting the economy.

No one knows what or when

At the end of a Casey conference a few years ago, the speakers were seated on the stage and the audience asked questions. The main concern – when and what will the end game look like.

They had no idea. Some made predictions, most felt the wheels were soon going to fall off soon – they were wrong.

One participant asked, “Inflation or deflation?” The response of the experts was, “Yes.” The consensus was we could experience high inflation which might be the last major blow to the economy; and then quickly move into deflation and perhaps a major depression.

No one knows for sure how it will shake out, but it won’t be pretty.

Help keep us on the air! I’m committed to keeping our weekly letters FREE. I was humbled when readers suggested we add a donations button to help us offset the cost of our publication. We are grateful for all the help we can get. It’s strictly voluntary – no pressure – no hassle! Click here if you’d like to help. You do not have to sign up for PayPal to use your credit card. And thank you all!

What can we do?

While government debt may not matter to the political class, it should matter to everyone who hopes to save and retire comfortably.

Prepare for the worst and hope for the best. Diversify, own real assets and not just paper. While many have been wrong on the timing, Dr. Hunt has clearly highlighted the trend. Take heed! Those who use some common sense and take some reasonable precautions will fare much better than most.

Source: Investors Alley 

The current U.S. corporate earnings season is the best seen since the third quarter of 2010. With just over half of the S&P 500 companies having reported, the largest U.S. companies are on course to post earnings per share growth of 23.2% from a year ago, according to FactSet.

But apparently, the best growth in seven years isn’t good enough for Wall Street, which so far in 2018, has been ‘selling the rip’ instead of ‘buying the dip’.

Despite spectacular gains in revenues and earnings, some companies’ stocks have barely budged or even dropped. The worry is that rising borrowing costs (interest rates going to 4% or 5% and beyond) and inflation mean that a turn in the business cycle is close. These worries were intensified when Caterpillar (NYSE: CAT), which reported record quarterly profits, said rising input costs may mean that the first quarter would be the “high watermark for the year.”

Other worriers point to the threat from cash investments. Putting your money into a three-month Treasury bill with a return of around 1.85% isn’t bad considering the trailing 12-month dividend on the S&P 500 is 1.97%.

The most serious of all these worries is that we’ve seen the peak in corporate earnings and that a recession is coming soon. But as it usually does, I believe Wall Street is over-reacting. Yes, a recession is coming… eventually. But I believe it will not arrive until late 2020 or even 2021 and it will be caused, as usual, by the Federal Reserve raising interest rates too steeply.

But what if the doom-and-gloom crowd are finally right and a recession is just around the corner? Here are three stocks that will do well even if the U.S. economy goes into a recession.

Just Netflix and… 

If the economy slides into recession, many Americans will cut out certain expenses. A vacation may be canceled or a major new purchase will be delayed. They may spend more time hanging around the house or apartment.

But these Americans will need something to keep them entertained… and what is better than Netflix (Nasdaq: NFLX)?

The company is growing gangbusters, both here in the U.S. and overseas. In the first quarter, Netflix posted net additional subscribers of 7.4 million, compared with about 5 million that most analysts were expecting, to reach a total of 125 million members. In the U.S., the company added more than two million subscribers – the largest sequential add in two years – to reach 55 million subscribers.

Revenues were up 40% to $3.7 billion, the fastest quarterly year-on-year increase it recorded since introducing its online streaming service in 2007. And its revenue outlook for the second quarter was above Wall Street’s previous estimates at $3.9 billion. Netflix said international streaming revenues will hit $1.94 billion in the second quarter, compared with $1.9 billion for the U.S.

Netflix’s CEO Reed Hastings points to the further opportunity to grow for the company, with the 700 million households that pay for television and fixed-line broadband around the world (excluding China) and the 2 billion people that use YouTube.

Despite the negative cash flow – largely due to spending on content – the Netflix business model is working. So it will keep growing and rewarding shareholders.

Pizza Anyone?

And what else goes better with binge watching than eating pizza? The pizza business is one of the most recession-resistant businesses I can think of and the best company in this niche sector is Domino’s Pizza (NYSE: DPZ).

The reason that it is the leading player in the sector is because Domino’s is, as outgoing CEO Patrick Doyle calls it, a tech company that happens to sell pizzas.

One example of its tech savvy is its implementation of automated phone orders via the artificial intelligence assistant DOM. The use of AI will likely grow its digital ordering business beyond the current 65% of total orders. That is good news since more digital sales translates often into bigger orders and better operational efficiency. According to research from analysts at BTIG, traditional orders over the phone or at the counter cost at least a dollar’s worth of an employee’s time, while each digital order costs only about 25 cents.

Domino’s mobile app has been a huge success over the past few years. It has totaled over 10 million installs from the Google Play store and the iOS App Store. In addition to traditional addresses, the app now offers the ability to deliver pizza to 200,000 outdoor hotspots — like beaches and parks. As incoming CEO Richard Allison says, “It’s our path to being a 100 percent digital company.”

The technology infrastructure supporting Domino’s has led to 20 consecutive quarters of positive comparable sales, with the latest quarter blowing away Wall Street estimates by $100 million. And comparable U.S. store sales rose 8.3%, far surpassing Wall Street estimates of 4.7%.

I expect this trend to continue, despite the change in CEOs, thanks to Domino’s technology edge over the competition. That’s the story Wall Street missed when it sold off the stock earlier this year on the announcement of the change in leadership.

And if a recession hits, a pizza will be one of the small pleasures people will be able to afford.

Dollar Shopping

The final beneficiary of bad economic times is a retailer that thrives in a poor economic environment.

While retailers around the country are closing stores in droves, Dollar General (NYSE: DG) is doing exactly the opposite. The discount store has opened more stores than ever before, with over 5,000 new locations across the U.S. since 2010. Dollar General now has more than 14,000 stores in the country — or just about as many as McDonald’s. And it plans to add another 900 stores in 2018.

For their expansion, Dollar General targeted parts of the country that have been slow to rebound from the prior recession — low-income, rural communities that larger retailers won’t touch. And it is making a boatload of money doing it. So even if a new recession is far into the future, Dollar General is thriving because poorer Americans can’t afford to shop anywhere but the dollar stores.

Morgan Stanley analysts talked about a ‘Goldilocks’ scenario where low-end consumer health does improve, but not enough to trade-up to other stores. As Dollar General CEO Todd Vasos told the Wall Street Journal, “The economy continues to create more of our core customer.” The company’s target shopper household earns less than $40,000 a year.

If you look at the company’s financials, it is impressive, with fiscal 2017 being the 28^th consecutive year of comparable-store sales growth. Dollar General management is not standing still either. In order to increase store traffic, Dollar General is focusing on both the consumables and discretionary categories, and on items ranging between $1 and $5. The company is expanding its cooler facilities to enhance the sale of perishable items and is rolling out a DG digital coupon program too.

These initiatives led the company to provide a robust outlook for 2018. Management anticipates net sales for fiscal 2018 to increase by 9% year on year, with same store sales continuing their long-term uptrend. Earnings for the fiscal year are forecast to be in the range of $5.95-$6.15, which was well above Wall Street estimates.

And if the economy does worsen, business will pick-up even more for Dollar General.

Warren Buffett Went All-in With a Sector He Swore He’d Never Touch. Will you?

Buffett could see this new asset run 2,524% in 2018. And he’s not the only one…

-> Shark Tank Personality Mark Cuban says “it’s the most exciting thing I’ve ever seen.”

-> Facebook CEO Mark Zuckerberg threw down $19 billion to get a piece…

-> Microsoft Founder Bill Gates wagered $26 billion trying to control it…

What is it? It’s not gold, crypto or any mainstream investment.

But these mega-billionaires have bet the farm it’s about to become the most valuable asset on Earth. And if you act fast, you could earn as much as 2,524% before the year is up.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.

Source: Investors Alley

 

Source: Shutterstock

Wall Street is seeing a flurry of mergers right now. Tax cuts have freed up cash for deals, and the money is flowing. So which tech companies are likely to be snapped up next? Share prices can soar when a takeover deal is announced — meaning that there is big value in identifying takeover targets correctly.

Luckily Morgan Stanley put out a report identifying tech companies most likely to get acquired in the next 12 months. The bank noticed that acquisition intensity increased to 3.2% in Q1 from 2.5% in the previous quarter. “Our model, ALERT (Acquisition Likelihood Estimate Ranking Tool), combines stock characteristics, cohort membership, and data regarding offers to forecast probabilities that stocks receive tender offers in the coming 12 months,” revealed Brian Hayes, the firm’s global head of quantitative research.

I used TipRanks’ data to identify the most compelling stocks featured in Morgan Stanley’s report. These are the stocks with a notably bullish Street outlook and a ‘Strong Buy’ analyst consensus rating. The advantage of these three tech stocks is that they represent compelling investing opportunities- even if a takeover doesn’t materialize.

So with this in mind, let’s take a closer look now:

‘Strong Buy’ Takeover Target: Ciena Corp (CIEN)

Ciena Corporation (NYSE:CIEN), is a tech stock focusing on telecommunications equipment. William Blair analyst Dmitry Netis likes the way the company is diversifying. He says new customers in new territories — such as Japan and South Korea — clearly show that Ciena has a leading product portfolio and market share gains.

He explains:

“We argue for a better multiple for Ciena shares due to higher quality earnings, above-market growth over the next three years, a leadership position in all segments of the optical market, improving operating margins and balance sheet, and strong free cash flows ($150 million-$200 million over each of the past two years).”

And don’t let a recent report that Ciena is seeing softness from AT&T Inc. (NYSE:T) faze you. The report alleges that the carrier is re-allocating capital dollars away from packet networking. However, after speaking with CIEN management, top Jefferies analyst George Notter says he sees “nothing wrong” with AT&T’s fiber-to-cell tower plans. He advises investors to focus on the big picture and reiterated his Buy rating and $31 price target.

Overall, CIEN has 9 recent buy ratings from the Street and 1 hold rating. These analysts see the stock spiking an average of 20% to $31.

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