The Trouble With Great Expectations

More on Big Tech earnings... A market drag... The latest inflation data... The BRICS nations are big on bitcoin... A U.S. bitcoin reserve? Eric Wade has thoughts... Counting down to the election (and more)... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] More on Big Tech earnings... A market drag... The latest inflation data... The BRICS nations are big on bitcoin... A U.S. bitcoin reserve? Eric Wade has thoughts... Counting down to the election (and more)... --------------------------------------------------------------- As promised yesterday, we've got more Magnificent Seven earnings to cover... After yesterday's close, both Microsoft (MSFT) and Meta Platforms (META) reported their quarterly results, and the market reaction today was telling. Both companies' top and bottom lines came in above Wall Street's estimates. But investors didn't like Microsoft's forward guidance or Meta's pace of user growth, so shares of the tech giants dropped today – and took the broader indexes down with them. Microsoft projected revenue for the current quarter to be slightly below prior expectations (though the number is still close to $69 billion), and both Microsoft and Meta talked up more spending on artificial intelligence ("AI"). Meta boosted its capital-expenditures ("capex") forecast for 2024 to $38 billion to $40 billion, while adding that it expects "significant acceleration" in this area next year. Microsoft's capex came in at $20 billion in the quarter – almost double the same quarter last year. That's a lot of money flowing into AI... It's not for misguided reasons... Both companies talked up demand for their AI offerings, with more than 1 million advertisers using Meta's AI software and demand outpacing supply for capacity in Microsoft's data centers. Like all new trends, the AI story isn't without its growing pains. Microsoft said that its suppliers are late in delivering data-center infrastructure that it needs to power its AI offerings. And its revenue forecast fell short of expectations as a result. It will take time for these companies to see these investments pay off. But with hundreds of billions of dollars being invested, Microsoft, Meta, and Alphabet (GOOGL) still believe they can gain a leg up in the long-term AI trend, so they're keeping up spending... What this means for the broader market... Microsoft and Meta are the third- and fifth-largest weightings in the S&P 500 Index, respectively. Together, they make up about 9% of the index. So they can have an outsized impact on where the broader market goes, even if the rest of the stocks are having relatively good days. With both stocks lower after their quarterly reports, they dragged down the overall market today – and the tech-heavy Nasdaq Composite Index (where these companies make up 15% of the overall index) suffered the most. Today, the benchmark S&P 500 finished nearly 2% lower and the Nasdaq was off 2.5%, while the Russell 2000 Index and Dow Jones Industrial Average lost 1.2% and 0.6%, respectively. So, remember, while the buzz around AI stocks may have been good for the market on the way up... these stocks can lead on the way down if their big AI investments don't pay off sooner rather than later, or meet sky-high expectations. Beneath the surface, things didn't look as bad, but they're still shaky. The equal-weight S&P 500 was down 1% and just dipped below its 50-day moving average (50-DMA), a technical measure of a short-term trend, as did the Dow and Russell 2000. But the other three major indexes are still trading above their 50-DMAs, so positive momentum for U.S. stocks remains in place for now. Also notable: Inflation has already accelerated again... Another day, another round of "official" inflation data. This morning, Uncle Sam published its personal consumption expenditures ("PCE") price index report for September. The "core" PCE number – which the Federal Reserve says is its preferred measure – checked in at 2.7% for the third straight month. And the month-over-month gain was 0.3%, the highest since April. I saw headlines today reporting inflation is getting closer to the Fed's goal (and thus that rate cuts can or should continue). Those stories didn't tell the whole – or correct – story. This is a little in the weeds, but important: They referred to headline PCE, which measured 2.1%. Now, that might be a good enough piece of data for a good story... or for the Fed to conveniently use to claim that high inflation has been conquered. But in the past, and right or wrong, the Fed has said it prefers "core" PCE – which strips out volatile food and energy prices – to gauge underlying inflation. And given the month-over-month growth rate of core PCE in September (0.3%), the pace was closer to a 4% annual clip than the Fed's 2% goal. These numbers do not reflect a trend of disinflation – or prices rising by a slower rate. It's a signal that the pace of inflation has accelerated again. Already. But I doubt the Fed will acknowledge this at its next meeting next week... It'll probably say it needs to wait for more data for confirmation. That sets the stage for the Fed to possibly continue making its "mistake" that the bond market has been pointing out... and federal-funds traders are still expecting. That is, it will cut rates again when it meets next week – even as the unemployment rate has improved... GDP growth is close to 3%... and inflation isn't yet under control. Such is the life we live in our fiat-currency world. Beyond the U.S... So the world's reserve currency, the dollar, is subject to our constant manipulations... No wonder governments beyond the U.S. borders have different ideas on how to do business... but I don't think a lot of people know the details quite yet. Last week, Russia hosted a three-day meeting of "BRICS" nations, a group that has expanded beyond the team of Brazil, Russia, India, China, and South Africa that made up the acronym for the group when they were its only members back in 2010. Iran, Egypt, Ethiopia, and the United Arab Emirates are now a part. Others have applied to become members. The summit in Russia – dubbed "BRICS Plus" – was attended by representatives of 36 countries. On the final day of the conference, Russian President Vladimir Putin spoke out against Western sanctions against his country in response to the war in Ukraine and talked about how the West's "perverse methods and approaches – to put it bluntly – lead to the emergence of new conflicts and the aggravation of old disagreements." The BRICS nations are pro-crypto... If anybody was listening, the message was clear in some of the specifics beyond the macro points. According to an Associated Press report last week... Russia has specifically pushed for the creation of a new payment system that would offer an alternative to the global bank messaging network SWIFT, which would enable Moscow to dodge Western sanctions and trade with its partners – some of which are also heavily sanctioned by the U.S. and its allies – more easily. In a joint declaration Wednesday, participants voiced concern about "the disruptive effect of unlawful unilateral coercive measures, including illegal sanctions," and reiterated their commitment to enhancing financial cooperation within BRICS. They noted the benefits of "faster, low-cost, more efficient, transparent, safe and inclusive cross-border payment instruments built upon the principle of minimizing trade barriers and non-discriminatory access." I (Corey McLaughlin) don't know about you... but the description of a non-dollar currency that's "faster," "transparent," "cross border," and "built upon the principle of minimizing trade barriers..." among the BRICS nations sounds a lot like the concept of cryptocurrency to me. I ran this idea past Crypto Capital editor Eric Wade today. He told me: "Exactly." This a huge deal – and would be a massive driver for demand for cryptos, bitcoin specifically. Several recently added BRICS governments (including the UAE and Ethiopia) are already involved in mining the world's most popular crypto. Many folks are unaware of this story, but... It's part of the reason bitcoin has gotten more political in the U.S. lately, too... The topic has come up during the campaigns of both Donald Trump and Kamala Harris. Trump has been publicly pro-bitcoin and has offered more specifics on the subject. Just today, he tweeted, a "Happy 16th Anniversary of Satoshi’s White Paper," referring to the creation and explanation of bitcoin by the pseudonymous Satoshi Nakamoto amid the financial crisis in 2008. He has also floated the idea of creating a national bitcoin reserve... (which would also certainly be a driver of demand for the crypto). Now, will it happen? Well, Eric has a few ideas about the idea... and he put together a free presentation about it. Some could interpret the proposal of a U.S. bitcoin reserve as a political ploy, Eric says, but he is confident it's inevitable no matter who wins the White House next week. He points out there is growing bipartisan support for cryptocurrencies. For better or worse, much like every other industry, crypto execs have been funding political campaigns at record levels. That includes almost $120 million this year in contributions... all to ensure a positive future for cryptocurrencies with government support. I could see politicians in the U.S. getting on board with pro-bitcoin or pro-crypto policies more emphatically in part if they think the BRICS nations are trying to use the technology to thwart the U.S.-led conventional banking system of the world today. But you should hear what Eric has to say about this story. Be sure to check out his free presentation for more about what this development could mean for bitcoin and the smaller, lesser-known cryptos that Eric is one of the world's foremost experts on... and how you can profit from owning the right ones. [You can watch right here](. And, oh yeah, there's five days left... Until Election Day in the U.S., that is. The waiting game, last-minute campaigning, and early voting continue. In the 25 states that report early-voting data with party registration, Democrats have submitted nearly 900,000 more ballots than Republicans (about 12 million versus 11.1 million), according to the University of Florida's "Election Lab" data. About 7.7 million independents or third-party-registered voters have already voted in those states, too. In the six states with gender data (Colorado, Georgia, Idaho, Michigan, North Carolina, and Virginia, a list that includes three critical "swing" states), women have outnumbered men who've submitted votes by a margin of 7.7 million to 6.2 million. This is early, partial data. We won't use it to make a "call" on next week's election today. However, this much I know: Next week will probably be a volatile one, one way or another, for the markets. In addition to the election outcome (or any delay), the Fed will announce its latest policy. Plus, as we've told you, the Chinese government is reportedly weighing additional economic stimulus plans that could come next week. And earnings season will continue as well. --------------------------------------------------------------- Recommended Links: [Here's the Unveiling You Missed on Tuesday]( Wall Street legend Marc Chaikin explained how November 8 will open the biggest "rapid fire" moneymaking opportunity of his 50-year career. This is a new way to spot potential buying sprees on 5,000 stocks – before they occur – for the chance to double your portfolio over the next year. [Click here to learn more, including his four free recommendations](. --------------------------------------------------------------- [Six Cryptos to Buy BEFORE the Bitcoin Supercycle]( Bitcoin is screaming toward a new all-time high. And according to crypto expert Eric Wade, it's just getting started. A proposed federal program backed by both Republicans and Democrats is set to ignite a new crypto bull market. To help you prepare, Eric just released an emergency briefing detailing six cryptos with 1,000% potential to act on immediately. [Click here for this brand-new crypto update](. --------------------------------------------------------------- New 52-week highs (as of 10/30/24): AbbVie (ABBV), Automatic Data Processing (ADP), Alpha Architect 1-3 Month Box Fund (BOXX), SPDR Gold Shares (GLD), Omega Healthcare Investors (OHI), Sprott Physical Gold Trust (PHYS), Spotify Technology (SPOT), Summit Materials (SUM), Texas Pacific Land (TPL), The Trade Desk (TTD), Tyler Technologies (TYL), and ProShares Ultra Gold (UGL). In today's mailbag, feedback on our annual Stansberry Research conference and Alliance meeting in Las Vegas... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "A big thanks for the great Alliance conference in Vegas. I've lost count of how many I've been to, but I have to say I really thought this year was one of the most interesting. Billy Beane was fantastic as well as those that followed. Some interesting investment ideas as well. I hope to see you next year." – Stansberry Alliance member Bob G. Corey McLaughlin comment: Thanks for the feedback, Bob. We certainly enjoyed the conference as well, and glad to hear the same from you and others. Hope to see you next year, too. All the best, Corey McLaughlin with Nick Koziol Baltimore, Maryland October 31, 2024 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open stock positions across all Stansberry Research portfolios. Returns represent the total return from the initial recommendation. Investment Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 1,397.8% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,380.0% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 1,055.2% Extreme Value Ferris BRK.B Berkshire Hathaway 04/01/09 706.7% Retirement Millionaire Doc WRB W.R. Berkley 03/15/12 512.1% Stansberry's Investment Advisory Porter TT Trane Technologies 04/12/18 499.1% Retirement Millionaire Doc AFG American Financial 10/11/12 457.5% Stansberry's Investment Advisory Porter HSY Hershey 12/07/07 442.3% Stansberry's Investment Advisory Porter TTD The Trade Desk 10/17/19 434.8% Stansberry Innovations Report Engel PANW Palo Alto Networks 04/16/20 375.2% 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 4 Stansberry's Investment Advisory Porter 3 Retirement Millionaire Doc 2 Stansberry Innovations Report Engel 1 Extreme Value Ferris --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Investment Buy Date Return Publication Analyst wstETH Wrapped Staked Ethereum 12/07/18 2,291.8% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 1,824.8% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,134.9% Crypto Capital Wade POL/USD Polygon 02/25/21 707.5% Crypto Capital Wade AGI/USD Delysium AI 01/16/24 312.5% 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 Microsoft^ MSFT 12.74 years 1,185% Retirement Millionaire Doc Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud 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 PNC Warrants PNC-WS 6.16 years 706% True Wealth Systems Sjuggerud Maxar Technologies^ MAXR 1.90 years 691% Venture Tech. Lashmet Silvergate Capital SI 1.95 years 681% Amer. Moonshots Root ^ 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%. --------------------------------------------------------------- Stansberry Research Crypto Hall of Fame Top 5 highest-returning closed positions in the Crypto Capital model portfolio Investment Symbol Duration Gain Publication Analyst Band Protocol BAND/USD 0.31 years 1,169% Crypto Capital Wade Terra LUNA/USD 0.41 years 1,166% Crypto Capital Wade Polymesh POLYX/USD 3.84 years 1,157% Crypto Capital Wade Frontier FRONT/USD 0.09 years 979% Crypto Capital Wade Binance Coin BNB/USD 1.78 years 963% Crypto Capital Wade You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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