A Message in a Box

A surprising winner today... What the box business can tell us about the economy... No growth but lower costs... Stagflation has been here for a while... Stocks can still go higher... Commodities are turning up... The Fed is on deck... Some days, the market movers really stand out... By that, I (Corey McLaughlin) mean the […] [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] A surprising winner today... What the box business can tell us about the economy... No growth but lower costs... Stagflation has been here for a while... Stocks can still go higher... Commodities are turning up... The Fed is on deck... --------------------------------------------------------------- Some days, the market movers really stand out... By that, I (Corey McLaughlin) mean the stocks that are up (or down) by the greatest percentage in a given trading day... Looking at one-day performance is admittedly extremely shortsighted, and as longer-term investors, we tend to look at longer-duration indicators and trends. But when put in context, the biggest movers of a single day can sometimes tell a useful story. Take today... The biggest gainer in the S&P 500 Index was... wait for it... Packaging Corporation of America (PKG). It's just what it sounds like... an American corporation that makes and sells corrugated cardboard boxes and other paper products and packaging. [Shares of PKG]( gained 10% today... while the major U.S. indexes were up again. The tech-heavy Nasdaq Composite Index and the benchmark S&P 500 each finished about half a percentage point higher. We doubt you were expecting a surge like this from a box-maker. The company, founded in 1867 in Illinois, is maybe the furthest thing from a flashy tech name. Still, Amazon does certainly use plenty of cardboard boxes, as does every business to a certain extent. PKG has thousands of customers, ranging from the likes of Procter & Gamble, Home Depot, and Berkshire Hathaway to smaller regional and local businesses in various industries and locations. I am also reminded of something a subscriber, Greg T., a 40-plus-year veteran of the box industry, wrote to us back in March. (Yes, we have subscribers involved in everything. I love it.) Toward the end of a terrific letter in the mailbag, he told us... According to the box business we are in a ditch. This wonderful industry will lead the economy out, as it always does. (If you missed the entire letter, be sure to [check it out the March 22 mailbag here]( where Greg shared his thoughts on a "box indicator" in response to our write-up of the "RV indicator.") So, why did Packaging Corp. shares soar today?... Well, it's not exactly because the economy is recovered from its decadeslong fiat-currency disease and the more recent acute inflation symptoms, meaning that everyone is about to be using more boxes. We'll get to what we mean momentarily. As a reminder, it's earnings season. Packaging Corp. announced its quarterly report after yesterday's close, and while its sales were down from a year earlier, the company beat consensus Wall Street earnings-per-share expectations by 15% with a net quarterly income of almost $210 million. The stock popped as a result. But that's not why I'm taking an offbeat turn and talking to you about a cardboard company's earnings results today. The stock isn't recommended in any Stansberry Research publication, nor am I making a stock recommendation today. But I bring up this company's earnings report because of what it might tell us about the U.S. economy in general. No growth, but lower costs... Mark Kowlzan, Packaging Corp.'s CEO, credited cost-cutting measures and efficiency efforts – including idling a mill in Washington state – combined with "energy and virgin fiber prices being lower than anticipated" as the reasons for beating expectations by such a margin. Yet the company's revenue was down almost 13% from the same period a year ago, and that trend may continue in the third quarter, which is happening right now. Kowlzan said... We expect shipments per day to improve versus the second quarter. However, prices will be lower as a result of the previously published domestic containerboard price decreases along with slightly lower export prices. In addition to making cardboard and paper products, Packaging Corp. also owns warehouses and distribution centers. The company is at the intersection of various parts of the U.S. economy and can be taken as a proxy for the "real economy." The company's sales aren't growing, though it expects volume to pick up this quarter at the same time its costs are coming down. At best, that sounds to me like a mixed bag for the box business, and far from a growth boom... Nevertheless, the stock had its best one-day performance in years. So it goes. The "[animal spirits]( are alive and can sniff out cardboard companies, it seems, even as the economy slows and many businesses struggle to keep increasing their profits. Along these same lines... 'Real' sales growth has plateaued... If you're not reading our free Stansberry NewsWire service, you really should. Editor Kevin Sanford shares an excellent market outlook each morning, [including today]( packed with information about potential market-moving events and sharp analysis. Kevin was talking about "real" retail sales trends – that is, sales numbers accounting for inflation – which directly applies to our unexpected discussion of Packaging Corp.'s latest earnings. It fits. As Kevin wrote, this data... ... provides a more accurate picture of the actual growth or decline in consumer purchasing power. However, very few media outlets seem to be covering this figure. Even if that's the case, I personally consider real retail sales to be a vital indicator in understanding the overall economic landscape. You see, consumers make up a significant portion of economic activity and their spending patterns reflect the strength or weakness of the economy. By analyzing real retail sales, economists can gain valuable insights into consumer behavior, trends, and the potential onset of a recession. The most recent data on real retail sales reveal interesting trends, Kevin said... In June, nominal retail sales increased 0.19% compared with the previous month and 1.49% on a year-over-year ("YOY") basis. However, after adjusting for inflation, real retail sales remained virtually unchanged, with a minimal increase of 0.01% compared with the previous month and a decline of 1.55% on a YOY basis. Then Kevin shared what I feel is a must-see chart. It suggests we might be in a "recession" right now even without matching the conventional idea of one – with spiking unemployment. Today's economy has its own defining features. As he wrote... What really sticks out to me is the charting of monthly real retail sales... Take a look at what has happened since the stimulus burst we saw coming out of the COVID-19 pandemic. We've seen nearly two years of zero growth. And as I said above, the latest June data shows just 0.01% monthly growth. But during this time, we saw the rise and fall of high inflation. In other words, this recession may not "look" like previous recessions on the surface. Instead, we could be looking at a period of sustained above-average inflation (more than 2%) coupled with low to zero growth – or stagflation. Can stocks keep going up in this environment? Sure. Well-run companies that make or sell in-demand products and services and are still managing to grow today while costs come down can do just fine. And momentum is surely bullish at this point for the major U.S. stock indexes, as are various technical indicators. As our Ten Stock Trader editor Greg Diamond [wrote to his subscribers]( today, "We're in a bull market." Last year's pain was last year's pain. Plus, if the pace of inflation keeps coming down and wage growth remains higher, and Americans keep spending money, eventually "real" retail sales growth will start accelerating again. But we're not there yet... For one thing, commodities prices have started to turn higher again... We've talked about the spike in agricultural prices upon Russia's exit from a deal to let Ukraine export its grain. Well, other commodities prices have been heading higher in recent weeks, too... The price for a barrel of Brent crude oil – the international benchmark – is up 12% since June 28, to around $82. A barrel of West Texas Intermediate, the U.S. standard, is up even more in the same span: 14% higher, to around $80. The Invesco DB Commodity Index Tracking Fund (DBC) – which tracks prices of 14 different commodities – had been trending down the past year. But last week, it broke notably above its technical long-term, 200-day moving average for the first time since a brief spike in November. And there's the Fed... All this said, financial life is probably getting another 25 basis points of debt costs tougher, starting tomorrow. And further monetary "tightening" from the Federal Reserve and other major central banks could still be coming this year. The question moving ahead is when the economy will reach a point where the Fed feels the need to totally stop or reverse these rate hikes. For now, the U.S. is in a "lower growth, but also lower prices" mode. Things keep getting "less bad" for now, and stocks keep going higher... Be prepared for the story to change, but enjoy the profitable times, too. As [I mentioned yesterday]( we'll learn more about the Fed's plans (for now) tomorrow when the U.S. central bank announces its latest policy decision and Fed Chair Jerome Powell holds a post-meeting press conference. Check back with the Digest for our analysis tomorrow evening. The Soon-to-Be Good Old Days of 2023 Will this be the best summer of the rest of your life? When we look back at the track artificial intelligence will likely take, E.B. Tucker says it might be. He explains to our editor-at-large Daniela Cambone... [Click here]( to watch this video right now. For more free video content, [subscribe to our Stansberry Research YouTube channel](... and don't forget to follow us on [Facebook]( [Instagram]( [LinkedIn]( and [Twitter](. --------------------------------------------------------------- Recommended Links: [Do You Own at Least ONE of America's Most Popular Stocks? Read This Immediately...]( For the first time ever, Marc Chaikin and Dr. David Eifrig have teamed up to discuss an urgent new market development. You'll find out whether three of America's most popular stocks are set to soar – or plummet – in the next 30 days. You may own or plan to buy at least one of them... and each has the potential to make or save you thousands of dollars. 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[Click here to learn more](. --------------------------------------------------------------- New 52-week highs (as of 7/24/23): ABB (ABBNY), Abbott Laboratories (ABT), Berkshire Hathaway (BRK-B), Cameco (CCJ), Costco Wholesale (COST), Cintas (CTAS), Dice Therapeutics (DICE), Expeditors International of Washington (EXPD), JPMorgan Chase (JPM), New York Community Bancorp (NYCB), VanEck Oil Services Fund (OIH), Rollins (ROL), Shell (SHEL), SPDR Portfolio S&P 500 Value Fund (SPYV), Constellation Brands (STZ), United States Commodity Index Fund (USCI), Verisk Analytics (VRSK), and Walmart (WMT). In today's mailbag, more feedback on presidential candidate Robert F. Kennedy Jr. proposing to back the U.S. dollar with "hard" assets, which Crypto Capital editor Eric Wade [wrote about on Friday](... and a response to my take in [yesterday's Digest]( about Elon Musk and Twitter/X... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Anything RFK Jr. proposes will be trashed more viciously than Trump by the Dem party and [mainstream media] since he is their biggest fear in the upcoming election season. Aside from that, who believes any reduction of power from the pols in DC (which includes the Fed) will happen without a revolution?" – Subscriber Robert B. Hi Corey, I need to take you to task a bit for writing such one-sided bashing of Musk and Twitter. First, Musk clearly stated when he bought Twitter it was not about money, it was about restoring free speech to the internet. He is protecting our First Amendment rights, without a doubt the most important right we have in this country. Getting rid of all the Twitter employees who are not on board with free speech or helped the government censor/stifle content was the best thing for that company and his goal of protecting free speech. "You also forgot to mention that while the Threads app did have 100 million people sign up, its user engagement has dropped 70% and only has daily active users of 13 million, compared to 200 million for Twitter. You know why all those people left Threads – because they censor people! I try and teach my kids how important free speech is and how important it is to think for yourself. I urge everyone to protect their First Amendment rights, it's the most important right you have." – Stansberry Alliance member Charles C. Corey McLaughlin comment: Charles, thanks. I totally agree with how important our First Amendment rights are, and they should never be taken for granted or compromised. That's why we, as regular readers know, do not hesitate to publish all kinds of viewpoints here, like this note kindly taking me "to task a bit." I could and probably should have included a point yesterday about Musk's publicly stated free-speech intentions regarding Twitter (now X). It could have fit near where we said the analysis wasn't anything personal against him, that with eccentric billionaires "you take the bad with the good," and that he deserves credit for what Tesla (TSLA) has become and for co-founding what became payments company PayPal (PYPL). But the main thing I wanted to point out is that, whatever Musk's stated goals, Twitter is now a shell of what it used to be... The product had promise for years and had trouble monetizing it. Now, it has less promise and more trouble monetizing it since Musk took over. He also tried to pull out of the Twitter deal once he got a better idea of the state of the company and, as I see it, the money he stood to lose. So the acquisition wasn't all about free speech. Money was in the calculus at some level. And it continues to be... The new Twitter/X CEO, hired by Musk two months ago, said in the announcement transitioning Twitter to "X" that the new platform will be "a global marketplace for ideas, goods, services, and opportunities." If that happens, surely currency will be exchanged, with X benefiting at least somewhat from it. As for Meta Platforms' Threads, the Twitter clone, I'm not sure it's going to be a long-term winner, either. It doesn't offer anything different than what Twitter had, and actually less since it has a smaller overall user base and fewer daily users, as you note, and doesn't even have a desktop version to access from a computer. Threads has proven, though, there is an appetite for an alternative Twitter-like platform... something else that can serve as a digital text-based "town square" like Musk has described Twitter in the past. I'm just not sure what it is or if it even exists yet. All the best, Corey McLaughlin Baltimore, Maryland July 25, 2023 --------------------------------------------------------------- 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 1,255.4% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,084.0% Stansberry's Investment Advisory Porter ADP Automatic Data 10/09/08 858.2% Extreme Value Ferris wstETH Wrapped Staked Ethereum 02/21/20 703.9% Stansberry Innovations Report Wade HSY Hershey 12/07/07 594.7% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 541.0% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 519.9% Retirement Millionaire Doc AFG American Financial 10/12/12 411.3% Stansberry's Investment Advisory Porter TTD The Trade Desk 10/17/19 335.8% Stansberry Innovations Report Engel FSMEX Fidelity Sel Med 09/03/08 323.7% Retirement Millionaire Doc 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/Wade 1 Extreme Value Ferris --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst wstETH Wrapped Staked Ethereum 12/07/18 1,602.5% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,066.9% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,029.8% Crypto Capital Wade MATIC/USD Polygon 02/25/21 816.8% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 677.6% 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%. 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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