October 2023 - Porter & Co.

Porter Stansberry – End of America Update: What’s Next?

Posted onOctober 31, 2023October 31, 2023AuthorPorter & Co.

Porter Stansberry delivers the next scathing installment of his “End of America” lecture — covering the American credit bubble, big banks’ unrealized losses, and what’s next for your money.

Man’s Right to Wealth

Posted onOctober 31, 2023October 31, 2023AuthorPorter & Co.

The big story this month was the continued rise in long-term U.S. Treasury yields. The yield on the benchmark 10-year Treasury note just touched 5% this week for the first time since before the Great Financial Crisis (from Bloomberg)…

Posted onOctober 30, 2023October 30, 2023AuthorPorter & Co.

However, unlike the rise in Treasury yields earlier this year, this recent rise isn’t due primarily to expectations of higher short-term rates (i.e., the Federal Reserve). Rather, in recent months, yields have been rising due to expectations of higher inflation (from Bloomberg via ZeroHedge)…

Posted onOctober 30, 2023October 30, 2023AuthorPorter & Co.

… as well as rising “term premium” – a measure of the added compensation investors demand for holding longer-duration debt – as a result of out-of-control government deficits (from Jurrien Timmer via X)…

Posted onOctober 30, 2023October 30, 2023AuthorPorter & Co.

This suggests the upward pressure on long-term yields could remain even if the Fed cuts short-term rates.

Unfortunately for equity investors, higher yields make stocks relatively less attractive. As you can see below, the “equity risk premium” – a measure of the difference between the expected return in stocks and the risk-free rate of return in Treasuries – has fallen to its lowest levels in decades (from The Daily Shot via X)…

Posted onOctober 30, 2023October 30, 2023AuthorPorter & Co.

In fact, by some measures, stocks are near their most expensive level versus bonds in the past 100 years. Previous extremes have led stocks to underperform bonds over the next decade, even if bonds themselves produced poor real (after inflation) returns (from Hussman Strategic Advisors)…

Posted onOctober 30, 2023October 30, 2023AuthorPorter & Co.

Rising interest rates mean deficits finally matter (from The Wall Street Journal on October 5)…

Posted onOctober 30, 2023October 30, 2023AuthorPorter & Co.

The U.S. has long been the lender of last resort to the world. During the emerging-market panics of the 1990s, the global financial crisis of 2007-09 and the pandemic shutdown of 2020, it was the Treasury’s unmatched capacity to borrow that came to the rescue. Now, the Treasury itself is a source of risk. No,
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Rising rates are beginning to weigh on corporate profits (from The Financial Times on October 5)…

Posted onOctober 30, 2023October 30, 2023AuthorPorter & Co.

Naturally, the bond carnage has been feeding worries that something somewhere will somehow “break”. MainFT ran a good rundown of the usual suspects this morning. But there’s arguably one missing. Thanks to resilient growth and the remarkable American consumer, listed US companies remain on average incredibly profitable, but the rising cost of debt is starting
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Why the BRICS nations – Brazil, Russia, India, China, and South Africa – don’t need a single currency to disrupt the global financial system (from Luke Gromen via FFTT Tree Rings on October 6)…

Posted onOctober 30, 2023October 30, 2023AuthorPorter & Co.

We have long said that we did not think BRICS would launch or even needed a single BRICS currency, but would instead pursue local currency trade, settled in goods and with any net deficits settled in gold that floated in all currencies. This week, Putin voiced remarkably similar views in a speech at the Valdai
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