“How will a Trump presidency affect my money?”

A lot of investors are asking themselves this question. That’s because stocks didn’t do what they were “supposed” to do when Trump won.

Heading into Election Day, basically everyone thought stocks would plunge if Trump beat Hillary. Some of the world’s top investors even predicted this.

But the exact opposite happened. Yesterday, the S&P 500 jumped 1.1%. The Dow Jones Industrial Average gained 1.4%.

Today, the S&P 500 is up another 0.2%. The Dow jumped 1.2% and closed at a new all-time high.

Almost no one saw this coming. Still, not everything that’s happened over the last couple days has been a complete surprise.

Today, we’re going to look at some of the biggest winners and losers of this election…starting with an industry that many have left for dead.

• Coal stocks have taken off…

Yesterday, Foresight Energy LP (FELP) surged 24%.

Foresight Energy is one of the largest U.S. coal producers. It’s also one of the last major U.S. coal companies that still trades on the New York Stock Exchange.

You see, the Obama Administration has basically tried to regulate coal companies out of existence. These stiff regulations, along with low coal prices, have made it very hard for coal companies to make money. Arch Coal, Peabody Energy, Patriot Coal, Walter Energy, and Alpha Natural Resources—five of the biggest U.S. coal producers—all recently filed for bankruptcy.

To be clear, not every bankrupt coal company has shut down. Peabody Energy, for instance, is still mining coal. Its stock just trades over the counter, instead of on a major U.S. exchange. Yesterday, its stock surged 50%. Today, it jumped another 16%.

• Many investors think Trump could help the coal industry…

The Wall Street Journal reported yesterday:

Donald Trump’s surprise victory fanned expectations in the energy industry that he would clear the path for new pipelines, end U.S. participation in global climate change pacts and undo environmental regulations to boost American coal mining.

The prospect that the president-elect would roll back years of Obama administration policies buoyed investors in fossil fuels companies Wednesday.

If Trump does what many expect, the U.S. coal industry could see a revival. That’s why money is pouring into coal stocks right now.

Now, we get that many people don’t like Trump’s energy policies. That’s because a lot of folks think coal is a “dirty” energy source that should be heavily regulated. Some of these people would never buy a coal stock, even if they thought it could make them a lot of money.

We aren’t here to tell you if Trump’s energy policies are good or bad. You can decide that for yourself. That said, coal stocks have been absolutely obliterated over the last few years. If Trump does what he’s promised to do, these stocks could deliver big gains.

• Biotech stocks spiked yesterday, too…

Just look at the chart below. It shows the performance of the iShares Nasdaq Biotechnology ETF (IBB), which tracks 180 biotech stocks. You can see that IBB surged 8.9% yesterday. Today, it’s up 1.7%.

Biotech companies develop or manufacture new drugs. Many are trying to cure diseases like cancer, HIV, and Alzheimer’s.

Like coal companies, the U.S. government heavily regulates biotech companies. If elected, Hillary Clinton planned to regulate the industry even more. She specifically wanted to address the issue of soaring drug prices.

Because of this, biotech stocks plunged 17% leading up to the election. The selloff wasn’t surprising since Hillary was the clear frontrunner.

Now that Trump’s going to be the next president, biotech stocks are soaring. CNNMoney explained why yesterday:

Many market strategists believe that Trump will not focus as much on high drug prices. Instead, he may seek to undo much of the Affordable Care Act — aka Obamacare.

“Controlling drug prices won’t be a priority for Trump. So his election is a positive for pharma stocks and biotechs. He’s more likely to look to make changes to Obamacare,” said Amy Kong, senior portfolio manager with Fiduciary Trust Company International.

Again, we’re not here to debate Trump’s stance on rising drug costs. We’re more interested in the possible investment implications. And right now, it looks like Trump will leave these companies alone, or at least regulate them far less than Hillary would. And that’s why they’ve seen big gains over the last few days.

• Moving along, U.S. government bonds are in free fall…

Yesterday, the yield on the U.S. 10-year Treasury jumped from 1.88% to 2.07%. (A bond’s yield rises when its price falls.)

That might not sound like much, but it was the biggest one-day spike of the 10-year yield since July 2013.

Today, the 10-year yield surged even higher to 2.14%, its highest level since January.

To be fair, U.S. 10-years were crashing before Trump was elected. You can see in the chart below that the 10-year has skyrocketed since it hit an all-time low of 1.37% in July.

• Concerns over rising inflation caused U.S. Treasuries to plummet…

Inflation is when prices for everyday goods and services rise. Clearly, inflation is bad for the average consumer. It means the money in their wallet has less purchasing power.

Inflation also hurts people who own bonds.

Let’s say you own a bond that pays a fixed annual interest rate of 3%. If there’s no inflation, your “real return” (your investment return minus the inflation rate) at the end of the year will be 3%.

Now, let’s say the inflation rate jumps to 2%. In this case, your real return would be 1%.

In short, inflation eats away at bond returns.

• The U.S. core inflation rate hit a two-year high last quarter…

But many investors think inflation could head much higher now that Trump is going to be president. And that’s why Treasuries nosedived over the past couple days.

Bloomberg Markets reported yesterday:

Treasuries plunged, with 30-year bond yields climbing the most since at least 1977, amid concern that a Donald Trump administration and a Republican-led U.S. Congress will unleash a wave of spending to boost the U.S. economy, triggering a surge in inflation.

Adjusted for current yield levels, which are close to historical lows, the magnitude of the day’s rise hasn’t been exceeded in data compiled by Bloomberg going back to February 1977. Benchmark U.S. 10-year yields rose above 2 percent for the first time since January as a bond-market measure of inflation expectations climbed to the highest since July 2015.

The more inflation we get, the more U.S. Treasuries will fall.

If possible, we encourage you to avoid U.S. government bonds right now. In particular, you should steer clear of long-term U.S. Treasuries. They’re even more vulnerable to inflation than bonds with short durations.

• You could also make money from higher inflation rates by owning gold or silver…

As Dispatch readers know, these metals are the ultimate safe-haven assets. They’ve preserved wealth through centuries of financial crises because they’re unlike any other asset. They’re durable, easy to transport, and easily divisible.

But the most important quality of gold and silver right now is that they protect against times of rising inflation.

You see, most people think about inflation in terms of rising prices. But inflation is also a decline in purchasing power. The higher the inflation rate, the more dollars it takes to buy a barrel of oil, a pound of copper, or an ounce of gold.

This combination of factors could provide a big boon to precious metals prices. That’s why we recommend most investors put 10% to 15% of their money in gold. This doesn’t change just because Trump is going to be the next president.

• Going forward, we’ll keep a close eye on how Trump’s policies impact the markets…

We’ll also tell you about the best ways to make money during these uncertain times.

Before we sign off, we want to offer you some simple, yet valuable advice: Stay disciplined, folks.

Right now, a lot of people are mad that Trump won the election. Other people are happy. Some couldn’t care less.

No matter what you think of the election, try not to let emotions or political views cloud your decision-making. This simple piece of advice could make you tens of thousands (or more) over the next four years.

Why Trump’s Plans Won’t Save Us

Editor’s note: Today, we’re continuing our special miniseries with Stansberry Research founder Porter Stansberry.

As you may know, Porter believes we’re entering a new credit default cycle that will create the biggest legal exchange of wealth in history. To help investors prepare, Porter is sharing his best insights free of charge.

Yesterday, Porter explained how to understand a “primal” force that controls the stock market during critical periods…like the one we’re in right now. Today, he explains what role Donald Trump could play during the coming debt crisis.

(The following essay was published on November 9, 2016, in The Stansberry Digest.)


From Porter Stansberry, founder, Stansberry Research

***Trump won…

Some people are happy. Some people are acting like someone shot their dog. But nobody likes my answer about what Trump means for the markets. So what do I (Porter) believe will happen now?

Well, my answer flies in the face of virtually every modern economist and pundits on CNBC. Virtually everyone believes that government spending and/or tax cuts will have a powerfully positive effect on our economy.

The Republicans believe tax cuts and military spending are the basic formula for economic prosperity. The people cheering today believe that Trump’s wall (his announced infrastructure spending), his tax cuts, and his estimated $6 trillion budget deficit over four years will create winners in the stock market and wealth for our nation.

In some limited ways, that will prove to be true. The Pentagon, for example, is the world’s largest consumer. It buys more oil than any other entity. And if Trump builds a wall across our southern border, he’s going to buy a lot of steel. But in other, far more important ways, the idea that government spending and government debt is a positive force in the economy is completely wrong. Fatally wrong.

We’re in the midst of a weeklong series of Digests that I’m writing in order to explain what I believe will be the best and most important series of trades of my entire career. As you surely know by now, it’s the idea behind our brand-new service, Stansberry’s Big Trade.

I believe we’re approaching an important new credit default cycle, which will create the largest legal exchange of wealth in history. Investors in highly leveraged equities will be wiped out. Investors who can anticipate this massive wave of coming corporate default will make a fortune. And that’s my goal – to help you understand why this cycle is inevitable so you can position yourself to profit from these events.

***As if on cue, we saw the car rental companies “blow up” yesterday because of distress in subprime car loans…

It was a superb example of the far-reaching and poorly understood influence of the credit markets.

Today, given Trump’s unexpected victory, I’d like to focus on the role government is likely to play in the coming debt crisis.

I want to make sure you understand… no matter who is president, no matter which party is in power… the only thing our government can do about a credit default cycle is make it worse.

You only need to understand two economic ideas to see through the media news and know what’s really going to happen next. The economic forces I describe below are far more powerful than any particular candidate or political party.

The first economic concept is easy: It’s the declining marginal utility of debt.

This won’t surprise any subscriber who has ever owned a business or used a credit card. At first, small amounts of debt create large percentage changes in spending and investment. But, as debts add assets and matching liabilities to your balance sheet, additional debts make a smaller and smaller percentage change in growth.

Say you’re a college student. Your income may be $10,000 a year, working a part-time job. If you take out a $5,000 loan, you can increase your spending dramatically – a 50% increase. But after your fourth year of college, you will have compiled $20,000 in loans on your balance sheet. This plus your income for the year means an additional $5,000 in debt will only increase your asset base by 16%. And as your debts grow, the marginal increase in utility provided by each additional dollar in debt will decrease.

As your debts (like our government’s) tally toward $20 trillion (or more than 100% of GDP), the marginal utility of additional debt can actually become negative.


Editor’s note: Porter and his team are teaching readers how to hedge their portfolios from the risks of the coming credit default cycle. They believe that making 20 or 30 times your money in some of these names is likely.

As Porter says: “When you know that a company cannot ever afford to repay its debts, it’s only a matter of time until it defaults. You can either be a winner or a victim when that happens. It’s up to you.”

If you haven’t signed up for the free webinar Porter is hosting next Wednesday, November 16, at 8 p.m. ET, this is one you don’t want to miss. He’ll show you exactly how to make the life-changing gains he sees coming. You can click here to reserve your spot.