Please Enable Images To See This
Are You Contrarian Enough for This Trade?
By Dr. Steve Sjuggerud
Tuesday, February 20, 2018
Eleven billion dollars...

That's how much money two major funds lost in combined market value over the last few weeks.

You might expect this, since the stock market just suffered a correction. But interestingly, these aren't stock funds...

Sure, stock funds lost money as prices fell. And folks are certainly worried about the market after the recent decline.

But this mass exodus happened in another asset. And you should consider this as a massively contrarian opportunity right now.

Let me explain...

----------Recommended Links---------
If You Feel Like You Missed out on Bitcoin Mania...
If you think you missed out on Bitcoin millions, you'll be shocked by what crypto expert Tama Churchouse is now saying. "There's still a ton of money to be made in the crypto market – but only if you know exactly how to react to the recent pullback." See his full prediction here.
'Your Social Security Number Has Been Erased'
Don't be surprised if you get a letter like this. More than 30 federal agencies are lined up behind a blockchain technology that could replace Social Security numbers and end identity theft. And the market potential is 38 times bigger than Bitcoin. Click here to get the full story.
---------------------------------

An $11 billion loss means these two funds saw 19% of their combined assets disappear... in less than three months.

The crazy part is that both funds fell less than 3% over that time. So they haven't lost assets because share prices are down, but because investors have pulled their money OUT of these funds.

Again, these aren't stock funds. They're two of the largest bond exchange-traded funds (ETFs) – the iShares iBoxx Investment Grade Corporate Bond Fund (LQD) and the iShares iBoxx High Yield Corporate Bond Fund (HYG).

LQD is the largest investment-grade bond ETF, while HYG is the largest "junk" bond ETF.

At the end of November, these two funds held nearly $60 billion in total assets put together. Both have lost more than $5 billion since. Take a look...


The mass exodus from these two funds has a single culprit: rising interest rates.

Yields have been moving higher since September. And fears of higher interest rates are hitting an extreme right now. You see it everywhere...

Inflation and a resulting bond crash are fund managers' biggest fears right now, according to the latest Fund Manager Survey from Bank of America.

Real-money traders are making the same crowded bet...

The Commitment of Traders (COT) report tells us what futures traders are doing with their money. And right now, futures traders are betting on higher interest rates at near-all-time extremes.

It's across the board. Futures traders are unanimously betting on higher two-, five-, and 10-year Treasury yields.

The thing is, we know that when EVERYONE believes in one trade, the trade is usually over... It means there's nobody left to buy. That's where it looks like we are now with this interest-rate trade.

Investors expect higher rates. They're selling bond funds to avoid losses if rates rise. And futures traders are actively betting on higher rates.

This all means betting on higher interest rates is a crowded trade right now.

And as a contrarian investor, that gets me interested.

LQD and HYG saw $11 billion disappear in just a few weeks. If you're bold, now is a moment to consider going against the crowd and betting on bonds... betting on lower rates.

Do it as a three-month sentiment trade. And set a tight stop loss to limit your downside.

Trades don't get more contrarian than this. But the time is right... Are you contrarian enough for this trade?

Good investing,

Steve

P.S. Last week, I found a unique way for my True Wealth readers to make this contrarian bet. The recommendation is brand-new, so I can't share the exact details with you. But it's a smart way to earn big yields – and potentially double-digit capital gains – as this extreme moment goes away. If you're interested in signing up for True Wealth, click here for more details.
Further Reading:

"The stock market hates rising inflation," Steve writes. Learn where we stand today – and when investors should start worrying about inflation – right here.
 
"The crypto market has shed more than $400 billion of market value since last month," Tama Churchouse says. But he believes this could be another contrarian opportunity for investors who make the right moves today... Read more here.
  Print


NEW HIGHS OF NOTE LAST WEEK
 
Rayonier (RYN)... timberland
Southern Copper (SCCO)... copper
Vale (VALE)... iron ore
Rio Tinto (RIO)... diversified mining
Raytheon (RTN)... "offense" contractor
Northrop Grumman (NOC)... "offense" contractor
PNC Financial Services (PNC)... regional bank
Comerica (CMA)... regional bank
CME Group (CME)... derivatives
Interactive Brokers (IBKR)... online brokerage
Cisco (CSCO)... Internet "plumbing"
Arista Networks (ANET)... Big Data "picks and shovels"
Zendesk (ZEN)... customer-service software
Match (MTCH)... online dating
Shopify (SHOP)... e-commerce powerhouse
Wayfair (W)... home-goods website
Estée Lauder (EL)... cosmetics
Coty (COTY)... cosmetics
Tapestry (TPR)... luxury purses
Pool Corp (POOL)... swimming pools
Callaway Golf (ELY)... golf equipment
SodaStream (SODA)... do-it-yourself soda
Denny's (DENN)... chain restaurants
Blue Buffalo Pet Products (BUFF)... pet food
Bristol-Myers Squibb (BMY)... Big Pharma
 
NEW LOWS OF NOTE LAST WEEK
 
Tanger Factory Outlet Centers (SKT)... outlet malls
Prestige Brands (PBH)... health and cleaning products
Nielsen (NLSN)... data and analytics

An inflation-proof fund that pays a 2.4% dividend yield...
 
Betting on bonds is a good idea today. But over the long term, inflation can hurt bond returns. Fortunately, Dave Eifrig has found a way around the problem...
 
 
Are You a
New Subscriber?

If you have recently subscribed to a Stansberry Research publication and are unsure about why you are receiving the DailyWealth (or any of our other free e-letters), click here for a full explanation...
 

Advertisement

Five years ago, Dr. Steve Sjuggerud made an eerie prediction. A lot of folks laughed it off – yet now, it's finally coming true and making one group of people serious profits. For the full story, click here.


recent articles

The One Secret to Thriving in 2018
By Chris Mayer
Friday, February 16, 2018
 
We all have the same questions: What awaits us this year? What dangers lie ahead? What opportunities? What should we do next?
 
Why Inflation REALLY Matters to Investors
By Dr. Steve Sjuggerud
Thursday, February 15, 2018
 
Was it a coincidence that inflation soared at the same time the stock market crashed? To find out, let's look a little further back in history...
 
Why the Crypto Correction Is a Good Thing
By Tama Churchouse
Wednesday, February 14, 2018
 
In the world of crypto assets, a fire is raging right now...
 
100% Chance of New Highs in the Next Six Months
By Dr. Steve Sjuggerud
Tuesday, February 13, 2018
 
Over the past 90 years, 100% of the time, stocks have been higher after going through what they just went through...
 
Most Investors Now Expect Higher Stock Prices
By Brett Eversole
Monday, February 12, 2018
 
Investors are getting bullish on stocks for the first time in years. That could mean a slowdown in the Melt Up – but it won't kill this bull market...
 


Home | About Us | Resources | Archive | Free Reports | Privacy Policy
To unsubscribe from DailyWealth and any associated external offers, click here.

Copyright 2018 Stansberry Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry Research, LLC., 1125 N Charles St, Baltimore, MD 21201

LEGAL DISCLAIMER: This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. Stansberry Research expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. And all Stansberry Research (and affiliated companies) employees and agents must wait 24 hours after an initial trade recommendation is published on the Internet, or 72 hours after a direct mail publication is sent, before acting on that recommendation.

You're receiving this email at newsletter@newslettercollector.com. If you have any questions about your subscription, or would like to change your email settings, please contact Stansberry Research at (888) 261-2693 Monday – Friday between 9:00 AM and 5:00 PM Eastern Time. Or if calling internationally, please call 443-839-0986. Stansberry Research, 1125 N Charles St, Baltimore, MD 21201, USA.

If you wish to contact us, please do not reply to this message but instead go to info@stansberrycustomerservice.com. Replies to this message will not be read or responded to. The law prohibits us from giving individual and personal investment advice. We are unable to respond to emails and phone calls requesting that type of information.