Taking off for the weekend... Real life rolls on... What Nvidia's 25% spike may mean – for now and later... The bond market thinks another rate hike is coming now... Oil short sellers 'will be ouching'... The latest from John Doody about gold...

Congress may be eyeing vacation ahead, but Mr. Market isn't there yet...

The politics of the debt-ceiling "debate" continue.

House Speaker Kevin McCarthy said again yesterday that a default won't happen and that Congress "wouldn't scare the markets in any shape or form"... Yet Republicans and Democrats still have yet to reach a deal and are headed to their vacation homes for Memorial Day weekend. (We're still waiting on our invite.)

You could take this to mean an agreement isn't close, with both sides planning to take this thing down to the wire with the June 1 "X date"... or that everyone's so confident they'll reach their deal, they don't have to disrupt their weekend plans. Today, McCarthy – who has emerged as the debt-ceiling spokesperson – wasn't exactly clear which scenario it might be. According to news service Reuters...

"We worked well past midnight last night," McCarthy told reporters. "I thought we made some progress. There's still some outstanding issues, and I've directed our team's work 24/7 to try to solve this problem."

Even as he made that pronouncement, McCarthy is preparing to possibly let lawmakers leave Washington on Thursday for a week-long holiday recess, with the proviso that they need to be ready to return for a vote.

I (Corey McLaughlin) suspect if both sides really wanted to, they could agree on a deal right now. But the Washington politicos let things linger until the last possible moment to wring any kind of political points from the other side. Great, I hope they're happy.

In the meantime, real life rolls on... like $7-per-pound ground beef at the grocery store, for example, ahead of Memorial Day weekend.

The business of the markets moves ahead, too...

A ratings agency came out of the woodwork to chime in yesterday...

Fitch Ratings, one of the "Big Three" credit-ratings agencies, placed the United States' top AAA status on "rating watch negative" because of the unresolved debt limit. As our Stansberry NewsWire's Kevin Sanford wrote in his morning briefing today...

The ratings agency expressed concern over the lack of progress in raising or suspending the debt limit despite the approaching deadline. In response to this news, the value of the safe-haven Japanese yen briefly rose before retracing some of its gains, and there was a modest decline in Treasury futures.

While it's nice for a widely followed credit agency to publicly tell Congress to get its act together, the message is largely insignificant at the moment to stock and bond markets. Other matters are driving price action.

There's another big story for stocks in the past 24 hours...

Shares of chipmaker Nvidia (NVDA) skyrocketed by 25% in after-hours trading yesterday after the company reported its quarterly financials.

This kind of move is rare for a big-cap stock like Nvidia, which added $200 billion to its market cap to become America's fifth-largest company while hitting a new all-time high for the first time since late 2021.

Nvidia's second-quarter revenue beat Wall Street expectations by more than 50%. And the company announced plans to increase supply to meet rising demand for its artificial-intelligence ("AI") chips, which power ChatGPT and similar AI services.

Now, I usually recommend tuning out the intensive trading that sends stocks surging or plummeting over minor data points in their earnings releases. But Nvidia's move is big even by the standards of earnings-season silliness... It is one of the biggest one-day gains in market cap for a stock in U.S. history.

And it's also notable for a macroeconomic reason...

This could be a signal of increasing risk appetite for growth stocks, which had disappeared last year when tech companies like Meta Platforms (META) and Netflix (NFLX) shed double digits following quarterly reports with "disappointing" earnings and guidance numbers.

This might sound bullish right now, but eager beavers now could be a detriment to the environment over the longer run for a reason I'll discuss in a moment...

Is another rate hike coming? The bond market is starting to think so...

Federal Reserve Chair Jerome Powell will never come out and say it directly... But while the central bank says inflation is still too high and its "fight" isn't over yet, an uppity stock market isn't something he wants to see.

A huge tech stock rising 25% in a few minutes in after-hours trading – where Wall Street does a lot of business – surely got the Fed's attention.

Fed officials' latest messaging over the past few days has suggested we should think of a potential rate hike "pause" as a "skip" instead (meaning more hikes are possible). And today's latest job numbers continue to show low unemployment. So many bond traders are starting to believe a little more that the central bank might actually raise rates at its policy meeting next month.

A juicier stock market would only add to the reasons for more "tightening."

Take a look at the odds among futures traders, according to the CME Group's FedWatch Tool... Almost half now expect the fed-funds rate to increase by another 25 basis points rather than staying where it is (a range of 5% to 5.25%) after the Fed's next meeting on June 13 and 14.

At the same time, bond yields have been moving higher again across the curve, signaling the same idea.

The 10-year Treasury yield traded up to 3.82% today, up from 3.39% on May 11. The 2-year Treasury is now yielding 4.52%, up from 3.90%, in that same span. So the spread between the two remains inverted and deepened to negative 0.70 percentage points, its lowest level since the onset of the banking crisis in March.

This spread has been upside down for nearly a year now, the longest stretch since ahead of the recession that began in early 1980. I can't tell you for sure what is coming next, but those in the bond market are still concerned with what's ahead for the economy.

And in oil, the Saudis are taking on speculators...

The OPEC+ oil cartel has an important meeting coming up next week that will make some headlines... And ahead of it, the Saudi government is already making some more.

The Saudi government wants oil prices a bit higher to fill its coffers with more money, and it appears the world's largest oil exporter plans to announce or do something that may stoke some volatility in oil. The country's energy minister, Prince Abdulaziz bin Salman, said on Tuesday at an economic forum in Qatar that those who are betting against higher oil prices had better "watch out"...

Speculators, like in any market they are there to stay, I keep advising them that they will be ouching, they did ouch in April, I don't have to show my cards I'm not a poker player... but I would just tell them watch out.

I find this hilarious and a tell, like a bad poker player might have.

The "ouch in April" that the Saudi energy minister is referring to is what OPEC+ announced at its latest meeting: cuts in oil supply from countries that included Saudi Arabia, Russia, and the United Arab Emirates. As we wrote in the April 3 Digest...

Russia had already been cutting supply by 500,000 barrels per day since November and, in concert with the moves from Saudi Arabia and others yesterday, extended those plans through the end of 2023.

That day, prices for West Texas Intermediate ("WTI") crude oil – the U.S. benchmark – and a barrel of Brent crude, the international standard, were each up almost 7%... their biggest one-day gains in nearly a year after the surprise announcement.

The spike was short-lived, though. A barrel of Brent climbed above $87 by April 12, but it has since retreated by 13%. That's back to around the $75 level where it was trading in March, as lower market demand associated with a growth slowdown seems to be a bigger deal.

The story is the same with WTI, except a few bucks less at its peak and current price.

In general, oil prices have been trending down since June 2022. The Saudis don't like it, and they don't apparently like anyone who is betting on the trend to continue, either. So from the sounds of it, expect OPEC+ to talk up some catalysts for higher oil prices next week.

I'm not making a formal recommendation... But should the market react like it did last time, a very short-term bullish bet on oil prices could work out well, even if the downtrend remains in place in the longer run. At the very least, expect some volatility in oil next week.

Finally, about gold...

Did you miss Gold Stock Analyst editor John Doody's interview with our editor-at-large Daniela Cambone this morning? If you did, good news: You can catch a replay for free right here.

John, who started Gold Stock Analyst back in 1994, and analyst Garrett Goggin explain their latest outlook for the precious metal and the potential catalysts for gold's price to shoot even above its recent all-time highs.

You'll also hear the inner workings of John's system for picking gold stocks...

He started it three decades ago and has used this system to recommend shares that have delivered a cumulative gain of more than 700% since 2001. This crushes the returns of gold itself or major gold funds, and it more than doubles the return of the S&P 500 Index since then.

Without giving too much away, I can tell you that John and Garrett know the gold industry better than anyone... and know the best ways to identify the best businesses in it, because there are a lot that you definitely don't want to touch.

These are just some of the reasons John's research is read by gold-mining executives and more than 40 professional money managers at hedge funds and mutual funds, along with private asset managers and brokers all around the world.

You can do the same. Check out John and Garrett's latest interview with Daniela to learn more about how to do that... and what they think the future for gold looks like right now. Existing Gold Stock Analyst subscribers and Alliance members are encouraged to watch, though you can also find John and Garrett's latest research in written form here as well.

AI Drug Discovery Is the Next Trillion-Dollar Industry On the latest episode of Making Money With Matt McCall, Matt discusses all things artificial intelligence, including the relationship between the emerging technology and pharmaceutical companies... Click here to watch or listen to this episode right now. And to catch all of Matt's shows and more videos and podcasts from the Stansberry Research team, be sure to visit our Stansberry Investor platform anytime.

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New 52-week highs (as of 5/24/23): Meta Platforms (META) and Palo Alto Networks (PANW).

In today's mailbag, thoughts stemming from yesterday's Digest about Gold Stock Analyst editor John Doody's expectations for gold the rest of the year... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"I think gold, silver, platinum and palladium could start a permanent move upwards relative to sterling soon, maybe even in June. Relative to the dollar it's less conclusive. I think the U.K. is more stable as regards managing the economy by the government and the central bank currently. The Fed and U.S. government are more erratic, with too much money thrown at Ukraine, COVID, and EV." – Paid-up subscriber Richard M.

All the best,

Corey McLaughlin
Baltimore, Maryland
May 25, 2023