Published By Banyan Hill Publishing | | | | Published By Banyan Hill Publishing | | | | Banyan Nation, If there is one recurring theme of 2023, it’s that investors seem to “hear what they want to hear.”
There has been a constant narrative that the Federal Reserve was “almost done” raising interest rates, and that lower rates were right around the corner!
Even institutional traders buy the narrative. The most recent action in the futures market suggests an 87% probability that the Fed leaves rates unchanged in September.
Well, they might. But if the recently released Fed minutes are any indication, higher rates are still likely, whether they come in September or shortly thereafter: “With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.”
I don’t know how good Fed Chairman Jerome Powell is at his job. I know it’s a tough one, and it’s easy for me to be a “Monday-morning quarterback.”
But he decided to keep an ultra-loose policy in place for a full year after the worst of the COVID-19 pandemic had passed.
That decision will likely go down in history as one of the biggest boneheaded moves in the 110-year history of the Federal Reserve. It inflated home and stock market prices and helped to ignite the inflation that they are now trying (and failing) to stamp out.
But I’ll give him credit for this: Powell is a straight shooter, and anything if not transparent. Unlike former Fed Chairs who intentionally gave opaque, almost mystical-sounding answers to intentionally confuse and distract (ahem, Alan Greenspan), Powell believes in being as direct and open as possible.
He tells you exactly what he is planning to do.
And right now, in black and white, Powell is telling us that inflation is sticky, the job market is still hot, and yes, additional rate hikes are coming.
This has implications for my favorite stock of all time (more on that later).
If the Fed doesn’t raise rates next month, it will be because they’re even more concerned about the potential effects it might have on commercial real estate (CRE). Per the Fed minutes: “Various participants commented on risks that could affect some banks, including unrealized losses on assets resulting from rising interest rates, significant reliance on uninsured deposits, and increased funding costs.
Participants also commented on risks associated with a potential sharp decline in CRE valuations that could adversely affect some banks and other financial institutions, such as insurance companies, that are heavily exposed to CRE.”
There are several potential landmines under the surface. But we’re ready for ‘em…
And on that note, let’s see what the team has been covering this week. | | | Over 50 years ago, a rural corner of America transformed into a hotbed of wealth. It went on to become home to 74 billionaires and 76,000 millionaires. Many call this the greatest creation of wealth in history. And it could be happening all over again. Join Ian King on Tuesday, August 22, 2023, at 1 p.m. ET, as he shows what’s happening and how you can take part. Sign up here. | | | Weekly Recap  - Invest Like It’s “Moneyball”
Remember the movie Moneyball, with Brad Pitt and Jonah Hill? It wasn’t about making money in baseball. It was about using data analytics to save money and build a winning team in the process.
This same idea can take the guesswork out of investing. Whether it’s sports plays or trading days, taking the “emotion” out of the game is mathematically proven to help you win.
- Rising Tide Alert: $200 Billion Mega Trend Boom
Thanks to the CHIPS Act, the Inflation Reduction Act and infrastructure laws, manufacturing is coming back to America. The 10-year-average manufacturing spend from 2010 to 2022 is about $80 billion. This year alone we are looking at a spend of nearly $200 billion!
This is a huge tide change. And the stocks in this sector are poised to benefit.
- How to Make Money in an Oil Bull Market
The bull market in crude oil, and in the stocks of the companies that bring it, is only getting started. Green policies in the U.S. and Europe and demand growth in emerging markets are all but guaranteeing higher energy prices … and marquee investors like Warren Buffett are getting in on the action.
The last energy bull market saw the price of oil rise more than 1,000%. How high will this one go?
- Will Price Targets Trend Higher for S&P 500?
Earnings season happens every three months. This is when companies share details on their recent financial performance, which helps investors understand how the company is operating. Smart investors can spot trends in the reported data, using the numbers to determine whether a stock is a buy or sell. Here’s how…
- The ChatGPT Backdoor No One Knows About
OpenAI is the company behind ChatGPT. It’s a private company, so you can’t invest in it. But Adam O’Dell has found a “backdoor” opportunity, through an overlooked and already highly profitable company. It’s also partnered with OpenAI. And its stock ranks a whopping Strong Bullish 84 on Adam’s Green Zone Power Ratings system.
My Favorite Stock of All Time  Now we get to it. My favorite stock: Realty Income (NYSE: O).
In full disclosure, I own Realty Income. I’ve owned it for years, and plan to continue owning it until I am dead and in the ground.
That being said, the fears about higher interest rates and potential weakness in commercial real estate has really sapped investor enthusiasm for real estate investment trusts, like Realty Income.
The shares are down by about a quarter from their 2022 highs … and sitting at prices first seen in 2016.  Now, I can’t say when this downdraft will run its course. I don’t have a crystal ball.
But I do know this…
While the share price is sitting at 2016 levels, the dividend most certainly is not. Realty Income’s monthly dividend check is about 33% higher than it was back then, and if history is any guide, the payout will only continue to grow with every passing year.
Today, Realty Income’s dividend yield of 5.23% is about in line with the yield you can get on a one-year U.S. government T-bill. If those are my two choices, give me Realty Income any day of the week.
Yes, the shares will fluctuate. That’s the reality of the stock market. But the dividend stream should manage to keep up with inflation over time, whereas Treasury coupon payments don’t rise.
Realty Income is a business, of course. It’s not a government bond. There are risks involved with running a business, and Realty Income borrows heavily to fund its growth. This makes it sensitive to rising rates.
Again, I’m good with that. In my view, the rewards far outstrip the risks.
Regards,
Charles Sizemore
Chief Editor, The Banyan Edge | | | This 3.6-mile-long road in a small town is hiding a $1.4 trillion secret. Join Ian King on Tuesday, August 22, 2023, at 1 p.m. ET, as he takes you on a field investigation of this area … and the #1 investment you can make. Sign up here. | | | Get The Banyan Hill App And start experiencing that "total wealth" freedom for yourself. | | | (c) 2023 Banyan Hill Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Banyan Hill Publishing. P.O. Box 8378, Delray Beach, FL 33482. (TEL: 866-584-4096) Legal Notice
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