The Largest Discovery in 30 Years

Another strong jobs report... More bad news for Snap... Why Snap's loss could be Facebook's gain... Is JPMorgan reading us?... The largest discovery in 30 years... A new warning from the 'Metropolitan Man'...


This morning, the U.S. Bureau of Labor Statistics ("BLS") reported the U.S. job market continued to strengthen in last month...

The BLS said non-farm payrolls increased by 235,000 in February, compared with expectations of just 190,000.

The report showed the headline unemployment rate fell to 4.7%, down from 4.8% in January. The broadest measure of unemployment – which includes discouraged and part-time workers – fell to 9.2%, its lowest level since April 2008. And the total number of employed Americans rose by 447,000 to 152.5 million, the highest on record.

Data also showed average wages grew at a 2.8% annual rate last month.

In sum, the report confirms this week's strong ADP jobs data, and it all but guarantees the will Fed raise rates next week. As Moody's Analytics economist Ryan Sweet told Bloomberg this morning...

We're getting closer and closer to full employment... Wages had been the one sore spot in the labor market data, and I think that's coming through here. With inflation accelerating I think we're going to start to see even stronger wage growth down the road... [A March rate hike is] pretty much a slam dunk.

Super-popular social-media company Snap (SNAP) just got some serious competition...

Yesterday, Stansberry's Investment Advisory portfolio holding Facebook (FB) announced the launch of a new feature called "Messenger Day." As financial-news network CNBC reported...

Messenger Day lets users snap pictures and video using Facebook Messenger's internal camera, and add effects such as filters, overlays, text and drawings. People can then add the content to their "Day" or include it in a conversation with friends. All posts disappear within 24 hours. (Sound familiar?)

In other words, Messenger Day is designed to mimic the main features of Snap's popular photo and video-sharing app, Snapchat.

Facebook has already rolled out similar features for its Instagram and WhatsApp users, but Messenger Day will be the first available to all 1 billion-plus Facebook users. Together with the recent launch of "Facebook Stories" – a knockoff of Snap's "Snapchat Stories" – Facebook users can now do virtually everything they do in Snapchat... without ever leaving Facebook.

This could be a big problem for Snap. As tech-news site TechCrunch noted yesterday...

Messenger Day could use convenience to compete with Snapchat for user growth, which has become a key weakness for Snap as it goes public. A billion people already use [Facebook], after all. Snap's share price dipped slightly this morning as Messenger Day was announced.

The launch demonstrates Facebook's philosophy that while Snapchat may have invented Stories, it's actually a fundamental content medium bigger than any one company. Facebook is not afraid to copy, no matter what critics say. All that matters is whether it's valuable to users.

While these moves could put Snap's business model in jeopardy, they could be great news for Facebook...

According to JPMorgan analyst Doug Anmuth, these features could accelerate Facebook's already rapid growth. As he explained in a note on Thursday...

We believe a key driver behind FB's faster user growth is an accelerating pace of product changes as FB emphasizes a video & camera-first platform...

We believe FB is just starting to build out its video ecosystem and we expect more content investment this year... We believe stories and disappearing messages should help increase organic sharing and engagement as users feel less pressure to post the perfect photo and instead share more in-the-moment experiences...

Some of FB's product changes are innovative (i.e., Instagram 10 photos/videos carousel post, FB video app for TV), while others are quite similar to offerings on other platforms (Instagram Stories), acknowledging shifting usage and increased competition in younger demos. However, either way Facebook's product changes are working to drive engagement at scale ... Facebook remains our favorite large-cap idea.

JPMorgan has a price target of $170 per share, which would represent a gain of about 23% from today's price.

Stansberry's Investment Advisory subscribers are already up 20% in a little more than three months, as of yesterday's close.

JPMorgan is also bullish on Stansberry's Investment Advisory portfolio holding American Express (AXP)...

In a separate note yesterday, the firm reiterated its "overweight" rating on the firm, citing the potential for stronger-than-expected earnings growth due to increased lending to its existing customer base. As CNBC reported...

At its investor day Wednesday American Express offered a "positive outlook as the company appears to be on the path to revenue and earnings growth," analyst Richard Shane wrote in a note to clients Thursday. "We believe that management has established realistic objectives ... that should be the foundation for enhanced shareholder value and future price appreciation... Lending to existing customers [is] a key growth driver."

Shane reaffirmed his American Express price target of $90, representing 14% upside from Wednesday's close.

American Express' investor day presentation revealed the new lending initiatives such as that general purpose term loans will be focused on current customers through targeted "merchant or industry specific" offers.

This should sound familiar to Stansberry's Investment Advisory subscribers...

The firm's renewed focus on its best customers was one of the key reasons Porter and his team recommended beaten-down shares last summer. As they wrote in the August issue...

American Express initially tried to fight increased competition by turning to less creditworthy customers. But the company realized this did nothing except dilute its brand and quickly scrapped the plan.

Now, it is developing new ways to lend to its traditional customer base. For example, American Express is using its rich data from the closed-loop network to target its best small-business customers, offering financing arrangements and other loans that address short-term liquidity needs...

Its recent moves are the right moves. American Express is once again focusing on its core, affluent customer base that brought the company to great success over the years...

As we explained, the company does have its challenges, which it continues to address. That gives us a rare opportunity today to buy a great company that possesses a huge amount of economic goodwill via its powerful brand at a historically low valuation. It's not often you find bargains this late in a bull market.

Stansberry's Investment Advisory subscribers who bought on Porter's recommendation are already up more than 25% as of yesterday's close.

Yesterday also brought some big news from the oil patch...

Spanish energy company Repsol announced it had discovered a new deposit in Alaska's North Slope territory.

According to the company, the deposit holds upwards of 1.2 billion barrels of recoverable oil... making it the largest onshore-oil discovery in the U.S. in 30 years.

Production – which could total 120,000 barrels per day – isn't expected to begin until 2021. But this discovery is just the latest undeniable sign that oil cartel OPEC's 50-year reign over oil prices is over.

Even now, the world's "swing" producer – the producer with the most excess capacity – is no longer Saudi Arabia. It's the United States. And this position is only likely to strengthen in coming years. As Porter explained last November – just before OPEC announced its historic deal...

At prices of more than $50 a barrel, America's shale fields can produce a lot more oil... well over 10 million barrels per day. Thus, if Russia and Saudi Arabia actually cut production, the U.S. will begin to take market share away from these producers around the world. And when that happens, OPEC will fall apart...

As you probably know, we were among the first writers anywhere to report on the discovery of the huge Eagle Ford shale, which in 2010 we predicted would become the largest oilfield in U.S. history. We were forecasting record volumes of oil production years ago, when most pundits were still worried about "Peak Oil" – the idea that oil production was in permanent decline. And even seven years later, it still seems most people simply don't understand the tremendous impact America's shale fields are having on the oil market.

But they're about to find out.

One last thing before we sign off this week...

Porter is traveling today, but he asked us to pass along a note...

In short, he attended another private meeting with the "Metropolitan Man" yesterday... And Porter says his latest revelations could have major implications for the markets this year.

We can't share all the details just yet, but we're working on a major new announcement... including revealing the Metropolitan Man's identity for the first time. Stay tuned for more soon.

New 52-week highs (as of 3/9/17): Allianz (AZSEY), WisdomTree Japan Hedged SmallCap Equity Fund (DXJS), Facebook (FB), National Beverage (FIZZ), short position in GGP (GGP), Johnson & Johnson (JNJ), Laboratory Corporation of America (LH), 3M (MMM), and Altria (MO).

In today's mailbag, a former "freeloader" comes clean... And a subscriber lets us know how his portfolio is doing this year. We'd love to hear from you, too. Send your notes to feedback@stansberryresearch.com.

"Hi Porter, I have to echo the kudos from yesterday's subscriber Stanley but with a twist. I confess... I am a former freeloader of your services. A couple of years ago, I ordered your book America 2020, which is based in part on the same essay series that Stanley lauded. I did not realize that at the same time I was signing up for a paid subscription to SIA. Well... I received and read America 2020 (several times, cover to cover). But when the subscription charge hit my credit card, I felt like a bait-and-switch had been pulled on me, and I called to complain. Your team courteously issued me a refund.

"But... due to some glitch, both the Digest and SIA kept showing up in my email, and I began to read them. As I continued reading, month by month I became progressively more impressed by the value of the knowledge that you share with your readers, and by the earnestness with which you seem to be seeking the success of your subscriber base. At some point, I became convinced that it was only right that I should be paying for such useful insight. So I called, and set up my payment for subscriptions to both SIA and the Stansberry Research Resource Report.

"That's not all... I decided to pay for my subscriptions even though I have been unemployed for over a year and a half and I now have basically no assets left to manage. Nevertheless, I am confident that at some point I will get back on my feet and will be able to apply all this insight to my eventual investing success. 'The workman is worthy of his wages,' a wise man once said, and you and your team certainly are. I am glad to say that I am again paying you honestly for the very valuable services that you provide." – Paid-up subscriber Eric

"In response to your question about my portfolio, I'll say 'great'! The driving force has been the combination of Steve Sjuggerud, Ben Morris, and TradeStops. Frankly, Steve's True Wealth picks and most recently all the picks in True Wealth China Opportunities have really taken off. Ben Morris and his DailyWealth Trader have also been very good even though I don't take all of his recommendations.

"Added to these two publications is TradeStops. I've only been a subscriber to the service for a few months but it has done more for me than any one thing in my investing career. Specifically, the TradeStops service allows me to balance my portfolio so that my risk is equal against all of my positions. Another great feature that I just recently used is a technique called '2VQ.' Essentially this tool shows mathematically how and when to add to your winning positions thereby maximizing the long-term profitability of a position. It's been a great start to the year due primarily to the team at Stansberry! Thanks again for your valuable work!" – Paid-up subscriber Bill Foley

Regards,

Justin Brill

Baltimore, Maryland

March 10, 2017