Chris’ note: At Daily Cut AM… Market Mission Control, our job is to get you through the coronavirus panic with your health and your wealth intact.
We want to provide an alternative to the hysteria in the mainstream media… and the confusing messages coming out of Washington.
So far, we’ve put a lot of emphasis on playing defense in your portfolio. You do this by following a sensible asset allocation plan… and making sure to have plenty of cash and gold on board.
But this crisis is also giving you the chance to go on the offense. And below, our tech expert at Legacy, Jeff Brown, reveals one of the best opportunities to profit right now. It’s in companies that allow the world to work remotely while virus lockdowns last.
Make sure to stick around to the end of Jeff’s insight. You’ll find more mailbag responses from your fellow readers… as well as some important coronavirus updates.
Numbers coming out confirm what we already knew to be the case…
COVID-19 is ushering in a societal change that is slowing down the internet.
This is great news for tech investors. More on that in a minute.
First, let’s look at what’s unfolding before our eyes…
Finnish telecommunications company Nokia is a global leader in 5G. It recently released data showing that most wireless networks around the world will see 30-45% growth in traffic over the next year.
But peak usage has already jumped 20-40%… over the past four weeks.
These numbers are beyond crazy.
It’s all because hundreds of millions of people who used to work in an office are staying home.
Videoconferencing traffic – for work and for socializing – has spiked 300%. Gaming traffic has exploded 400%. This is probably because millions of kids are staying home from school.
Network data traffic will more than double every 12 months if this persists. We’re talking about the definition of exponential growth.
It will overwhelm communications networks all over the world.
As a result, “cloud” data centers are building out additional infrastructure, as are wireless carriers.
The 27-member European Union (EU) has gone so far as to ask companies such as Netflix, Disney, Zoom, and Facebook to cut the quality of their video.
The EU hopes this will relieve some of the strain on its networks and free up bandwidth for healthcare and distance learning.
Bottom line: Business is booming for many technology companies right now.
Here’s why…
Companies providing wireless services have seen a massive spike in demand.
Any companies making the products data centers use – wireless networks and 5G infrastructure – are getting slammed with new orders right now.
Sales are going up, not down. But their stocks have pulled back. That spells opportunity for savvy tech investors.
And guess what…
This shift to remote working and remote entertainment will have a lasting impact.
I predict we’ll see a second surge in COVID-19 cases in the fall. It won’t be as bad as the surge we are experiencing right now. But it will be enough to prompt many people to continue to work and play remotely.
We can expect these modified behaviors to persist through the 2020-21 winter in the Northern Hemisphere.
The bigger picture is that remote operations just make sense for certain industries.
The transition to a more remote-based workforce was inevitable. COVID-19 was just the catalyst.
We’ll continue to see elevated network use even after the virus is just a distant memory.
I know investing after the recent spate of extreme stock market volatility seems counterintuitive to some.
But as my colleagues and I here at Legacy Research have been preparing you for, crises like this one are also great opportunities to build your wealth. They give you the chance to pick up quality stocks at “bargain basement” prices.
And providing the company you invest in doesn’t go bust (which won’t happen with the in-demand 5G companies I’ve selected), the lower the price you pay for a stock, the higher your profits will be when you sell.
Make no mistake: The crowd is running scared. And I understand the urge to panic alongside everyone else. But I hope you stay rational instead.
The world needs increased bandwidth and 5G wireless network services now more than ever.
That’s why I’ve been preparing my readers by recommending best-of-breed 5G and cloud-based companies.
They are all trading at bargain valuations right now. To add these companies to your portfolio, go here now.
Chris here – Each day, hundreds of people are signing up as Legacy Research readers… and joining us for the first time.
If you’re one of them, welcome aboard!
Here at Daily Cut AM… Market Mission Control, we’re putting together a “community center” for you for as long as the lockdowns last.
It’s where you can send your thoughts about how the global coronavirus pandemic is impacting your health and wealth.
It’s also where you can share your personal stories about how you’re getting through this crisis. What are you doing to stay sane in these lockdowns?
And it’s where you can put your most pressing questions to the analysts right across Legacy Research.
I’ll get to as many of your emails as I can. And I’ll publish as many answers as I can get through in these pages.
So send your questions and stories my way. Reach out at [email protected].
Last week, President Trump tweeted that the cure for the coronavirus – lockdowns – may be worse than the disease.
And it’s prompted a flood of feedback on this difficult – but important – question.
We also got an interesting email from a Legacy reader who works in a mine. It’s another clue about what’s going on with the “gold crunch” I put on your radar last week.
But first, an appeal from a medic on the frontline of the fight against COVID-19…
I am a board-certified emergency medicine doctor. I will tell you how you can help. We need a massive infusion of N95 masks and personal protective equipment [PPE].
This is so those of us on the frontlines are able to stay well and continue to show up to do our job, which is administering emergency and critical care to our communities.
The PPE includes head coverings, face shields, plastic gowns, body suits, gloves, shoe coverings. We need some people to help organize a response for us and disseminate equipment to the locations that need it.
I know there are folks staying at home now (rightly so!) who can help with this effort. Let’s help each other through this difficult time.
– Matthew W.
Thanks for your service, Matthew. And thanks for writing in. I hope you get the equipment you need.
The health risks from the coronavirus are widely reported. (Here at the Cut, we use this coronavirus resource from the folks at Johns Hopkins University.)
But as the world goes into lockdown, it’s less clear what the economic risks will be…
How much damage will governments’ reaction to the pandemic do to society? How hard will the lockdowns hit businesses and livelihoods right across America? And what about our civil liberties?
In Spain and Italy, for instance, governments there have ordered the army onto the streets to police the lockdowns.
These countries are turning into military curfew states. Meanwhile, under new emergency powers, governments are tracking people by way of the GPS in their cell phones.
In Britain, one former police chief suggested British cops use tasers and “baton rounds” (plastic bullets) on people who don’t comply with lockdown rules.
It’s a situation that’s at the front of readers’ minds…
This virus has gone through Europe and is now in Portugal, where I’m from. Things are looking pretty bad for our family.
I am $30,000 in debt. If I fail a single payment, our family could lose the house we live in. All this debt was to invest in education and to renew an apartment for rent. This is the only income we can consider safe for a three-member family (mother divorced). Income from rent is $600.
My sister works on a contract basis. She probably won’t have the contract renewed with this coronavirus, where people are staying at home…
My 64-year-old father works in tourism. He may lose his job also. He worked his entire life to pay debts. Finally, we were able to pay them off last year. But now, he won’t have money to retire.
– Daniel G.
I’m on the side that thinks this is an overblown panic. Not because COVID-19 isn’t contagious or killing thousands… but because I don’t believe you shut down the planet over it.
It’s been shown that, unless you are older and especially with some type of pre-existing condition, you’re likely to come through ok, even if you get the virus.
I feel a better solution would be to quarantine those more at risk and let the rest of us keep the world running while we build up immunity, just like the flu. What if this comes back next season? Do we continue to destroy businesses and people’s lives?
– Mel L.
Mel isn’t alone in believing the government should only quarantine the folks who are most at risk…
If you quarantine the active population instead of the most endangered part of the population, you destroy the system which could defend the older people. In the end, everybody will suffer, considering the uncertain outcomes of the quarantine.
– Ferenc P.
We know people die in car crashes, plane accidents, truck accidents, and so on. But do we stop driving or flying? No. But now, some are saying that one death is one too many. And then they will drive away waving!
I believe we need to isolate the ones most susceptible to the harm of the virus and let it run its course. It is going to spread anyway.
– Michael D.
It’s not just the economic impacts that have folks worried. It’s the effect of the lockdowns on mental health…
I am in my 80s and I am very concerned about COVID-19. I am overwhelmed with fear about the insanity of all the locked-in rules that will drag our economy to the ground… and the lives of all people… Unemployment… despair… depression… People who cannot afford medicine/food/housing… I pray this lockdown insanity will stop now.
– Zucena L.
I wonder how many people will die because of the stress caused by being alone and/or lonely, especially for older people… the lack of income, with more people having to choose between food and medicine… the shutdown of small businesses, from which we may never recover… and the intense emotional spiral it will cause in people who risked their homes, retirement savings, and potential earnings to start their own enterprises.
– Peggy E.
Much of the reason behind the lockdowns is our society’s desire to save anybody from any risk. We need to wear helmets when riding bicycles because we could “break our crown” if we take a tumble.
I’ve seen a friend after taking a terrible tumble from her bike. She survived, but was badly bruised. What can you expect when you are over 65, like she was? So everybody in the nation needs to wear helmets and be careful because of this?
That is being risk-averse to an insane degree. So really, the problem is this virus of the mind that nobody can die or suffer, and we all have to be very careful. So much so that we lose our liberty, physical freedom, and soon, our collective mind. This will not turn out well.
– Mary Ann M.
We’ll wrap up today’s mailbag with an update on how the coronavirus panic will affect the gold-mining industry…
I work at a mine in Alaska. We are basically sheltering in place at work. I’m not scheduled off until June. The crew that was off-shift is now being quarantined at a hotel in town for two weeks before they can come out to work.
Another of our properties, in Quebec, is shut down by the government due to the COVID-19 emergency. It won’t be able to start mining again until restrictions are lifted. The output of gold from one might not affect the metal’s price. But all the mines in Canada might make a dent.
– Eugene L.
I get that gold is one of the best places to be invested through this crisis. However, I am concerned about the gold producers. If they are required to shut down operations due to COVID-19, won’t they head lower like everything else?
– Tim P.
For an answer, we turned to our globe-trotting rock hound (geologist) Dave Forest. Here’s what Dave recently told paid-up subscribers of our International Speculator advisory…
One of the effects of coronavirus is we’re seeing a lot of mines shutting down.
There’s been a lot of news, particularly the last few days, about non-essential businesses being ordered to close in many places, including mines.
Last week, South Africa – which is a top-10 gold-producing nation – said that it’s closing all of its gold mines. The entire industry is going to close.
South Africa is a big producer of gold and a big producer of platinum and palladium. So prices reacted positively to that.
Now, in general, this is going to be good support for prices because supply is disappearing.
The question is going to be: How does it impact the stocks? Producers who lose their revenues, who lose production from mines being shut down, how does it affect them?
My feeling is gold miners won’t go far. They will move with leverage to the underlying metal. While gold will do better than equities, gold miners will do well, too.
That’s why I’m not worrying too much about gold miners being beaten down as much as mainstream stocks.
I see this as an opportunity to buy great names at pennies on the dollar. And you should, too.
We still believe gold is the ultimate safe-haven asset.
So take this time to scope out picks you haven’t built a full position in yet… and grab some at bargain prices.
Do you have any updates on the government lockdowns in your area? How are you keeping sane? Do you have a pressing question for Bill Bonner, Doug Casey, Teeka Tiwari, Jeff Brown, or any of the Legacy team?
Write us anytime at [email protected].
Now, more on the coronavirus outbreak…
Over the weekend, President Trump announced he’s extending federal coronavirus guidelines across the U.S. until at least April 30.
That goes against his earlier wish… which was to relax lockdowns as early as Easter (which falls on the weekend of April 12).
And White House medical advisor Dr. Anthony Fauci warned that things could get bad.
He said it was “entirely conceivable” that COVID-19 would kill up to 200,000 Americans and infect millions more.
At writing, Johns Hopkins University data shows the U.S. now has more than 143,055 confirmed cases.
That’s almost double the 82,198 confirmed cases in China – a country with nearly four times as many people.
And folks have been corralled in their homes across the world.
Three billion people are now living in isolation… That’s more than one in three people alive today.
All but the most essential movement and social contact is restricted.
The largest city in Europe – Moscow – and the most populous city in Africa – Lagos – have now brought in strict confinement orders.
A new online tool from the app Citymapper shows how people’s movement in 41 of the world’s major centers has fallen by up to 96%. You can find a detailed analysis of the data here.
Finally… we’ve gotten a lot of reader feedback on the idea that a large part of the population is immune to the coronavirus.
This is based on the results of extensive testing of the 3,711 passengers and crew aboard the Diamond Princess cruise ship, where the virus spread.
Only roughly 20% of the ship’s passengers got infected. This has led to speculation that the other 80% were immune.
What’s more likely to have stemmed the spread of the virus are the confinement countermeasures the captain ordered after the first passenger tested positive.
Remember, the R0 (R naught) measure? It tells you how many people one infected person infects, on average.
According to the Centers for Disease Control and Prevention (CDC), the initial R0 on the Diamond Princess was 14.8. This means each infected person infected nearly 15 others.
That’s about four times higher than at the epicenter of the outbreak in Wuhan, China.
But after the captain confined passengers to their cabins, the R0 dropped to 1.8. So each infected passenger passed on the virus to less than two other passengers after these measures were put in place.
That’s a huge decrease in the spread due to quarantine measures.
Not every government is going down that route, however. One of the countries going against the grain is Sweden.
Police and soldiers are enforcing coronavirus lockdowns in most of Europe.
But Sweden has opted for a lighter touch. It’s keeping offices, restaurants, and schools open to avoid the kind of economic impact we’re seeing in places where lockdowns are in full force.
The country’s prime minister, Stefan Löfven, tightened restrictions over the weekend by limiting gatherings to 50 people.
But he is insisting that there is no need to go down the route of near-total confinement.
As he put it: “We all, as individuals, have to take responsibility. We can’t legislate and ban everything. It is also a question of common sense behavior.”
That doesn’t mean the Swedish economy is roaring ahead. The government expects GDP to fall by 4% this year. It also expects the jobless rate to hit 10%. Particularly hard-hit is the service industry.
This tells us that ending lockdowns won’t necessarily save the economy. People will still steer clear of bars, restaurants, cafes, and malls.
The real threat to the economy is the pandemic. We’re not getting back to “normal” until we get it under control.
I’ll have more for you on this in future Daily Cut AM updates.
And I’ll be back with you later with our regular Daily Cut dispatch. So look out for that this evening.
Regards,
 |
Chris Lowe
March 30, 2020
County Kilkenny, Ireland
P.S. If you’re in lockdown… we know it can be boring being stuck indoors with nothing to do. So we’re unlocking a digital copy of another book by Legacy cofounder Bill Bonner. It’s called Family Fortunes: How to Build Family Wealth and Hold on to It for 100 Years.
About 10 years ago, Bill and his eldest son, Will, researched how wealthy families hold on to their wealth over generations. What resulted is an essential guide to passing wealth from one generation to the next. And it’s filled with concrete, practical advice you can put to use right away.
You can access your free copy here, courtesy of Bill. When you’ve read it, tell us what you think at [email protected].
Like what you’re reading? Send your thoughts to [email protected].