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Business/Finance See other Business/Finance Articles Title: The Iran Deal's Undisputed Winner The Iran nuclear deal is done. With the prospect of Western sanctions soon lifting, everyone is trying to figure out the financial impact. To the Tehran bureau chief of The New York Times, it means getting reimbursed for expenses will be a lot easier... The price of crude is moving little in response to the deal. At last check, a barrel of West Texas Intermediate fetched $52.18. Brent, the international benchmark, has slipped about 40 cents, to $57.47. As our Byron King reported via his contacts more than a month ago, Iran has at least 34 supertankers of oil loaded and ready for delivery once sanctions are lifted -- about 50 million barrels in all. How soon it comes on the market, and whether it does so all at once, remains to be seen. If you're looking for one clear financial winner from the deal, it's the U.S. defense industry. Both Israel and the Persian Gulf monarchies look upon Iran as an enemy... and Bloomberg reported last week they're already shopping for more than $6 billion in weaponry. "In theory, an Iran deal could lead to a reduction in tensions in the region that would reduce the demand for advanced weaponry," says William Hartung at the Center for International Policy. "In the short term, a deal could actually boost the demand for arms." In May, Congress and the White House signed off on $1.9 billion in arms sales benefiting contractors including Lockheed, General Dynamics and Raytheon. Saudi Arabia, meanwhile, is looking to buy up to $1.9 billion in helicopters, radar and spare parts... and another $1.75 billion in missiles. Interesting logic -- the U.S. pursues rapprochement with Iran, all the while arming up America's traditional allies in the region. But that's exactly the phenomenon our Jim Rickards identified in this space two months ago. "Rather than 'tilting' toward Iran or Saudi Arabia," he said, "the U.S. will pursue a traditional balance-of-power approach in which neither the Sunnis nor the Shiites will be allowed to become too strong or too weak. "For Iran, this means not crossing the nuclear threshold. For Saudi Arabia, this means not supporting the Islamic State. For Israel, this means progress on the Palestinian issue. All sides can expect help as needed, provided U.S. interests are served. The region will have to work out its own modus vivendi without direct intervention by the United States." No direct intervention... but nonetheless steering business to U.S. defense contractors... Meanwhile, Uncle Sam is on the verge of unleashing his own $156 billion spending spree -- a massive chunk of the Pentagon's $560.4 billion budget for fiscal 2015. "That makes now an especially urgent entry point for new defense investors," says Byron King -- "there's big money on the way. In fact, Congress has already approved spending on three must-have military necessities. Without them, our military is sunk -- in one case, almost quite literally." Byron describes these three programs as "supercontracts" -- and he's identified a way to pull in substantial profits starting Tuesday, July 21. That's one week from today. Play it right and he says you could pull down gains of 400%... 2,028%... or even a staggering 8,225%. If you want to grab a share of that $156 billion, Byron shows you how when you click here. So much for the rebound of the mighty American consumer. A month ago at this time, the mainstream was cheering a 1.2% monthly increase in retail sales. Here at The 5, we said we'd withhold our applause until we saw the trend hold for another month or two. Good thing we did: The June report out this morning from the Commerce Department is abysmal. It reveals a 0.3% drop from May to June. Heh... The most pessimistic guess among dozens of economists polled by Bloomberg was a 0.2% increase. Even if you throw out auto sales, because they're volatile, the number stinks. And if gasoline prices hadn't been rising last month, the number would be even worse. Anyone still counting on the Federal Reserve to raise interest rates in September is almost sure to throw in the towel now. December, here we come! U.S. stocks are shrugging off the retail numbers for the moment. All the major indexes are adding to yesterday's big gains. The S&P 500 is back above 2,100. The Nasdaq is looking strongest, back above 5,100. Bonds are enjoying a modest rally too, the 10-year Treasury yield a hair below 2.42%. Gold has slipped a tad, to $1,155. Little movement to report in the currencies. The euro sits a shade above $1.10, the dollar index at 96.8. Small-business owners turned glum in June. The monthly Optimism Index from the National Federation of Independent Business tumbled more than four points, to 94.1. That's the weakest reading since March of last year. "June terminated a promising string of improvements in owner optimism during the first months of the year," says NFIB chief economist Bill Dunkelberg. "While it is not a disaster or a signal of a looming recession, it is a disappointing sign that economic growth on Main Street is not set for a strong second half." Asked the "single most important problem" they face, 23% of survey respondents identify taxes. That's now the clear leader, with regulations and red tape at 20% and quality of labor at 12%. "Not all energy stocks are the same!" says our income specialist Zach Scheidt -- eyeing oil's recent drop from $60 to $52 with the prospect of a further drop below $50. "Pipeline companies aren't hurt by lower oil prices at all," he says. "In fact, many of these companies are making larger profits because they're pumping more oil. Remember, they get paid by the volume of oil they transport. So investors are throwing the baby out with the bath water as they ditch their energy stocks. "This indiscriminate selling has sent pipeline stock prices lower. But the businesses remain very strong. The market will figure that out soon enough." In addition, there's the fear of what will happen whenever the Fed gets around to raising interest rates. Many blue chip dividend payers could be hurt. "But this concern doesn't apply to pipeline stocks," says Zach. "Investors who'd normally be holding bonds or CDs didn't decide to buy pipeline companies. Instead, they bought shares of Procter & Gamble or Duke Energy. "Now some investors are selling pipeline stocks because they're afraid other investors will sell when rates rise. This is a good example of being too smart for your own good. These investors are afraid of monsters under the bed -- and their fears are unfounded." Zach has his Lifetime Income Report readers in three pipeline plays... delivering yields as high as 7.8%... and they're all buys at present prices. Here's another cautionary tale from the front lines of legalized marijuana: Even if you're selling recreational weed legally under state law in Colorado (or Washington, Oregon or Alaska)... you can be sued out of business. That's what happened to Medical Marijuana of the Rockies. It's been sued by an anti-pot group called the Safe Streets Alliance. The suit cites the federal Racketeer Influenced and Corrupt Organizations Act, or RICO -- the 1970 law that started out as a tool against mobsters. Also sued were the firm's landlord, accountant and the bond company that guaranteed its tax payments. The legal logic: Under RICO, you're subject to penalties for profiting from a criminal enterprise... and pot is still a crime under federal law. As soon as those being sued cut ties with Medical Marijuana of the Rockies, they were dropped as defendants in the suit. Medical Marijuana of the Rockies has closed its doors. Another pot business, Alternative Holistic Healing, isn't shutting down without a fight: It promises to contest the suit in court. "It's a frivolous lawsuit," says the shop's lawyer Matthew Buck. To be continued... "I flinched a little when I read this phrase," a reader writes after seeing a fellow reader opine yesterday that "good money always chases away bad money." "I was been deeply schooled in Gresham's law, which is that 'bad money drives out good.' "Of course, Gresham was talking about good coinage versus debased coinage: When both are in circulation, the bad coinage will be in use and the good coinage will typically disappear from the marketplace. "So I would hope that the previous writer, or any other readers of The 5 for that matter, would kindly explain some background and/or provide examples of the 'good money drives away bad money' principle -- the phrase seems very strange to me, and I feel rubbed in the wrong way." The 5: Hmmm... Anybody in? Write here. "What really tears me up about the medical breakthroughs," a reader writes after our coverage of the race toward a cancer cure this month, "is the money-hungry scientist that gets a great cancer cure and charges hundreds and even thousands of dollars. "The average person suffering from cancer hasn't got a chance to live because of the outrageous prices they charge. The doctors and scientists don't care about their patients unless they have the cash to pay for treatment or the insurance. Especially the people that don't have and can't afford insurance. This country is so money hungry that's all they care about. The hell with the patients (people)!!! "And you even gamble on how the breakthrough is going to make money on the stock market. I'm an average American who lives payday to payday, and I wouldn't buy any of these stocks without feeling guilty for using this over the lives of cancer patients. That money should be put toward the cancer development to cure of cancer, the hell with the stock market." The 5: So... do you propose the government confiscate a portion of everyone's brokerage account and put the money toward cancer research? Look, you won't get any argument from us that the U.S. medical system is rigged with cost-shifting scams that benefit Big Insurance and Big Pharma, making American "health care" the most expensive in the world. But a cancer cure? That won't come cheap. About 30 companies are putting their money on the line in hopes of making it happen. They wouldn't do it without the promise of a meaningful payoff. From where we sit, investing alongside these scientists is a classic case of "doing well by doing good." Best regards, Dave Gonigam The 5 Min. Forecast Post Comment Private Reply Ignore Thread
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