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Saturday, May 31, 2014

 Despite the conflict between Ukraine and Russia, European stocks hit a six-year high this week. And True Wealth editor Steve Sjuggerud is betting they'll go even higher.
European Central Bank President Mario Draghi was in Portugal on Tuesday and Wednesday to decide the next steps in European monetary policy.
Draghi has already said he will ease in June... And this week, he continued along those lines...
"We are aware of the risks of a too-prolonged low-inflation period," Draghi said.
 Draghi is particularly concerned about how difficult it is for small- and medium-sized businesses (which are responsible for 80% of European employment) to obtain loans.
In short, more easing is coming. And Steve thinks we're about to see more of the "Draghi Asset Bubble" – the resulting price inflation from further monetary stimulus in Europe – just as we saw with former Fed Chairman Ben Bernanke in the U.S.
 From the latest issue of True Wealth...
Last month, Draghi outlined his "biggest fear" during a press conference. His big fear is that a lack of growth will lead to permanently high unemployment, inflicting long-term pain on Europe.
Unfortunately, his biggest fear appears to be coming true... This week, the growth numbers came out – and they are not good. The euro-currency countries grew at just 0.2% in the first quarter. And the unemployment rate sits at 11.8%.
Draghi needs to act fast to try to improve these numbers. So he'll take pages out of former U.S. Federal Reserve Chairman Ben Bernanke's playbook.

As Steve explained – and we've written about extensively over the past few years – Bernanke put unprecedented economic stimulus measures in place in the U.S. He cut interest rates to near-zero percent and bought billions and billions of dollars' worth of government bonds, causing prices of all assets (including stocks) to soar higher. Steve nicknamed this the "Bernanke Asset Bubble"...
This week, Draghi followed Bernanke's lead. In words practically straight from Bernanke's mouth, Draghi said interest rates in Europe will remain "at present or lower levels" for an extended period of time. He also said he's willing to deploy unconventional measures if needed. He said these things would likely happen in early June.

 Steve believes we're in the seventh inning of the rally in the U.S. stock market... But he says European markets are in earlier innings.
Steve made his True Wealth subscribers a fortune during the Bernanke Asset Bubble... They're up 85% in homebuilder stocks, 247% in health care stocks, 103% in technology stocks, and 147% in private-equity firm Blackstone Group.
 And Steve says we have the same setup in Europe today that we did in the U.S. a few years ago. As he wrote in his most recent issue...
We are now in the early innings of what I call the Draghi Asset Bubble. If you missed out on the Bernanke Asset Bubble in the U.S., please, don't miss out on this!

 In addition to being a great investment opportunity, you should consider owning some European stocks as a way to balance your portfolio exposure.
As our friend and investment manager Meb Faber explained in his book Global Value, most people invest far too much money in their home market. This is a theory called the "home-country bias."
According to asset-management giant Vanguard, U.S. investors have about 70% of their stock-market funds in U.S. stocks. But as Meb explained, U.S. stocks make up 49% of the global market cap for stocks. And the U.S. is only responsible for 19% of the world's gross domestic product (GDP). That's why it's important to hold a portfolio more in balance with the U.S. global footprint.
Plus, the U.S. is one of the most expensive stock markets in the world today. You can read more about this idea in the May 15 DailyWealth.
 In the March issue of the S&A Resource Report, Matt Badiali told his subscribers about an important phone call he received...
"Matt, it's going to happen again. Enduring is getting ready to sell..."
On February 20, a geologist friend of mine called to tell me one of the best shale developers in the country, Enduring Resources, was quietly selling off its assets in West Texas' Permian Basin.
Four years ago, we had a similar situation with the Eagle Ford Shale in southern Texas. The "sweet spot" of the Eagle Ford was the Hawkville Field. Leases in that area were expensive and popular, because it was already proven. So Enduring leased ground wells to the north of this area.
They got in cheaply because it was far from Hawkville. Enduring's geologists understood the rocks. They realized that the shale trend would run directly through their land leases... and it did.
Mid-tier oil company Talisman Resources and partner Statoil bought Enduring's Eagle Ford acreage for $1.33 billion. That works out to $13,600 per acre, a 36% increase over the price Talisman paid for another Eagle Ford acreage just a year earlier. The Enduring deal became one of the benchmarks to value Eagle Ford land. After that, more and more companies moved into the Eagle Ford. And it's now one of the most prolific shales in America.

 Matt's industry contact expected Enduring's Permian asset sale to happen by the summer. As part of the sale, Enduring would release the data from the region. Insiders believed the oil volumes in the rock would shock the industry and mark the beginning of a huge growth play in the Permian.
 Last month, rumors started swirling that Enduring was looking to sell itself for $2 billion. Bloomberg reported the company had hired investment bank Jeffries to explore a deal. No parties would comment.
About three weeks ago, Reuters reported that former Chesapeake Energy CEO Aubrey McClendon was leading an investor group to buy Enduring for $2 billion. Again, no parties would comment...
But Matt and his inside sources think that number is too low... They think the $2 billion figure is just for Enduring's Permian production.
Regardless, it's a major deal for the Permian. And it's a testament to the "boots on the ground" research we provide our subscribers here at S&A, who knew about the potential for this major deal a full month ahead of Wall Street and the mainstream media.
 And subscribers who followed Matt's advice and bought the recommendations in his March issue are already sitting on healthy gains. Matt's picks are up an average of 14% in seven weeks, and his top recommendation is up 46% in less than three months.
 You can learn all of Matt's top ways to invest in the U.S. shale boom with a subscription to the S&A Resource Report. Click here to learn more.
Sean Goldsmith

This Week's Winners
S&P 500 Symbol Change
Tyson Foods TSN +10.7%
Priceline Group PCLN +9.7%
TripAdvisor TRIP +7.9%

Countries Symbol Change
Italy EWI +5.7%
Austria EWO +2.9%
Japan EWJ +2.5%

Sectors Symbol Change
Clean Energy PBW +5.3%
Semiconductors PSI +3.2%
Internet FDN +3.2%

Commodities Change
Natural Gas +4.6%
Aluminum +2.8%
Cocoa +1.5%
Date Range:5/22/2014 to 5/29/2014
This Week's Losers
S&P 500 Symbol Change
Peabody Energy BTU -4.6%
Dollar General DG -3.5%
Allergan AGN -3.3%

Countries Symbol Change
Chile CH -2.1%
Brazil EWZ -1.5%
South Africa EZA -1.4%

Sectors Symbol Change
Gold Mining GDX -4.9%
Big Oil IXC 0.0%
Nanotech PXN +0.0%

Commodities Change
Nickel -4.1%
Wheat -4.1%
Gold -3.0%
Date Range:5/22/2014 to 5/29/2014
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