Dave Gonigam – June 18, 2012
- Another week, another “eurozone euphoria” that becomes a big bummer: Barry Ritholtz, Chuck Butler, Abe Cofnas weigh in with everything you need to know (and nothing you don’t!)
- Blackouts threaten Southern California this summer… but what if you could bottle up “unused” electricity for when you need it? Byron King spotlights a one-of-a-kind play
- When one-third of patients become symptom-free: Promising trials on a lymphoma drug that could one day top $1 billion in annual sales
- When political party doesn’t matter: Carving out a tiny — but lucrative — exemption to the law
- The nightmare of Americans returning home, continued… feedback on our new Saturday 5 Things… the “other” Colorado River… and more!
Let’s see… Where are we? Why, we’re exactly where we were this time a week ago today.
Ostensibly “good” news from Europe on a Sunday drives up the futures… only to give it all away and then some by the time U.S. markets open on Monday.
Last week, it was a bailout for Spanish banks. This week, it was a victory by the pro-austerity party in Greece. Whoopee.
“[The vote] was absolutely and unequivocally crucial, unless it didn’t matter at all,” writes Vancouver favorite Barry Ritholtz, spotlighting the reason we devoted minimal space to the election run-up. “Either of which was equally likely.”
“Indeed, this past week was absolutely critical, except that it wasn’t. The Greek elections determining their future relationship to the eurozone was simply of the utmost importance, unless not. Yes, they didn’t matter; No it was quite important. Unless it was the other way around.
“The ‘mother of all central bank interventions’ is going to save Europe, unless it doesn’t, in case its back to square one. Everything has changed, except nothing is different. Indeed, nothing has changed except for everything. Unless it wasn’t, in which case it was.”
“This election does nothing to satisfy the question of solvency for Greece,” writes EverBank’s Chuck Butler, likewise convinced of the vote’s insignificance.
“But everyone likes to kick the can down the road these days, and that’s exactly what they’ll end up doing in Greece. A year from now, should Greece remain in the euro-club, they will have to pull a balanced budget out of their hats, and I can hear the Greek leaders now, calling for huge cuts in the bailout terms, and holding their membership in the euro-club as bait.”
“So we’re destined to revisit this all a year from now. And that’s assuming that a coalition government can be formed in the next three days.”
Result? The dollar index is inching up, past 82 last we checked. The euro is down to $1.257.
“Make no mistake,” says our monitor of market sentiment Abe Cofnas with his own Greek assessment.
“The message is one of relief, not optimism, and a pause in the ongoing pain of the sovereign debt disease facing the eurozone.”
A brief pause, at that: Yields on 10-year Spanish government bonds crested the 7% danger threshold again today.
And with that, the major U.S. indexes have been in the red all morning. As of this writing, the Dow is off about a quarter percent, to 12,736.
Having discounted events in the eurozone, traders are now shifting their focus to that other repository of pompous, self-serving and ultimately nefarious bureaucracy run amok: the Federal Reserve.
The Fed’s Open Market Committee meets tomorrow and Wednesday. At 12:30 p.m. EDT Wednesday this august body will issue another stirring proclamation on interest rates. And at 2:15, Fed chief Ben Bernanke will regale credulous reporters with another news conference crafted to foster the patina of transparency.
“We don’t know what the FOMC will signal as far as further stimulus,” says Abe. “But we don’t have to know.”
Which brings us to this week’s “mock trade.” Abe figures one of two things will happen: The easy-money junkies on Wall Street will be satisfied with their next fix from the Fed, enough to power the Dow past 12,775 by Friday.
Alternatively, the junkies will see the Fed holding back on the next fix. The pangs of withdrawal will hit immediately, and the index will tumble below 12,575 by Friday.
Either scenario means a payoff of 29.8% at the close on Friday. Upfront cost: $77 per contract. If it works, that $77 turns into $100 in four days.
Intrigued? Here’s where you can learn how to put these mock trades to work for real.
Precious metals have yawned and stretched in reaction to the eurozone news. Gold sits about where it did Friday afternoon, at $1,627.
Silver’s likewise barely moved the needle at $28.32.
The operator of Southern California’s electric grid is warning of rolling blackouts this summer.
Hot weather, combined with the shutdown of a problematic nuclear plant, will stretch the grid to the max, according to the California Independent System Operator. Last September, a heat wave was a contributing factor to an hours-long blackout affecting 1.5 million customers in California and Arizona.
“It’s better to have too much electric generation out there to meet the load, versus too little,” says Byron King, eyeing an obscure, but potentially lucrative investment opportunity.
The reason most Americans experience few blackouts is that usually there’s “extra” electric power in the grid system that goes to waste… because there’s no way to store it.
“But what if you could store excess electricity, and in large amounts?” Byron suggests. “Utility companies could keep the most-efficient generating systems running all the time, and not use the less-efficient generating plants. Utility companies could store excess energy from the efficient sources, and when the load dropped, they could draw it back down during peak demand hours.”
“One of the future key technologies for all this is large storage battery systems that rely on what I call ‘pancromium’ as an enabling element. The technology is out there, and it’s going to happen sooner than later.”
“Pancromium” has far more uses than these mega-batteries. They’re also key to a new variety of computer chip meant to mimic the activity of the human brain.
Byron has his eye on a miner of this element — sitting on the only mine of its kind in the United States and set to become the lowest-cost producer in the world.
And it’s only one of three companies he’ll spotlight during a conference call one week from today — Monday June 25. You’ll have a chance to hear from CEOs as well as resource-investing guru Rick Rule. We still have space available… but it pays to move quickly.
A remarkable drug already proven to fight late-stage lymphoma now shows promise in treating other patients.
“The new data,” says Ray Blanco of our tech/biotech team, “cover relapsed or resistant Hodgkin’s lymphoma in patients who have received stem cell transplants. Seventy-five percent of patients showed a positive response to therapy, while a full third showed their condition completely clearing up.”
Even better: “Even after following patients for over two years, there haven’t been enough deaths to determine a median survival period for the entire population of patients on this regimen.”
The developer of this drug is already up 65% for readers of Ray’s Technology Profits Confidential… but he’s encouraging them to hang on, as sales of this treatment could ultimately top $1 billion a year.
For a full review of the technologies Ray says are changing the world and making early investors wealthy, give this a look.
In the long and tortured history of alcoholic beverage-control laws… here’s an episode that stands out like the wino at a teetotaler’s conference.
The North Carolina legislature is about to ease up on Sunday and holiday liquor sales. But not much. Only on Labor Day this year. And only in one county, Mecklenburg.
Mecklenburg County is home to Charlotte… which hosts the Democratic National Convention starting on… Labor Day.
The measure passed with overwhelming bipartisan support: “The political party of the people attending is not material,” said Republican Rep. Bill Brawley. “Our state will treat them the way we would want our own people to be treated when they visit other states.”
The liquor tax revenue they’d pass up otherwise, of course, has nothing to do with it…
“I’m an American citizen and often travel to Canada on business,” writes a reader adding to our growing pile of “nightmare-entering-the-U.S.” stories.
“I usually enter and exit through Ottawa. Going to Canada, one person checks my passport and one person takes my customs paperwork. All in all, about five-10 minutes including the typical lines. I don’t count the check the airline does in the U.S., because I assume that’s for our oppressive government.”
“Leaving Canada to the U.S. is an entirely different story. First, the airline checks my passport and enters it into their system. Then I proceed through a gate to a customs officer who checks my passport for a second time and customs form. I then go into the line for the typical security we’ve all grown to love. Sometimes, my papers are checked a third time while in the line, sometimes not.”
“I then show my paperwork a fourth time to the guy standing behind the rollers before my luggage goes into the X-ray. A fifth time as I exit the body scanner. A sixth time when I give it to the customs and immigration office (the one and only guy who really needs it).”
“Finally, in case I’ve slipped through all of this, the airline checks my passport one more time before I board. An absolute minimum of half an hour, and the really ridiculous thing is most of these worthless agents can see the two-three guys up the line that just checked my papers.”
“When I question why this is, each agent blames another agency and the fact that they each have different requirements to be met.”
“If you want to kill a zombie with a shotgun,” writes a reader carrying on one of the more, umm, unusual threads we’ve had in a while, “you’ve got to use the stuff designed for the job:
“It’s real, by the way.”
“Hats off,” writes a reader of our new Saturday 5 Things You Need to Know weekly wrap.
“I read your 5 Mins. faithfully, and this 5 Things digest shines a beacon of laser light on the important weekly events, taking them out of the ‘ground clutter’ of fluff like ‘I am a government pensioner and I earned my government check!’ or ‘Help, a bunch of meanies in Customs won’t clear my yacht immediately and I had to RENT a car AND miss two-for-one happy hour on Deco Drive!’ or the correct ammo load for zombie eradication.”
“But it is wonderful to have so little news at the moment that we can devote time to speculate on the firepower needed to take down zombies. Maybe next week’s 5 Things will be highlighting the premiere of Abraham Lincoln: Vampire Hunter.”
“Kudos on your new 5 Things feature!”
“I enjoyed,” adds another, “the succinct bullet points and the ability, if I wanted, to go deeper or just refresh my memory. Great job.”
“Loved the premiere edition of the weekend 5,” says one more. “Evil never stops, and neither should those of us wishing to thwart its effects.”
The 5: Well, we wouldn’t say our aims are quite that ambitious. But we appreciate the kind words!
“Your story smells of something,” writes a reader about the homeless guy who found 40 gold Krugerrands in Texas.
“I am curious,” writes another, “how he stopped to wash his feet in the Colorado River when the Colorado River does not get even close to Texas. Inquiring minds, you know. Love The 5 though.”
The 5: Different Colorado River. Starts south of Lubbock and empties into Matagorda Bay. We learn something new every day…
“The no-horn sign,” writes a reader with an explanation for Chris Mayer’s Mongolian head-scratcher on Friday, “means please don’t blow your car horn in this area. It is usually seen in residential areas or near hotels.”
The 5: Well, that makes more sense than a ban on buskers who play the trumpet…
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. The aforementioned Barry Ritholtz will be among our best speaker lineup ever at this year’s Agora Financial Investment Symposium… now only five weeks away.
We’ve had a handful of cancellations… which means there’s room if you want to join us. You can be among satisfied attendees who’ve heaped praise upon us, like this…
- “Exposure to some of the best thinkers in the investment world.” — Pela C.
- “Great perspective on economy and investments.” — Rich I.
- “…unique, helpful, engaging, and informative.” — Dave K.
Dr. Marc Faber will be back after a two-year hiatus. Historian Niall Ferguson will join us for the first time with his unique perspective on “the West and the rest” — the subtitle of his recent book Civilization.
We encourage you to move soon if you want to join us: Hotel space in our host hotel, the Hotel Fairmont Vancouver, is filling quickly. Full details on dates, speakers and logistics at this link.