August 24, 2012
- A biotech revolution Patrick Cox says he underestimated… and why you can still get in on the ground floor
- Diving over the “fiscal cliff” into recession: Chuck Butler on the three choices politicians face… and the two they’ll take
- “Peak Cheap Oil”: Byron King on harsh realities that can’t be overcome by the shale boom
- A curbside indicator of a looming recession… a localized economic boom pumped up by silicone… reader musings about a farmland bubble and Flying Pigeons… and more!
“Clearly,” confesses our biotech maven Patrick Cox, “I underestimated the impact of Moore’s law, the accelerating power of computer technologies, on biotechnology.
“This year,” he explains, “it became very clear to me that the big story, at least in the near term, is the ‘phytochemical revolution.'”
Phytochemicals are the chemical compounds that occur naturally in plants. And according to Patrick, they are making huge waves in the biotech field.
“There’s nothing new about phytochemical usage, of course,” Patrick goes on. “The Greeks used many plant products, including salicin, from which modern aspirin comes from.
“Ayurvedic medicine from ancient India relied on a wide variety of medically useful phytochemicals, including the anti-diabetes compound pterostilbene, derived from pterocarpus marsupium, or Indian kino tree.”
Here’s what is new: “The tools needed to find effective phytochemicals, as well as the biological mechanisms behind their actions, have plummeted in price.”
Meanwhile, the developers of the synthetic drugs — the pharmaceutical industry’s bread and butter — face rising costs. “The burden of regulation has increased. Recently, I’ve heard from biotech executives that the Obama administration is afraid of medical innovation because of the mistaken belief that new therapies will increase the cost of health care, which they have a political interest in keeping down.
“These two forces have combined to change the economics of drug discovery, shifting the focus toward natural, as opposed to man-made, compounds.”
Case in point: a phytochemical product already on the market — because it didn’t require FDA approval — and already turning heads.
Patrick takes it himself… and based on his glowing recommendation, so do many of his readers.
“In Vancouver,” he says, “readers who are using the product told me again and again that it has changed their life. It certainly has mine. One particularly charming reader showed me her hands, which had been crippled by arthritis only a year ago.
“Now, however, she’s able to lift heavy objects and do the things she hasn’t been able to do in years. Her husband, a surgeon, had been initially dismissive of this drug,” he writes, “but saw her improvement and tried it for his knee problems, which have also responded to the anti-inflammatory alkaloid.”
And it’s not only older people who benefit: Patrick’s own teenage kids “have not, for the first time in years, suffered from seasonal allergies,” after taking this product.
“There have been exceptions to this effect,” Patrick makes clear, “but most people who take this drug seem to enjoy significant relief.”
The plant from which this alkaloid is derived, you wonder? Of all things, it’s tobacco.
“Moreover,” Patrick goes on, “it is beginning to look like this drug will be an important ‘performance enhancing’ therapy.
“More and more, I’m hearing from younger athletes that the product is a significant training aid because it reduces the soreness caused by training and reduces recovery time.”
Anecdotal evidence, you say? Yes. Patrick readily concedes that. But if it’s scientific proof you want, that’s on the way. “Dr. Paul Ladenson, the chief endocrinologist at Johns Hopkins, is expected to deliver a critical peer-reviewed paper at an important scientific conference within the next few months.
“I haven’t seen the paper,” says Patrick, “but I know how excited the people who work with him are. If the paper delivers the information I expect it to deliver, a lot of very important scientists are going to get ‘proof’ that this drug is the biggest breakthrough in autoimmune disorders ever discovered.
“These disorders include, by the way, cancers, Alzheimer’s, thyroiditis, prostatitis and many other diseases,” Patrick concludes.
If you’re still skeptical, he understands. That’s where he started. But the science that’s already emerging is so compelling, it drove Patrick to put together this presentation for you.
Keep in mind, once the peer-reviewed research comes out, the profit train will have likely left the station. Already, the company’s second-quarter sales show 400% growth over the last year.
Patrick details the science behind the product… the life-changing wealth it could produce… even how you could score some of the product for yourself… when you follow this link.
Major U.S stock indexes lost a bit of ground on the open, adding to yesterday’s losses. The S&P teeters on the edge of 1,400.
If S&P futures can hold above 1,390.5 by day’s end, it means a 14.2% payout for the “mock trade” Abe Cofnas suggested here on Monday. To learn more about Abe’s four-day trades — he’s the first newsletter editor to follow this unique market niche — take a look here.
Precious metals are catching their breath after a healthy run-up this week. In early trade, gold sits at $1,669. Silver is pausing at $30.52.
Good news: The Congressional Budget Office forecasts fiscal 2012 will end with the smallest deficit in four years. Bad news: It’ll still be $1.1 trillion.
That headline was obscured by the CBO’s forecast for the “fiscal cliff” come the new year: Assuming the 2001-03 tax cuts expire and $1.2 trillion of “automatic” spending cuts kick in, we’ll be back in recession.
“I love tax cuts just as much as anyone,” wrote Chuck Butler in yesterday’s Daily Pfennig. “And on the outside looking in, one would think immediately that we, as a country, can’t afford the tax cuts. But the debt has grown so much that abolishing the tax cuts is not going to be the elixir for what ails us.
“I’ve gone over this many times in the past: At this point, we, as a country, have only three choices in dealing with our debt:
1. We can increase our revenue (raise taxes — It’s coming!)
2. We can reduce our expenditures (cut deficit spending — fat chance!)
3. We can allow the dollar to depreciate further and further to pay back debts with cheaper dollars. (looks like the easiest thing to do — right?)
“My call on this is that we’ll take what’s behind Doors 1 and 3 and hope for the best!”
Prepare accordingly. Chuck consulted closely with Addison on The Little Book of the Shrinking Dollar — packed with 47 ways to protect your purchasing power as the politicians keep their distance from Door 2.
And if Chuck’s warning isn’t strong enough to grab you by the lapels, maybe this one from Bill Bonner is…
Oil is retreating a bit from yesterday’s four-month high. At last check, a barrel of West Texas Intermediate fetches $96.50.
“Oil will be scarce, and expensive. ‘Cheap’ is over,” Byron King declares of our future.
Byron recently mused about Peak Oil in Outstanding Investments, inspired by a reader inquiry: “You’re not one of those guys at the fringe who says, ‘We’re running out of oil and we’ll all freeze in the dark.’
“But,” the reader goes on, “you still talk like the oil industry won’t be able to meet world demand in the future. With all the new oil shale developments, isn’t the U.S. on the right track? Is it time to move away from that Peak Oil way of looking at things?”
“I should begin,” Byron replies, “by saying that I met the late geologist M. King Hubbert back in 1977, when he gave a talk at Harvard.” Hubbert was the Shell Oil geologist who gave birth to the Peak Oil concept.
“Hubbert, being “a creature of his times,” Byron says, “cut his teeth working in oil development during the 1930s and 1940s. By the 1950s, he was looking ahead and considering where the oil industry could go with the technology then available or foreseeable in the tech pipeline.
“Of course, Hubbert was aware that many shale formations contain significant oil and gas, but he didn’t foresee the modern technology we have now.
“Thus, the answer to the reader’s question is that Peak Oil analysis is still relevant,” Byron says. But “if you still don’t like the term ‘Peak Oil,’ I suggest that you use the term ‘Peak Cheap Oil,’ because that’s the future into which we’re heading.”
Despite “Peak Cheap Oil” at our doorstep, it’s not all doom and gloom. In fact, Byron has put together a presentation about what to expect — and how you can profit — from the next massive energy boom that is — as we speak — revitalizing America. Definitely worth a watch.
Behold, the strangest recession indicator we’ve come across yet…
Economist Michael McDonough finds an 82% correlation between rail shipments of trash and GDP since 2001. Trash, he submits, is an excellent leading indicator: “It’s holistic because it’s not isolated to a single part of the economy,” he tells the public radio program Marketplace.
“It’s people throwing things out, it’s buildings being demolished — it’s everything… I mean, if you’re going to build a new building, there might be a building that’s already there. If you buy a couch, you might be throwing out an old couch. If you go out to McDonald’s and you buy something, you’re going to throw something out.”
Makes sense… although we wish his data set went back longer than 20 years. We’re agnostic on whether the chart is a reliable recession barometer.
We do, however, see one isolated sector of the economy — in an isolated location — with economic activity that’s off the charts…
“Prostitutes and strippers have flooded into Tampa — notorious for its adult entertainment hot spots — hoping to cash in on an expected 50,000 visitors,” reports one Florida newspaper. “Stripper Lisa Ann, a Sarah Palin look-alike known as ‘Nailin’ Palin,’ will appear at one club for two nights just before the convention begins.”
“Many clubs,” CNN reports, “have taken out ads inviting GOP delegates ‘to party like a liberal’ in a city where the ‘poles are open all night.'”
Perhaps the first instance of “Super PAC” used as a verb…
“When we compared spending,” says the group’s Angelina Spencer, “the average showed Republicans spending $150 per person at an adult club, versus Democrats, who averaged $50 a person.”
Given how we’ve managed to offend both Republicans and Democrats over the last month, we’ll leave it to others to speculate why.
“I agree with the fellow about the land bubble,” a reader writes in reply to Wednesday’s mailbag.
“The new farm bill, whenever they pass it, will eliminate the direct payment to farmers and is planned to take out $25 billion in subsidies to farmers over five years.
“I think the uncertainty of the farm bill and the effects of the drought will certainly dampen the land market. A friend of mine who raises corn and soybeans on 2,000 acres says crop insurance doesn’t even cover the cost of inputs let alone the cost of cash land rent.”
“If you look back to the early 1980’s,” adds another, “you will also see a farmland bubble that burst.
“I think it was in 1981, just as Reagan began his presidential reign. The Carter years had grown the bubble and land values collapsed, causing a complete overhaul of the agricultural financing community.
“I was just wondering what irrigated cropland in Colorado was worth this morning. Try $5,000 an acre. Much of that is the value of the water, but only a few years ago it was going for around $3,000.
“The bust is coming. When, no idea, but I would assume it would pretty well follow the future bust in bond prices.”
“The Flying Pigeon,” writes a reader of the iconic Chinese bicycle that’s now a hot U.S. import, “is a copy of the 1913 Raleigh DL-1, which was the ancestor of the Raleigh Tourist sold here until 1985.
“It was the large 28×1½” wheel, long wheelbase model made for stable cruising on rough country roads, unlike the faster-steering 26″ Raleigh Sports, which most U.S. 3 speeds were modeled on.
“The Flying Pigeon factory was started by a Japanese businessman in China in 1936 and simply taken over by Chairman Mao. They changed from the unusual Raleigh front axle and proprietary bottom bracket threading to standard. They also made the bars so narrow that if you ride your normal-size frame, the ends of the bars will hit your knees in normal turns.”
The 5: And we bet the Raleigh version sold for a heck of a lot less than $300 in 2012 dollars…
“In our society,” a reader writes after Addison’s abortive jury duty experience, “it seems jury duty is an occupation much to be avoided.
“I was called several times, but never seated. Several times, I was called into the jury room for interview and selection. One of the first questions the lawyers would ask me was my occupation. When I replied that I was an engineer, I was immediately subject to one of the several legal tricks of sending a person off the jury.
“This same tactic has been used on many my friends, also engineers. Another friend was a lawyer, and he informed me that the judicial system does not like engineers on juries because we ask too many questions. In addition, we tend to think for ourselves and not within the constraints of the law.
“Isn’t our representative democracy great in assuring us the right of trial by jury of our peers!”
The 5: Indeed. Stand by next week for Addison’s next great adventure in civic engagement!
Cheers,
Dave Gonigam
The 5 Min. Forecast
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