February 15, 2013
- Look… up in the sky… It’s a fireball… It’s a meteor… No, it’s stimulus!
- Never give up: Checking in with David Walker, five years after stepping down as comptroller general
- Never mind the cool new cellphones: Byron King on the real profit potential behind the “miracle material”
- Checking in with Soros and Paulson’s latest gold moves… A casualty of currency wars on the shelf of your favorite liquor store… a reader’s plea that barks up the wrong tree… and more!
Not that we want to make light of the injuries and damage caused by the meteor. But already Russia’s deputy prime minister is saying — as a wire service story puts it — “the incident showed the need for leading world powers to develop a system to intercept objects falling from space.”
Never let a crisis go to waste, huh?
Cue the way-back machine: “If we discovered that, you know, space aliens were planning to attack,” Krugman mused in 2011, “and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months.”
On the subject of deficits and debt, the national debt stands this morning at $16,524,304,599,079.04.
We note the total only because on this day five years ago, David Walker resigned as comptroller general. He hoped that as a private citizen he’d have a better chance to spread the word about the threat of a spiraling national debt. He took up the cause with alacrity in many forums, not least our documentary I.O.U.S.A.
On the day of his resignation, the national debt stood at $9,289,242,421,070.23. The increase in the ensuing five years works out to nearly 44%.
Walker, bless him, is undeterred. “It’s outrageous,” he writes in a recent piece at Politico, “that at a time when our nation’s finances are in such disarray, and the clock is ticking on our potential debt bomb, our elected officials are taking ‘spring breaks’ and a week off for every federal holiday instead of focusing full time on the task at hand.”
With that in mind, Walker’s pushing a “No Budget, No Pay” initiative.
To little avail. After today, Congress goes home for all of next week. Heh…
[Ed. Note: The one-week recess is good news in the sense that it buys more time for public opposition to build to the nomination of John Brennan as CIA director — one of the key planks of our anti-drone petition. You have signed it, right?]
Another day of drift for the major U.S. stock indexes. The Dow is up fractionally, about 20 points below 14,000.
The day’s economic numbers are all good…
- New York manufacturing: Expanding for the first time since last summer, according to the Fed’s Empire State survey
- Consumer sentiment: Up for a third straight month, say Reuters and the University of Michigan.
Gold is getting crushed this morning — testing $1,600 as we write. Silver’s already broken below $30.
Well, you can’t say we didn’t warn you. As a reminder, Greg Guenthner’s downside target is $1,550 — a low tested three times in the last 18 months.
“The dollar is riding on the white horse this morning,” writes Chuck Butler from his post at EverBank World Markets in St. Louis, “and all the currencies (except yen) and metals are bowing down to pay homage to the dollar.” At last check, the dollar index is up past 80.5.
“We do have the G-20 meeting going on, and I would think that some traders that were short yen decided to cover the short ahead of the G-20 meeting, just in case there’s talk about stopping Japan from pushing for currency weakness.”
“I think all we’ll get out of this G-20 meeting is nothing more than a statement that they want members to refrain from competitive devaluation. Then get on their private jets and head home.”
“Imagine a boat,” suggests Byron King, “with a hull that’s a fraction of an inch thick.”
It’s Friday. We can’t let a three-day weekend pass without a mention of our favorite “miracle material.” So we invite you to play along for a moment…
“Imagine,” Byron goes on, “a hull the size of a standard canoe, yet it’s so lightweight that you can pick it up with one hand…that hull is so strong that you can shoot bullets at it and hardly leave a scratch.”
Byron confirms what readers of The 5 already know. “You don’t have to imagine these exotic-sounding materials. Because these kinds of materials already exist.” The applications for graphene are endless and we haven’t been bashful about keeping you, dear reader, as informed about them as possible.
But applications are only part of the equation. To have graphene, somebody has to make it out of graphite, and as Byron puts it, “developing the technology… that was the hard part.”
One company has gotten through that hard part, though. It “has achieved the ability to convert graphite from the ground — pretty much fresh out of the mine — into graphene,” says Byron.
How? “We’re early in the game,” he explains, “so a lot of the actual company structure hasn’t quite crystallized — if I may mix my business and scientific metaphors.” But he says the company has found success “between patents and a whole lot of other trade secrets that will never see the light of day.”
Bottom line: There are profits to be made at the source—graphene production. The company “is actually selling graphene to other users — an impressive, yet confidential list — for princely sums. That is, a lot of money per gram.”
You can claim a portion of those princely sums for yourself. But it’s best if you do so in the next two weeks… for reasons Byron makes clear here.
George Soros has slashed his holdings in GLD, the big gold ETF — after spending the last two years rebuilding his position.
Soros’ latest 13-F on file at the SEC shows he held 600,000 shares at year-end 2012 — down more than half from the total he held the previous quarter. It’s still more than he held a year ago.
John Paulson’s GLD stake remained steady at 21.8 million shares.
Meanwhile, Soros has pulled in $1 billion on falling yen bets since November, or so says “a person close to the billionaire’s $24 billion family office” who spoke up to Bloomberg.
A cool billion would equal Soros’ take from his trade that “broke the Bank of England” in 1992. Well, not counting for inflation. Speaking of which…
“Demand for our bourbon is exceeding our ability to make it,” writes Maker’s Mark COO Rob Samuels, “which means we’re running very low on supply.”
Thus is the company watering down its signature product — cutting the alcohol content from 45% to 42%.
Demand? Sounds like another case of “food fraud” to add to the many we cited last month — on the day the horsemeat-in-burgers scandal started to break, no less.
We don’t blame Mr. Samuels for putting the situation in the best possible light… but as before, we’ll chalk up the dilution of bourbon to the dilution of currency.
“PLEASE,” a reader writes in all-caps that we’ve faithfully preserved, “STOP REFERRING TO THIS MIRACULOUS DISCOVERY AS STEALING FROM GOD.”
The 5: We understand where you’re coming from… but we’re not the ones using those terms when we describe the immortalization of human cells. It’s the critics who invoke that sort of language.
Obviously, more than five weeks after our presentation first went live, it’s still stirring the pot. But the window on the investment opportunity is starting to close. “We can no longer delay going completely public with this information,” our publisher Joe Schriefer said during a brief meeting he called this morning.
Here’s the deal: First intended for our readers only, the presentation has been leaked by unknown sources and has gone viral. Fortunately, the actual secret behind it remains safe. For now.
Still, we want to protect your “first to profit” advantage… so our hand has been forced. If you want full access to the secret behind “the promise of immortality,” you must act before midnight next Wednesday, Feb. 20. You still have five days to give the idea your thorough consideration.
“Interesting concerns about drones in America,” writes one of our regulars. “Why did you not raise the same fuss when Google was doing exactly the same (well, almost, just from a car and being nondeployable, but just as stealthy)?”
The 5: As far as we know, Google Street View lives up to its name — taking its pictures from public rights of way, offering a perspective no different from someone driving down a street or walking down a sidewalk. Nor is Google backed by law enforcement or the military.
Meanwhile our “leaders” never rest: “In a major step toward opening U.S. skies to thousands of unmanned drones,” reports The Associated Press, “federal officials Thursday solicited proposals to create six drone test sites around the country.”
Supposedly, the proposals must incorporate privacy guidelines. You can be forgiven for not feeling reassured. You can take a stand… and take a small step that might make a big difference… by signing our petition.
“Please use facts,” writes a persnickety reader who takes exception to our assertion yesterday that the Patriot Act was drawn up before Sept. 11. We’ll spare you the boatload of Wikipedia text he pasted as if it negated our point.
Here’s a fact: In 1995 — two months before Oklahoma City — then-Sen. Joe Biden introduced the Omnibus Counterterrorism Act, with many provisions that ended up in the Patriot Act more than seven years later. “The bill [Attorney General] John Ashcroft sent up was my bill,” Biden said as the Patriot Act was rushed through Congress in September 2001.
Here’s another fact. “I remember,” says former counterterrorism czar Richard Clarke, “someone asking a Justice Department official how did they write such a large statute so quickly, and of course the answer was that it has been sitting in the drawers of the Justice Department for the last 20 years waiting for the event where they would pull it out.”
“With all the central banks and countries buying oodles of gold, can you please tell us what they will do with it once it’s in their vaults? I have trouble, and I’m sure I’m not alone in understanding this mystery.”
The 5: Understand it’s central banks in developing countries that are loading up. They don’t trust the dollar any more than you do. Or the euro or the yen.
“You have been consistently covering gold buying at the world’s central banks,” writes another. “I’m curious what our Fed has done in the last 10 or so years. I don’t know if you’ve ever actually specified their activity. It’s easy to assume the numbers would be close to zero.”
Officially, there’s no “activity” to “specify.” But your assumption may be valid anyway… for reasons we’ll lay out in the next issue of Apogee Advisory.
Have a good weekend,
The 5 Min. Forecast
P.S. We’re back tomorrow with your weekly wrap-up, 5 Things You Need to Know. U.S markets are closed on Monday for Presidents Day, so the weekday edition of The 5 returns on Tuesday.