When All Else Fails…

May 28, 2013

  • Rapid-fire breakthroughs: For the first time, 3-D printing saves a life
  • From Byron King’s lips to The Wall Street Journal’s ears: How U.S. fracking makes for a fractious OPEC conference
  • So much for the surplus: Sprott’s David Franklin with the bull case for platinum
  • Mixing business with pleasure: The not-so-definitive survey on sex in the workplace
  • Making sense of Guenthner’s $1,100 gold call… reconciling a depression and a new industrial revolution… reader plays “If I were king”… and more!

  “April and Bryan Gionfriddo’s 6-month-old son, Kaiba, wasn’t breathing, and the prognosis wasn’t good.”

U.S. News reports he had what’s called tracheobronchomalacia — which causes the windpipe to collapse.

“Quite a few doctors said he had a good chance of not leaving the hospital alive,” said April. “At that point, we were desperate. Anything that would work, we would take it and run with it.”

She reached out to two doctors at the University of Michigan: Glenn Green, a professor of pediatric otolaryngology, and Scott Hollister, a professor of biomedical engineering.

What happened next was so amazing it landed in the New England Journal of Medicine last week.

“Honestly, we had never heard of 3-D printing before until they mentioned it at the hospital,” Gionfriddo said. “At that point, it seemed like the only thing that could work. There was no other option.”

Green and Hollister needed FDA approval to perform a surgery with a 3-D printed implant — especially because it was a life-or-death situation. They got it when the Gionfriddos signed a waiver. Then the doctors sprang into action.

“Hollister took a CT scan of Kaiba’s chest and, using computer design software, created a splint that would perfectly attach to his trachea. Within a couple days, the device was ready to be surgically implanted.

“Within minutes of having the splint implanted, Kaiba began breathing. Within three weeks, he was completely off a ventilator.”

A 3-D printed model of 6-month old Kaiba’s trachea, bronchi and the lifesaving splint.

We’ve covered other uses of 3-D printers in the pages for a while, but this is the first instance of a life saved. Now Dr. Green is building on his success. According to U.S. News, he “is working on creating nose, ear and jawbone replacements for children.”

“You can make complex, customized things for a patient’s anatomy, and you can build them rapidly from a CT scan image… I think as the technology advances,” he said looking to the future, “you’ll see whole engineering groups at some hospitals.”

[Ed. Note: As much as we marvel the capabilities of 3-D printing, the real “game changer” is how they open up the realm of manufacturing to anyone with a good idea and an Internet connection. “You don’t need to invest in a massively expensive plant or acquire a vast workforce to turn your ideas into reality,” writes Chris Anderson in Makers. “Manufacturing new products is no longer the domain of the few, but the opportunity of the many.”

Mr. Anderson is among the distinguished guests who will take the podium July 23-26 at the Agora Financial Investment Symposium. Through midnight Friday night, discounted registration remains available. We’d love to see you there… and we’d hate to see you pay full price when you don’t have to.]

  Stocks are roaring higher as traders return to their screens this morning, bleary-eyed and sunburned.

At last check, the Dow has tacked on more than 200 points, to 15,515. Small caps are outperforming; today might finally be the day the Russell 2000 notches its first close above 1,000.

The day’s numbers are sunny and bright: The Case-Shiller home price index has now registered four straight monthly gains of more than 1% — something that last happened in 2005. Consumer confidence as measured by the Conference Board sits at its highest level since February 2008.

For whatever reason, traders are choosing to see these numbers as a sign of fundamental economic strength… instead of a sign that the Federal Reserve will ease up on QE soon. We fully expect an opposite reaction to good numbers on one or more trading days before the next Fed meeting June 18-19. Heh…

100  Crude has rallied more than 1% this morning. A barrel of West Texas Intermediate (WTI) fetches $95.39.

Brent crude — a better gauge of what most of the world pays — is at $104.23.

  “OPEC members gathering on Friday in Vienna will confront a disagreement over the impact of rising U.S. shale oil production,” reports this morning’s Wall Street Journal.

Hmmm… Where’ve we heard something like this before?

Oh, yes: “Every new barrel of WTI and Canadian oil — of which there are more and more, thanks to fracking — displaces a barrel of OPEC oil in the North American market,” said our Byron King in this space nearly two months ago. “OPEC oil exporters hate $100 oil,” he added on May 7, “because most of them need much higher prices to balance their national books.”

African OPEC members are feeling the pinch worst, Nigeria’s oil minister calling U.S. shale a “grave concern.”

The betting right now is that OPEC won’t cut production quotas on Friday — mostly because Saudi Arabia and the other Persian Gulf monarchies “are the only OPEC members with the flexibility to cut production,” says the Journal… and they’re still holding up OK in the face of U.S. shale.

In fact, Saudi Arabia’s oil exports to the U.S. grew 14% last year. Hmmm…

  Not much to say about precious metals: The bid on gold is $1,381, silver, $22.27.

Platinum — which has generally traded higher than gold since gold’s mid-April smash — trades at $1,461.

  The supply-demand balance for platinum group metals (PGMs) is starting to get out of whack.

Sprott Asset Management’s David Franklin — making a return appearance in Vancouver this year — cites a new report from Johnson Matthey, the giant precious metals refiner. “The platinum market was in deficit by 375,000 ounces in 2012,” he writes. “The palladium market was also undersupplied but by a much larger margin of more than 1 million ounces.

“For platinum and palladium, this was a reversal of the position a year earlier, when both were in surplus. Gross demand for these metals continues to recover from the slump in 2008.” Demand in the automotive sector — which uses PGMs for pollution control — continues to grow, despite a huge slump in European auto sales.

“While demand is expected to remain solid for 2013, the bull case for the PGM story is on the supply side,” says Mr. Franklin. “As we analyze the state of the miners, their situation is getting progressively worse, even more so than we expected.” Costs are rising at a frightening rate: At current prices, one of South Africa’s mining giants is losing nearly $300 per ounce produced.

Ouch… Bad news for the miners, good news for the bullion.

  Meanwhile, the cat has been let out of the bag in the business world…

“Sex at work,” Business Insider reports, “is a lot more common than most people think.”

It all began with a BusinessWeek article titled “The Truth About Sex and Work.” Observed columnist Liz Ryan: “About once a month, I hear from a distressed human resources chief who’s dealing with some kind of amorous shenanigans involving his or her executive team…”

In response, Business Insider took it upon itself to conduct an eye-opening sex-at-work survey with 2,500 participants. The voices have spoken:

  • Nearly 85% of respondents believe that colleagues should be allowed to have sex
  • 65%, though, think that managers shouldn’t be allowed to have sex with subordinates
  • 92% believe Human Resources shouldn’t need to know.

Also, most participants thought that their colleagues have had sex with a colleague. And more than half of them have had sex with a colleague.

Of course, work can get in the way of sex too…

“I just wish we could expand the conversation to acknowledge that the two worlds we inhabit,” Ryan concludes — “the policy-and-rule-driven business world and the messy, sticky and random human world — really aren’t as distant as we pretend they are.”

Note well: This was not a scientific survey, but rather an online poll of Business Insider readers who had nothing better to do over Memorial Day weekend…

  “So if all that you say is true,” a reader writes after several bullish items on gold last week, “why is your Rude Awakening analyst telling us it will go to $1,100?”

The 5: Because he’s looking at the charts — which is what we pay him to do.

From the September 2011 high at $1,920 to the April 2013 low at $1,320, we’re looking at a 31% drop. That’s still mild compared with the nearly 50% drop from 1974-76 — from roughly $200 to $100 — which we’ll remind you was on the way to $800 in January 1980.

So a fall to $1,100 would not at all surprise us… especially if India’s government continues to crack down on gold imports, suppressing demand. Now, that’s a buying opportunity!

  “Ah, now, this is the kind of info we can sink our thoughts into,” says a reader. “You said a ‘depression’ and a ‘new industrial revolution’ taking place at the same time…

“That can get the juices going in a person who knows things are going to H-E-double-L. Sure, you and I cannot predict the precise time of the demise of the American and European currency, but any gutsy comments like the above validates my already made-up mind that it’s going to happen.”

The 5: You’d have good company if you joined us in July in Vancouver. Our theme this year is “A Tale of Two Americas: Seeking Opportunity at the Crossroads of the Great Energy Revolution, Radical New Technologies and the Crushing Debt Crisis.”

We’ll sort out the contradictions in search of the best places to invest right now. Seats are still available, but filling fast.

  “Is it just me,” a reader inquires, “or is the ‘IRS scandal’ just common sense?

“Before giving tax-free status to a person or entity, doesn’t it make sense to ensure they deserve it? Doesn’t it make sense to look at groups typically against taxes a bit closer than groups that generally don’t express disdain for taxes?

“If I ran the IRS, I would even audit based on income level and party affiliation. Given that Republicans generally — with exceptions, of course — hate taxes, it is likely they are looking for every possible angle to avoid them and may accidentally or intentionally take a few breaks that don’t apply. Additionally, upper-middle-class Democrats tend to be a bit more honest and socially conscious when it comes to money and taxes.

“The lower-income Democrats are a different story, but auditing them doesn’t make much sense. I would definitely audit businesses and high-income individuals from both parties, but investigating middle- to upper-middle-class Democrats seems like a waste of taxpayer money, while investigating the other side is likely to yield a return on investment. Obviously, I don’t have broad-based statistics on who cheats on their taxes, but based on people I know, it is the conservatives and business owners that tend to bend the rules.

“Both parties are a disaster, so my view is hardly due to home bias. I just don’t see profiling as an automatically bad thing. It can be taken too far, but a bit of profiling can help cut costs or yield better results.”

The 5: “If I ran the IRS…” says it all right there…


Dave Gonigam
The 5 Min. Forecast

P.S. Some of the money rushing into stocks today is rushing out of Treasuries. The yield on a 10-year note is up to 2.11%, the highest in more than a year.

On April 8, Options Hotline editor Steve Sarnoff recommended a bearish play on TLT, the long-term Treasury ETF. Since then, TLT has slipped 6%… while Steve’s option recommendation has soared 103%.

Never traded options before? Using Steve’s method, you could make money on your very first trade.


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