June 25, 2013
- Feral hogs, Federal Reserve head fakes and why QE5 might be just around the corner
- “We were up and running in an hour”: The scourge of counterfeit drugs, and the company that could put the scammers out of business
- How to goose the jobs numbers: “Tens of thousands” implementing Obamacare. PRO-level readers have a way to play it…
- The virtues of Ecuador, continued… a gold spat breaks out at our blog site… a plea for “zero dollars”… and more!
“Feral hogs were first introduced into Texas by the explorer Hernando de Soto in the mid-1500s,” according to the city of San Antonio’s Animal Care Services agency.
“However, it was not until the 1980s that populations of feral swine literally exploded across the state due to a number of reasons including supplemental wildlife feeding and hog relocation for hunting purposes.”
So feral hogs are a big nuisance in Texas: For non-Texans, it is this essential background that was missing from the big financial story yesterday.
“I do believe,” Dallas Federal Reserve chief Richard Fisher told the Financial Times, “that big money does organize itself somewhat like feral hogs.
“If they detect a weakness or a bad scent, they’ll go after it.”
Fisher tends to make a little more sense than your typical central banker — well, up to a point. But yesterday he set out on a mission — to play mind games with the market.
Here’s how the FT story began: “A top U.S. central banker on Monday warned the ‘feral hogs’ of financial markets against trying to force the Federal Reserve to shelve plans to slow its bond buying…”
Fisher “warned that markets should not think the Fed would end up propping up the economy indefinitely, or that it could be pushed to keep buying Treasuries at the same pace and, in so doing, keep inflating asset price bubbles.”
How Richard Fisher views Mr. Market…
Sorry, we don’t buy it. Fisher has a reputation among Fed governors as a “hawk.” Naturally, he’s going to play bad cop in the interminable good-cop-bad-cop routine the Fed performs while trying to manage market expectations.
“From my perch,” says our trading specialist Jonas Elmerraji, “it looks like QE5 is right around the corner!”
In Fisher’s remarks, Mr. Elmerraji detects the kind of scent that comes from places where domestic hogs are kept in large numbers.
“This chart tells the whole story,” he says. It’s a variation on a chart we shared last week. This is the Fed’s 5-year break-even inflation rate — a formula Fed wonks use to gauge where investors believe inflation will be five years from now…
“It’s a metric that I’ve been using as a QE predictor for a while now,” says Jonas. “And it’s been a damn good one.
“You see, Ben Bernanke isn’t trying to maximize jobs, boost GDP growth, spur on stock prices, or even kill gold prices. Instead, he’s just targeting this narrowly defined measure of inflation.
“Every time that inflation gauge dipped below 2.2% between 2008-2011, the Fed announced a QE program. Obviously, something changed in 2012 with QE3 and QE4 — the Fed got more aggressive with their buying. Instead of waiting for inflation to dip below that 2.2% red line before announcing another round of QE, they started buying on higher lows to try to give the economy a shot in the arm.
“Guess what? It didn’t work.
“Right now, inflation is crashing back down toward that red line again. To me, that suggests QE5 is right around the corner, no matter what the Fed’s statements imply.”
And no matter whether this number is a valid measure of your cost of living, we hasten to add.
“Whether you hate QE or you love it,” says Jonas, “the implications are good for stocks.”
Stocks have found their footing for the moment. The major indexes are up about half a percent this morning — the Dow at 14,726, the S&P at 1,580.
Traders are chewing on several numbers that point to a continued “recovery,” however weak…
- Durable goods orders: Up 3.6% in May, says the Census Bureau. The number has grown three of the last four months — pumped up this time by civilian aircraft
- Case-Shiller home price index: Up 1.7% in April, which adds up to a staggering 12.0% year-over-year increase
- Consumer confidence: At its highest level since January 2008, says the Conference Board.
“You can buy any drug you can imagine,” Dr. Bryan Liang tells his local newsreel KGTV-10News.
Dr. Liang, a professor at the University of California in San Diego and director of the San Diego Center for Patient Safety, is an expert on counterfeit drugs.
Liang and his group set up a fake pharmacy online that was retrofitted to look like many of the online peddlers of counterfeit drugs. Their fake pharmacy called ‘No prescription drugs’ has a “domain name, Facebook page, Twitter account and plenty of willing customers,” 10News reports.
“We were up and running in an hour,” Liang told the rag. “We had an average of 100 hits a month for each of our online pharmacies from 12 countries.”
Here’s a shocking statistic: According to the National Association of Boards of Pharmacy, of the 10,000 drug websites they reviewed, 97% of them were peddling counterfeit or substandard medications.
Also, The National Crime Prevention Council and The U.S. Food and Drug Administration, after studying the drugs themselves, found these dangers most prevalent:
You could end up ingesting extremely toxic chemicals: Some of the counterfeit drugs were found to contain fillers such as drywall, antifreeze and yellow highway paint.
You never know what you’re getting: Some of the counterfeit drugs tested contained three times the active ingredient of their noncounterfeit counterparts. In a recent case, counterfeiters emptied bottles of the anti-psychotic drug Zyprexa, replacing them with aspirin.
You could end up getting drugs that are too weak: Some fake drugs contain some active ingredient, but are subpotent. Subpotent drugs are especially dangerous in the treatment of illnesses like HIV and malaria.
You could get nothing at all: Some drugs are just chalk or water. A counterfeit version of Serostim, for example, a growth hormone drug for AIDS patients, was found to have no active ingredient at all.
The worst part? Patients can’t tell the difference, says Liang.
“They’d have to go through a laboratory,” Dr. Liang concludes. “The stuff looks perfect.”
[Ed. Note: Dr. Liang met up with former FBI agents and drug experts at an annual conference in San Diego last month to try to come up with a solution. Although we’re still scoping out the details, among the solutions discussed, we’re hard-pressed to believe that one company’s revolutionary technique wasn’t on the list. We’ll fill you in on this company more tomorrow. In the meantime, you can learn how this company could solve this problem in a heartbeat — and make investors wealthy — right here at this link.]
The number of people whose job is to implement Obamacare is already in the “tens of thousands,” according to an analysis by Reuters.
Precise numbers are hard to come by: The Department of Health and Human Services wouldn’t respond to a Reuters query. Nor would the scads of companies who’ve lined up tens of millions in contracts.
But the wire service reckons its estimate is safe when you consider only the state offices that will run the vaunted “exchanges” — you know, the ones that are supposed to make buying health insurance as simple as booking a flight on Orbitz… heh — and thousands more are yet to be hired by the IRS and assorted nonprofits.
“The number of such workers, obtained through documents and interviews with officials, consultants and contractors, could be significant enough to produce a modest, if temporary, boost to employment across several industries,” Reuters suggests.
We can’t help but wonder if most of the jobs will be part-time so the employers won’t have to furnish health insurance…
One thing’s for sure: The contractors are cleaning up: Among the deals disclosed last week by the Government Accountability Office…
- $88 million to GCI Federal Inc. for information technology work
- $55 million to Quality Software Services for a “data hub” to support the exchanges
- $10 million to public relations giant Porter Novelli to spread the word and encourage the uninsured to sign up.
“The only thing everyone seems to agree on about Obamacare is that it will be unpredictable,” says our Dan Amoss. “And unpredictability breeds confusion.” One company is set to help employers cut through that confusion and profit handsomely: PRO-level readers can scroll down to learn its name right now. If you haven’t gone PRO yet, you can do so at this link.
“Snowden better stay in Russia,” a reader writes after yesterday’s episode, “or some other country that gets no aid from the good ole’ US of A.
“Ecuador, I’m afraid, you get way too much aid from USA and they will cut you off if you don’t return him! You’ve been warned, any of you little third-world countries that are thinking of hiding this ‘criminal.'”
The 5: We’re not sure how much aid Ecuador gets, but it’s surely less than it used to be. President Rafael Correa likes to poke his finger in Washington’s eye, and he doesn’t do it in a buffoonish way like the gone-but-not-forgotten Hugo Chavez.
In 2007, the Bush administration was trying to renew its lease on the Manta air base, the better to wage the “war on drugs.” Correa’s reply: “We’ll renew the base on one condition: that they let us put a base in Miami — an Ecuadorean base.”
The lease expired and the last U.S. troops left Manta in 2009.
“Lining up to buy gold in 1980 in the USA was a sign of the top,” writes a reader at our blogsite. “Chinese customers lining up is the 2013 version.
“See you at $1,000 per ounce while the Dow, or as I call it MFST et al., is at 16,000.”
“Don’t forget,” another writes in response, “those lines are NOT in the USA… our enlightened citizens are instead lined up at the local ‘We Buy Gold’ store to exchange their jewelry for fiat at about 15-20 cents on the dollar.
“Sure, gold may soon see $1,000 again like you say, and personally I hope it does so I can buy more at a better price, but don’t get too smug yet about current prices being a ‘top.’ A little panic in U.S. banking could erase all the past two-years’ losses in a few weeks.”
“The warnings,” a reader writes after our item about wacky warning labels yesterday, “are less about safety and reality, but more about lawyers, which California has in excess abundance.
“Even with all the warnings plastered over exercise machines (for instance), look back at your own comments concerning Atlas Shrugged movie backer John Aglialoro and his company-by-theft Cybex, who got sued in New York state by a woman who pulled a machine down on top of her by using for something it was not intended.
“Initial court ruling of $44.5 million later reduced to ‘manageable’ $19.5 million. (And this considering that a young boy in New Jersey, equally crippled by a bully, got a mere $4 million.)
“Thus, eat plastic worms at your own risk — especially if they have barbed hooks already in them. Who would have thought so?”
“Can you print up more of Chris Mayer’s ‘Zero Dollar’?” a reader inquires.
The reader is a subscriber to Chris’ entry-level newsletter Capital & Crisis. Chris is just back from a sojourn to Spain. Among the attractions — an exhibit in Madrid by the Brazilian concept artist Cildo Meireles…
“Circulating those around will really advertise the point,” our reader suggests. “We’ll leave them at coffee counters and libraries.”
The 5: Optimistic, you are…
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. Could a brand new kind of “plan” replace your 401k? We call it the “shadow pension” and it’s already showing Americans how to collect up to three fat income checks per month — 100% tax-free. Click here for details…