April 1, 2014
- Bio-programmers rewrite genetic code to remove buggy wetware, cure HIV
- March manufacturing: Can we all shut up about the weather, finally?
- Uncle Sam’s inevitable default: Read the numbers and weep
- The ultimate in Chinese wealth preservation… made in the USA
- “Eat the rich” debate reaches ridiculous levels
“I believe this technology will eventually change everything,” says our Ray Blanco. “And it has the potential to break through to the mainstream consciousness this year.”
It’s called gene editing. Among many other things, it has the potential to cure HIV. But that’s only the start.
Before we proceed any further, a confession: Ray shared this prediction at the start of 2014. But we never passed it along to you. Your editor can be a little slow on the uptake when it comes to scientific matters. “Gene editing”? What’s the big deal about that? So Ray patiently sat me down recently to explain what’s at stake — both the science and the profit potential.
I came away convinced… and maybe you will too.
“We’ve been editing genes for years,” Ray began. “Biotechnology is an information technology, even if it works with wet stuff, rather than silicon.
“We’ve used it to improve crops, thus beginning to realize a dream of Green Revolution hero and Nobel Prize winner Norman Borlaug.”
Borlaug, who died in 2009, is sometimes credited as “the man who saved a billion lives” by developing new crop varieties and growing methods… and putting them to work both in the West and the developing world.
“We’ve also been gene editing in the lab in all kinds of organisms,” Ray goes on. “A lot of biomedical research wouldn’t be possible without gene editing technology. We modify genes to study diseases in animals and use those data to gain knowledge so that we can treat the diseases in humans.”
The cutting edge of current Alzheimer’s research involves mice bred to have a certain genetic mutation. “The new future drug that might save your life,” says Ray, “could very well owe its existence to gene editing technology’s help.”
“But what about human disease itself?” says Ray, taking matters to the next level.
“We know that a lot of disease has a genetic cause. But to date, we’ve been limited to treating the symptoms of so-called bad genes. We fiddle along the edges, but the core problem remains.”
The current state of the art — technologies like antisense and RNA interference — only modify the way genes are expressed. “If you have a genetic disease that can be treated using this technology, as exciting as it is, you will need to receive the therapy for the rest of your life. Those errors written in the code of life, your DNA, remain, and if you stop receiving the drug, the problems return.
“But what if we could strike at the root? What if we could, like biological software engineers, rewrite the bad code instead of temporarily patching the aftermath? All the code and data are written in long protein strands.”
“Permanently fixing bad code on those strands might cure a person for life,” says Ray.
OK, that’s exciting. So what’s the near-term catalyst, I asked Ray? What’s going to happen this year?
Ray pointed to a recent paper in The New England Journal of Medicine. “The idea,” he says, “is to use gene editing to cure HIV.”
Not treat. Cure.
How does it work? “We’ve discovered a tiny percentage of the population out there that isn’t susceptible to HIV. Their immune systems’ T cells are, for lack of a better word, immune to infection.
“HIV uses a couple of gateways to get into T cells, and one of these gateways is coded by a gene called CCR5. Individuals that have a specific CCR5 mutation have a different ‘lock’ on the surfaces of their T cells that HIV can’t open. HIV’s ‘key’ is shaped to fit the more common variety of lock. It can’t fit the mutated version.”
A few years ago, a leukemia patient who was also infected with HIV got a bone marrow transplant. The transplant cured the disease. Turns out the marrow donor had that CCR5 mutation.
Now scientists seek to replicate the effect — editing genes using “zinc finger nucleases.”
Ray says you can think of them as “a variety of different Lego blocks. They can combine into any shape or sequence in order to correspond to whatever gene we want to change. The constructs are highly specific and work only on the desired genetic sequence.”
So far so good with HIV patients: Their HIV counts are falling, even without the use of the most common HIV drug cocktail.
“If we can go in and edit genes,” Ray sums up the long term, “it means we can cure genetic diseases that we inherit from our parents.” And the profit potential, he says, begins now.
For access to all of Ray’s Technology Profits Confidential recommendations, look here.
Stocks are in the green this morning… and once again, it’s technology and small caps leading the way up.
The Nasdaq is up more than 1% as we write, to 4,247; the small-cap Russell 2000 is up 1%, to 1,184.
The Dow and the S&P are laggards, each up less than a half percent; that said, the S&P is flirting with another record, at 1,880.
It being the first of the month, traders have scads of manufacturing numbers to chew on. In each case, numbers higher than 50 indicate expanding factory activity; below 50, contraction…
- China: Up barely from 50.2, to 50.3. That’s the official number; a separate measure kept by HSBC clocks in at 48, an eight-month low
- Eurozone: Down slightly from 53.2, to 53. The number has been above 50 for nine straight months
- United States: The ISM Manufacturing survey jumped from 53.2, to 53.7.
With any luck, we’re through hearing about the rough winter affecting economic numbers for the worse.
Whoops, check that — the March unemployment numbers are due Friday. Heh…
“The Inevitability of a U.S. Government Default.”
That’s not the name of a talk at the World War D conference in Melbourne this week… but it might as well be. In fact, it’s the headline of an alarming article in The Independent Review, the quarterly journal of the Independent Institute.
Uncle Sam will default on the national debt, assert economists David Henderson and Jeffrey Rogers Hummel. “The default could range from outright repudiation to partial repudiation,” they write.
The problem is that category of federal spending known for better or worse as “entitlements.” The Congressional Budget Office forecasts that spending on Social Security, Medicare and the federal component of Medicaid will reach 35.7% of GDP by 2037.
Since 1950, federal revenue has topped 20% of GDP only once. Indeed, it’s nigh impossible for Uncle Sam’s tax take the last 60-odd years has always been in a tight range between 15-21% of GDP.
As matters stand now, Medicare Part A is set to become insolvent in 2026. Social Security won’t be far behind, 2033.
True, the feds could tap into general revenues to make up the gap… and send the deficit skyrocketing.
But imagine the response: “If investors respond by requiring a risk premium on Treasuries,” Henderson and Hummel write, “the unwinding could move very fast, much like the sudden collapse of the Soviet Union or the more recent fiscal crisis in Greece. Politicians will be unable to react fast enough to close the gap, and there will be no one able to bail out the U.S. government, unlike what happened with the Greek government.”
Yep, these guys would fit right in with the likes of Jim Rickards at the World War D conference. The “D,” by the way, stands for… well, you name it: debt, devaluation, deleveraging, default, depression and digital warfare.
The expert speakers aren’t wanting for solutions you can use to protect yourself. And even though you’re not Down Under this week, you can be the next best thing — on the list to get access to high-quality recordings from all of the important sessions. Here’s where to sign up.
Gold can’t catch a break; at last check, the bid is down to $1,282.
“People are getting money out of mainland China and sticking it here,” says Mel Wong.
Mr. Wong runs the local Realtors association in the West San Gabriel Valley of southern California. And housing prices in many pockets of “SoCal” have eclipsed their 2007 peaks, thanks to an influx of Chinese buyers looking to escape China’s own housing bubble.
Chinese buyers account for 12% of all U.S. homes purchased by foreign citizens last year. More than half of those buys were in California. And two-thirds of the buyers paid cash.
Developers are catering to their unique needs — detached studio apartments for visiting relatives, and feng shui design. The Los Angeles Times describes one home in Chino: “You can’t see the back door or a staircase from the front door, both of which are thought to create imbalance. Lennar sales representative Michael Lua also noted that the sink and refrigerator in the main kitchen are not directly across from the oven and range, which would create friction between water and fire elements.”
In a few cases, buyers are biting off more than they can chew. A palatial home near Riverside looks just as affordable as a cramped condo in Shanghai… until you account for yard maintenance, pool maintenance and property taxes (of which China has none). Oops…
“While I’ll agree that shenanigans will always remain with trading,” a reader writes after our discussion yesterday of high-frequency trading, “I do think that HFT, something not available to most, is a rather unfair feature provided to those with the resources to develop the software, purchase the hardware and gain the access to an exchange’s trades.
“That unfair timing advantage could be eliminated or certainly reduced by a 25-cent or more tax on each share traded via a computer, and I don’t mean my personal computer that simply instructs some broker to try and buy/sell some shares.”
The 5: But where do you draw the line on computer power?
The problem starts with the SEC, which allows the exchanges to share all the data about unexecuted incoming orders. From there, “stealing pennies” becomes inevitable.
And as Barry Ritholtz wrote yesterday, “the losers are the investors — by way of their pension funds, retirement accounts and institutional funds. The HFT’s take — the ‘skim’ — comes out of these large institutions’ trade executions.”
“Geez,” a reader writes, “you managed to totally miss (or sidestep) my point. Let me try to spell it out for you.”
[OK, we’re game…]
“A reader made the point that there was no mass exodus from the workforce by the rich at a time when the top tax rates on the high-income brackets were significantly higher. You dismissed the point by throwing out these supposed more deductions, loopholes, etc. which infers [sic, he means implies] that the average tax rates on the rich were about the same then and now.
“My point is that the average tax rates on the 1%/0.01% income folks were much higher when the marginal rates were also higher — ergo the argument that higher tax rates would destroy the incentive for the rich to work does not seem to be supported by the data — ergo the reader had a valid point.”
The 5: Oy. We have no idea at what tax rate “the rich” might cease working. The fact their forebears once paid higher rates is suggestive they might put up with similar rates, but there’s no guarantee.
But why the obsession? Clearly, you have some ideas about who constitutes “the rich” and what amount constitutes their “fair share.” But be careful if your objective is to maximize tax revenue. As the chart above shows, Uncle Sam’s take relative to the rest of the economy is going to remain more or less constant, no matter how much you eat the rich.
“I think everyone is missing the point here,” writes a reader keeping his eye on the ball: “the property rights we all are entitled to.
“If some of the people are in favor of ‘taking’ or taxing someone’s wealth simply because they can, they should be fearful of what might be taken from them in the future. We have already started down the slippery slope of taking from some of our citizens to give to others, and it will get worse.
“In reality, we are paying a reverse wealth tax today, but most are not aware of it. The zero interest rate policy has been taking the purchasing power of all Americans and transferring it to the 0.01%, but that fact alone does not mean we should tax their inheritance. What we should be raising our voices against is the manipulation of the economy by the government that is enriching these few.”
The 5: Can I hear an amen?
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. Uncle Sam’s default may be inevitable… but that doesn’t mean you have to go broke in the process.
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