May 21, 2014
- A crippling disease that affects 1.5 million Americans — the ones who survive, anyway
- From nine medications a day… to a single wonder drug that could deliver 200% gains
- Dollar deathwatch, continued: Putin and Xi pull off a last-minute deal
- Stocks rebound, while one precious metal itches for a breakout
- The still-sorry state of the American homeowner… the commodity boom, flushed away… an “extinction-level event”… and more!
Lauren Johnson takes nine medications to get through the day. “Those drugs,” she says, “include chemotherapy, an antimalarial, a beta-blocker, an anticonvulsant, corticosteroids and a drug used to treat nerve damage.”
Remarkably, she does not have cancer or malaria or any of the other diseases these drugs are intended to treat.
Still more confounding, “When people see me, they always say, ‘You don’t look sick.'” She works as an associate producer at CNN in Atlanta and rears a daughter at home. But she feels chronically awful — “like having a horrific hangover while doing two-a-day workouts… The disease has affected my brain, GI system, lungs and heart.”
The disease is lupus. “If I could write a letter to lupus, I would say ‘I want me back. I’ve had enough.'”
For all her trouble, Johnson is one of the lucky ones.
Lupus took the life of Grace Mary Lovejoy on Aug. 7, 2007 — four months shy of her 11th birthday. “I had to make the hardest decision of our lives,” her mother recalled of the moment the girl’s heart started to give way and the doctors asked whether to continue resuscitating her.
“Grace Mary was really a beautiful girl, and she had a true innocence about herself. Grace Mary was an angel in disguise.”
Her story was related to us recently by our investment director Paul Mampilly. For the record, he changed the name and the date to protect the family’s identity. What isn’t changed is the fact that had Grace Mary lived, “she would be 17 today, dreaming of her prom and going to college.”
Before we go any further, there are three things you need to know about lupus…
- 1.5 million Americans live with it
- 72% of Americans age 18-34 — the group most vulnerable to the disease — have never heard of it or have heard only of the name
- 90% of its victims are women. “If you’re a man,” says Paul, “just think about your daughter, your mother and your wife.”
Lupus is an autoimmune disorder.
“Imagine,” says Paul, “if the United States Army came to attack us instead of going to kill our enemies. Well, that’s how you should think of an autoimmune disease.
“Our body has its own built-in army called the immune system that protects us by attacking enemies, things like bacteria and viruses. When you get an autoimmune disease, it’s as if our body’s army is going to war against us. That is, instead of attacking bacteria and viruses, it comes to attack our own body instead.
“I never want to have to write about another Grace Mary again,” Paul adds. And with that in mind, he is eagerly following the fortunes of a company that’s on the verge of a genuine breakthrough that would put lupus in its place.
He calls it a “Phase 3 Rocket.” That means clinical trials have reached an advanced state after a two- or three-year process. “A company can announce results of a drug only once the trial is complete,” says Paul. “And we know that a result is coming soon.
“Everyone that participates in a clinical trial, from the doctors to the patients to the CEO of the company, is required to keep things under wraps until the official announcement is made. You can go to jail for insider trading if you violate these rules. No one knows the exact day when the trial results are going to be announced — not even the CEO of the company. This means that the results may be announced tomorrow. Or next week. Or it may take longer, maybe even as long as a month.”
Many investors will pile in once the announcement is made. “I can tell you from 25 years of experience that by then, it’ll be too late,” says Paul. To make the big money from a Phase 3 Rocket trade, you have to buy the stock before the news is announced.”
The potential gain? A quick triple. And the gift of life for lupus’ victims.
[Ed. note: Paul is also keeping tabs on a company whose breakthrough antibiotic is rapidly approaching Judgment Day from the FDA — no later than next Monday, going by the “magic calendar” he’s developed. If you’re not familiar with it, time’s a-wasting.]
U.S. stocks have recovered most of yesterday’s losses, the S&P 500 bouncing back to 1,884 as we write.
The indexes tanked yesterday after two Federal Reserve governors gave “hawkish” speeches anticipating an end to the easy-money heroin. But all’s forgiven this morning as traders anticipate the release of minutes from the Fed’s April meeting this afternoon, around the time this episode of The 5 hits your inbox.
Traders are also chewing on retailers’ earnings releases; Target delivered a “miss,” despite analysts lowering their expectations after the firm’s credit-card hacking fiasco.
Gold is losing ground, though not by much. At last check, the bid was $1,289.
Silver’s flat, at $19.39, but platinum is up three-quarters of a percent, to $1,477. “This forgotten precious metal is quickly sneaking toward a powerful breakout,” advises Greg Guenthner of our trading desk.
“The deal that wasn’t”… suddenly is.
That’s about all we know for certain in the aftermath of the first meeting between Russian president Vladimir Putin and Chinese president Xi Jinping on Chinese soil.
The problem when Xi Jinping wears a suit coat is you can’t tell how high his pants are…
As we’ve mentioned for the past week, the two planned to sign a deal to export Russian natural gas to China. But yesterday, it appeared the final negotiations were falling apart.
“That was a shock,” said a post at Foreign Policy’s site last night, “a blow to Putin’s objectives and a reminder of how much China has the upper hand when it comes to gas deals with Europe’s biggest gas supplier.” You could practically hear the Beltway class, ever hostile to Putin, clinking their martini glasses in celebration.
Supposedly, the two sides couldn’t come together on a price. Russia wanted the price it charges European customers — about $12 per million BTUs. China wanted to pay what it pays to its Central Asian suppliers — roughly $10 per million BTUs. (The U.S. price is about $4.50, thanks to our shale bounty.)
But as dawn broke on the U.S. East Coast, word came from Shanghai the deal was done — price not disclosed, although the total value of the deal is $400 billion over 30 years.
Also not disclosed is whether the trade will be conducted in dollars — the world’s reserve currency — or in rubles and yuan.
But in the meantime, the negotiators in Shanghai also came to terms on boosting their nondollar trade in other goods.
Or as a joint statement said: “The sides intend to take new steps to increase the level and expansion of spheres of Russian-Chinese practical cooperation, in particular to establish close cooperation in the financial sphere, including an increase in direct payments in the Russian and Chinese national currencies in trade, investments and loan services.”
Russia’s “de-dollarization” plan we mentioned last week is proceeding apace.
Crude prices are pushing $104 this morning, the highest level in a month.
The Energy Department’s weekly crude inventory report showed a big drop in recent days. But U.S. production is now moving at its fastest clip since 1986.
For the record: Nearly 10 million homeowners remain underwater on their mortgages — owing more than the underlying property is worth.
That’s 18.8% of all U.S. homes carrying a mortgage during the first quarter, according to Zillow. The only saving grace is the figure a year ago was 25.4%.
Maybe the commodity boom really is over now.
The seven-year history of this daily e-letter is in part an ongoing chronicle of bizarre thefts of valuable commodities — fryer grease from restaurants, hay bales from parched Texas fields, lead from the roofs of Anglican churches, copper tubing from a TV transmitter (35,000 volts of electricity? No problem), etc.
But there’s been a drought of such stories for more than six months now. The best we’ve found of late is an item from Seattle, where the desired commodity was… porcelain.
Police say it goes like this: A couple walks into a Subway for sandwiches. They place their order, and the man heads to the restroom. He takes so long his wife knocks on the door and finally leaves without him.
“When the man eventually emerged from the bathroom,” according to a Reuters account, “he hurriedly exited the store in possession of a large plastic garbage bag, police said.”
Then an employee discovered the toilet tank was missing. Estimated value: $550.
The thief remains on the lam. But whenever he needs to be on the throne, he’s all set…
“One thing these people may not understand is that if the dollar’s reserve status is eliminated, the U.S. economy will collapse, and with it the entire world economy,” a reader writes.
We’re not sure which “these people” he’s referring to, but as we’ve been saying for days — including today — it’s a valid concern if the likes of Russia and China are looking to get out from under the dollar’s shadow.
“There is simply too much debt in the world,” our reader goes on. “It can never be paid off, because there is not enough wealth in the world to pay everything off. With it will go the entire social and political structure of every nation in the world.
“When a country like Argentina or Mexico defaults (which they both have done in the not-too-distant past), the debt causes only a temporary discomfort in the world economy (like a gas pain), but when the U.S., the EU, Japan and practically every other country in the world defaults, the results are catastrophic. Even the countries without debt will suffer as their markets close down and world trade grinds to a halt.
“International trade has made all countries so interdependent that none can escape. The only possibility (and it’s only a possibility, because matters have gotten so out of control) is to follow Ron Paul’s lead and reinstate the gold/silver backing for the economy.”
The 5: “It’s too late,” says Richard Duncan — the deep-thinking author of books like The Dollar Crisis. We had the pleasure of his company at lunch yesterday.
He totally gets how the dollar losing its gold moorings was the beginning of the end. He gets that ever-expanding credit is the only thing that keeps the economic machine humming (more or less) now.
But it’s not, he submits, a simple matter of withdrawing that credit, ripping off the Band-Aid in the form of a sharp but short depression like 1920-21, and moving on. Do that now and it would be — we think he was exaggerating for effect, but we can’t be sure — “an extinction-level event.”
The only choice we have, he says, is to pile on more debt. Judging by Japan’s experience the last 25 years, he figures the politicians could double the national debt to $34 trillion and get away with it. “But what if instead of building bridges to nowhere, as Japan did, we committed to developing a cancer vaccine in the next 10 years? The money’s going to get spent anyway.”
On that last score, he has a point…
“So Putin having served in his country’s spy organization makes him a thug?” writes yet another reader taking issue with a fellow who wrote in on Friday.
“Elder ex-president Bush headed the CIA and expended military intervention beyond our shores. What does that make G.H.W. Bush?
“Let’s hope, however, that Mexico’s current leaders don’t try to recover Texas.”
“Putin may be portrayed as a thug,” adds one more, “but he did score two hat tricks in his recent hockey game, along with his four assists.
“I am beginning to believe he may have stayed in a Holiday Inn Express.”
The 5: [Insert rimshot here.]
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. “The number of companies reporting concerns about cybersecurity to U.S. regulators has more than doubled in the past two years,” concludes the Financial Times after studying the 10-K forms every publicly listed firm files with the SEC.
Fully 1,174 companies mentioned cyberthreats in their filings.
As we’ve said for more than a year now, cybersecurity is big business. The big growth phase remains in its earliest stage. And the government is directing the biggest flows of money.
Know where that money is flowing and you have a formula for gains of 12,428%. Because that was the kind of money to be made the last time the feds aimed a firehose of money like this.
If you missed out then, here’s your second chance. Grab it now.