October 3, 2014
- Just when we’re ready to mock the Ebola hype…
- What the government (probably) isn’t telling us about Ebola
- How Ebola and the “Animal Rule” will alter money flows this month
- But wait, there’s more: Ebola and the possibility of martial law
- Black clouds on the silver lining of this month’s jobs report
- Readers take on oil exports, “fishing forecast” trading strategies, financial “snowflakes”… and more!
“With our government just clueless about this crisis, once again it falls to the pundit sector to solve it,” quipped Stephen Colbert last night on Comedy Central.
Colbert had great fun with the media frenzy over Ebola — to wit, the title his writers gave the coverage…
Among the highlights — a clip of an infectious disease specialist appearing yesterday morning on Fox & Friends. “Ebola is… very infectious,” she patiently explained, “but it’s not as contagious.”
Replied one of the frenzied hosts: “I wonder if they’re just trying not to panic us.”
“Well,” the expert said, and then coughed.
“Did you hear that cough?” Colbert shouted. “Did you hear that cough? C’mon! She clearly has Ebola! Now so do all the Fox and friends!”
Your editor laughed heartily. Because we’ve seen this all before, right?
Five years ago, swine flu was supposed to put 1.8 million Americans in the hospital… and nothing came of it. Last year, a strain of bird flu was supposed to be “one of the most lethal” ever, according to the World Health Organization. Once again, it was all for show, not for go.
So as awful a disease as Ebola is, and for all the devastation it’s wreaking in West Africa, Americans have little to worry about despite the diagnosis of the first Ebola patient in the United States this week.
Right?
“I believe that the situation in Dallas is worse than what is being reported,” says FDA Trader editor Paul Mampilly.
Sure, Paul, way to wreck a perfectly good Friday episode of The 5, where we try to keep the tone light going into the weekend. Buzzkill.
“The official story we are getting can’t be 100% true,” he adds.
Hmmm… That’s certainly plausible. The only thing worse than the government and the media playing something up to scare the masses is the government and the media playing something down to calm the masses…
Consider the case of the Dallas patient, Thomas Eric Duncan. Paul urges us to think it through…
“Duncan is visiting the U.S. from Liberia. Liberia is one of the worst Ebola-affected West African countries. Duncan claims to have come to visit his family. He has family in Texas and North Carolina.
“Just pure common sense says that Duncan may have actually come to the U.S. to get treated for Ebola. Why do I say that?
“Liberia has virtually no health care system. Duncan had zero chance of surviving Ebola in Liberia. Liberia doesn’t even have enough gloves and masks to treat Ebola patients. In Liberia, Ebola is a death sentence. But in the United States, Duncan has a shot at surviving.
“Turns out Duncan lied on the health screening questionnaire asking if he had been exposed to Ebola,” Paul says of the latest developments.
“News reports confirm that Duncan was definitely in contact with people that were infected with Ebola. Just for background, all travelers from Liberia are required to fill out this questionnaire.
“If what I believe is right, Duncan had Ebola during his flights. And every person on those flights is at risk of getting Ebola. During his journey, he went through Brussels Airport (in Belgium), Dulles Airport (near Washington, D.C.) and then Dallas/Fort Worth Airport. So Duncan would have come into contact with hundreds of people.
“If I am right, more people are going to get Ebola in the U.S.”
“That means we’re going to need every single Ebola drug that we have to try to help these patients,” Paul goes on. “And then pray that they work.”
There are no FDA-approved drugs for Ebola now. But the FDA has something called the Animal Rule. “The Animal Rule,” Paul explains, “allows the FDA to give conditional approval to drugs if they work in animal studies.
“So every company with a drug in their pipeline is going to put their drugs into this kind of testing ASAP.
“Right now there are 13 companies working on Ebola around the world. Seven companies are working on vaccines, and another six companies are working on drugs to treat Ebola.
“I believe that the situation in Dallas is worse than what is being reported. That means all these companies’ Ebola drugs are going to become incredibly valuable. When? Once more cases start getting confirmed.”
[Ed. note: Yesterday, Paul recommended two of those names to his FDA Trader readers. One of them is set to jump 40% if its drug wins approval. The other, 81%.
Paul has put together a comprehensive strategy to help readers like you collect quick gains from fast-moving developments in the biotech industry. To learn how it works and how it can generate as much as $32,750 in a month, look here.]
“If a major pandemic started in the continental U.S., you could see martial law,” writes Jim Rickards in a briefing released this week exclusively to Agora Financial readers. (Click here for instant access to this briefing.)
Jim too seems determined to be a downer in this Friday 5. Heh…
“The Ebola virus comes to mind,” he adds, helpfully.
“In that case, people’s movements and activities would be severely limited and monitored. Investors might sell their stocks as commercial activity and business productivity ground to a halt.”
A pandemic is one of 30 potential “snowflakes” Jim says might set off a financial avalanche. The conditions are all there… it’s only a matter of what proves the final trigger.
Jim laid out all 30 snowflakes in one of three reports he issued this week. The other two reports identify eight investments aimed at giving you shelter. We urge you to review these reports in advance of an online Q&A he’s doing on Tuesday, Oct. 14.
Access the reports, and the Q&A, available only to Agora Financial readers, so you know you’ll be privy to information Jim doesn’t share when he’s interviewed on TV. Sign up right here for instant access to the reports. Instructions on how to take part in the Q&A will follow.
The Labor Department delivered a positive market-moving jobs report today. Too bad there’s less to it than meets the eye.
First, the market impact: As we write, the major U.S. stock indexes are all up at least three-quarters of a percent. The S&P 500 has rallied smartly to 1,962 — well above the 1,950 “line in the sand” our trading desk said would prove decisive this week.
The greenback is rallying to yet another four-year high, the dollar index now at 86.7. (Doesn’t hurt that the European Central Bank is resorting to buying asset-backed securities and even junk bonds; the euro sits at a two-year low of $1.25.)
Alas, gold looks set to test its $1,180 lows reached in both June and December of last year. At last check, the bid was $1,194.
Once again, the unemployment rate has touched a post-crisis low… and once again, it’s because tens of thousands of Americans left the workforce for good.
The numbers the elite media tout are a 5.9% unemployment rate and 248,000 jobs created by U.S. employers.
The more revealing and less publicized number is 100,000 Americans who gave up looking for work.
That brings the labor force participation rate — the percentage of the working-age population in the labor force — down to 62.7%. This is the lowest reading since February 1978, when Saturday Night Fever was finally wearing out its welcome at the box office and Andy Gibb topped the charts with “(Love Is) Thicker Than Water”
Thus, the real-world unemployment rate as calculated by John Williams at Shadow Government Statistics remains above 23% — where it’s been stuck for 18 months.
“Let’s see if I got this correct,” a reader writes, addressing two items from yesterday’s episode…
- “Because the U.S. oil refiners did not forecast properly the fracking oil developments and kept their refineries focused on processing the heavy crude, the solution is to export the new cheap fracking crude so other entities can profit while causing oil product prices to rise in America. And I’ll bet that the refiners got and probably are still getting billions in R&D and accelerated depreciation tax write-offs. Sounds like another rip-off to me.
- “Jonas Elmerraji says the markets may hold and rally off the trend line or go down a bunch. That’s almost as good as a fishing forecast — if you have the right bait, you might catch something. LOL.”
The 5: On the first point, we never said whether it was just. We said only it’s investable.
On the second, here’s a better fishing analogy: If nothing’s biting, you go elsewhere. If you do get a bite, you stand a good chance of getting more in the same spot.
Which is another way of saying anyone who tells you he can pick exact bottoms and tops is either delusional or dishonest. Good traders — and Jonas is very good indeed — are patient enough to wait for the market to demonstrate whether a top or bottom is in. If the S&P 500 had pushed decisively below 1,950 this week, that would have dictated a certain type of trade. But as it happened, the index has bounced off that level, dictating a different type of trade.
“Congratulations getting Jim Rickards on board,” a reader writes. “Finally, a powerful American with a brain who knows how to use it.”
The 5: Thanks. For any disbelievers out there, we furnish visual evidence…
At Agora Financial HQ in Baltimore this week…
“There is another potential snowflake,” a reader adds to Jim’s comprehensive list, “that could have profound impact on pensions.
“There is an initial court ruling in the Stockton, California, municipal bankruptcy case saying they may be able to pay back CalPERS at a substantially lower rate than other creditors. The final ruling is expected at the end of October, so it might pay to watch how ‘heavy’ this snowflake actually becomes.
“Love The 5.”
The 5: “A federal bankruptcy judge on Wednesday upended the widely held belief that public workers’ pensions have a special status in California that makes them impossible to cut,” The New York Times adds, “further chipping away at the idea that pensions are sacrosanct in a municipal bankruptcy.”
We mentioned the dire state of public-sector pensions earlier this week. Not hard to envision a hiccup at CalPERS and suddenly government workers swarming on Sacramento to protest and demand justice.
“The SDR is issued by the International Monetary Fund, but how much difference is there between that ‘currency’ and the U.S. dollar?” a reader writes after our thumbnail explanation of special drawing rights yesterday.
“The SDR currently is backed by the full faith and credit of the individual nations of the IMF, a promise made by the politicians to tax their citizens, if need be, to support the SDR.
“People need to stop and think about that: They are being held hostage by a group of people they did not elect to office and who have no accountability to anyone. This is the Federal Reserve going worldwide, and the readers of The 5 surely understand how well the concept has worked for us since it was chartered in 1913.”
The 5: Yup. In an infographic we prepared for another Agora Financial publication last spring, we called the IMF’s leaders “the new monetary overlords.” We were only partly tongue-in-cheek.
Why would the IMF end up with that role? In the next financial crisis, “the task of re-liquefying the world will fall to the IMF,” Jim Rickards wrote in The Death of Money, “because the IMF will have the only clean balance sheet left among official institutions. The IMF will rise to the occasion with a towering issuance of SDRs, and this monetary operation will effectively end the dollar’s role as the leading reserve currency.”
No one can say precisely when that moment arrives. But as we said above, it’s best if you start following Jim’s guidance now. Especially if you’d like to take part in the online Q&A session we’re holding with him, exclusively for Agora Financial readers.
Have a good weekend,
Dave Gonigam
The 5 Min. Forecast
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