October 20, 2014
- No, the NSA did not nail the Ebola outbreak days in advance…
- …but NSA techniques applied to the market can make you scads of money
- Blue chip blues… the trouble at IBM The 5 PRO spotted more than a year ago
- Byron King sees reason for optimism… and a sector to start buying now
- Mayer still scouting for bargains in Europe… No matter what you call your product, someone’s bound to be offended… A reader’s stimulus suggestion… and more!
If the NSA is so brilliant, so all-knowing, how did it miss the Ebola outbreak in Africa?
We pose this cheeky question today by way of following up on something we wrote about last winter… and spotlighting a way to predict stock market moves with uncanny accuracy.
Back then, we drew your attention to an NSA project called Open Source Indicators. As The Wall Street Journal described it, the program “reviews a range of publicly available sources, such as tweets, Web queries, oil prices and daily stock market activity, to gauge the likelihood of certain ‘significant societal events.’”
A year ago, OSI had a confirmed hit — accurately anticipating riots in Brazil coinciding with that nation’s independence day.
Last month, there was media buzz that an OSI-funded effort called HealthMap led to an Ebola heads-up… delivered to the world four days before the World Health Organization declared an epidemic, on March 25.
“Online Tool Nailed Ebola Epidemic,” gushed a headline from The Associated Press. Enthused a public-health blogger, “Some of the first health care workers to see Ebola in Guinea regularly blog about their work. As they began to write about treating patients with Ebola-like symptoms, a few people on social media mentioned the blog posts. And it didn’t take long for HealthMap to detect these mentions.”
Just one problem in this case: It isn’t true. Yes, Harvard’s HealthMap service did monitor some early mentions of the outbreak on March 14. Yes, it issued an alert on March 19. Yes, HealthMap gets funding and data from OSI.
But “by the time HealthMap monitored its very first report,” writes Kalev Leetaru at Foreign Policy, “the Guinean government had actually already announced the outbreak and notified the WHO.”
It was right there in a French-language article from the Chinese government news agency Xinhua on March 13 — a day before HealthMap spotted its first report. And this wasn’t any brilliant investigative journalism on the part of Xinhua; it was merely an account of a press conference held by the Guinea Department of Health, broadcast on Guinean state-run TV.
“Contrary to the narrative that data mining led to an intelligence coup,” Leetaru writes, “HealthMap’s earliest signals on March 14 were actually simply detections of this official government announcement in French.”
Turns out most of Open Source Indicators’ capabilities are confined to English and Spanish.
“This is not to say that there were not far earlier signals manifested in the myriad social conversations among medical workers and citizens in the region,” adds Leetaru, “only that it was not these indicators that HealthMap — or anyone else — detected.”
Oh, well.
Remarkably, OSI’s techniques turn out to be more reliable when applied to the stock market.
The problem with Ebola, as we’ve seen, was an incomplete data set. Fix that problem and the results become more reliable. So reliable you can generate gains of as much as 100% in as little as 20 days.
We can’t go into much more detail than that today — we’ve been sworn to secrecy by the gentleman who showed us the spreadsheet demonstrating his system’s proven results. But all will be revealed starting this Wednesday… when you can sit in on four days of FREE training, showing you the system in action, step by step.
To assure yourself access, all you need to do is send us your email address. We’ll take it from there. Here’s where to sign up.
After nearly two weeks of wild swings, the major U.S. stock indexes look mighty calm this morning. Every major index is slightly in the green, save the Dow — which is being dragged down by IBM.
Big Blue delivered a nasty earnings surprise this morning. “We are disappointed in our performance,” CEO Ginni Rometty said. “We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry.”
The news is no surprise to readers of The 5’s PRO edition. “The quality of earnings matters as much as the quantity of earnings,” editor Dan Amoss wrote back in July. “Over time, low-quality earnings tend to disappear, resulting in painful surprises for shareholders.”
Dan’s first warning about IBM came in August of last year, when the firm’s revenues had declined for five straight quarters. It’s now 10 and counting. (You don’t benefit from the 5 PRO’s actionable insights? You can remedy that at this link.)
“No matter what’s happening with oil prices, the Middle East, Ebola or whatever… critical parts of the U.S. economy are thriving,” writes Byron King with an eye on two sectors he follows for us — energy and defense.
He’s taking heart from the news at PPG Industries (PPG), a firm that supplies basic materials like paints, glass and such to businesses nationwide. The firm reported record sales. Said CEO Charles Bunch, “We continue to benefit from customer adoption of our leading technologies. Our sales performance was driven by continued gains in aerospace, automotive, OEM coatings and automotive refinish, where our growth this quarter matched or exceeded recent quarters.”
“Gains in aerospace and autos?” comments Byron. “Aren’t those industries at the heart and soul of generating wealth across the economy? If you’re in this game for the long term, now is a good time to buy into beaten-down oil and energy plays.”
Byron is keen right now on the “Big Three” oil services plays — Schlumberger (SLB), Halliburton (HAL) and Baker Hughes (BHI).
“My view is cautiously to buy back in,” he wrote his Outstanding Investments readers on Friday. “Do NOT back up the truck, so to speak. Don’t mortgage the ranch and try to make some sort of ‘brilliant’ trade here. But we’re looking at strong companies — technically and financially — with a strong future. If you wanted to buy in, or add to a position, nibble away — but don’t spend all your funds just now.” After all, oil prices might still have another tumble or two ahead.
Indeed, crude is giving up some of its late-week gains this morning — down more than 1%, to $81.69.
Gold, meanwhile, has recovered its recent highs at $1,244. But the industrial metals are looking weak; copper is back below $3 a pound this morning for the first time in six months.
“Europe is full of opportunities in restructuring companies,” says Chris Mayer,
“The macro for Europe looks terrible,” Chris acknowledges, “but as David Marcus of Evermore Global told us recently, Europe is full of opportunities in restructuring companies. I swapped emails with David last week, and he reiterated his view. ‘There is even more opportunity,” he wrote, ‘as investors yet again extrapolate little things into the perception that the world is going to end. Buy the crisis.’”
Since January 2012, Chris has urged his Capital & Crisis readers to seize upon “the biggest fire sale in history” in Europe, buying quality assets on the cheap. His favorite way to play it remains property investor Kennedy Wilson (KW) — up 118% and still a keeper. For more where that comes from, look here.
“It didn’t make sense for us to change the name,” says a spokesman for Ben & Jerry’s. “We named it because it’s a pop culture reference.”
Back in February, the company introduced a new ice cream flavor…
Nowadays, no matter what you say, you’re bound to offend someone…
See, it has hazelnut in it. And as the spokesman explained to Huffington Post, “Not a lot of words rhyme with ‘hazelnut.’” So why not play off the title of a Led Zeppelin song? (Actually someone else wrote it before Led Zep revised and popularized it, but that’s long story we can’t fit into our 5 Mins. today.)
No matter to a couple from Tampa — whose son was killed during a hazing ritual at college in 2008.
Far be it from us to minimize the trouble with hazing rituals… but really?
Anyway, Ben & Jerry’s has respectfully declined a request to change the name. More from the spokesman: The company and its marketing have not “condoned hazing, supported hazing or even inferred hazing.”
Just in case you, you know, had any doubt about that…
“In regards to the comment on the gentleman’s request to quit publishing readers’ comments,” a reader writes after Friday’s episode, “I am pretty sure of two things.
“One, you have to be an amateur to become a pro, and that takes thought and action, hence amateur posts and comments to learn.
“Secondly, there may be many amateurs that have net worths way beyond the pros.”
“Regarding reader comments, I am with you, Dave!” another writes. “There is tremendous entertainment value to the reader comments.
“Like most other ‘gatherings’ of people, the readership of The 5 is a well-populated ship of fools!
Keep up the good discourse. Cheers.”
“QE4,” a reader muses: “What would happen if the Federal Reserve bought consumer debt?
“Banksters, looking out only for themselves and their pals,” she goes on. “Do you want to stimulate the economy? Get some inflation going maybe? Spend $85 billion a month buying credit card and other consumer debt. That’s like around 400 bucks a month in credit cancellation and thus a credit availability increase for Jimmy and Jane Spendthrift to run up again.
“Screw the banksters and those that support them. Give the common guy and gal that money this coming easing, and that will get things cooking nicely, I would wager.”
The 5: Hey, that’s pretty good: We honestly can’t tell if you’re being facetious.
Of course, we already have a mechanism for zeroing out the bad debts of people who get in over their heads. It’s called “bankruptcy.”
It should be put to use more often for consumers and banks alike. Allow student debt to be discharged in bankruptcy the way it was before 2005. Revoke the doctrine of too-big-to-fail in the banking sector, a doctrine that in many ways goes back to Paul Volcker’s days running the Fed.
As Treasury Secretary Andrew Mellon advised President Hoover, “Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.”
Alas, Hoover ignored the advice.
Bush the Younger and Obama didn’t even consider it in 2008-09. Ditto Fed chief Ben Bernanke. They passed up the chance to cleanse the system the way the Fed and President Harding did when they stood aside and let the depression of 1920-21 run its course.
“The year 2009 would have resembled 1920 in the severity of its depression, with skyrocketing unemployment, collapsing industrial production and widespread business failure,” our newest editor Jim Rickards reminds us in The Death of Money.
“But an inflection point would have been reached. The government-owned banks could have been taken public with clean balance sheets and would have exhibited a new willingness to lend. Private equity funds would have found productive assets at bargain prices and begun investing. Abundant labor, with lower unit labor costs, could have been mobilized to expand productivity, and a robust recovery, rather than a lifeless one, would have commenced.”
Ah, what could have been…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. We’re still pinning down a date with Jim Rickards for an event in which we plan to roll out Phase Two of our “Prophesy 2015” project.
If you missed out on Phase One, this will be your next chance — and maybe your last chance — to protect yourself from a financial crisis Jim assures us will be worse than 2008. Watch this space for details.