October 24, 2014
- Ebola arrives in the finance and media capital
- If government can’t get its Ebola act together, it’s up to you…
- Staggering gold numbers from China, and the next number you need to watch
- Big gains from growing the Internet’s pipes… and there’s more to come
- Homeland Security crackdown on cotton panties… $25 billion as “chump change”… how banks create money, continued… and more!
“I pray that Ebola bypasses New York,” wrote our investment director and FDA Trader editor Paul Mampilly in this space last week.
“I lived in New York for 16 years,” he continued, recalling his hedge fund days. “I know New York City as well as anyone who lives there today. Ebola is going to be a nightmare in New York.”
Not only is New York the most densely populated big city in the United States, it is the nation’s financial epicenter. (Overnight squib from the Financial Times website: “U.S. Futures Dip on Ebola Concerns.”)
New York is also the nation’s media epicenter. Your editor has never lived there, but I’ve worked in the media. I too can assure you Ebola in New York is a whole different matter than Ebola in Dallas.
See, if you’re a media worker in New York, you take certain events personally… and you amplify your concerns and fears about those events through your work.
Osama bin Laden was well aware of this phenomenon; he knew he’d get far more mileage out of having guys fly planes into skyscrapers in New York than, say, poisoning the water supply of a small town in flyover country.
Which brings us to matters this morning…
Just when you thought the hoopla had died down…
Cue the insistent questions about Dr. Spencer’s whereabouts before he checked in to Bellevue Hospital yesterday. How many people came into contact with him at a bowling alley the day before? On the subway? At a restaurant?
Spencer, who treated Ebola victims in Guinea, returned to New York via JFK airport — one of five airports where the U.S. government has ordered arrivals from Guinea to go through extra screening.
Yes, he went through that screening. Your tax dollars at work. (What would you expect? Those dollars are being funneled through a contractor. By the time the money reaches the screeners, those with EMT training earn the paltry-for-New-York sum of $19 an hour.)
Then again, you are not surprised, because you saw us cite an expert here two weeks ago who said the airport checks would be worse than useless.
But such performance is par for the course at the U.S. Centers for Disease Control and Prevention. Like any government office, it’s been subject to “mission drift.”
The CDC’s predecessor agency was formed during World War II to deal with malaria in the Southern states. “Nowadays,” writes syndicated columnist Jacob Sullum, “the CDC’s mission includes pretty much anything associated with disease or injury.” That means a lot of stuff that has nothing to do with communicable diseases, as shown in this infographic from the folks at Reason…
They’re also concerned about whether you own firearms, by the way. It’s a “public health” issue, dontcha know.
Matter of fact, current CDC director Tom Frieden got his gig in part because he had anti-smoking cred. Wait a minute, wasn’t that the surgeon general’s purview? It’s so confusing…
But it’s all good now that we have an “Ebola czar,” right? “You may wonder:” writes Sullum, “Isn’t that Frieden’s job? Yes, but he has a lot of other things on his plate.”
You probably don’t need us to tell you that if Ebola is coming your way, the government will do nothing to protect you — even if it has the best of intentions.
So protection starts at home. As the saying goes, “If it’s to be, it’s up to me.”
That’s why Laissez Faire has issued a revised and updated Ultimate Pandemic Survival Guide. It begins with a completely counterintuitive proposition — Ebola hasn’t killed one person. Rather, it’s something else that opened the door for Ebola to do its dirty work. Learn how to keep the door shut and you stand a much better chance of survival… as you’ll see when you follow this link.
To the markets: Traders have shaken off the aforementioned Ebola jitters for the moment. Each of the major indexes is slightly in the green as we write, save the small-cap Russell 2000.
Treasury yields are climbing back down. Gold is stabilizing after two days of losses, at $1,231.
The one outlier is crude, down nearly 2% and on its way to testing the $80 level again.
“Why the Western media don’t report on these numbers is a mystery,” gold analyst Koos Jansen writes of gold demand in China.
Mr. Jansen works for a Singapore-based firm called Bullion Star, and he consults for the Gold Anti-Trust Action Committee. It’s high time we bring his work to your attention. (Thanks to our friend Chuck Butler at EverBank World Markets, who lit a fire under us via this morning’s Daily Pfennig.)
Some background: We’ve long tracked China’s gold demand… even as we concede the numbers are a black box. China announces its gold imports via Hong Kong… but more of its imports are coming through Shanghai and Beijing, and those don’t get reported. The Hong Kong numbers have become nigh worthless.
Mr. Jansen took it upon himself a while back to construct a reliable estimate based on figures that are publicly reported but little known. His conclusion this week: China’s gold demand in 2013 totaled 2,199 metric tons.
2,199 metric tons is a staggering figure: It makes up most of world gold mine production.
“This data is not a secret,” Mr. Jansen points out. “Yet the Chinese have been trying to hide it as much as possible and it looks like either they’re being helped by Western institutions or these institutions are ignorant.”
Significantly, that figure does not appear to include purchases by China’s central bank — which last disclosed its gold holdings in April 2009.
“[The People’s Bank of] China officially says it has 1,054 metric tons of gold in its reserves,” says Jim Rickards, editor of Rickards’ Strategic Intelligence. “Evidence from various sources is that the real figure is 4,000 metric tons or more, but the Chinese will not admit this, because they wish to acquire more at cheap prices and do not want to spook the market.
“The last time China publicly updated its gold holdings was in early 2009; the time before that was late 2002. The average gap between updates was 6.5 years. If China waited the same amount of time, the next update would come in September 2015. The number will shock the market. Most investors are not prepared for such a surprise right now. Are you?”
The buildout of Internet capacity is starting to deliver impressive gains to the earliest investors.
We tipped you off to the phenomenon in early August with the help of our Ray Blanco. Essentially, the Internet’s “pipes” haven’t been expanded since the late ’90s, and since then demand for bandwidth has exploded with YouTube and Skype and cloud storage.
Yesterday a company leading the way in this buildout reported a record quarter. Shares are up more than 50% since Ray recommended it to his Technology Profits Confidential readers on July 25. “It’s winning market share from the competition,” he says. “The company has the best performing, most power-efficient and most easily managed optical networking equipment available.”
It’s still a buy… along with three other companies Ray says are key to accommodating the exploding demand for bandwidth. As Ray explains here, it’s not too late to jump in.
No sooner did the 2014 Wastebook come out (documented in this space yesterday) than we already have an entry for the 2015 edition — a panty raid by Homeland Security.
Another instance of “mission drift”: The agency that was formed in 2002 to stop the “terrists” now enforces copyright law against clothing retailers.
Peregrine Honig runs Birdies Panties in the Kansas City area. She made a few dozen pair to celebrate the Kansas City Royals’ appearance in baseball’s World Series.
And then the feds showed up on Tuesday. “We just thought it was something funny we could do,” Honig tells The Wichita Eagle. “But it was so scary.” No, it wasn’t a SWAT raid. Honig’s business partner Danielle Meister says you could tell “they felt like they were kicking a puppy.”
The paper explains exactly how Honig’s plan went awry. “She thought that since the underwear featured her hand-drawn design that she was safe. But the officers explained that by connecting the ‘K’ and the ‘C,’ she infringed on Major League Baseball copyright. (The officials involved could not be immediately reached for comment.)”
If you can’t quite make it out, it says “Take the Crown.” Hmmm…
The officers confiscated the goods and made Honig sign a statement promising she wouldn’t use the logo.
A follow-up story in The Washington Times indicates Ms. Honig came up with an alternative design and posted it on the shop’s Facebook page.
At last check this morning, the Facebook page was down. Nothing like a good mystery…
“I don’t know where you live, but $25 BILLION is a lot of money to flush down the toilet,” a reader writes, bringing us back to the Wastebook.
“This is out-and-out stealing from the taxpayer. This also tells me that the federal budget is way too big, when $25 billion is considered chump change.”
The 5: Ummm… Maybe we were a bit too subtle yesterday?
“I know it is fashionable to blame bankers for all evil, but let’s at least do it based on facts not fiction,” a reader weighs in with our latest entry in the debt-jubilee thread that started Monday.
“Loans bankers grant do not come out of thin air. They come from monies deposited by customers, and the bank’s earnings are the difference between interest they pay depositors and what they charge borrowers. Fractional reserves mean that a bank cannot lend all of a depositor’s money but must keep a percentage (currently 10%) in reserve.
“If you think that amounts to organized crime, you ought to look at the insurance business. Unlike banks, who hold your money at your disposal, insurers take your money for good and lend it or do whatever they please. They return anything only in the unlikely event that you insure for: a home fire, auto crash, you name it.
“Now, I have no problem with either, but if you think it is wrong to make money that way, then insurers beat bankers in the highway robbery derby.”
The 5: Hmmm… Wonder what our recovering banker Chris Mayer would say about this? Actually, we already know: “Banks do not lend out deposits. Loans create deposits,” he explained late last year. It’s a bit arcane, but he helped us boil it down to the bare essentials here.
Have a good weekend,
Dave Gonigam
The 5 Min. Forecast
P.S. Amazon is in deep, deep trouble. Yesterday, it posted its biggest quarterly net loss since at least 2003. It also “guided down” on sales and profits for the fourth quarter of this year. “That puts Amazon on track to lose an estimated $40.5 million for the year, which would be the company’s largest annual loss in 12 years,” Bloomberg reports.
Of course, Amazon’s earliest investors have made out quite well. The original 20 who kept it afloat at the start each contributed about $1 million. As of last year, that $1 million investment was worth more than $24 billion — an increase of 2,399,900%.
Don’t despair if you missed out. An even more lucrative opportunity stands before you right now. And you don’t need $1 million to get started. Even a $5,000 grubstake has the potential to turn into millions. See the profit potential for yourself right here.