Until there’s a cure for cancer, there’s the next-best thing — a treatment that spares cancer patients the trials of radiation and chemotherapy.
And 2015 is the year it could happen.
Looking back on the first full week of 2015 here at The 5, it’s been depressing stuff — Fed policy… a wicked flu outbreak… confronting uncomfortable realities about the shale energy boom. Away from the financial beat, there are the awful, still unfolding events in France.
So today, we aim for something uplifting… and we turn to one of our tech specialists, who happens to be a cancer survivor.
“I was cured with radiation therapy,” says Ray Blanco — complete with the hair loss, fatigue, skin sores, nausea and vomiting that accompany it.
“The way they give radiation therapy — the way they’ve done it for 70 years — is like an X-ray. They put you underneath a machine and they zap you. Not only do they hit the cancer, but they hit all of you.”
So when Ray first heard of a company working on a treatment that would render radiation obsolete, he had to investigate.
“What this company has done,” he explains, “is actually put the radiation in a drug, and the drug goes only to a cancer cell, so it homes in. They give you the drug. The drug goes into your body and goes only to the cancer cell.
“This company is working on acute myeloid leukemia in older patients. Now, this is really bad in older patients because the way we deal with it is with chemo drugs, and chemo drugs in older patients are awful, because these patients don’t have the health to deal with the side effects of the drug. This company has developed a compound with far less severe side effects. So far, the data they’ve generated are really much superior.”
This is the year the drug goes into Phase 3 trials. That’s the last step before putting in for final approval from the FDA.
The drug’s maker has a market cap of under $200 million. “If they succeed with their development and marketing plan,” says Ray, “it could be another Seattle Genetics, which has a market cap today of over $4 billion.”
For access to all of Ray’s best guidance for 2015, we invite you to subscribe to Technology Profits Confidential — no “video sales letter” to watch, and a full-price guarantee if you’re not satisfied. Check it out.
Depending on which job number you look at… we’re in the best shape since 1999… or the worst shape since 1977.
The Bureau of Labor Statistics regaled us this morning with its December jobs report — 252,000 new jobs, the unemployment rate down to 5.6%. Last year turned out to be the best year for job creation since 1999 — 2.9 million new jobs, all told.
Wages, you wonder? They fell in December for the first time in a year and a half. For all of 2014, they rose 1.7% — more than the official inflation rate. Too bad the official inflation rate is statistical poppycock.
Then there’s the labor force participation rate — the percentage of the working-age population in the labor force. The number is now back to its level of December 1977 — when the big box-office draw was Close Encounters of the Third Kind and Debby Boone topped the charts with “You Light up My Life.” (Apologies if we put it in your head for the rest of the day.)
Pollyanna pundits are fond of saying this decline is all about the baby boomers heading into retirement, so it’s not as bad as it looks.
We called BS on this claim a year ago, and we still do: The 55-and-over workforce has grown by 25% since the “official” start of the Great Recession in December 2007. The workforce aged 25-54? Still 4.5% smaller than it was seven years earlier.
In other words, people in their “prime earning years” have given up looking for work… while oldsters who ought to be living it up on the golf course are taking orders at a Burger King on the Ohio Turnpike (an inevitably depressing sight whenever my wife and I take a road trip).
Finally, we turn to the real-world unemployment rate from John Williams at Shadow Government Statistics. He measures unemployment the way the feds did, well, back in 1977. It’s 23.0%.
That’s the lowest since May 2013. Yay?
Stock traders have chosen to look at the glass-half-empty side of the jobs report. Either that or they think the headline numbers are strong enough that the Federal Reserve will raise interest rates sooner rather than later.
At last check, the S&P 500 has shed more than three-quarters of a percent, to 2,045.
But Treasuries are rallying, the 10-year yield back below 2%. And gold has popped a bit, to $1,218. Crude is down 40 cents as we write, to $48.39.
“Sooner or later — perhaps sooner than we think — China will bail out Russia,” says our Byron King, offering a 2015 forecast from the military-tech realm.
“That is, China will make some deal to use its massive dollar-denominated holdings to back up Russia’s economy until oil prices begin to recover. After all, China needs a stable, intact, economically solvent, ‘friendly’ Russia.
“From China’s perspective, there’s no further need for the U.S. to ‘protect’ Asia. After all, World War II ended a long time ago. In Chinese eyes, U.S. military power in the western Pacific is a strategic threat. Besides, U.S. Pacific-Asia policy tends to be meddlesome, in the view from Beijing.
“From Russia’s perspective, the U.S. and NATO are an ‘Anglo-Zionist’ cabal that wants to weaken Russia and plunder the nation’s resources. Russian leadership looks back to the 1990s, when the national economy of the former USSR simply broke apart, as a time of Western exploitation.
“Russia is a future key energy supplier to China. Plus, Russia has impressive military technology, while China is focused on capital investment in manufacturing. These two nations are already working together, and the relationship will likely deepen.”
Byron believes that relationship will ultimately work to the benefit of major U.S. defense contractors as Washington makes the inevitable countermoves, never mind the “sequester” chatter inside the Beltway right now. It’s an ongoing story he’ll follow in Military-Tech Alert.
Lesson from Zimbabwe: Trust once lost is not easily regained.
Six years after the great hyperinflation there…
…the government is trying to reintroduce its own currency. They’ve made do with the U.S. dollar in the interim.
Which raises its own problems: “The paper greenback is readily acceptable,” according to Reuters, “but getting U.S. coins en masse to put into circulation is a different matter.” Thus, everyday transactions are conducted with lollipops, chewing gum and pens.
Solution? “Bond coins,” so named for a $50 million bond Zimbabwe floated to mint and import the coins from South Africa.
“Trouble is,” the newswire goes on, “not many people want to use them, because they think they will not be able to persuade others to accept them. Some also fear the coins could be a first step toward the return of the dreaded Zimbabwe dollar.”
Hmmm… If “getting U.S. coins en masse to put into circulation” is the issue, perhaps the Zimbabwe government could swing some kind of deal and acquire all those Susan B. Anthony, Sacagawea and Presidential dollar coins that sit in storage because no one in this country wants them.
When last we chronicled this surplus in mid-2011, more than a billion of these $1 coins sat idle in Federal Reserve vaults around the country. The most recent figures are from 2012 — nearly 1.5 billion. The presidential series is going in chronological order, and they’re only up to Harry Truman. And by law, Sacagawea dollars must make up 20% of all dollar-coin mintage.
Seriously. Send ’em to Zimbabwe. If nothing else, we might get some entertainment out of it: Maybe some cipher president like Millard Fillmore would become a legend there…
“Notwithstanding the explanation of a ‘three-way collar,'” a reader writes after our oil-themed episode Wednesday, “my first thought when reading that most oil producers are hedged through 2015 is to ask who has the other side of those hedges.
“The oil producers may not take the hit this year, but someone will, and it would be nice to have an idea now who is on the losing side of that trade.
“Of course, they will be hedged as well, and it may result in a bunch of 5-10% losses scattered over a bunch of different investors, but possibly not.”
The 5: “Most producers work with specialist investment banking firms to set up their hedges,” replies our friend Erik Townsend, who knows oil futures inside out.
“The general program is that the bank funding the drilling project will require hedges two years in the future to cover enough of the production output to assure a positive cash flow. The driller’s hedge may come in the form of an over-the-counter contract, but the immediate counterparty almost always offloads that risk to exchange-traded futures contracts and options on futures.
“So the answer to who the counterparty is lies in who holds the long interest in crude oil futures. While it’s easy to figure out which banks are counterparties to the drillers’ hedges, it’s nearly impossible to figure out how much of that risk they’ve offloaded through the exchange-traded futures and options markets.
“A key aspect of this is to recognize that the hedges are typically placed two years in the future. The quoted ‘price of crude oil’ is almost always the spot or front-month futures contract price. On Friday morning, that price was $47.80 for West Texas Intermediate crude (WTI), but the January 2016 WTI contract (two years in the future) was still quoted above $63, about $8 higher than the front-month contract.
“To gauge the pain being felt by the counterparties (and also to estimate how much pain remains to be felt), we have to focus on the long-dated contracts, which are far more thinly traded and less liquid than the front-month. If front-month prices remain below $50 for an extended period of time, longer-dated contracts will eventually ‘catch down’ to the spot market, meaning more pain is coming for the counterparties to these hedges, even if front-month prices stabilize where they are now.”
“I believe that there are two classes of enforcement,” a reader writes about the police “work stoppage” in New York — “those that nail serious wrongdoers and those that produce revenue.
“In a slowdown, reducing those that produce revenue is the most effective in getting one’s point across.”
The 5: Or as our own Jim Rickards tweeted yesterday…
Doggone it, now we’ve ended a Friday episode on a downer despite our best efforts…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. A quick reminder… Jim Rickards’ next live online briefing, exclusively for Agora Financial subscribers, is this coming Monday at 10:00 a.m. EDT.
This is when Jim takes on issues he doesn’t talk about on cable TV… and even answers questions from readers like you.
Rickards’ Strategic Intelligence subscribers have automatic access. If you’d like to join their ranks, here’s where to do so.
