- If treating a disease generates 1,100% gains… what about a cure?
- An ill omen from FedEx… and where’s the inflation?
- Door No. 2: Jim Rickards on why this week’s Fed meeting won’t stop the market volatility
- Your remains in orbit… the real way to create wealth… why bankers are as incompetent as bureaucrats… and more!
The road to a better Parkinson’s treatment runs through Australia.
Yesterday, our Stephen Petranek joined us to describe a revolutionary stem cell treatment for Parkinson’s disease. More than 1 million Americans are subject to the pronounced tremors, slow movement and stiff muscles that come with the disorder. Current treatment involves a drug combination that becomes less effective over time.
As noted yesterday, the stem cell treatment is already showing immense promise in monkeys.
We’re talking about an entirely new class of stem cells — and one that doesn’t require the use of human embryos.
“Early stem cell pioneers extracted stem cells from human embryos — fertilized eggs that some people believe are no different than living children,” Stephen recalls. “So the fact that the procedure destroyed the embryo didn’t sit well with them.
“The Catholic Church spoke out against stem cells derived from embryos, and President George W. Bush signed a law banning further research into new lines of stem cells.”
There’s no such issue with these unique and patented stem cells. They’re not derived from embryos. “Instead, they come from unfertilized egg cells,” Stephen says. “Goodbye, ethical problems.”
Human trials might soon be underway in Australia. That nation’s version of the FDA is on the verge of approving a Phase 1/2a trial.
Once approval is secured, it will take only a few weeks to enroll patients, because the company developing this treatment has already met with an ethical board that will watch over the study. “Ethical approval is more important in Australia than in the United States,” the firm’s chief scientific officer told Stephen recently.
If the trial is successful — and the first results should take only six months to come in — the company will ask the FDA to launch a Phase 2b study in the United States.
If successful, the firm might be able to skip the final Phase 3 and come to market with the treatment much sooner than usual. “With a disease like Parkinson’s, which has no long-term treatments available and with many patients dying,” Stephen tells us, “the FDA could choose to implement a therapy that has shown itself safe and effective in a large 2b study.”
Early investors have already made big money with inferior treatments that tackle only the symptoms of Parkinson’s and not the cause.
Amicus Therapeutics is up 390% in recent months… and its drug is still in preclinical trials. Avanir Pharma, meanwhile, is up 1,100%. Its treatment is further along, in Phase 2… but again, it treats only the symptoms.
Now imagine the profit potential of a company that promises not a treatment but a cure.
Better yet, let Stephen do the math. “Some stem cell companies pursuing Phase 1 trials trade at a market cap of $200-300 million. If this firm successfully completes a Phase 1 trial, it could trade at a similar market cap. That means the market cap could jump as much as 20 times higher.
“If everything goes well, I estimate the stock could jump 1,015% in the next 12 months, based on this comparable analysis.”
No, there are no guarantees. And as you’ve likely figured out, we’re talking about a very small company here. It doesn’t even trade on a public exchange. That’s why we’re keeping a strict limit on access to an interview with a biotech consultant and former executive describing this opportunity. We can share only a few clips at this time… and only with a limited number of readers. Follow this link for immediate access.
Major U.S. stock indexes are drifting upward as the Federal Reserve begins The Most Important Meeting in Fed History™ — about which more shortly.
At last check, the S&P 500 has tacked 11 more points to yesterday’s 25-point gain — propelling the index to 1,989, its highest level all month.
But the real action is in the commodity space. Gold is up more than 1.5%, to $1,122. And crude is reacting strongly to the latest weekly inventory numbers from the Energy Department. As we write, a barrel of West Texas Intermediate is up nearly 5.5%, to $47.02.
The street chatter is all about a potential beer merger. No. 1 producer Anheuser-Busch InBev is looking to acquire No. 2 SABMiller. SABMiller says it’s open to the idea.
Meanwhile, FedEx delivered a big fat earnings “miss” for the most recent quarter… and it’s “guiding lower” for 2016. If FedEx moving boxes from place to place is a general barometer of economic activity, that’s not good…
Consumer prices allegedly fell last month, if the latest estimate from the Bureau of Labor Statistics is to be believed.
The consumer price index dropped 0.1% in August, pushed by falling gasoline prices. The year-over-year change works out to a 0.2% increase.
The “core” rate of CPI — which excludes food and energy — rose a tad. Year over year, the increase is 1.8%, still below the Fed’s 2% inflation target.
In the real world, yearly inflation as measured by Shadow Government Statistics clocks in at 7.8%. The number’s been creeping upward four months now.
Homebuilders are feeling their sunniest since — uh-oh — 2005.
The September housing market index from the National Association of Home Builders registers 62, a 10-year high. Digging into the report’s internals, current sales look good, as do future sales. Even traffic is showing improvement… although we’re not sure we’d go so far as Econoday, which ventures, “this suggests that high rental prices may be pushing potential first-time buyers into the market.”
In any event, it’s more wind in the sails of Greg Guenthner’s homebuilder trade — which as he pointed out here yesterday has held up remarkably well during the current market downdraft.
“The rest of September and October will look like August — only worse,” ventures our Jim Rickards — addressing said downdraft.
In other words, uncertainty about the Federal Reserve will still cast a pall over markets after it issues its latest interest-rate proclamation 24 hours from now.
As you’re likely aware, Jim has said all year the Fed won’t raise rates… even as the mainstream has kept pushing back its outlook for a rate increase from March to June to September.
“What went wrong?” Jim asks rhetorically. “Why did the Fed lead markets to believe they would raise rates, and then fail to do so? Why did Wall Street fall for the Fed’s head fakes without ever realizing that the Fed cannot raise rates for the foreseeable future. Possibly not until 2017?
“The answer is that the Fed’s obsolete models consistently overestimated growth by orders of magnitude. Based on rosy forecasts, the Fed thought that robust growth (and higher inflation) was right around the corner and they could keep rates low until it arrived. But it never arrived, the growth depression continued and the Fed never raised rates. They kept chasing the chimera of higher growth. The growth was a mirage (and it still is).”
Which brings us to tomorrow.
If the Fed raises rates, “it will lead to a ‘risk off’ emerging-market meltdown,” Jim says. “If the Fed does nothing but continues to ‘talk tough’ on future rate increases, we will have more of the volatility we have seen since early August as markets resume the Fed guessing game…
“The Fed will choose Door No. 2: no rate increase, but more tough talk about increases in the near future. This will keep the dollar strong, put more pressure on China for devaluation, continue the emerging markets capital outflows and cause a resumption of the Fed guessing game and the volatility that goes with it.”
Gee, we can hardly wait…
“What if the mega-rich just want rocket ships to escape the Earth they destroy?” reads the Drudge-bait headline of a commentary at The Guardian by one Jess Zimmerman.
Yesterday, Amazon CEO Jeff Bezos debuted the newest rocket produced by his space-travel company Blue Origin. Bezos is hardly alone in pursuing civilian space travel: There’s Elon Musk’s SpaceX and Richard Branson’s Virgin Galactic.
“At this rate,” Ms. Zimmerman writes, “would-be space travelers will be able to choose their favorite tech company, find its richest guy and buy a ticket on his craft of choice.”
Well, it does cost a lot, says our Stephen Petranek — who follows high-tech as avidly as biotech. “About 600 people,” he tells us, “have put down a deposit against a $200,000 ticket from Virgin Galactic on Branson’s SpaceShipTwo for a trip into near space (62 miles or so up, where the sky is black and the Earth is small, but you’re at best only on the edge of where space begins).
“But if you really want to get into space for much less, you should consider Elysium Space Inc.,” Stephen goes on. “It is offering to send you where the stars shine brighter for as little as $12,500.
“Yes, there’s a catch. You have to be dead.
“Elysium offers three services: the Shooting Star Memorial, the Lunar Memorial and the Milky Way Memorial. It all depends how far you want to go.
“The Shooting Star Memorial will send your cremated remains into Earth orbit, where the orbit will eventually, uh, decay, and you will become a shower of shooting stars. The Lunar Memorial will get your ashes to the moon, and the Milky Way service will send your leftovers far into deep space.”
Stephen tells us a Shooting Star launch is already set for late this year. All aboard!
“I read the numbers and I hear the analysts who point to the GDP being over 3.0% on an annualized basis and how our economy is moving forward,” a reader writes wearily. “What few, if any, bother to dissect is how the numbers are arrived at.
“Mining, manufacturing and construction, which are the only true numbers that actually matter, have declined for the last 40 years, where today they make up less than 23% of the total. This would be even worse if interest rates were market-driven versus controlled by the Fed, as homebuilding would be almost nonexistent and auto manufacturing would be much lower.
“In his book Our Enemy, the State, Albert Jay Nock writes, ‘The only true way to increase wealth is to take capital and apply it to raw materials to create a finished product.’
“This sounds simple, but once you comprehend the meaning, you then understand money printing can never be a substitute for creating wealth. It is that simple, but sadly, the ones who need to understand choose to look the other way.”
The 5: Amen.
“You come down on the government for promoting the incompetent,” a reader follows up from yesterday’s mailbag.
“But is that not what the banks did to the incompetent souls who led them to bankruptcy?”
The 5: Well, yes. And your point?
Government has given the banks a taxpayer backstop. Of course the banks are going to act more and more like government.
Best regards,
Dave Gonigam
The 5 Min. Forecast
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