“A Highly Tradeable Event”

  • Nicotine, mental illness and the quest for a breakthrough drug
  • Another whiff of inflation, courtesy of “Dr. Copper”
  • How NOT to play dividend stocks — avoid!
  • Already one blown deadline for Obamacare repeal
  • Housing starts looking sluggish… the mess the EPA made and won’t pay for… Hollywood goes to war, 2017… and more!

Who says nicotine is such a bad thing?

Research from the University of Colorado published this week in the journal Nature Medicine found nicotine can stimulate activity in the prefrontal cortex. That helps relieve many of the issues that come with schizophrenia — like difficulty making decisions, focusing and remembering things. It might also explain why nearly 90% of people afflicted with schizophrenia take up smoking — it’s how they self-medicate.

Naturally, science is now on the hunt for a way to harness nicotine’s benefits for schizophrenic patients in a way that won’t give them lung cancer and emphysema later in life.

Until then, there are more conventional medical treatments for schizophrenia, bipolar disorder and major depression… and the side effects can be nearly as awful as the disorders themselves.

About 5% of patients who take antipsychotic drugs develop a condition called tardive dyskinesia. “Many people with TD are unable to speak, chew or swallow,” says Ray Blanco of our science-and-wealth team. “Their tongues move uncontrollably, and they might even break their teeth.

“It’s bad enough they have to deal with their mental illness. Not even being able to speak to others or feed themselves surely makes them feel even more isolated than before.

“Tardive dyskinesia is a product of too much dopamine. In a way, it’s the opposite of Parkinson’s disease. Parkinson’s patients don’t have enough dopamine, so they have difficulty moving. TD patients, on the other hand, can’t stop.”

At present, there is no treatment for this condition. But Ray says that’s about to change here in early 2017.

For more than a year, he’s been following the fortunes of a company working on a solution to TD. “It works by targeting neurotransmitters,” he explains. “It is highly selective, meaning off-target effects are minimized. This raises the commercial prospects, since the potential for unwanted for drug-drug interactions is reduced. That’s really important in a group of patients who are often taking multiple drugs for their health condition.”

Ray expects federal regulators will make their final call on the drug April 11 — what Ray calls a “magic date” that can prove very lucrative for drugs that win approval.

But next month comes an FDA “advisory committee meeting” set for Feb. 16. That’s when the FDA brings together a panel of experts to hold a public hearing and consider the benefits and risks of a new drug.

“It’s a highly tradeable event,” says Ray. “A positive vote at the end of an advisory panel meeting can move a stock up fast. Double-digit gains are very common on a positive outcome.”

And that’s just one example of the gains to be had from magic dates. Often they can be much more lucrative — doubling your money or better. There are 29 of these dates coming up over the next year.

Learn more about how they work when you follow this link. Please note: This presentation comes offline at midnight Sunday night.

To the markets, where stocks are stalling and the safe havens are falling.

At last check, the Dow was inching higher into over-20,000 territory, at 20,103. But the other major U.S. stock indexes are in the red. Treasury rates continue backing up, the 10-year now 2.54%. And gold keeps backing down, the bid $1,186. The dollar has regained a bit of strength. Crude is knocking on the door of $54 a barrel.

We’re now in the thick of earnings season. Boeing and Caterpillar both beat expectations. Ditto for No. 1 cable provider Comcast, which also declared a 2-for-1 stock split and raised the dividend. Meanwhile, shares of No. 2 cable provider Charter are soaring on rumors of a takeover bid by Verizon.

The big economic number of the day laid an egg; new home sales crashed 10.4% from November–December. In fairness, this number is extremely noisy… but even the three-month average is down a bit, and the year-over-year change is minus 0.4%.

A less followed but more meaningful data point is the Chicago Fed National Activity Index. This composite of 85 economic numbers has proven itself a reliable recession predictor across more than four decades. The number this morning indicates economic growth is slightly subpar by historical standards, but nowhere near recession territory. Hooray?

“While the world is distracted by presidential press conferences, no one’s paying attention to the commodity space,” says Greg Guenthner of our trading desk.

“Most folks still aren’t interested in a commodity market that’s produced nothing but losses over the past several years. But the market says it’s time for these forgotten industrial metals to shine once again. And we can’t ignore the breakouts in copper, steel and aluminum.”

On Tuesday, copper jumped to prices not seen since 2015…

Description: theCopperComeback.png

“Copper has endured a painful downtrend for six years,” Greg reminds us. “The metal has now exploded out of its long-term downtrend after building a solid base last year.”

We’re not sure copper is still the surefire indicator of economic health it used to be; time was the metal was known as “Dr. Copper” because it supposedly had “a Ph.D. in economics.” But the copper revival is another sign of inflation heating up — on top of the others we’ve had since last fall…

Now for an investing idea that sounds great in theory but is awful in practice. Don’t try it at home — or anywhere else.

Our story begins with our income specialist Zach Scheidt being accosted in a coffee shop by someone who knows how much Zach likes high-quality dividend-paying stocks. “Zach,” the guy says, “I’m thinking about buying shares of different stocks just before the dividend is paid. Then once I collect the income, I’ll sell and buy the next stock. That way, I’ll earn more income from the money I have to invest. Brilliant, right?”

Here’s the problem, says Zach: “As a general rule, when a stock goes ‘ex-dividend,’ shares drop the next day by about the same amount as the dividend that is paid. In other words, if you buy a stock for $50.00 just before the company pays a $0.60 dividend, the stock will likely trade down to $49.40 after the company records its dividend.

“Of course, markets (and individual stocks) move higher and lower based on a lot of factors. So each stock will not trade lower by exactly the same amount as the dividend. But it’s impossible to ‘game the system’ just by purchasing shares before a dividend is paid — and selling them after.”

Sorry, there’s no free lunch. But Zach is onto the next best thing — a teensy clause within a Social Security Administration document that could unlock payouts of $6,880 during 2017.

Curious? More here.

OK, where were we when we suggested Trump and the GOP Congress would foul up the repeal and replacement of Obamacare?

No sooner did we go to virtual press yesterday than The Wall Street Journal posted this story on the web: “Two days before Republicans’ self-imposed deadline for producing legislation to repeal the Affordable Care Act, GOP lawmakers acknowledged they were unlikely to meet it.”

The budgets passed by both houses of Congress this month required four committees to deliver Obamacare-overhaul proposals by tomorrow. Alas, there were no “or else” consequences attached to this requirement, and so the deadline will be blown. Maybe late February or early March is the word now.

We repeat: Don’t wait for Trump and Congress to relieve you of Obamacare’s burdens. You can do it for yourself right now.

Being the government means never having to say you’re sorry: The Obama administration left a parting gift for victims of a toxic wastewater spill caused by the Environmental Protection Agency.

In August 2015, an EPA contractor hired to clean up an abandoned mine called Gold King accidentally breached a tunnel wall. Three million gallons of acidic water laden with heavy metals flowed into the headwaters of the Animas River. The impact devastated farmers, ranchers, river raft operators catering to tourists, Indian tribes and local governments.

Look at the lovely hue of that river water… [EPA photo]

Five days before Team Obama closed up shop, the EPA rejected the $1.2 billion in claims filed by the victims. It’s the doctrine of “sovereign immunity,” dontcha know — the legal principle that government types are exempt from the laws you and I have to observe. Or as an anonymous EPA flunkie told The Denver Post, “You want government officials to be able to go in and not hold back on using their judgment because they are worried they will be sued.”

Colorado’s congressional delegation is drawing up a bill to make the EPA pay anyway. Not that it’ll come out of the salaries and pensions of the employees and contractors who screwed up. No, just as with careless cops who get sued for busting down the door of the wrong house and terrorizing the innocent people inside, it’s you who’ll pay, dear taxpayer…

“The developers should have never been able to build a stoop on the public sidewalk,” writes a New Yorker about our item on the fee some homeowners pay the city to climb their own front steps.

“If you build a building, it should be on the private parcel, not on the public sidewalk. What would happen if you decided to build a garage on the town road in front of your house, obstructing the public throughway? The town would fine you and tell you to take it down.

“I find it laughable that someone would buy a property without the right easements and then bitch and cry and moan about it. The city should fine the hell out of the owners and make them return the public easement to the public. They should fine the greedy, conniving developers who decided to build on the sidewalk to illegally increase the value of their project.

“The agreement between the city and the developers is the real story. It just goes to show how much power the developers have and how corrupt city workers can be. I wonder how much money the city employees got in kickbacks/bribes from the developers to get permission to build on the sidewalk.

“The people who bought the properties are idiots and should accept that they didn’t conduct their due diligence. I’ve got some great oceanfront property in Arizona and a nice plot on the moon for sale. Anyone interested?”

“I think we could soon be seeing The Art of The Deal meet The Art of War,” writes one of our regulars — picking up on our recent warnings of distant war drums in the South China Sea.

“Maybe by early 2018, but it seems we are on an intentional collision course with China.

“Hillary’s pivot looks to have been picked up without a hitch by Trump with the added niceties toward the Russians. Don’t want a two-front war, ya know.

“If you start to see a bunch of hero-worshipping war movies/shows being released, you’ll know our domestic psyops folks are getting us ready.

“Of course, that’s not a perfect tell, due to the huge size of our military-industrial complex these days, even during peace — well, relative peacetime. We have huge standing armies that make a ready audience for these shows.

“I see seven war movies for 2017 and two already announced for 2018.

“One of the 2018 movies is about a German conscientious objector who is assassinated by Hitler. Oh, and there’s Six on the History channel, about SEAL Team Six escapades. Probably missing a few, not to mention reruns of older war movies.

“I can’t wait for AI, VR/AR and robotics to make our human soldiers a thing of the past.

“And no, this wasn’t done tongue in cheek.”

The 5: Hey, why not? Already Fox is rolling out the revival of 24 right after the Super Bowl — just in time for a president who says “torture works”…

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. “The first time in history,” says President Trump of Dow 20,000. “I’m very proud of that,” he tells ABC News. “Now we have to go up, up, up.”

While the mainstream is obsessed with the Dow, you’ll be far better off with a handful of super-cheap stocks trading below $1 a share that, based on Trump’s executive orders, are set to go supernova. A $100 investment in the right names could fund your retirement.

The time to act is now, during his first 100 days. Click here for the scoop — no long video to watch.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

Recent Alerts

Power to the People (Options)

“The ability to trade any market, anytime, from anywhere has changed everything,” says options-trading expert Alan Knuckman. Read More

Ukraine and the End of the Dollar

U.S. officials are talking about imposing what amounts to the financial death penalty on Russia… But Russia has given themselves a reprieve. Read More

Cuban Missile Crisis Redux

The proverbial “geopolitical tensions” involving Russia have a funny way of bubbling up around the Olympics. Read More

Pain and Suffering (Crypto)

“If you believe demand for BTC will grow in the coming years,” says crypto expert Chris Campbell, “a lower Bitcoin price in the short term is a good thing.” Read More

2022 Outlook: Gold

In contrast with the mainstream, Jim Rickards says gold will reclaim its 2020 record highs this year. Read More

The Amazing Shrinking Stock Market

“If there is a bright spot in the economy today, it is in the abundant flow of private and public capital,” says our resident futurist George Gilder. Read More

The Fed vs. the Stock Market

After more than three decades, it’s possible the Fed no longer has the stock market’s back. Read More

Bombshell 2022 Crypto Forecast

Crypto investor James Altucher predicts: “Ethereum will be the next trillion-dollar coin, hitting $100,000 before 2023.” Read More

2022: Inflation-Proofing Your Portfolio

“You can continue to grow your wealth in 2022 even though different stocks will be leading the market forward,” says our retirement specialist Zach Scheidt. Read More

Best Tech Bet for ’22

When it comes to the tech sector in 2022, Ray Blanco says it pays to be “choosy.” Read More