- The EARTHSHAKING market impact of the Comey firing (never mind)
- The other thing that happened in D.C. yesterday that could cement Trump’s legacy
- The new FDA commish and a cancer-diagnosis breakthrough
- “Belt and Road” — China throws a big party, U.S. not invited
- Let them eat stale pretzels: Buffett opines on air travel
“Dow opens lower after President Trump fires FBI Director James Comey,” says an utterly useless CNBC alert on your editor’s iPad.
In what way does such a headline make your life better, make you more knowledgeable or show you the way to newfound riches?
It does none of those things. But for harried “content creators” at CNBC with multiple deadlines per hour, it’s journalistic junk food — cheap and easy.
The use of the word “after” kinda-sorta implies causation without having to do the heavy lifting of proving a causal link. But logically, it makes no more sense than a headline that says “Dow opens lower after Snoop Dogg announces ‘Snoop Fest’ in father’s hometown”… even though both are equally true!
There might come a time when l’affaire Comey has an impact on the economy and the markets. But not today.
We suspect that whatever progress the Trump administration was making on health care and tax reform will quickly run aground on the shoals of renewed Kremlin-baiting… and that markets haven’t fully “priced in” the likelihood. Certainly that’s what our David Stockman believes. But again, not today.
[Just in: A supposedly slam-dunk Senate vote to repeal Obama-era rules on methane emissions failed, with only 49 votes in favor. Hmmm…]
Even if Trump is soon rendered a lame duck, unable to enact any of his economic agenda, something else happened in Washington yesterday that might well cement a positive legacy.
The U.S. Senate voted 57-42 to confirm Dr. Scott Gottlieb as commissioner of the Food and Drug Administration.
This is a huge deal, and not only because — according to the agency’s own website — the FDA regulates products accounting for 20 cents out of every dollar spent by the average American.
We’ve been closely eyeing this appointment all the way back to Trump’s inauguration. At the time, we were hopeful Trump would reach beyond the usual suspects for an FDA commissioner. Maybe even someone who would break from five-plus decades of orthodoxy that says all new drugs and devices must be proven “safe and effective.”
If safety alone were enough to merit FDA approval, drug companies could slash their research-and-development costs… and lifesaving treatments could come to market more quickly.
Gottlieb was a conventional choice for FDA commissioner… but as conventional choices go, a good one.
He was a deputy FDA commissioner under Bush the Younger. He hung his shingle at a conservative think tank more recently. Wrote Ronald Bailey at Reason when Gottlieb was named in March, “While not a radical reformer, Gottlieb clearly has a good understanding of how over-regulation has been slowing down innovation.”
Indeed: As a cancer survivor, Gottlieb knows full well the human costs when FDA regulators drag their feet and keep promising treatments out of the hands of patients who have no other hope.
As Gottlieb once wrote, “In so heavily prioritizing one of its obligations — the protection of consumers — the FDA has sometimes subordinated and neglected its other key obligation, which is to guide new medical innovations to market.”
And so Gottlieb’s ascendance is outstanding news for one of the most promising medical innovations of the 21st century.
Because it’s not just drugs on Gottlieb’s radar. “In particular, Gottlieb has been a critic of how the FDA regulates new diagnostic technology,” says Ray Blanco of our science-and-wealth team.
“He notes that raising the regulatory burden will only stifle innovation and block new tests from coming to market.”
Now he’s in a position to do something about it… clearing the way for a device that would transform the way doctors detect cancer. Forever.
The device is small enough to fit in the palm of your hand. So it could be a fixture in every doctor’s office.
A technician would take a drop of blood from your fingertip. Then it would go in the machine, where it would be mixed with a reddish-gold liquid. Within 10 minutes, you’d have a rock-solid reliable cancer diagnosis with little or no need for other testing.
The most promising use of this device is for prostate cancer — and lordy, is it ever needed.
By the time a man reaches age 70, he stands a 1-in-8 chance of a prostate cancer diagnosis. Not that the diagnosis is necessarily accurate, though.
As we pointed out earlier this spring, the existing PSA screening is nigh useless. Dutch researchers have concluded a PSA test lowers your lifetime cancer risk by only 2.4%.
And for what? A high PSA reading means you get to experience all the joys of a transrectal biopsy… and there’s a high likelihood your condition turns out to be benign.
“Some 1.2 million biopsies are performed in the U.S. yearly,” Ray says, “and more than half of them could be avoided with a more accurate test. That’s hundreds of millions of wasted dollars from both unnecessary biopsies as well as resulting complications.”
“Since early detection is key to curing many diseases — including cancer — this gold-enabled diagnostic technology will help save countless lives,” Ray concludes.
“It’s not inconceivable that eventually there’d be a version of this machine for personal use. Imagine having a version at home, allowing you to get a medical diagnosis without making a doctor’s appointment.
“The device could be wired to the internet, sending pertinent information to your doctor if there’s any hint of trouble. That means you’ll be able to start treatment as soon as possible — increasing your odds of beating the diagnosis.
“And as the researchers increase the number of conditions the device can diagnose, the more diseases you can catch early. Before long, it could be a must-have appliance for every home.”
Ray goes so far as to call it a “universal cure machine.”
See what we mean about Trump cementing his legacy? Heck, he could be impeached and still go down in history as the guy who appointed Scott Gottlieb to the FDA and enacted policies that saved millions of lives.
Or not. Maybe it won’t make Trump “immortal”… but it’s a huge breakthrough… and the profit potential of 10,000% or better is for real. Follow this link and see for yourself.
As the day wears on, the Dow is barely in the red relative to yesterday’s close — 20,959. Gold is little moved at $1,219. So much for any “Comey effect.”
The big mover is oil — up nearly 4% at last check, to $47.58. The Energy Department’s weekly inventory report showed a drawdown of 5.2 million barrels from America’s crude stockpiles.
China’s holding a big party next week… and the United States isn’t invited.
Leaders from 28 countries will attend something called the “Belt and Road Forum.”
China is bankrolling an enormous initiative that harks back to the Silk Road trade routes of old. Called “One Belt, One Road,” it envisions a maritime “belt” of routes around Asia and an interior “road” through central Asia.
“This is a network of highways, railroads, airports, bridges, tunnels, ports, dams, telecommunications channels and other critical infrastructure stretching from Shanghai to Rotterdam,” explains Jim Rickards.
What’s in the works is nothing less than an economic earthquake after four centuries, Jim says.
“For 400 years, commerce between Asia and the West has been by ship. That commerce was dominated first by the U.K. and the Royal Navy and then later by the U.S. and the U.S. Navy through control of chokepoints in places like the Straits of Malacca and the Suez Canal.
“If China can move goods by land, then maritime routes and naval dominance are suddenly obsolete.”
The summit is this coming Sunday and Monday. Said a “senior Asian diplomat” to the Reuters newswire, “The uncertainty over Trump and his ‘America First’ is leading countries to realize they need to get on good terms with China.”
It’s more than that, Jim tells readers of Rickards’ Strategic Intelligence: “This is one more sign of the coming decline of U.S. power and the U.S. dollar. China would happily conduct commerce with no dollar intermediation at all. China cares only about its own currency… and gold.”
We’ll keep an eye on developments from the Belt and Road conference over the weekend…
“Ol’ Warren better watch out!” a reader writes after yesterday’s episode. At the rate things are going, next time he won’t be handed back his head and will be given a horse instead.
“What are the chances that the next Berkshire Hathaway retreat will be held at a Disney theme park called ‘Sleepy Hollow’?
“Now, that would be worth the hotel and travel expenses!”
The 5: Buffett’s let-them-eat-cake mentality really came through in another CNBC moment on Monday.
Asked about his recent investment in airlines and the miserable experience of the typical air traveler these days, he opined that airplanes “may become like cattle cars, but a significant percentage [of passengers] would rather be treated that way and fly for X than have far more legroom… and fly for X plus 25%.”
Actually, Warren, a significant percentage of passengers would rather allow some foreign competition to break the oligopoly of U.S. airlines — that is, if they knew foreigners are forbidden from owning more than 25% of a domestic airline.
That way they could have more legroom and still fly for “X.”
But you’re not interested in allowing them that option, are you?
Didn’t think so.
Which reminds us of something Buffett’s partner in crime Charlie Munger said in 2010. We cited it here in The 5.
“You should thank God” for bank bailouts Munger was caught saying to a crowd of students at the University of Michigan in a video that went viral. “Hit the economy with enough misery and enough disruption, destroy the currency and God knows what happens.
“So I think when you have troubles like that you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger.”
Reminder: At the time, Berkshire Hathaway held a 6% stake in Wells Fargo, holder of $1.7 trillion in “assets” that were off balance sheet and a significant recipient of bailout funds.
“Now, if you talk about bailouts for everybody else,” he went on, “there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies.
“At a certain place, you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”
Yes. That really happened. And no one cared longer than 24 hours…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Time is growing short: David Stockman believes the market will get blindsided tomorrow.
It’s been a rough year for retail — 3,200 chain stores are closing their doors — but that’s nothing compared with what he sees coming.
While many people on Wall Street will be caught unawares… David sees the potential to seize on the market chaos for epic gains. It’s a one-of-a-kind market setup — which he describes in depth right here.
