Apple: Safer Than Uncle Sam?

  • Apple bonds become a “safe haven” for investors…
  • … but you can make a fortune when Apple “kills” the iPhone
  • Federal Reserve puts a “Help Wanted” sign in the window
  • Gold’s “Kinetic Window” follows script perfectly with 16 days to go
  • A Big Pharma breakthrough — and how the French will one-up it
  • “China’s ICO ban is certainly not the end for cryptos”
  • Countdown to Fed tightening… Wells Fargo’s “skullduggery” is worse than we think… Is Trump a politician?… And more!

“Apple Bonds the New Treasuries,” says a Drudge headline this morning.

The world’s biggest publicly held company sold $5 billion in new debt yesterday. The researchers at Intellectus Partners noticed an uncanny resemblance to the way the U.S. Treasury issues new debt, “with benchmarks for repeat issuance of debt due in two, five, 10 and 30 years,” reports Bloomberg.

The article goes so far as to venture that some investors might view Apple bonds as a safer option than Treasuries, given the possibility of a debt-ceiling showdown this month.

Hey, why not? Standard & Poor’s gives Apple the same credit rating as Uncle Sam — AA+, one notch below the highest AAA rating. And while Washington, D.C., is $20 trillion in debt, Apple sits on a cash pile totaling $261.5 billion.

The yields on Apple’s bonds are better. A bond expiring in May 2023 carries yields 2.36% this morning, compared with 2.2% for comparable Treasury paper (and a 1.54% dividend yield for AAPL shares).

But for our purposes in today’s episode of The 5, we’re going to assume you’re not seeking a smidgen of income to stay barely ahead of inflation.

And as it happens, our research team has uncovered a swing-for-the-fences profit opportunity linked to Apple.

We’re now less than a week away from the next Apple dog-and-pony show — the unveiling of the next-generation iPhone.

Which is strange given a flurry of recent headlines about how Apple is preparing to “kill” the iPhone.

Dig deeper, however, and there’s no contradiction at all. Apple is hitching its fortunes to an under-the-radar tech trend with growth potential of 269,130%. For maximum gains, you’ll want to be properly positioned before Apple’s announcement next Tuesday. And by that, we don’t mean AAPL stock and certainly not its bonds.

We’re talking about nothing less than a second chance at epic wealth if you missed out on the smartphone boom a decade ago. Here’s the full story — no long video to watch.

To the markets, where traders are digesting a surprise vacancy at the Federal Reserve.

Vice Chairman Stanley Fischer says he’s resigning for “personal reasons” effective Oct. 13. He did not elaborate on what those reasons are.

On the one hand, Fischer will be departing only nine months before his term was up anyway. But on the other hand, Fischer is one of four people in the Fed’s power structure whose opinion matters when it comes to setting policy. President Trump gets to name his replacement even sooner than expected.

At last check the Dow was little changed from what it was before the news broke — recovering about 75 of the 234 points it lost yesterday. Gold rests at $1,338, its high so far this year. The yield on a 10-year Treasury note is 2.07% — as low as it’s been since Trump’s election.

In the meantime, the Fed remains on track to start shrinking its balance sheet starting at its next meeting two weeks from today.

While our Jim Rickards is confident the Fed is done with interest-rate increases this year, he says policy will continue to “tighten” in the form of balance-sheet normalization.

“This is Fed-speak,” Jim explains, “for reducing the money supply by not rolling over maturing Treasury bonds and mortgages into new bond purchases. Without selling a single bond, the Fed plans to reduce its balance sheet by letting old bonds mature, receiving the cash (which disappears) and doing nothing.

“This process of balance sheet normalization is the opposite of quantitative easing (QE). The proper name for it is quantitative tightening (QT), although the Fed refuses to call it what it is…

“My estimate, and also that of some academic researchers, is that every $500 billion of QT is equivalent to one 0.25% rate hike. The QT will be announced on Sept. 20 and may start then or shortly before the end of 2017.”

Jim says the markets have not yet “priced in” QT. Once they do, he expects a hit to the stock market and the dollar… and another boost for gold.

Speaking of gold, the Midas metal’s “Kinetic Window” is playing out just as Jonas Elmerraji told us it would in mid-June.

Jonas made that call based not on Fed policy or Chinese buying or any of the other “macro” factors we talk about — but simply on the accumulated weight of gold’s price action going back more than a decade.

Aided by an immense amount of computer power that Agora Financial invested in for more than a year… Jonas concluded that Friday, June 23, would mark the start of a 92-day “Kinetic Window” in which there’s an 83.5% probability of a price rise.

With only 16 days to go before the end of that window — the part of this chart shaded in green — gold as measured by the GLD ETF is looking like a textbook Kinetic trade…

Kinetic Window chart

GLD is up 7%… and the GLD options Jonas recommended to his readers are up 82%.

Jonas is watching his proprietary computer platform spitting out several new trades for September and October, after a summertime lull. There’s no time like the present to jump on board.

Days ago, the FDA gave its approval to a therapy that will — and we’re not engaging in hyperbole here — transform modern medicine.

The pharmaceutical giant Novartis achieved a medical holy grail by creating a treatment that alters a patient’s own cells to fight disease. So far the therapy — called Kymriah — is being used for a small percentage of young patients with B-cell acute lymphoblastic leukemia who haven’t been helped by conventional cancer-fighting drugs.

Our science-and-wealth expert Ray Blanco explains how Kymriah works: “Novartis gets white blood cells from the patient’s blood. Then in a lab, technicians edit certain genes in these cells. The procured cells are ‘soldier cells’ of the immune system, normally tasked with killing pathogens and even attacking cancer cells.

“However, after the genes are edited, the cells are far more effective in this disease. They become ‘super soldiers’ programmed to go after leukemic cells with tremendous aggression.

“These cells are put back in the patient’s bloodstream,” Ray says, “and then they go to work… with amazing results.”

And Big Pharma is racing to adapt this cell-editing technology — CAR-T — for other diseases.

Stunning as this breakthrough is, there’s just one problem: Kymriah is wicked expensive. As in $475,000 per patient.

“Novartis’ tech is great, but a batch has to be custom-made for every patient,” Ray says. “Using foreign cells isn’t possible because they will be rejected by the host… and the cells will turn around and attack the host, too.”

Which is why Ray is following a French company that’s working on a “universal” version of CAR-T. Its scientists found a way to scrub cells of “genetic data responsible for tissue rejection. It inserts ‘super soldier’ genes and then mass-produces and stockpiles doses just as with other cancer therapies.”

Readers of Technology Profits Confidential are up a modest 11% since recommendation… but with a federal stamp of approval on CAR-T, its prospects are bright…

“This is only a short-term setback,” says Jonathan Rodriguez of China’s heavy-handed intervention in the cryptocurrency markets.

As we mentioned yesterday, the Chinese central bank just banned ICOs — the initial coin offerings comparable to an IPO for a stock. Jonathan — who’s part of Louis Basenese’s research team at The Crypto Alert — says there’s no cause for panic.

“China’s ICO ban is certainly not the end for cryptos,” he says. “In fact, NEO — China’s own government-sanctioned version of ethereum — is still up more than 15,000% since the start of the year. And that’s after a 43% drop in the currency last week.

“The fact is… digital currencies have been red-hot all year and were due for a pullback. And the China news provided the best excuse for traders sitting on paper gains to book a fat profit.”

Indeed, readers of The Crypto Alert have a chance to buy more of their favorites at cheaper prices — even after bagging a 200%-plus gain last week.

To the mailbag: “So it turns out Wells Fargo’s skullduggery is even worse than we were led to believe, when Round 1 of their ‘Eight Is Great’ scam hit the news last year. Whodathunk?

“You’ve got to love these guys. Wells pretends to be different than the other vampires. They’re based on the West Coast, faraway from all the bad players on Wall Street. They do things differently and have a ‘wide moat.’ Isn’t that special? Heck, they even pass Warren Buffett’s smell test — which is why he owns a boatload of WFC shares (through Berkshire Hathaway).

“But it turns out Wells created 1.4 million more fake accounts than they originally admitted. That’s only a 60% increase in the number of customers they ripped off. Oops.

“No doubt there will be a corresponding jump in the number of senior managers whose heads will roll. Or in the number of whistleblowers who will be rewarded (instead of punished or fired).

“Or not. Hey, Wells is a systemically important financial institution, right? So they’ll pay another cost-of-doing-crooked-business fine and the C-level executives who perpetrated the whole thing can still retire in style.

“Really, you can’t make up this stuff.

“If we have learned anything about these too-big-to-jail banks, they share common practices (including fraudulent ones) and no one will really be held accountable. It’s just business as usual in the finance industry!”

“I can’t be the only one who is tired of hearing that Trump is a ‘nonpolitician,’” a reader writes after Alan Knuckman’s remarks here yesterday.

“There are literally thousands of pictures and videos of Trump with dozens of politicians from decades gone by. My favorites are the ones of Trump and the Clintons laughing and having a great time on the golf course or some exclusive dinner gala. He has donated millions of investor dollars to politicians to get favorable regulations for his businesses.

“In other words he has been playing the political game for most of his adult life and has had friends in high places for decades. That’s a nonpolitician?”

The 5: Taking things a bit literally, are we?

Look, the guy got where he is today because he successfully passed himself off as an outsider. Too, there are thousands of people embedded in the power structure of this country who firmly believe he is not one of “them.”

So please forgive us for occasionally using shorthand to convey that phenomenon even as we recognize what a political animal he is.

[Now comes the influx of email from people offended we would point that out!]

Best regards,

Dave Gonigam
The 5 Min. Forecast

P.S. As we go to virtual press, readers of The Crypto Alert have bagged another big gain — 150% in the space of a month.

But as we pointed out above, the China scare this week has put some of the most lucrative and resilient cryptos “on sale.” For access to the best bargains, look here.

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.

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