- Ray Blanco: “No magic bullet for cancer”
- The crying need for a medical breakthrough
- A headwind for crypto is a gale for gold
- Straight from the Pentagon files: Silicon Valley Bank
- The Fed’s man of few words… “I can see the [depressing] future”… A quirky Canadian campaign… And more!
For the first time in three weeks, there were no Sunday-afternoon interventions ahead of the Asian markets reopening on Sunday evening.
The financial crisis of 2023 has gone dormant for the moment. All we got was an announcement overnight from the FDIC that the deposits and loans of Silicon Valley Bank will be taken over by Raleigh-based First Citizens Bank.
Of course, we remain on guard for new developments — and there’s an interesting backstory about the bailout of SVB depositors we’ll get to later — but for our main topic today, we dare to take on something other than the trouble with the banks…
“There is no magic bullet for cancer,” laments Paradigm’s tech-and-biotech authority Ray Blanco. “We’ve been searching for a magic bullet going back at least as far as Paul Ehrlich, the father of chemotherapy and winner of the Nobel Prize in medicine all the way back in 1908.”
Ray — a cancer survivor himself — bristles at the “Cancer Moonshot” project announced by Joe Biden back when he was vice president in 2016 and still ongoing. The National Cancer Institute’s budget was upped by 5.6% last year alone, to $7.3 billion.
But curing cancer is not like putting a man on the moon.
A moon landing was a totally doable proposition when JFK laid it out in April 1961; Apollo 11 landed in July 1969. “While there were difficult engineering problems to be solved,” says Ray, “no basic scientific breakthroughs were needed. The basics of getting to the moon had been solved by Robert Goddard’s liquid-fueled rocket in 1926, and further refined by Wernher von Braun in the decades following.”
In contrast, a cure for cancer “requires more than solving an engineering problem,” says Ray — “it needs a scientific breakthrough.”
In addition, “Cancer isn’t a single enemy that can be killed with a single bullet. It’s a handle we use to describe hundreds of different diseases caused by cells that have run amok. Every single one of those different diseases is unique.”
And every individual cancer case is different. “Not only are the genes in these malignant cells unique because they derive from the person who gets sick, the mutations that emerge are also unique.”
Still, there’s been undeniable progress combating cancer since President Nixon launched a “war on cancer” in 1972.
“The National Cancer Institute keeps a database on cancer incidence and death rates,” Ray says. “Every year, the risk of death following a cancer diagnosis falls a little bit. A fraction of a percentage one year, maybe a full percent the next. In 1975, for all cancers, the five-year survival rate after diagnosis was under 49%. Today, it’s almost 69%.”
The amount of money spent by the private sector — roughly $250 billion a year — dwarfs the $7.3 billion spent by the feds.
The incentives are enormous: “An effective new drug, one that raises survival just a few percent,” says Ray, “will generate huge profits while it remains patent-protected.”
What’s more, a quality cancer-treatment developer is buyout bait for Big Pharma: “We saw that recently with Seagen (originally Seattle Genetics), which was caught in a bidding war between Pfizer and Merck.” In the end, Pfizer came out on top, paying $43 billion.
Seagen was one of the original recommendations in Ray’s Technology Profits Confidential when the newsletter launched in 2010. It’s up over 1,000% by now.
Ray is on the hunt for the next great developer of a cancer therapeutic… but what he’s most excited about right now is a company working on a breakthrough treatment for an equally stubborn disease. As Ray explains here, this microcap biotech firm might be sitting on the most valuable patent ever.
The big market stories today are a stiff headwind for crypto… and a gale for gold.
The Commodity Futures Trading Commission is suing Binance, operator of the world’s biggest crypto exchange. “Since the launch of its platform in 2017,” says the CFTC’s complaint, “Binance has taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to ‘block’ or ‘restrict’ customers located in the United States from accessing its platform.”
With that, Bitcoin has slipped below $27,000 for a second time in a week. Still pretty good by the standard of the last nine months — but it affirms Paradigm crypto analyst Chris Campbell’s near-term jitters. As he wrote Altucher Confidential readers on Friday: “Is the bull market on? I personally don’t trust it. The pulse is erratic. There’s far more noise than there are signals.”
As for gold, it got pounded shortly after trading opened for the day in London. It’s still down over $20 at last check, back at $1,957.
From our perch, it looks like another chance to buy the dip: “Trading in options contracts linked to the metal suggest many investors are expecting a more sustained rally in the weeks ahead,” said the Financial Times over the weekend.
Looking at a chart of call options on GLD — the biggest gold ETF — it’s apparent people started piling in the moment the banks started looking shaky…
And there’s similar activity in gold futures and options traded on the CME.
Stocks are a mixed bag to start the week: The Dow is up more than half a percent to 32,424… and the S&P 500 is up less than a quarter percent at 3,978… while the Nasdaq is down nearly a half percent at 11,771.
The KBW Bank Index is up 2.4% at last check, with still-ailing First Republic Bank up 15%, for no obvious reason other than the glow of the aforementioned SVB headlines.
And as long as we bring up SVB again…
It’s not just celebrities and “tech” companies that were dependent on Silicon Valley Bank: So was the Pentagon.
There was a fascinating revelation tucked into a front-page Wall Street Journal story this morning about the military-industrial complex’s growing dependence on Silicon Valley startups.
“The shock waves from Silicon Valley Bank’s rapid collapse this month rippled through the Pentagon, where officials scrambled to come up with plans for startups working on defense projects that had accounts there, according to government and industry officials.”
Yes, the authorities came through with a backstop for all deposits, including those over the $250,000 FDIC limit. But “had the government not stepped in, some military production could have been at risk, said Mike Brown, a former director of the Pentagon’s Defense Innovation Unit, which aims to strengthen ties between the military and tech startups.”
All told, the Journal says the flow of private capital into the defense and aerospace market has swelled from $1 billion in 2017 to $6 billion now.
Interesting context, huh? It’s not only “Democratic donors” who benefit from the SVB bailout.
Of course, from where we sit, that makes the bailout even more outrageous — not less.
“Don’t be too quick to jump into a great opportunity,” says Paradigm value-and-income authority Zach Scheidt.
Zach was having a discussion with a colleague last week who mentioned how office REITs — real estate investment trusts investing in office buildings — have been left for dead. For instance, Boston Properties (BXP) is down 60% in the last year.
They’ve got nowhere to go but up, right? All the risks to this sector — the work-from-home trend, rising interest rates when it’s time to refinance the debt — they’ve already been priced in, right?
“I’m concerned these stocks could have further to fall,” Zach counters. “After all, we’re only two weeks into this banking crisis and the Fed is still raising interest rates.”
It comes back to timeless investing wisdom: “Stocks under pressure can often fall much further than many expect,” Zach explains. “As risk continues to mount, investors sell. And it can take months (or even years) before that selling is over.
“So in cases like this, I prefer to put stocks on my watch list rather than buy them right away. After all, you don’t want to catch a falling knife, as the old Wall Street saying goes. I’m very happy to miss the bottom and wait for the rebound to start in earnest before putting too much capital to work.
“If you’re watching a certain area of stocks under pressure, I recommend doing the same. Don’t buy just because the stocks are cheap and have value. Sit on your hands and wait for the danger to pass.
“That way, you can buy on the way back up and sidestep the risk of an all-out panic sending stocks like office REITs lower.”
Say what you will about Fed chair Jerome Powell, but at least he’s a man of few words — well, fewer words than his two most recent predecessors, anyway.
The folks at Bianco Research have painstakingly run every statement from every Fed policy meeting through a word processing program — going back nearly 30 years.
The resulting word count reveals that Powell’s statements have been generally less wordy than Janet Yellen’s… and also less wordy than Ben Bernanke’s after Bernanke embarked on “QE3” money printing in 2012.
Paradigm’s macro maven Jim Rickards knows the guy who crafts these every-six-weeks statements, including the one that went out last Wednesday. “He labors over every word in consultation with the Fed chair,” says Jim.
And at least for the time being, there are fewer words to labor over. We’ll count that as a plus, even if it’s a very small one.
“I can see the future,” today’s mailbag begins on a depressing note…
“A widespread banking collapse caused by Fed’s insistence on raising rates to stem inflation caused by Congress’ profligate spending. Public loss of confidence in banks in general, and the Fed in particular, results in CBDC, aka ‘Biden Bucks,’ becoming the currency of the realm and we Americans, toast.”
The 5: You’re hardly the only one thinking that way. For instance, the crypto pundit Nic Carter earlier this month…
Jim Rickards will have more to say on the subject tomorrow. Meanwhile, on a lighter note…
“Thanks for the comments on Regina, Saskatchewan,” a reader writes after last Thursday’s edition.
“Everyone needs a good laugh, plus everyone needs to lighten up and not take themselves so seriously. The story provided both. I think they should continue with their promotional campaign in their quirky Canadian way. Aye!”
“How nice to get short, to-the-point information and opinions to help us common folk understand the world of today,” writes our final correspondent.
“And it is without hastily drawn charts to prove some point or another — also without paragraphs lauding the expertise of the writer, whether written by the writer or a good friend.”
The 5: Thanks. Our records show you’re a very new reader, coming on board in January. Seeing as this e-letter is coming up on its 16th anniversary next month, it’s good to know a newcomer finds it as relevant as our longtimers do!
The 5 Min. Forecast