Global Market Comments
January 26, 2018
Fiat Lux
SPECIAL STEM CELL ISSUE
Featured Trade:
(JOIN THE MAD HEDGE TECHNOLOGY LETTER PRODUCT LAUNCH)
(THE STEM CELLS IN YOUR INVESTMENT FUTURE)
(CELG), (TMO), (REGN)
I'll do anything to postpone aging, as regular readers of this letter already know.
So when my doctor told me that she could extend the life of my knees by ten years with a stem cell injection, I was all for it.
You better pay attention too.
Stem cells, along with CRISPR gene editing, are two hyper accelerating medical technologies that promise to cure your ills, extend your life, and make you fabulously rich along the way.
Have I got your attention?
When my doc confirmed that she was already getting spectacular results from her other elderly patients, such as the dramatic regrowth of knee cartilage, it was like pushing on an open door.
Yes, these are the famous well worn 65-year-old knees you have heard so much about that hike and snowshoe 2,000 miles a year with a 60 pound backpack.
My doc is no lightweight. She is the orthopedic surgeon for the US Ski Team at Lake Tahoe, which is why I sought her out in the first place.
As a UCLA trained biochemist, I have known about stem cells for most of my life. They only left the realm of science fiction a decade ago.
Early sources of stem cells relied on stillborn human fetuses, creating a religious and political firestorm that lead to severe restrictions, a funding drought, or outright bans.
During the 2000's, California was almost the only state that permitted stem cell research.
Since then, the technology has developed to the point where they can be easily harvested throughout the human body.
Easy, except when the source is the bone marrow in your own hip.
"You may feel a slight twinge," said my doctor, as she flushed the air out of a gigantic horse needle the width of a straw. "I only have to hammer this needle into your hip bone 20 or 25 times to get the marrow I need."
This was definitely NOT in the literature I had been provided.
I said, "Don't worry, Marines are immune to pain."
"Does that work" she asked.
"No, not really," I replied, grimacing.
I felt every single blow, and tried to imagine myself on a far away tropical island.
Once she obtained the 10cc she needed, she popped it into a small centrifuge to separate the stem cells (clear) from the red blood cells (red).
She then used an ultrasound machine to precisely inject my own stem cells at the exact right spot in both of my knees.
Being the true journalist that I am, I took pictures throughout the entire procedure with my iPhone X (see below).
The problem with advanced, experimental treatments is that they are not covered by your health insurance. Still, I thought $2,000 for ten years of extra life for both knees was a bargain.
Stem cells are undifferentiated cells that can transform into specialized cells such as heart, neurons, liver, lung, skin and so on, and can also divide to produce more stem cells.
You can think of stem cells as chemical factories generating vital growth factors that can help to reduce inflammation, fight autoimmune disease, increase muscle mass, repair joints, and even revitalize skin and grow hair.
Goodbye Rogaine!
When you are young, you have oodles of these cells, which is why kids so rarely die from dread diseases.
However, as you age, your exposure to too much sunlight at the beach, too many chemicals in the food and water you eat and drink, and natural background radiation degrades your DNA and reduces your stem cell supply.
Supplies of stem cells diminish as much as 100 to 10,000-fold in different tissues and organs. Welcome to old age, and eventually death.
The procedure I underwent is called Autologous Adult Stem Cells Treatment.
The great thing about it is that since you are using your own cells, the risk of rejection or infection is minimal. And they are free!
This approach has become the must go to treatment for the wealthy seeking to repair aging, sagging parts of their bodies.
They are often sold with vacation packages in exotic third world countries where regulation and medical mal practice suits are non existent.
The fact that the treatments are now becoming widely available in the US testifies to its effectiveness.
Do any search on stem cell treatments, rejuvenation, or life extension and you will find hundreds and hundreds of private clinics offering to do so for high prices.
California leads the nation with 109 clinics (including 18 in Beverly Hills alone), followed by New York and Texas.
Just follow the money.
The market is now on fire, and is expected to reach $170 billion by 2020.
As a result, a number of breakthroughs in longevity are just around the corner.
The industry is now branching out into fields considered unimaginable just a few years ago. I'll cover some of the highlights.
Imagine using your own stem cells to repair not only your knees, but any other organ. This is already being done in the lab with animal trials.
In Japan they are growing human eyes from scratch, including lenses, corneas, and lenses.
At Stanford, stem cells are bringing dramatic improvements in stroke victims.
At USC they are deployed to bring rapid repairs to those with severe spinal chord injuries.
A number of private firms have sprung up to facilitate banking of your own stem cells through cryogenic freezing, such as Lifebank. Just harvest them when you are young for future use.
Better yet, get born to wealthy parents who will pay to have your birth placenta and umbilical chord frozen, the two richest sources of stem cells known.
The key term to search for your investment strategy is Mesenchymal Stem Cells, the major stem cells for cell therapy, or MSC's.
These cells have the ability to differentiate into vital cells that can be used to cure autoimmune disease, cardiovascular disease, liver disease and cancer.
There are now several hundred clinical trials involving these cells underway.
A more adventurous strategy is to buy the stem cells of others and have them injected into yourself, a procedure known as parabiosis.
A company in Monterey, CA named Ambrosia is doing exactly this for $8,000 a patient. The goal here is to reverse aging across every major organ system.
Of course, I'm thinking there's got to be a trade here.
Not so fast.
Almost all stem cells efforts are now confined to the research labs of major universities, or are buried inside of large biotech and drug companies.
A few researches have spun off to set up their own private companies with substantial venture capital backing.
That said, there are a few peripheral listed plays.
Celgene (CELG) is one of my favorites, and is an early entrant in the field. They are using placenta derived cells to cure a whole host of diseases, which you can find listed on their site by clicking here.
Thermo Fischer Scientific (TMO) provides a range of tools and supplies scientists need to pursue stem cell research (click here for their site).
Regeneron (REGN) is using stem cells to pursue a broad range of serious medical conditions, including ophthalmology, cancer, rheumatoid arthritis, asthma, atopic dermatitis, pain and infectious diseases. Click here to visit their site.
There is one problem with the entire sector. We have a new president who has opinions on drug companies, which on occasion have lead to traumatic one day declines in these shares.
So these may be next year investments, instead of next week ones.
And how are my knees doing? I knew you would ask.
A little swelling in my knees went away in a day. I sat funny for a few more days, thanks to my bone marrow extraction.
It will take about six months before any real growth in new cartilage in my knees can be measures with an MRI scan, which I have scheduled. I'll let you know those results in a future letter.
But you know what?
My knees have not hurt an iota, despite my regular tortuous exercise regime. And I thank that, right there, is a win.
And if it works, my doctor wants to extract fat cells from my middle, known as Adipose Cells, and inject their stems cells, into my knees.
Talk about killing two birds with one stone!
This Won't Hurt a Bit
"Have a seat at the table, or you'll end up on the menu," said a confidential friend of mine in the Trump administration.
Global Market Comments
January 25, 2018
Fiat Lux
Featured Trade:
(GOLD IS BREAK OUT ALL OVER),
(GLD), (GDX), (NEM),
(THE 13 NEW TRADING RULES FOR 2018)
I'm sitting here at my Lake Tahoe lakefront mansion watching the Dow Average meander and go nowhere.
It is one of those perfect, picture postcard days, with a blue sky and cobalt lake. The fields outside are covered with snow crystals sparkling in the sunshine.
After the close, I'm going to have to shovel off my outside decks to keep the weight of the ice from collapsing them.
Those (TLT) puts are looking pretty good this morning, and are approaching the maximum profit point with only a few weeks to expiration.
In these tedious trading conditions it is more important for me to teach you how to avoid doing the wrong thing than pursuing the right thing.
I am therefore going to fill you in on my 13 Rules for Trading in 2018. Tape them to the top of your computer monitor, commit them to memory, and maintain iron discipline.
They will save your wealth, if not your health. Here they are:
1) Dump all hubris, pretentions, and stubbornness. It will only cost you money.
2) The market is always right, even if all the prices appear wrong.
3) Only buy the puke outs and sell the euphoria. Do anything in the middle, and you will get whipsawed.
4) With option implied volatilities so low, outright calls and puts are offering a far better risk/reward right now than vertical bull and bear vertical call and put spreads. It is also better to buy stocks and ETF's outright with a tight stop loss. This won't last forever.
5) If you do trade spreads, you can no longer run them into expiration the collect the last few pennies. If you have a nice profit take it, don't hang on to the last 30 basis points, even if it means paying more commission. The world could end three times, and then recover three times, before the monthly expiration date rolls around.
6) Tighten up your stop loss limits. Not losing money is the key to winning in this market. There is nothing worse than having to dig yourself out of a hole. Don't run hemorrhaging losses, like the (VXX) from $55 down to $25. It will get easy again someday.
7) Buy every foreign crisis and sell every recovery. It really makes no difference to assets here in the US.
8) Several asset classes are becoming untradeable for long periods (retail, the ags). Stay away and stick to the asset classes that are working (technology stocks and short bonds). This is not the time to get greedy and bet the ranch.
10) Turn off the TV and just look at your screens and data. Public entertainers have no idea what the market is going to do, especially if their last job was sports reporting. Their job is to get you to watch the ads for General Motors and TD Ameritrade.
11) As the bull market in stocks enters its ninth year, too many traders, analysts, and strategists have become complacent. You are going to have to work for your crust of bread this year. This is an earnings, technology, and cash flow driven bull, not a QE or tax cut driven one.
12) It is clear that more money was allocated to high frequency traders this year. That is driving the new, breakneck volatility, increasing stop outs.
13) Ignore Washington at all costs. The market doesn't give a fig what's going on there, to quote The Queen.
The hackers are getting better. Better change your password too, from 12345 to DKFGGIDKFOKBJGELXPEVJBKDLKFBBJFCJCKVLBKGTY69!, and hope that the 69 doesn't give you away.
Only The Real Gunslingers are Prospering in This Market
Global Market Comments
January 24, 2018
Fiat Lux
Featured Trade:
(WHY CHINA'S US TREASURY DUMP WILL CRUSH THE BOND MARKET),
(TLT), (TBT), ($TNX), (FCX), (FXE), (FXY), (FXA),
(USO), (OXY), (ITB), (LEN), (HD), (GLD), (SLV), (CU),
(THE NEW OFFSHORE CENTER: AMERICA)
??
Years ago, if you asked traders what one event would destroy financial markets the answer was always the same: China dumping it's $1 trillion US treasury bond hoard.
It looks like Armageddon is finally here.
Chinese sellers were a major factor in the recent break of ten-year US Treasury bond yields above 2.60%. They recently tickled 2.68% a new four-year high. With a breakdown like this you could be printing a 2.90% yield in a couple of months.
You may read the president's punitive duties on Chinese solar panels as yet another attempt to crush California's burgeoning solar installation industry. I took it for what it really was: a signal to double up my short in the US Treasury bond market.
For it looks like the Chinese finally got the memo. Exploding American deficits have become the number one driver of all assets classes, perhaps for the next decade.
Not only are American bonds falling in value, so is the US dollar (UUP) in which they are denominated. This creates a double negative hockey stick effect on their value for any foreign investor.
In fact, you can draw up an all assets class portfolio based on the assumption that the US government is now the new debt hog:
Stocks -Buy inflation plays like Freeport McMoRan (FCX) and US Steel (X)
Emerging Markets - Buy asset producers like Chile (ECH)
Bonds - run a double short position in the (TLT)
Foreign Exchange - Buy the Euro (FXE), Yen (FXY), and Aussie (FXA)
Commodities - Buy copper (CU) as an inflation hedge
Energy - another inflation beneficiary (USO), (OXY)
Precious Metals -Entering a new bull market for gold (GLD) and silver (SLV)
Real Estate - The ultimate hard asset with a massive demographic tailwind (ITB), (HD), (LEN)
Yes, all of sudden everything has become so simple, as if the fog has suddenly been lifted.
Focus on the US budget deficit, which has soared from $450 billion a year ago to $700 billion today on its way to $1.2 trillion later this year, and every investment decision becomes a piece of cake.
This exponential growth of US government borrowing should take the US National Debt from $20 to $30 trillion over the next decade.
I have been dealing with the Chinese government for 45 years and have come to know them well. They never forget anything. They are still trying to get the West to atone for three Opium Wars that started 179 years ago.
Imagine how long it will take them to forget about washing machine duties?
By the way, if I look uncommonly thin in the photo below it's because there was a famine raging in China during the Cultural Revolution in which 50 million died. The Chinese government never owned up to it.
Don't See Any Bond Buyers Here
Global Market Comments
January 23, 2018
Fiat Lux
Featured Trade:
(KEEP A CLOSE EYE ON FREEPORT MCMORAN),
(FCX), (COPPER), ($SSEC), (BHP), (RIO), (ECH), (CU),
(WILL BITCOINS REPLACE THE $10,000 BILL), (GLD),
(THE SERVICE JOB IN YOUR FUTURE), (MCD)
It is clear from the improving economic data from China that the hard landing scenario is off the table. It is all part of the synchronized global economic recovery that is powering financial markets everywhere.
This is great news for the producers of everything that the Middle Kingdom buys in bulk, especially copper.
If you like copper, you've got to love Freeport-McMoRan (FCX), one of the world's largest producers for the red metal. These factors explain the sizeable insider buying that has been taking place in the shares over the past months.
The technical picture is looking pretty positive as well. The chart is showing that a strong upside breakout took place in the fall, supported by a sharp turn up in the 50-day moving average. This is universally positive for share prices.
This commodity is known in the investment industry as Dr. Copper, the only metal that has a PhD in economics. That's because of its uncanny ability to predict the future of the global economy.
Copper is now screaming of better things to come, along with the stock market, like a 3.5% GDP growth rate in the US this year, and stronger growth elsewhere.
The recent strength further is confirmed by longer-term charts for the Shanghai index ($SSEC), which is showing that a double bottom may well be in place.
Copper was the first metal used by man in any quantity. The earliest workers in the red metal found that it could be easily hammered into sheets and worked into shapes, like swords, which became more complex and artistic as their skill increased.
The ability to resist corrosion ensured that copper, bronze and brass remained as functional as well as decorative materials during the Middle Ages and through the Industrial Revolution to the present day.
Of the 19.1 million metric tonnes of copper produced in 2015, the latest year for which figures are available, Chile was far and away the leader, with 5.76 million metric tonnes. It was followed by China at 1.71 million tonnes, Peru at 1.7 million tonnes, and the US at 1.38 million tonnes.
This makes the Chile ETF (ECH) another great backdoor play in copper, which is up a ballistic 178% in two years.
As copper is a great electrical conductor, it is primarily used for electrical wiring, followed by the construction industry and shipbuilding, and the auto industry, especially in the rapidly growing electric vehicle space.
It's true that copper is no longer the dominant metal it once was, due to a structural global oversupply in shipping and the ongoing transition of the Chinese economy from a manufacturing to a services economy. Their copper intensive infrastructure is already largely built out.
Because of the lack of a consumer banking system in the Middle Kingdom, individuals have been hoarding 100-pound copper bars and posting them as collateral for loans. Get any weakness of the kind we saw in 2015, and lenders panic, dumping their collateral for cash. That's what made the early 2016 bottom.
The high frequency traders are now also in there in force, whipping around prices and creating unprecedented volatility. You can see this also in gold, silver, oil, coal, platinum, and palladium.
This is why I am spurring readers into the shares of Freeport McMoRan. The gearing in the company is such that a 50% rise in the price of copper triggers a 100% rise in (FCX).
More conservative and less leveraged investors can buy the First Trust ISE Global Copper ETF (CU).
Where to Find Copper
The conspiracy theorists will love this one.
The IRS has long despised the barbaric relic (GLD) as an ideal medium to make invisible large transactions. Did you ever wonder what happened to $500, $1,000, $5,000, and $10,000 bills?
Although the Federal Reserve claims on their website that they were withdrawn because of lack of use, the word at the time was that they disappeared to clamp down on money laundering operations by the mafia.
In fact, the goal was to flush out income from the rest of us.
Currency trivia question of the day: whose picture was engraved on the $10,000 bill? You guessed it, Salmon P. Chase, Abraham Lincoln's Secretary of the Treasury.
Now organized crime, terrorists, and tax cheats have another means with which to sidestep the IRS: Bitcoin.
When India dumped its high denomination banknotes in 2016, to where did everyone flee? To Bitcoins.
When China clamped down on individuals desperate to get their savings out of the country, what means did they use? Bitcoin.
As a result, the price of Bitcoins exploded some 110% to $1,100 over the past six months, and then crashed.
It is an old nostrum that if you block one means to avoid taxes, new ones will spring up to replace them.
This is a classic case.
Out With the Old
