When Time Is Of the Essence

Posted On Nov 6, 2015 By Dave Gonigam

  • 5.3 million Americans losing an average $52,290 a year…
  • … and one tiny company that could put a stop to it
  • Hey, lookit all the new jobs!
  • Why the Fed still can’t afford to raise rates
  • Hollywood makes another try with Atlas Shrugged… second-guessing Jim Rickards… a “nonelitist” reader’s complaint… and more!

[Time-sensitive announcement: Today’s episode of The 5 comes to you earlier than usual. That’s so you’ll have enough time to review and act on a market-moving opportunity set to break this weekend while the exchanges are closed. If you choose to act on this opportunity, you’ll need to do so before the market closes today. By Monday, it will be too late — for reasons you’ll see right here.]

“I remember one family,” recalls New York physician Diane Meier, “where one of the daughters had the responsibility for caring for the mom who had Alzheimer’s disease, and she provided wonderful care to her mother for more than 15 years.

“And when her mother finally died, this sister had no job, no visible means of support, no skills and was basically put on the welfare rolls because she had no income to fall back on, because she had devoted most of her adult life to the care of her mother.”

We’ve been thinking a lot the last few days about the financial toll of Alzheimer’s disease. We’ve thrown several alarming facts and figures your way…

  • Current number of U.S. cases: 5.3 million
  • Projected number of U.S. cases by 2050: 13.8 million
  • Current annual treatment cost: $226 billion
  • Projected annual treatment cost by 2050: $1.5 trillion
  • Total cost of care for a dementia patient on Medicare during the final five years of life: $287,038
  • Amount of that total covered by Medicare: just under $100,000.

To those figures, we add a new one this morning: $56,290. That’s the average cost of care, per year, incurred by an Alzheimer’s patient — or, if the patient’s savings are exhausted, the patient’s family.

So says a study out this week from the University of Utah, sponsored by the National Institute on Aging.

Not surprisingly, the study says people whose families have a history of Alzheimer’s are 40% less likely to plan on retiring before age 65 compared with people who don’t have that family history. “People with low confidence about their financial situation in retirement,” says the study’s co-author Cathleen Zick, “should be proactive, and that would be a sea change in our culture.”

As it happens… you can act this afternoon to secure your financial situation in retirement… and capture the gains from the first successful Alzheimer’s drug this century.

“A biotech with a cure could potentially save the world economy hundreds of billions in Alzheimer’s-related health care expenses,” says our Ray Blanco. “It would also be set to earn many billions in annual sales and huge profits for its investors.”

Many have tried and failed — including pharma giants Eli Lilly and Pfizer — usually by going after the “amyloid plaque” that gunks up the brains of Alzheimer’s patients. But for eight years, Ray has been following the progress of maverick scientists at a tiny biotech going after “sigma receptors” that lie at the edge of a cell’s membrane.

“By modifying the effects of these receptors,” says Ray, “the drug is designed to ‘recalibrate’ a malfunctioning cell, restoring a more normal operation and reducing the disease’s severity.”

That is, the drug reawakens the body’s ability to repair damaged cells — and to great effect.

Early results from a Phase 2a trial showed improvement in 83% of patients — and that was before the researchers figured out the optimal dose. And in only five weeks, patients showed 38% improvement in measured cognitive function.

Which brings us to the reason we’re sending today’s episode early: Tomorrow, the company reveals final Phase 2a results at a conference in Barcelona, Spain. “The time to apply to present at this scientific event had closed,” says Ray – “but the company’s researchers were allowed to jump in late by the conference’s organizers. It’s quite possible that stunning data might be the reason.”

The near-term profit potential? Put it this way: One Alzheimer’s drug had yearly sales of about $2 billion before it went off patent. That’s five times the market cap of this company.

The long-term profit potential? Nearly limitless. “The technology also shows promise in other neurodegenerative diseases,” Ray tells us, “such as ALS, Huntington’s, multiple sclerosis and Parkinson’s — for which the company has received funding from the Michael J. Fox Foundation.”

The time to act is before the market closes this afternoon — before the presentation tomorrow. “If you’re on board ahead of time,” says Ray, “you’ll be in position to collect potentially life-changing gains. If you’re scrambling to buy come Monday morning, you could get locked into an outright bidding war for available shares.”

There’s still time to review Ray’s research and decide for yourself before day’s end. Here’s where to get started.

To the markets — where it’s all about the job numbers this morning.

It being the first Friday of the month, the Bureau of Labor Statistics is regaling us with its monthly nonfarm payrolls report. The wonks conjured a crazy-good number — 271,000 new jobs for October, and all but 3,000 of those were in the private sector. The “expert consensus” was counting on 190,000.

In addition, the numbers show evidence of wage growth; average hourly earnings popped 0.4% — putting the year-over-year growth at 2.5%. Meanwhile…

  • The “U-3” unemployment rate reported on your hourly AM radio news fell to 5.0%. That’s the lowest since April 2008
  • The “U-6” rate — which includes part-timers who want to work full-time, plus people who’ve given up looking for work in the last year — fell to 9.8%. That’s the lowest since May 2008
  • Even the real-world unemployment rate from Shadow Government Statistics — running the U-3 number the way it was in the 1970s — is now the lowest in three years, at 22.8%.

The labor force participation rate — the percentage of the working-age population in the labor force — remains mired at a 38-year low of 62.4%.

But it’s the 271,000 new jobs number traders are fixated on. Conventional wisdom says the number removes all doubt: The Federal Reserve will raise its benchmark Fed funds rate next month.

As we write midmorning, we see the following effects, in order of magnitude…

  • The dollar is on a tear. The euro has sunk to $1.075, the lowest since April. That’s propelled the dollar index past 99 for the first time since April
  • Bond yields are soaring. The 10-year Treasury is up to 2.33%, the highest since July
  • Gold has tumbled below $1,100 for the first time since July, the bid at last check $1,088. The rest of the commodity complex is also hurting; West Texas Intermediate crude is back below $45
  • Stocks are generally in the red, though not dramatically. The S&P 500 is down two-thirds of a percent, at 2,087.

Of course, you don’t come to us for conventional wisdom. So we can tell you the 271,000 number doesn’t alter Jim Rickards’ calculus about the Fed leaving rates alone next month: As he said here just yesterday, unemployment isn’t the only thing the Fed takes into account. It also considers GDP and inflation — both of which are below the Fed’s desired targets.

Besides, one month of good job numbers doesn’t constitute a trend. The last three months put together still look disappointing… and there’s one more jobs report due before the Fed meeting.

And… all that dollar strength today puts the Fed in a bind. Raise rates now and it sets off a wave of debt defaults in emerging markets that could easily boomerang stateside.

By the time Dec. 16 rolls around, the Fed could easily hold off on raising rates with an excuse like, “… while the Committee awaits confirmation that inflation expectations continue to rise in line with its forecasts.” (They really say stuff like that.)

True, after a whole year of all talk and no action on rate increases, that could send markets into a tizzy.

Well, we did say in January this would be the year faith was lost in central bankers…

Maybe this time Hollywood can do Atlas Shrugged right?

Albert Ruddy, a film and TV producer whose credits include The Godfather, has won a 40-plus year battle to acquire the film rights for Ayn Rand’s 1,368-page paean to liberty and entrepreneurship.

Ruddy tried to convince Ms. Rand in person in the early ’70s, but her insistence on script approval was a deal-killer.

Many rumors of a movie or TV miniseries surfaced in the decades after her death, in 1982. In the end, the task fell to John Aglialoro, the CEO of treadmill maker Cybex. He produced a trilogy for theaters. The first installment in 2011 had a budget of $20 million and grossed $4.6 million. By 2014, the third installment was produced for only $5 million and grossed $847,000. Different actors portrayed the main characters in each of the three installments.

“You shot the book, not the movie,” Ruddy recalls telling Aglialoro. And thus Ruddy convinced Aglialoro to sign over the rights. Ruddy figures on a six- or eight-hour TV series, probably for distribution on Netflix or a similar streaming service.

Expect the novel’s 1957 railroad context to be brought into the near future. “When you look at guys like Jeff Bezos, he’s not only doing Amazon, he wants to colonize Mars,” Ruddy tells The New York Times, waxing enthusiastic about a strike by the innovators that leads to an Internet blackout.

The project sounds like a go. Can the Angelina Jolie as Dagny Taggart rumors be far behind?

“I’d like to say that I do find The 5 useful and make a point to read it every day,” a reader writes. “I’m also a big follower of Jim Rickards because I think he is a rare voice of truth in the midst of madness.

“Surprisingly, there is no ‘BUT’ in this email — simply a question about Jim Rickards’ latest no Fed rate hike call. You reiterated that in yesterday’s 5, but I took notice of the following tweet he made the same day:

Description: Jim Rickards Tweet 1106.png

“‘Could be blunder time’ seems to indicate that he believes a December rate hike is now a real possibility.

“Am I drawing an incorrect conclusion here? I’m keeping my fingers crossed that you will publish a response to this email. I’m thinking that other subscribers who follow him on Twitter might have the same question.”

The 5: Heh — Jim never rules out the possibility of a Fed blunder.

Back on Aug. 13, when conventional wisdom said a September rate increase was a lead-pipe cinch, Jim was sticking to his guns. But he also had a caveat: “If Yellen does raise rates, fasten your seat belt and look out below. Markets will have no bottom, and we’ll be in for a 1998-style crash beginning in emerging markets.”

Was he trying to have it both ways? Hardly. Jim wrestles with probabilities in a world with few certainties. And you can never dismiss a low-probability event as long as the probability is greater than zero.

Rest assured we’ll be on Blunder Watch from now all the way through the next Fed statement on Dec. 16.

“We all watch and listen to the latest concerning the Federal Reserve and how it will affect the economy short term and long term,” writes one of our regulars. “What we should be discussing is our lame duck Congress and administration, who collectively have done nothing positive since 2000.”

[We’re racking our brain trying to think what Congress did that was positive in 1999 or 2000. Certainly not the repeal of Glass-Steagall…]

“They have the ability, but not the courage, to either change what the Federal Reserve does or cancel its charter. But this would be cutting off the gravy train that allows them to stay in office, so they don’t do it.

“We no longer have people such as Paul Volcker, or even Jimmy Carter, in government. Men who had the courage to act, knowing it would cost them their careers. Jimmy Carter may have helped inflation along in the ’70s, but he didn’t stand in the way of Paul Volcker prior to the 1980 elections when he raised the interest rates at the Federal Reserve, which all but doomed any chance Carter had at re-election.

“Going back over 25 years, it seems those in Congress seem more interested in what they can get for themselves than what they can do for all the people, and taking from one to give to another is not doing something for the people of our country. Eventually, those they are taking from run out of things to confiscate.”

“I love the information,” a reader writes about Ray Blanco’s Alzheimer’s research this week. “However, some of us are still trying to keep our heads above water. The subscription price to get this information still remains unavailable to the nonelitist. The poor get poorer.”

The 5: We’re sorry if the cost of Ray’s premium research is out of your reach at this time. Ray does have an entry-level newsletter that’s more accessible.

We try to serve as diverse an audience as possible. So most of our editors have an entry-level publication that’s suited for smaller and more conservatively invested portfolios.

They also have a premium advisory service that aims for much bigger gains in a shorter time frame. Researching those premium ideas requires more time and expense — whether it’s Byron King jetting off to Madagascar to check out a graphite mine or Jim Rickards attending a conference in Malaysia to get the skinny on who will fire the next shot in the currency wars.

Or in this case, Ray Blanco spending eight years following the maverick scientists who might well stun the world tomorrow with the prospect of an Alzheimer’s cure.

And we charge more accordingly. With any luck, the gains you make from our $50-a-year newsletters will be enough that you can move up to the higher-end services. That’s our fervent hope, anyway — both for your sake and ours!

Have a good weekend,

Dave Gonigam
The 5 Min. Forecast

P.S. Clock’s ticking — if you want the biggest possible gains from the first drug of the 21st century that can make a meaningful difference for Alzheimer’s patients — the time to act is this afternoon. Click here to begin.


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