Dear New World Investor:
The economy is slowing rapidly. The S&P Global Manufacturing PMI in the US fell to 52.4 in June from 57.0 in May, missing expectations of 56.0 and pointing to the slowest growth in factory activity in almost two years – the second-weakest since July 2020. It showed slower service sector output expansion and the first contraction in manufacturing production in two years. While output and new orders contracted, inflationary pressures cooled. Looking ahead, goods producers registered the lowest degree of confidence for 20 months.
What’s next? Deflation in the core price indices, including the Fed’s favorite, Personal Consumption Expenditures. How does that happen? It’s just the business cycle. In good times, like opening up after a pandemic, companies increase prices and increase inventories to meet increased demand. That can cause supply chain problems, so companies even order extra stuff as “just in time” is replaced by “just in case.” Then, when demand slows (perhaps due to tough talk by the Fed scaring the markets?), companies suddenly have way too much inventory and they have to discount, hold flash sales, or sell to liquidators. Prices fall.
Not every product will see its price cut. The business cycle in commodities takes much longer, usually lasting several years in either direction. Many are only just starting to see their price cycle higher. But, other products, especially consumer products like those carried by the Walmarts and Targets of the world, are about to see a deflationary plunge the likes of which we have not seen since the Global Financial Crisis. Store checks show voluntary destocking by aggressive discounting already started on the Memorial Day holiday weekend. Discounting pressure should accelerate through July.
Because more retailers are now discounting, companies are having to offer even bigger discounts to get consumers to buy, and it is a race to the bottom in margins in order to clear inventory. Target, Walmart, and Macy’s announced recently that they are starting to receive large shipments of the outdoor furniture, loungewear, and electronics everyone wanted, but couldn’t find, during the pandemic. Morgan Stanley said lead times were eight months and the retailers will keep receiving these into 2023.
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I don’t think the Fed has realized that in the always-connected Internet era, they only have to talk about raising interest rates to sharply slow the economy. Today’s hawkish comments from several Fed policymakers, including Michelle Bowman and Christopher Waller in favor of another 75-basis point hike at the July 26-27 policy meeting, and Chairman Powell testifying that the central bank remains fully committed to bringing down inflation, capped the early S&P advance. (Although props to Philadelphia Federal President Patrick Harker, who said yesterday that the US economy is starting to show signs of softening demand, which if continued, could make the case for a slightly less aggressive interest rate hike in July. Ya think?)
No doubt the headline inflation numbers will stay higher than the month-over-month core numbers that the Fed looks at. The core numbers exclude food and energy but still include the impact of higher energy prices, which are a major factor in the higher prices of everything from food to consumer products. Economist David Rosenberg said: “When you strip out of the May CPI all the items that are linked to energy (airfares, moving/freight, rental cars, delivery services, new and used vehicles), the core was +0.36% and the year-over-year steadied near 4%.”
The numbers speak for themselves. In the US, the monthly price change in May for all items was 1% but for fuel oil, airline fares, piped utility natural gas, and gasoline the price changes were 17%, 13%, 8%, and 4% respectively.
A sharp drop in the monthly core inflation rates in the Producer Price Index, Consumer Price Index and Personal Consumption Expenditures Index should be enough to ignite a stock market rally, even if it takes a while for the Fed to change its tone. The first estimate of June quarter real GDP, which could be negative, is on Thursday, July 28 – the day after the next Fed decision. Buckle up, cowboy.
Market Outlook
The two weeks that ended last Friday were record tough. The breadth of losses was without equal, based on data that goes back to the Great Depression. In five of the seven sessions through last Thursday, at least 90% of S&P 500 stocks dropped, a record run of widespread losses. It was a rout.
A similar if slightly less harrowing picture prevailed across asset classes. From Treasuries to corporate bonds and commodities, everything was down for a second straight week, a stretch of sweeping declines that hasn’t happened since the 2013 taper tantrum.
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Bear markets end in capitulation, and that looked like it. History says we will rally, then drop back to test the lows, and then start an upward grind. The S&P 500 added 3.5% since last Thursday but still is in bear market territory, down 20.4% year-to-date. The Nasdaq Composite jumped 5.5% but is down 28.2% for the year. The small-cap Russell 2000 gained 3.7% and is down 23.8% in 2022.
The BofA Bull & Bear indicator dropped to 0.0. There are no bulls left. That’s as contrarian bullish as you can get.
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It previously fell to 0.0 in August 2002, July 2008, September 2011, September 2015, January 2016, and March 2020. Except for the 2002 double-dip recession and systemic events in 2008 and 2011, three-month returns have been strong, as the table below shows.
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The fractal dimension stalled in its plunge towards the end-of-trend 30 level. It’s certainly possible that the fractals start rising again towards the 55 consolidation level – that happened at the bottom in January 2021. I’d rather see the trend complete, which it could in the next couple of weeks just with a flattish market.
Top 5
Changes this week: None
Near-Term – chronological order
OIL iPath Pure Beta Crude Oil Exchange-Traded Note – Crude should rise quickly
GBTC Grayscale Bitcoin Trust – Bitcoin is coming out of one of its periodic sharp drops
META Meta – Bounce from overdone selloff
VLD Velo3D – Rapid revenue growth; low market cap
Long-Term – alphabetical order
GRPH Graphite Bio – second-generation genetic editing
NVTA Invitae – the winner-take-most of genetic testing
META Meta – a leader in the metaverse
RKLB Rocket Lab – #2 to SpaceX in space
VLD Velo3D – Return manufacturing to the US
Virus Update
Worldometers now shows 547,070,211 worldwide confirmed infections, of which 528,832,875 have run their course. Of those, 522,486,420 recovered and 6,346,455 died – matching the last four week’s all-time low case fatality rate of 1.2%.
In the US, there have been 88,451,152 confirmed infections, of which 85,194,065 have run their course. Of those, 84,154,263 recovered and 1,039,802 died – the ninth week in a row at the all-time low case fatality rate of 1.2%.
Hospitalizations are flattening out.
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Daily deaths are down to 218, the lowest level since the pandemic began in March 2020.
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Coming Events
All times below are ET, and most of the presentations and slides are archived on the companies’ websites so you can listen to them.
Monday, June 27
RKLB – Rocket Lab – Before the open – Added to Russell 3000
CDE – Coeur Mining – 10:00am – Renmark Virtual Non-Deal Roadshow Series
Short Interest – After the close
Wednesday, June 29
March quarter GDP – 8:30am – Third estimate
Thursday, June 30
CWBR – CohBar – 1:30pm – Longevity Therapeutics Summit panel
The $20-For-$1 Stocks
Say you put $2,000 into a stock that goes from 50¢ a share to $10. The $2,000 turns into $40,000. Then you put the $40,000 into another stock that goes from 50¢ to $10. That turns the $40,000 into $800,000. You did it with two stocks, and never risked going negative more than $2,000. (Not that you won’t be mad at me if the first one works and then the second one doesn’t, taking your $40,000 to Money Heaven.)
If you can afford it – and it would not be too big a position in your portfolio – putting $2,000 into each of these 12 speculative biotechs might be a good way to start.
The market capitalizations of these recommendations typically are very low. At the same time, Initial Public Offering valuations had moved very high. We were seeing $750 million to $900 million valuations for a good preclinical/Phase 1 IPO, and even $300 million to $500 million for mediocre Phase 1s. I don’t see how investors make 5x to 10x in a reasonable, three- to four-year period if they buy at those valuations. How many biotechs have moved north of $10 billion within 5 years after pricing an IPO in the $700 million to $900 million range? Hardly any. Buying these out-of-favor, fallen, or forgotten companies that can get important products through the FDA at very low market capitalizations seems like a much better strategy to me.
Risks
Development-stage biotechs are subject to investor sentiment swings from wildly optimistic to excessively pessimistic – mostly the latter recently. After the Primary Risk for each company, I’ve added the clinical stage of their lead product, the probable time of their first FDA approval, and the probable time of their next financing.
As always, you need to think about an appropriate position size. You could buy a full position upfront and then just hold on, or buy some upfront and leave room to add more on the inevitable financings, transient clinical trial setbacks, and the like.
Algernon Pharmaceuticals (AGNPF – $3.61) said that patients from multiple sites participating in the Phase 2 trial of Ifenprodil for idiopathic pulmonary fibrosis and chronic cough have requested an ongoing supply of Ifenprodil for their personal use now that the trial has ended. Algernon is helping the clinical sites obtain additional supplies of the drug through the Australian Government’s Special Access Scheme that allows patients to access unapproved therapeutics.
But “The Company is advising that it is not making any express or implied claims that Ifenprodil has the ability to cure or treat IPF or chronic cough at this time.” Yeah, right. This is good news, and we’ll see top-line results in July. They got a Canadian patent for compositions and methods for treating IPF. AGNPF is a Hold.
Primary Risk: Ifenprodil fails in clinical trials.
Clinical stage of lead product: Phase 2/3
Probable time of first FDA approval: 2023
Probable time of next financing: 2022
Arch Therapeutics (ARTH – $0.05) said the Center for Medicare and Medicaid Services authorized the use of A4100 as a temporary code to facilitate the reimbursement of doctor’s offices and wound clinics for the use of synthetic skin substitutes. They are advising providers to submit claims under this new code.
In parallel, Arch is submitting a Healthcare Common Procedure Coding System application to CMS for a permanent HCPCS code for Medicare and other insurers.
Remarkably, they said they are planning to start a six-site, 60-patient clinical study in the September quarter with the primary endpoint of wound closure. They said: “This study is intended to accelerate payer adoption as well as differentiate and highlight the key benefits of AC5 in treating hard-to-heal wounds.” I don’t know how they can fund that – Arch has to be living day-by-day on At The Market stock sales. ARTH is a Hold for a buyout.
Primary Risk: AC5 fails to sell or the internal trial fails.
Clinical stage of lead product: External approved. Internal trial 2022
Probable time of first FDA approval: External done. Internal 2023
Probable time of next financing: June 2022 quarter
Invitae (NVTA – $2.81) ended March with $874,712,000 in cash versus $115,626,000 in debt and is run by a management that has been saying for three years they will always have enough cash to get to profitability by cutting back R&D, marketing, and G&A expenses and did cut $100 million a year in expenses in the March quarter, but Wall Street still thinks they’ll go bankrupt. They won’t and that’s all you need to know to back up the truck at this level. You’ll make a bundle on the stock even if they never become the Amazon of genetic testing (but they will). This SeekingAlpha writer gets it. Buy NVTA under $10 for a first target of $50 and eventually $100+ when they become the Amazon of genetic testing.
Primary Risk: A competitor starts taking significant market share.
Clinical stage of lead product: NM
Probable time of first FDA approval: NM
Probable time of next financing: Not needed
Medicenna (MDNA – $1.07) reported their March fourth quarter and fiscal year results. They lost five cents a share for the quarter, beating the consensus estimate for an eight-cent loss. On the conference call (SLIDES HERE and TRANSCRIPT HERE), they made some encouraging comments about licensing MDNA55: “We have, as you know, earlier this year, completed a very comprehensive analysis that would be supportive of the commercial potential for MDNA55 with respect to conducting a thorough primary market research and adoption of MDNA55 at different hospitals across both Europe and U.S. following interviews with about 40 different KOLs, 20 in Europe, and 20 in the U.S
“And of course, also from a market opportunity, whether it’s us, ourselves, but nevertheless, for partner purposes, for collaboration, we needed to make sure what the pricing might be for MDNA55, which was something that we were able to complete as well as getting feedback from payers and insurance and reimbursement agencies to find out what kind of expectation there might be.
“In all these cases, we’ve seen very positive feedback from these KOLs, from payers, from insurance companies, reimbursement agencies, etc., with respect to what the pricing might be. And that was really important for us to have in place, which we now have in place. And I would say that our interactions with potential partners address those – that bit of information that was not available. So it does give us additional two check boxes that we are progressing with.
“But I think the other key feature of our discussions going forward with potential partners is the fact that localized administration of a drug is something that’s sort of discouraged potential partners in the past, administration of a drug intracranially is something that’s not out there. There is nothing approved until very recently, when Daiichi announced that they had a virus-based therapy, which is being administered directly in the brain tumor as well, which was approved by Japanese authorities. So that third bit of information and has substantially improved the profile of MDNA55 from that perspective.
“And also there is, as you can see, consistent or increased awareness of using an external control arm in different oncology clinical trials. So over a period of the past several months, we’ve seen quite a bit of renewed interest in MDNA55, and we are progressing and advancing those discussions, and that process continues. And we’ll provide updates as we get closer to a time when we can make more meaningful announcements regarding a partner, but we are definitely fully engaged with the process at the moment.”
Most of the presentation was about MDNA11, which I think will be a blockbuster drug, replacing Interleukin-2. It is superior to the two main competitors in development. Alkermes’ ALKS-4320 and Sanofi’s SAR444245.
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Their upcoming milestones include:
* * July 2022: Initial PK/PD data from the fourth dose-escalation cohort of the Phase 1/2 ABILITY study
* * December quarter, 2022: Identification of MDNA11’s recommended Phase 2 dose in the ABILITY study
* * December quarter, 2022: Commencement of the ABILITY study’s single-agent expansion phase
* * December quarter, 2022: Clinical update from the ABILITY study
The company finished the quarter with $20.5 million in cash, enough to get them to mid-2023. Buy MDNA under $3 for a first target of $20, then maybe $40.
Primary Risk: Their drugs fail in the clinic.
Clinical stage of lead product: Entering Phase 3
Probable time of first FDA approval: 2023
Probable time of next financing: late-2022
ScyNexis (SCYX – $1.95) enrolled the first patient in a new Phase 3b, open-label, multicenter study to evaluate oral ibrexafungerp for complicated vulvovaginal candidiasis in patients who have failed treatment with fluconazole. The study will enroll about 150 difficult-to-treat patients who will receive 600 mg of oral ibrexafungerp for one, three, or seven consecutive days, determined by their underlying complicating condition including an immunocompromised state.
Complicated patients include patients with recurrent VVC, those with VVC caused by non-albicans Candida species, and those with diabetes, immunocompromising conditions like HIV, or immunosuppressive therapy like corticosteroids.
In the FURI Phase 3 trial, 10 of the 14 patients with refractory or relapsed VVC had successful clinical outcomes. In the CANDLE Phase 3 trial, 24 patients who failed to respond to the initial three-day regimen of fluconazole received a one-day open-label treatment course of ibrexafungerp, and 71% successfully achieved a significant reduction or elimination of signs and symptoms.
Buy SCYX under $2 for a first target price of $20 now that Brexafemme is approved and a buyout at $50.
Primary Risk: Ibrexafungerp fails to sell.
Clinical stage of lead product: Approved
Probable time of next FDA approval: mid-2022
Probable time of next financing: 2023 or never
Biotech & Digital Dominators MegaShift
There are at least four ways to make money in the stocks of these large, growing, dominant companies. You can:
* * Buy a stock and hold it
* * Buy a stock and write a call option against it
* * With a Level IV options account, write an out-of-the-money put option
* * With a Level IV options account, write an out-of-the-money put option and use part of the premium to buy an out-of-the-money call option
Gilead Sciences (GILD – $62.58) said the Week 48 results from their pivotal Phase 3 clinical trial of Hepcludex for the treatment of chronic hepatitis delta virus (CHDV) infection met the primary endpoint and achieved statistically significant results. No participants had an adverse event leading to discontinuation of Hepcludex and no serious adverse events were attributed to the treatment.
There are currently no other approved treatment options for CHDV, the most severe form of viral hepatitis, and people living with CHDV typically have a poor prognosis with high healthcare-related costs.
The company made two oral and 22 poster presentations at this week’s International Liver Congress. Gilead is a powerhouse in HIV and HCV and will become one in oncology. I think it is the best buy in Big Biotech today for the conservative part of your portfolio. GILD is a Long-Term Buy under $70 for the first target of $100.
Meta Platforms (now META – $158.75) expanded the ways creators can make money on Facebook and Instagram with digital collectibles like NFTs, subscriptions, paid online events, and interoperable subscriber groups that let creators receive payments from fans on other platforms and automatically add them to subscribers-only Facebook Groups.
Zuckerberg did a virtual roundtable with reporters about the future of Meta as it pivots to the metaverse. He knows where he’s taking the company and I agree. META is a Buy under $250 for a $400 target in 2023 or 2024.
There are a lot of investment possibilities in the metaverse:
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Other Tech
PagerDuty (PD – $27.17) CFO Howard Wilson said their land-and-expand strategy starts with one team in a company, expands team-by-team until they are spending about $100,000 a year, and then the customer standardizes on PagerDuty as a platform. He added that PagerDuty is a critical infrastructure in companies related to their servicing their most valuable assets, their customers. And the teams that are delivering those services are the teams that are protected even when there are layoffs in a recession. PD is a Buy up to $30 for a 2- to 5-year hold as their digital operations management Software-As-A-Service gains market share.
Primary Risk:Digital operations management is a competitive area.
Probable time of next financing: None needed
Velo3D (VLD – $1.75) opened a European Technology Center in Augsburg, Germany to manage the company’s operations in Europe, host customers for training, and provide a base for the sales and support teams. Europe will be a very big market for end-to-end additive manufacturing solutions as a way to catch up to China. VLD is a Buy up to $6 for my $50 target as Velo3D’s high-tolerance metal parts printing business grows.
Primary Risk:A new 3D metal printing competitor emerges.
Probable time of next financing: None needed
Inflation MegaShift
Gold ($1,826.00) booked another little loss week, although it lost the 38.2% retracement level at $1,842. The consolidation continues.
Cryptocurrencies
Cryptocurrencies are a diversifying asset that offer a unique opportunity to make (or lose!) a lot of money quickly. You can easily buy Bitcoin and other cryptocurrencies at Coinbase, Block, or Robinhood.
Bitcoin (BTC-USD on Yahoo – $20,976.35) was crushed 12 days straight by cascading margin liquidations to under $20,000 but quickly recovered.
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It took out support after support, even the most important of all: the $19,511 high from the previous bull cycle. Throughout its brief, 12-year trading history, bitcoin has never dropped below previous cycle peaks…until now. Last Saturday’s low print of $17,629.00 probably was the low for this cycle. If so, the 74.5% drop from the November 10, 2021 high of $68,997.80 was the fourth-worst in bitcoin’s history.
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BTC-USD, ETH-USD, GBTC and ETHE are Strong Buys.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.
Oil – $104
Gasoline prices fell a little under $5 to $4.94, with California (where my 19-year-old drives her VW Golf) still the worst at $6.358 and Georgia (where my brother drives his F-250 pickup) at $4.439. Here’s a good way to not solve the energy crisis:
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Perhaps the big oil executives will give a “stern message” on gas prices to the Biden administration. Secretary of Energy Jennifer Granholm would be a good place to start.
Hey, JGran, if you want the industry to increase investment in fossil fuel and gasoline production, don’t say: “We don’t want to be at the whim and the volatility of fossil fuels…we want to move to clean energy.”
The July 2026 Crude Oil Futures (CLN26.NYM – $53.16) are a Buy under $55 for a $200+ target.
The iPath Pure Beta Crude Oil Exchange-Traded Note (OIL – $33.98) is a Buy under $36 for an $80+ target.
* * * * *
If the universe is only 14 billion years old,
how can it be 92 billion light years wide?
* * * * *
Your listening to What Mama Wants Editor,
Michael Murphy CFA
Founding Editor
New World Investor
All Recommendations
Check out the complete Portfolio page HERE.
Buys
These are the stocks everyone needs to own because transformative events are happening over the next year or two, and I expect to hold them long-term.
$20-for-$1
Aptose Biosciences (APTO – $0.80) – Buy under $2.50, ultimate target $30
Bellerophon Therapeutics (BLPH – $0.90) – Buy under $5, first target $30, then $100
Compass Pathways (CMPS – $10.70) – Buy under $20, hold a long time for a 10x return
Graphite Bio (GRPH – $2.67) – Buy under $9, hold a long time
Inovio (INO – $2.01) – Buy under $7, hold a long time
Invitae (NVTA – $2.81) – Buy under $10, first target $50, then $100+
Medicenna (MDNA – $1.07) – Buy under $3, first target $20, then maybe $40
ScyNexis (SCYX – $1.95) – Buy under $2, target price $20, then $50
Other Biotech
TG Therapeutics (TGTX – $4.63) – Buy under $7, target price $25+
Tech Dominators
Apple Computer (AAPL – $138.27) – Buy under $150 for new iPhones
Corning (GLW – $31.60) – Buy under $33, target price $60
Gilead Sciences (GILD – $62.58) – Buy under $70, target price $100
Meta (FB – $158.75) – Buy under $250, target price $400
SoftBank (SFTBY – $18.96) – Buy under $25, target price $50
Other Tech
First Trust NASDAQ Cybersecurity ETF (CIBR – $41.17) – Buy under $40; 3- to 5-year hold
Fastly (FSLY – $12.65) – Buy under $20; 2- to 5-year hold to $80+
PagerDuty (PD – $27.17) – Buy under $30; 2- to 5-year hold
QuickLogic (QUIK – $7.98) – Buy under $10, target price $40
Liberty Media Acquisition Corporation (LMACA – $9.80) – Buy under $10, target price $20 to $30
Rocket Lab (RKLB – $4.07) – Buy under $13, target price $30+
Velo3D (VLD – $1.75) – Buy under $6, target price $50
Inflation
A Short-Sale or REO House – $391,200 – Buy while fixed mortgage rates are low
Bag of Junk Silver – $20.97 – hold through silver bull market
Sprott Gold Miners ETF (SGDM – $25.39) – Buy under $28, target price $50
Sprott Junior Gold Miners ETF (SGDJ – $29.78) – Buy under $39, target price $100
Sprott Physical Gold and Silver Trust (CEF – $17.40) – Buy under $18, target price $30
Global X Silver Miners ETF (SIL – $27.37) – Buy under $30, target price $50
Coeur Mining (CDE – $3.35) – Buy under $5, target price $20
First Majestic Mining (AG – $7.58) – Buy under $11, next target price $23
Paramount Gold Nevada (PZG – $0.50) – Buy under $1, first target price $10
Sandstorm Gold (SAND – $6.02) – Buy under $10, target price $25
Sprott Inc. (SII – $36.07) – Buy under $40, target price $70
Cryptocurrencies
Bitcoin (BTC-USD – $20,976.35) – Buy
Grayscale Bitcoin Trust (GBTC – $13.69) – Buy
Ethereum (ETH-USD – $1,132.23) – Buy
Grayscale Ethereum Trust (ETHE – $7.77) – Buy
International & Other Recommendations
EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ – $31.88) – Buy under $38 for a $66 target in 12 to 18 months
KraneShares Bosera MSCI China A Share Fund (KBA – $37.20) – Buy under $40 for a three- to five-year hold
Morgan Stanley China A-Shares Fund (CAF – $16.06) – Buy under $18 for a three- to five-year hold
KraneShares CSI China Internet ETF (KWEB – $32.22) – Buy under $40 for a double over the next three years
Acreage Holdings (ACRDF – $1.07) – Buy under $2 for the Canopy Growth merger
Mongolia Growth Group (MNGGF – $1.33) – Buy under $1.30; long-term hold
Energy
Crude Oil Futures – July 2026 (CLN26.NYM – $53.16) – Buy under $55; $200+ target
iPath Pure Beta Crude Oil Exchange-Traded Note (OIL – $33.98) – Buy under $36; $80+ target
Energy Fuels (UUUU – $5.26) – Buy under $8; $30 target
Holds
These are holds but not sells – yet. They could get moved back to one of the buy categories if their prices drop or outlook improves, or they could become sell recommendations in the future.
Algernon Pharmaceuticals (AGNPF – $3.39) – Hold for chronic cough results
Akebia Biotherapeutics (AKBA – $0.32) – Hold for FDA meeting
Arch Therapeutics (ARTH – $0.05) – Hold for buyout
CohBar (CWBR – $0.18) – Hold for human trials of CB5138-3
Publisher: GwynRose LLC, 5348 Vegas Drive, Suite 868, Las Vegas, NV 89108
New World Investor does not act as a personal investment adviser or advocate the purchase or sale of any security or investment for any specific individual. The recommendations and analysis presented to members are for the exclusive use of members. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time. Nothing in this presentation should be considered personalized investment advice. No communication to you by Michael Murphy or any of our employees or contractors should be deemed as personalized investment advice.
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WOW. Early
1st !! Wow!!
Big oil has a stern message for Joe. Don’t screw with the oil companies. How does he expect the oil companies to increase production, risk billions in investment dollars and decades of time in investment payback when his future of oil is extremely limited. It’s NOT going to happen. Even places like Saudi Arabia have declining production numbers. And forget about building new refineries. Again it takes billions of dollars of investment capital and years/decades of sales to recoup the investment. Who is going to do that in this oil future climate?? Get a clue Joe.
I’m the first one to say this newsletter shouldn’t be a forum for political opinion and I believe we should support our president no matter who it is (who should root against the pilot flying the plane?) but Biden is by far the worse president in my 65 years. It’s clear he is lost so he’s attacking and pointing blame at everyone except his policies and his incompetent economic team who couldn’t recognize chronic inflation when everyone else did. Trump and Biden are both divisive (though sleepy Joe said he would be a uniter) the difference is Trump knew what he was doing on both foreign policy and the economy.
I agree. But even young, mentally capable Dems sabotage the economy by being soft and permissive on criminals. They want the votes from criminals and poor illegal immigrants who seek govt benefits. Dependency on govt spreads through the lower middle class, then the middle middle class, as people are incentivized to not work but collect benefits instead.
So your theory is that the Dems are actively destroying the economy by being “soft on crime” and allowing illegal immigrants in so they can get their votes?
Really?
Do you realize that every item you put into your mouth is picked or harvested by an illegal immigrant? This is why the former guy basically gave up on his wall. His strong farmer base cried foul as they are unable to operate without illegal immigrants.
Illegals cannot vote in case you do not know that.
Wait until the next national election!
THE NRA AND GUN MANUFACTURERS make sure that all mass killers which occur weekly if not daily have the best military assault weapons to kill people with and the Republicans are the enablers.
Biden isn’t my first, second or 10th choice but he is a gentleman and doesn’t bombard the public with inane tweets and hateful rhetoric. Sleepy joe beat trump simply because he wasn’t trump and this is driving DJT crazy. I really hope that trump can stay healthy enough to run again because he really energizes the left.
The inflation we are seeing is based on uncontrolled money printing starting with GWB. This inflation was going to happen regardless of the color tie the president is wearing.
Let’s remember to give the present POTUS credit for the damage control he has been responsible for. He has UNIFIED NATO to confront Russian aggression in Ukraine unlike the disunity NATO suffered from the previous POTUS.
The oil companies run the country. They are in every congressman and woman’s pockets. Both parties.
They lost their ass during the pandemic and are now intentionally not drilling to raise gas prices to make up for it. Biden is a fantastic scapegoat.
The US currently subsidizes big oil to the tune of 20 billion a year, isn’t that enough to get them to drill?
Give me a break.
Can you suggest just where they can drill without a year or more of paperwork in D.C. P,S, The line from Canada was killed recently by whom?
Big oil could be patriotic snd invest in clean energy like BP is and make money while helping save the Planet. They seem to be concerned only in making money and not give a damn about the country that is why they will eventually be forced to go clean and lose the people.
Firms that do not make money fail. Would you support them as an investment under those conditions……..
Totally agree. Unlike the US government, they can’t print money and run in the red for decades. And it’s not just domestic oil companies. Data from Rystad Energy shows that global investments in oil and gas exploration and production peaked 8 years ago and has plummeted 65 percent since then. At the same time, the International Energy Association expects worldwide demand to be 25 percent higher in 2050. Almost 30 years from now. Energy analysts are predicting $200 a barrel of oil. Just FYI
MM – Re: SCYX
Your 6/9 note stated:
Buy SCYX under $12 for a first target price of $27 now that Brexafemme is approved and a buyout at $85.
In today’s note the targets have been dropped without any explanation as to why:
Buy SCYX under $2 for a first target price of $20 now that Brexafemme is approved and a buyout at $50.
Previously you had based your estimate on a 30% market share at a 6x revenue multiple. What are you basing your new estimate on & why?
MM, what is the fair value of SandRidge Energy, Inc. (NYSE:SD) in your opinion? Thanks.
Another great Radar, Michael Murphy. You are right to be a skeptic about another .75 move by the Fed. Some other hits besides a fasenergy one, will be food as our Preze is ordering higher levels of ethanol for our gasoline engines, I won’t say the Forrest Gump thing. If we get a hot summer, chances are very good for blackouts in the Northeast as Hochul in NY continues to reject utility proposals to do a quick pipeline to NY andRI from the Marcellus shale.To make things worse the PA governor put the kabosh on Marcellus shale oil going thru the Western part of PA to up north. Another thorn for energy stocks continnues to be bad ESG numbers to keep banks from financing capital investments in capex for E&P drilling. That ESG has morphed to real socialism and has to go, IMHO. Yes, NVTA has perked up. Looks like analysts believe they will actually get good csh flow numbers. Finally,with the EU supporting a membership for Ukraine (which will take over a year if they go forward with that) doesn’t that make UKraine part of NATO if they do? That complicates things for Vlad and I really am confused where our national interest stands now. China is salivating, IMHO for a move on Taiwan. What would that do to our economy/inflation. We need a big tax cut then. Yeah, almost.
GLTA
Oil is rolling over, way too crowded a trade. There will be some pain this summer for sure but this is just the start. Everyone ignored climate change thinking it wouldn’t be their problem. We should have been off oil 20 years ago but the corrupted people running the government kept lining their pockets with oil money .. both left and right.
I think the best thing you can do is locate property in either the Pacific NW, northern New England, or my favorite .. Canada. It’s going to get mighty hot in the continental US.
Big oil cos, Greed is driving people to buy electric vehicles and go solar . BP is investing in clean energy in a big way. They are smart.
One of the problems is that the conversion time slot does not look as fast as everyone assumes. Even worse, there still is the problem of where to get the raw energy that does into these vehicles to the point where willing up starts……….
Or take the release of oil from the national reserves several months ago, Seems the oil was like Bunker C (about one step above road-tar). Seems no refiner in the USA could refine it, Russians could. So a trip friendly to Venezuela followed along with a trip to Saudi to cover that problem…..
Oh yes, suppose everybody with a little cash might want a modern electric vehicle. Not enough of them available unless you have lots of cash or some position in D.C.
Sort of like baby food without a US plant flying stuff for their Germany plant (Remember toilet paper & : John Carson on TV decades in a similar plot.)
Want to understand the cost of gasoline as well as a lot of other impacts on our economies and the market too; please drop by “Visual Capital”, which has some excellent visual (and more) presentations on many topics that impact our economy and investments.
Now they have a series on the costs of petrolium and what impacts it.
Their approach (now copied by others) is to collect raw data and present it in a graphic presentation. With each, they also present the data summary and interpretations in plain English.
Most of their features are impacts to investing, but there are others of second order interest. Such as where the wealthy hang out.
Their second order presentations allows you to dig up elements. For example find out how China has a hold on processing most of the worlds Rare Earth materials are refined there and why they hold stock in others.
http://www.visualcapitalist.com Correcting the above entry for V.C. with the email address. Sorry for my error above.
I wouldn’t bet on META. People are getting tired of them and Facebook using data collected on users to sell it to other people there by creating users as actual targets and not customers of the service. No privacy much these days but Mehta and Zuckerberg are virtual criminals the way they use information collected from us. I and many of the people I know have dropped their Facebook accounts and swear they won’t ever go into the meta-universe they are creating. There are too many other options out there. Zuckerberg‘s involvement in election fraud also has me sick even mentioning his name . Do your own research though
Facebook doesn’t sell data to anyone. They use the data to sell targeted advertising to customers. I have run ad campaigns on Facebook. I get to list the demographics of who I want to target and Facebook delivers the ads. I do not know who saw the ad unless they respond to it.
I don’t know why people would want to see random ads instead of ads targeted to their demographic and interests.
This is all true. People who are tech savvy don’t think about this search privacy issue. However, I’ve seen people creeped out when they search for something, and next thing they see is various ads for something they searched once. Its one thing if they are searching for something they want to buy. Its another thing when they search for something out of curiosity or for someone else, and the next thing that happens is that other third parties start contacting them to sell them something, when the consumer had no idea how this company found out about their search query.
Just saying the targeted ads are sometimes useful (they are) is not good enough for John Doe public computer novice. Novices can get paranoid about being watched, might get nervous that there’s something going wrong with their computer being infected, or maybe that the danged govmint is about to take over their computer, guns and voting rights. A large number of Internet users hardly know how to use a computer and know little about the Internet or security issues. Half the people out there have IQs below 100, but they can have Internet connected phones and computers.
People don’t like to be watched secretly. Their privacy IS being invaded when a search leads to a surprise that other companies find out about their search, then reach out to them to buy something obviously related to what they thought was a “private” anonymous search. They didn’t intend to blast their search out to the world publicly. Its similar to gossip going around a social network, except its product oriented (and might be helpful too).
Maybe a request to see products during their search might alleviate this paranoia that third parties are “listening in” or find out about their search efforts. Or some explicit message that their search will be used to find products they may find interesting. Avoid the surprise. Apple is wiser about privacy issues than Mock Zuckerburger.
@Michael Murphy and all. Looks like ARCH may have a competitor or Buyout Company; Approval by Europe and appealing their U.S. counterpart, Oleogel.
Filsuvez’s European Approval Adds Growth Driver For Amryt Pharma (yahoo.com)
My speculation is that the technology could be considered as a device as this skin destruction disease looks like it needs some form of reconstruction mechanism besides a medicine that eliminates the proclivity of the body to undertake this self destrction process. JMHO
It’s not a device for sure – they had to do a Phase 3 trial, which means it was on the drug approval path. It’s been approved in the EU since 2016 under the brand name Episalvan for the treatment of partial-thickness skin wounds where the top layers of the skin have been lost. This expands the label to include epidermolysis bullosa, a rare disease. I don’t think it’s a competitor for AC5.
Thanks Very much for the analysis. Much appreciated.
Goof Morning all Looks like Final GDP data are a little worse than anticipated, weaker by one tenth of a percent minus GDP data on the way to a recession. Let’s see what happens to the opening bell Good for gold. We need to make the Trump tax cuts permanent says Larry Kudlow not a trillion and a half more spending as the administration is proposing. Not gonna have help from Saudi Arabia. Gotta open up the US spigots and eliminate the regulations to drill, IMHO. GLTA
The left wingers should actually favor oil drilling, which would deplete oil reserves sooner than later, ultimately accelerating the more widespread adoption of alternative energy. But in order to get their goals, it takes artificial sabotage of one thing (oil) to get another (alternatives). That’s the way socialism operates–sacrifice of something to get another. But free market capitalism lets each method sink or swim based on its own merits and market demand, without govt interference.
Is 20 billion in oil subsidies considered “free market capitalism?”
NOBODY IS STOPPING BIG OIL FROM DRILLING. Why is that so hard to understand?
All govt subsidies are wrong, because they amount to govt favoritism pushed by special interest groups at the expense of taxpayers who don’t agree with the agendas. We certainly don’t have full free market capitalism in the US, although there is more of it in the US than other countries.
There are lots of govt barriers to increasing oil supply–long permitting procedures, blockage of Keystone, other regulations we don’t know about, etc.
There is no such thing as energy that is free from environmental costs. Left wingers ignore that inconvenient truth. The latest I heard about is putting up windmills in the ocean all along the East Coast. Digging into the ocean floor to anchor the windmills–what’s the impact on the ocean geology and marine life? As for EV’s for everyone, where’s all the lithium for batteries going to come from? Greenies hate mining, so does lithium come from the free sun’s rays or from extensive mining?
Thank God those precious oil companies don’t drill into the ocean floor and leave leaking oil wells or anything.
Wall Street ratings. Even notice that two wall street masters gurus are rating the same stock firm so differently?
A lot of widely different ratings at the same time are both right on – but from a different viewpoint.
Firm A is right for a short term situation, while Firm B caters to clients who buy and hold and even recommend what to buy more buys or sells now.
In many cases, both are “spot on” for today.
This can be due to the type of clients they are catering to, in house bias of their gurus or even how much their firm gets underwriting business from the specific firm.
So beware of conflicting recommendations – both might be on target but only for that differing customer base.
The new Radar Report for 6.30.22 is posted.