The boom continues...
The boom continues... Steve's incredible call... Hundreds-of-percent gains are still possible here... What earnings are saying about the economy... On the ground in Greece...
The boom in biotech continues...
The Nasdaq Biotechnology Index hit a new all-time high this morning following news of the latest blockbuster deal in the sector.
Cancer-drug company Celgene (CELG) said it will buy Receptos (RCPT) for $7.2 billion, or $232 per share... a 12% premium to Receptos' closing price on Tuesday.
The deal is Celgene's second in less than a month. It paid $1 billion in June to acquire a 10% stake of Juno Therapeutics (JUNO). Both deals give the company more access to the growing market for immunotherapies... a revolutionary new approach to medicine that harnesses the body's own immune system to fight disease.
Shares of both companies were trading about 10% higher as of midday trading today.
Including today's rally, the biotech index is now up nearly 30% for the year, following gains of 31% last year, 65% in 2013, and 34% in 2012.
And no one has helped subscribers make more money from the rally than our colleague Steve Sjuggerud...
Longtime readers may remember Steve first recommended biotech shares in January 2012. As he told his True Wealth Systems subscribers at the time...
We just got a new "buy" signal on biotech stocks...
As I've written many times, "If you catch just one biotech bull market in your lifetime, you may never have to work again." We may be entering the next biotech bull market right now. Get on board.
We shared Steve's latest thoughts on the trade in the October 28 Digest...
We bought biotech stocks in January 2012. At the time, we were coming out of the 2011 stock market correction. Folks weren't interested in anything risky. So no one was paying attention... But biotech stocks started a "stealth" bull market. The trade turned into a 56% gain in just 10 months...
A month later, biotech moved back to a "buy." And even after our big gain, biotech stocks were still cheap and hated. Most investors would be scared to buy back into a trade a month after locking in a 56% gain in 10 months. But based on history, we saw a huge opportunity and we got back in. We closed our second biotech trade in April 2014... locking in a 184% gain in just 16 months.
Both trades combined led to a 343% gain... enough to turn $10,000 into more than $44,000 in a little more than two years.
Steve recommended biotech stocks a third time that month, and his True Wealth Systems subscribers are still long today. Including today's rally, they're up more than 100% so far on the latest trade in less than 10 months.
Subscribers who followed Steve's recommendations from the beginning are now up almost 800% so far... enough to turn $10,000 into nearly $90,000 since 2012.
But Steve isn't the only Stansberry Research analyst who has led subscribers to huge gains in biotech...
As you may know, Dave Lashmet is the editor of Stansberry Venture, a publication that is focused exclusively on giving subscribers access to venture-capital-like opportunities in the stock market.
Dave scours the market looking for little-known small-cap companies that are producing the next potential wonder drug or technology.
Since launching last November, Dave has recommended a handful of innovative biotech companies... including three small firms leading the development of a new generation of immunotherapy drugs like the ones we mentioned earlier.
But unlike a Celgene (whose market cap is $105 billion), the small stocks Dave recommends could easily soar hundreds of percent on a successful drug discovery or buyout offer.
Dave's Stansberry Venture subscribers are already up 99%, 179%, and 152% in fewer than eight months on his first three recommendations. To learn more about Stansberry Venture, click here.
In last Thursday's Digest, we shared some upbeat commentary from our colleague Dr. David "Doc" Eifrig. In short, Doc says the U.S. economy is "chugging along." As we wrote...
The good news is everywhere... The latest data show the economy is growing at nearly 3%, as measured by gross domestic product (GDP)... Unemployment is trending lower... Initial jobless claims – the number of people losing jobs today – are the lowest since at least 2000... And consumer sentiment, as measured by the University of Michigan's survey, is the highest it has been since before the financial crisis.
Doc highlighted some other "real world" indications that the economy is on the rise, noting increased traffic on his recent flights, bustling restaurants, rising prices for rental cars, and more.
And recent earnings announcements appear to agree with Doc's assessment...
Banking giants Bank of America (BAC), PNC Financial (PNC), JPMorgan Chase (JPM), and Wells Fargo (WFC) all reported generally positive earnings this week.
Bank of America reported second-quarter profits of $5.3 billion, more than double its profits in the same quarter of 2014 ($2.3 billion) and easily topping analyst estimates. Revenue – which had declined in previous quarters, a trend analysts expected to continue – rose nearly 2%.
One highlight was in mortgage loans, which rose 40% over the same period, while costs of delinquent mortgages fell nearly 40%.
Both JPMorgan and Wells Fargo saw lower delinquent loans as well, leading the Wall Street Journal to declare "the deadbeats are dead." From the article...
JPMorgan Chase and Wells Fargo both said the percentage of loans they couldn't collect was close to zero in the second quarter...
Charge-offs – or defaulted loans that a bank has given up trying to collect – are for now declining across a broad spectrum of products, including credit cards, mortgages, and auto and home-equity loans.
"Consumers have deleveraged. They've paid down debt," Wells Fargo Chief Executive Officer John Stumpf said in an interview Tuesday. [JPMorgan CEO Jamie] Dimon, on a call with media, likewise said credit quality among his bank's customers was "exceptional."
JPMorgan Chase reported a 5% rise in second-quarter earnings, up from $6 billion in 2014 to $6.3 billion today. Wells Fargo reported lower second-quarter profits, but it did slightly increase its earnings per share and revenue. Elsewhere, PNC matched revenue expectations but beat analyst estimates for earnings per share and revenue.
But it isn't only banks that are doing well...
Railroad giant CSX (CSX) also reported stellar earnings, suggesting the economic recovery isn't limited to just the financial sector.
Citing cheap oil prices and lower expenses, CSX beat net income estimates by nearly 5% and earnings per share estimates by almost 6%.
We end today with a short update on Greece...
Regular readers know our stance on the situation: Greece is bankrupt. Whether or not the latest bailout is passed, there will be no permanent solution to the crisis until Europe agrees to cut or forgive Greece's debt, or Greece leaves the euro.
But today, we learned we're not the only ones who think so...
In a confidential report leaked yesterday, the International Monetary Fund ("IMF") warned that the current bailout deal is doomed to fail without substantial "debt relief" for Greece. From an article in British newspaper The Telegraph...
The International Monetary Fund has set off a political earthquake in Europe, warning that Greece may need a full moratorium on debt payments for 30 years and perhaps even long-term subsidies to claw its way out of depression.
"The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date," said the IMF in a confidential report.
The report was shocking not just because it's rare for government-backed groups like the IMF to be so candid... but also because Germany – the largest, most powerful economy in the eurozone – has said the current bailout cannot be approved without IMF involvement.
Regardless of what happens next, we don't expect the crisis to have a strong influence on the markets. And our friend Bill Bonner – founder of our parent company Agora and mentor to our founder Porter Stansberry – agrees.
In yesterday's edition of his daily letter, Bill Bonner's Diary, he explained...
You have no particular reason to care about what goes on in Greece. It is a tiny economy by global standards, with little impact on the rest of the world. And for the U.S., Greece's importance is vanishingly small. Exports to Greece account for about 0.004% of U.S. GDP.
Bill has been on the ground in Athens, Greece for the past several days. He has gotten a first-hand account of the real problems there. According to Bill, the crisis is mostly a standoff between two groups of "zombies" – Bill's name for folks who produce nothing and live off the hard work of others...
On the one side, there are the big, international zombies who want to continue to earn fees by lending money to bad credit risks. On the other side are the smaller, local zombies, who hope to keep taking the money with no intention of ever giving it back. "The Greeks peaked in the time of Aristotle," said a companion at dinner. "It's been downhill ever since."
But you can't accuse the Greeks of not being clever. They happily take the Northern Europeans' money – whether from tourists or bankers. It's all the same to them.
"They've got a special retirement system in Greece, like your Social Security system," continued our friend. "If you are in a career that is considered 'hazardous' you are allowed to retire with full benefits when you are only 53 years old. And guess what they consider hazardous? All kinds of things... including cutting hair. They get so much money that we've seen three generations all living on one retirement pension."
Like us, Bill doesn't think Greece is a threat to your wealth. But he is concerned a similar crisis could be coming to the U.S.
Instead of seeing footage of Greek seniors lined up at ATMs on TV, Bill says it could happen right here at home. Imagine finding yourself locked out of your bank account... unable to withdraw cash or even use a credit card.
Bill admits this sounds outrageous... so he has put all of his research online. You can find it by clicking here... and decide for yourself.
New 52-week highs (as of 7/14/15): Acadia Healthcare (ACHC), American Financial Group (AFG), Activision Blizzard (ATVI), ProShares Ultra Nasdaq Biotechnology Fund (BIB), Bristol-Myers Squibb (BMY), Chubb (CB), CVS Health (CVS), eBay (EBAY), iShares U.S. Insurance Fund (IAK), Prestige Brands Holdings (PBH), ProShares Ultra Health Care Fund (RXL), and Scorpio Tankers (STNG).
In today's mailbag, two readers respond to Doc Eifrig's thoughts on the U.S. economy. Send your experiences to feedback@stansberryresearch.com.
"Dear Doc, I read with interest your desire to know where times are tough still – Well I'm in east central Ohio; since NAFTA, manufacturing has been decimated here (Ansel Edmont went to Mexico, GE Plastics & Pretty Products are now grassy fields, for example). We're are just a bit too far west to get any of the Utica shale fracking activity (though we have a disposal well for frack waste that runs 24-7). The frack revolution natural gas supply has hurt the coal mines here, along with EPA regs. Main Street is full of empty shops, a nice 4 story brick commercial building across from the courthouse sold for unpaid taxes! Even the mini plaza by Wal-Mart by the highway has empty storefronts. Our local hospital teeters on the edge of bankruptcy, and you can get nice homes here in town that once belonged to white collar workers from the local industries for prices that would shock people from the bi-coastal world. Check out this property, for sale for years, a real white elephant, a relic from the town's glory days. In a big city I'm sure it would be worth millions.
"It's next to the site of the former country club that closed & was leveled a few years ago – most of the membership had died and no young people up & coming to replace. There's a lot of drug activity (SWAT team raided the house next door to me this spring). Employers find it hard to get workers who can pass the drug tests. So things are 'grinding upwards' very slowly in this part of our Republic. Thanks for the help with Income Intelligence. Looking forward to new info every day. Wish something would help our area get back on its feet." – Paid-up subscriber Doug Virostko
"With all due respect to Doc, Porter, Steve et al. for all their hard work and subsequent well-deserved financial success in life, there are those among your readership who are trying to get there by preserving and growing their own wealth, obviously, otherwise we wouldn't be subscribers! My inferences drawn from the back-and-forth between Mr. Miller and Doc is that Mr. Miller and Doc are on separate sides, somewhat, of our increasingly divided society.
"Porter, of course, has written about this extensively in his missives regarding the death of the middle class. Let me just tell Doc that Porter is right... Whereas I suspect Doc rubs elbows more often than not with folks like Steve (independently wealthy, owner of a nice tract of Florida beachfront, etc.) and Porter (just dropped a million to start up a razor company, founder/owner/operator of a lucrative publishing empire, etc.) I am decidedly part of the other side of the divide, that dying middle class trying to keep its collective head above water. I would guess that Mr. Miller is closer to my own milieu, and sees things differently, as do I.
"As to my own individual data points, they would include my retired mother's weekly volunteer work at the local food pantry (traffic is 'up'!)... The Tuesday special at the local Popeye's Fried Chicken (two pieces, dark, for $1.19, or you can get a bucket to feed the family for $7.99!) and the lines are out the door with us 'working' poor. Every trip to the grocery includes a visit to the discount bin for dented canned goods and discontinued items at steep discount; I could go on ad nauseam.
"Now, it's not that I nor Mr. Miller (so I suspect) begrudges the success of others. I work a blue collar job, drive an 18 year old car, and take every other pain possible to save a penny so I can 'pay the pig first' each month. But it is very much true that it is hard and getting harder to do. What is writ large in the macro statistics (5.3% unemployment? BULL$#!T! <2% inflation? PLEASE!) has been manipulated to mask the real granular truth of middle class reality in current day America. So where Doc can say things are looking up, and they are, very marginally... it isn't that the future is emanating any type of rosy hue. Or as Steve would say, they're just going from bad to less bad. But less bad is still, well, BAD!" – Paid-up subscriber Wayne Gordon
Doc Eifrig comment: Wayne, thanks and look for more to come on this... I'm about to go on my annual cross-country venture with my 11-year-old Hyundai! Hah!
Regards,
Justin Brill
Baltimore, Maryland
July 15, 2015
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