North Korea, OPEC and Precious Metals

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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The news putting the markets on edge this morning is that a nuclear test and missile firings took place in North Korea. A country that barely has electricity (check out a nighttime map of the world to see what I mean), is supposedly threatening the world's security. The only thing missing from the story was an allegation that North Korea loaded the missiles with mutated swine flu virus and aimed them toward Dick Cheney. Safe haven trading raised the value of the U.S. dollar, which was about to break below major support. Counter intuitively gold and silver had a sharp sell off on the news when they should have gone up. Light sweet crude fell below $60, but quickly jumped back above that level. OPEC is meeting on Thursday and this will dominate oil news for the next few days. Its membership is worried about reducing the supply of oil in storage.

While OPEC's stance should be bullish for the oil market going forward, you would never know it if you just read the mainstream media headlines. These are emphasizing 'OPEC unlikely to cut production quotas at May 28th meeting'. Since OPEC is more likely to increase production during the heavy oil use northern hemisphere driving season, this is not exactly either surprising or negative news. The Saudis, as well as other OPEC members, have furthermore stated quite clearly that their goal is to get global stockpiles of oil down from the current 61/62 days of forward cover to the average 52-54 days. Their current price target for oil is $75-$80 a barrel, the same as the New York Investing meetup's. Don't expect production increases or the possibility of further production cuts to be off the table before both goals are met.

In the near term, oil prices should also be supported by rebel action in Nigeria - a major source of oil for the U.S. News reports today are stating that rebels have sabotaged a major pipeline run by Chevron in the Niger delta and this has cut off 100,000 barrels a day of supply. The most amazing thing about this news, is that I first read about it on a wire service report nine days ago. I have been looking for it to appear in general news coverage ever since. You should ask yourself why major news that would raise the price of oil was buried by the U.S. media? If this was an isolated incident it could be written off as mere coincidence. However, as has been pointed out numerous times in this blog, oil coverage has been incredibly slanted toward the bearish viewpoint for months now with the use of misleading statistics and one-sided quotes from analysts who only hold negative views. The tenor of coverage looks like it has been changing in the last few days though.

Other than oil, you need to continue to pay attention to gold and silver. Spot silver, traded above its key resistance level of $14.50 at the end of last week getting to around the $14.80 level. While the spot price fell to $14.30 on the North Korean news, it was back up above $14.50 by 9:00 AM. A tug of war between the bulls and bears seems to be taken place currently at that price. Spot gold fell almost to $940, but shot back to $950 pretty quickly. Once gold breaks above about $965 level, it will be able to test $1000 and go on to new all time highs. The bears are really coming out of the woodwork in the last few days though to try to talk gold down -
a number of them have target prices for gold of $600 and major short positions on the metal. Soon they should be screaming as if they were hit by a North Korean missile.

NEXT: GM Sage Continues; Gold Becomes the New Oil

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

The Scamdemic in Insurers, Autos and Swine Flu

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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While I have often criticized the U.S. government for sloppy and corrupt economic policy, it is really outdoing itself lately to reach news highs on the stupidity meter. Essentially, federal government policy can be described as reward the incompetent. If a choice must be made between rewarding the extremely incompetent versus the very incompetent, reward the extremely incompetent. Better yet still if maximum unemployment and long-term economic damage can result from a policy choice, which should also costs ten times more in the long run. Unfortunately, as the latest news on swine flu reveals, this problem isn't limited to economic policy, but effects life or death health issues for the American public. If there was a movie analogy for the last two U.S. presidential administrations, it would have to be "Dumb and Dumber".

Today's news included bailouts for the life insurance companies and the simultaneous winding down of the American auto industry. The Treasury department has agreed to provide at least $22 billion in TARP funds to six life insurers, including Hartford Financial, Lincoln National, Allstate Corp., Ameriprise Financial, Principal Financial Group and Prudential. Like all bailouts that have taken place so far, expect more to be paid out in the future. While the insurance companies were being saved from their financial profligacy, the auto companies are being allowed to flounder.

Chrysler announced it was closing a quarter of all of its dealerships and GM is eliminating 1100. GM faces a June 1 deadline for bankruptcy. The Obama administration has done everything possible to push GM over the edge. While the costs of a bailout would be minimal compared to the financial companies, the costs of not bailing out the auto companies will be staggering. These will include paying off CDSs (credit default swaps) for GM bonds, unemployment insurance, health care costs, state and local government bailouts, etc, etc, etc. The administrations attempt to get the bondholders to accept worthless equity in the company sets another bad precedent as well. This will damage the ability of all U.S. manufacturing companies to raise capital in the future (especially from foreign sources). It was long term government policy initiatives to build up the FIRE (finance, insurance, real estate) economy at the expense of manufacturing that led to our current difficulties. Is the government trying to fix this mistake? Not at all, they are trying to compound it.

Some more interesting news on the swine flu debacle #2 (the first debacle was in the mid 1970s) came out in the last 24 hours. A report from Bloomberg News stated the World Health Organization is investigating a claim by an top flu researcher and one of the developers of Tamiflu, Adrian Gibbs, that the swine flu virus currently circling the globe may have been created in a medical lab as a result of human error. Presumably, it was accidentally released. In reaction to the report, a spokesperson for the CDC in Atlanta vehemently denied the possibility of swine flu being man made even though the CDC has yet to review Dr. Gibbs data (hmmm, I wonder who could have operated a lab where this could have taken place). Regardless of what may have happened in the past, there is no need to have doubts about whether or not the CDC's operations will be in competent hands in the future. The Obama administration has just announced that it is appointing New York City Health Commissioner Thomas Frieden to head the CDC. In case you have forgotten, Frieden was the one who stated there were hundreds of undiagnosed cases of swine flu in the city (there weren't) when the flu first appeared. While doing everything possible to unnecessarily spread panic, the NYC health department was busy botching the early testing of potential swine flu cases. The extremely incompetent Frieden will be replacing the merely incompetent Richard Besser.

NEXT: Market Meltup in Mumbai

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

NYIM May 5th Meeting; Oil Report; Swine Flu Update

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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We would like to thank our guest, best selling author William Cohan for a great interview at the New York Investing meetup last night. The discussion of his recent book, "House of Cards" touched on many of the major issues currently facing Wall Street and the financial system. Cohan was mostly critical of Wall Street during his talk as he was in his book. There was also a talk at the meeting about stocks, oil, gold and silver and where the opportunities currently lie. To find out even more about this topic, we urge everyone in the New York Metro area to attend the New York Hard Assets Investment Conference next Monday and Tuesday. Registration is free and can be done by going to: http://www.hardassetsny.com/. Meanwhile, more news about swine flu is coming out, but the medical authorities are finally being somewhat more responsible about informing the public about what is really going on.

While there are many point of agreement between the New York Investing meetup and William Cohan, some divergences of opinion come out during his interview. Cohan stated quite clearly that he believed significant reform was on the way for Wall Street and that he had high hopes for Timothy Geithner's tenure as Treasury Secretary. While there is certainly a strong movement for reform among the American populace, little has been done so far and anyone who reads this blog regularly knows we are not fans of Timid Tim Geithner. We certainly agree with Cohan's criticism of Congress and the large campaign donations that it accepts from Wall Street has corrupted our system. We don't agree with Cohan's favorable views of TARP, something we vehemently opposed and consider to be one of the biggest wastes of government money ever. Cohan did provide some interesting insight into the failure of Lehman Brothers saying there was really no clear answer why the authorities let it fail other than the timing of its demise (if it had been first, he believes a bailout would have taken place) and it wasn't a favored institution of the government as is Goldman Sachs. We hope to have at least excerpts of the interview out on video shortly.

The weekly oil storage report came out from the EIA this morning and it looked pretty bullish. Oil in storage was up only 600,000 barrels, while analysts has expected a rise of 2,000,000 barrels. Gasoline was down 200,000 barrels and the high demand summer driving season is just about to begin. In the meetup last night we showed how oil was well below its 200-day moving average and predicted it needs to get to that level before the current rally will end. Oil jumped up to a new 5-month high after the inventory report with light sweet crude reaching $55.55 a barrel. There is probably at least $20 more upside to the commodity, if not more, before a 2009 high is hit.

In today's media coverage, the first actual American death of someone who tested positive for swine flu was reported. Read the articles carefully however, they do NOT say that the woman who died on the Texas/Mexican border died of swine flu. Indeed the medical authorities refuse to state that she did and said that she had other 'critical underlying medical problems'. The little Mexican boy who died in Houston also had other significant medical issues. In Mexico, the current count is 42 deaths (still nowhere near the originally reported 160). No medical history is available for most of these people, who were poor and had limited access to health care. It is quite possible all of them had other medical issues as well and swine flu was not the primary cause of their deaths. This would explain why there are no swine flu deaths outside Mexico in places where advanced health care systems and accurate record keeping exist. There is no substantial proof that the current outbreak of swine flu is deadly, nor that it is even a serious disease.

NEXT: A Rally Frothing at the Mouth

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Banks Get Swine Flu; William Cohan at New York Investing

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

The long awaited bank stress test is scheduled to be out this Thursday. There have already been more leaks in this government PR gambit than in a sinking ship. Meanwhile, the Swine Flu panic is winding down, with an article by TIME magazine this morning questioning whether all the hoopla was justified (see the Sunday and Saturday entries for this blog for a detailed analysis for why it wasn't). And finally, I will be interviewing best-selling author William Cohan at the New York Investing meetup tomorrow. Whether or not you saw him on the Daily Show with John Stuart or elsewhere on TV, this is your chance to see him in person.

In the news out today, Citigroup and Bank of America are stating that they are going to be raising $10 billion more in capital to shore up their reserves. Didn't both of these banks say they were profitable in the first quarter and planning on returning TARP funds? Something seems to be inconsistent with this story. Wells Fargo and PNC Financial also need more capital. The U.S. banking system is by no means stable yet and if the Fed withdraw all the funding it is providing from its half dozen or so programs, almost every major U.S. bank would collapse immediately.

While it is difficult for the average person to understand how poorly the government has handled the Credit Crisis, it is much easier to see how badly they have handled the current outbreak of swine flu (the 1976 outbreak was bungled as well and had tragic consequences for hundreds of people who participated in the government's vaccination program - there was only one supposed swine flu death). A number of the top government medical authorities made dire warnings of impending tragedy and sounded the alarm bells at top volume in the last two weeks. Not only is there no rising death toll as they warned us about, but there are no deaths at all outside of Mexico. Even the supposed deaths that have taken place in Mexico are questionable. Over a week ago, Mexico claimed 160 deaths from swine flu had taken place, the current claim is 20. Mexico's health care statistics seem to be about as reliable as most U.S. banks financial statements (see the previous blog entry for more about this).

If you are in the New York metro area, you should be coming to the May 5th meeting of the New York Investing meetup tomorrow (PS 41, 116 West 11th Street at 6th Avenue, starting at 6:45PM, for more details see: http://investing.meetup.com/21). I will be interviewing William Cohan about his latest book, "House of Cards", which is about the demise of Bear Stearns (New York Investing was the first major group to predict that this would happen in August 2007). Cohan doesn't make a lot of personal appearances, so this is your opportunity to not only hear what he has to say about the Credit Crisis, but get him to sign of copy of his book for you.

NEXT: Market Getting Frothy; Meeting tonight for New York Investing

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Pandemic of Government Stupidity Over Swine Flu Sweeps Globe

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

The biggest thing to fear from the current swine flu outbreak is the stupid reactions of government officials. While we would like to think that we live in a world where intelligent scientific thought dominates and ignorance and irrational emotional reactions are not the basis for important decisions, the reaction to swine flu indicates otherwise. The global medical establishment, highly trained scientists, have reacted more like voodoo shamans instead of engaging in rational analysis. The mainstream press, instead of acting as a responsible gatekeeper, has had a field day spreading panic. Government officials have followed up by doing some of dumbest things imaginable (in case you don't understand what is going on with how they are dealing with the Credit Crisis -think about how well that's probably being handled).

One of the most outrageous government acts so far has taken place in Hong Kong where authorities have sealed the downtown Metropark Hotel, where a sickened Mexican tourist had stayed, trapping 350 business travelers, tourists and employees inside. Riots have broken out in Egypt when police have tried to fulfill the government's mandate to kill all of the country's pig population - there is no evidence that any of pigs have swine flu there. In Baghdad, the Boars in the zoo were slaughtered even though there is no swine flu in Iraq. The U.S. has closed down hundreds of schools. In Mexico, the capital is totally closed down and will remain so for a few more days. Officials from the CDC, the federal Health and Human Services Department and the New York City Health Department have made irresponsible statements that have helped engender panic. The first two warned of an increasing death toll from swine flu and the latter that there were already hundreds of cases in New York City last week - none of which has turned out to be true.

The source of all the worry about swine flu is and always has been suspect. There have been two competing strains of information that have led to contradictory conclusions. Authorities throughout the world have chosen to believe the unreliable information source over the reliable one. The first strain of information are reports and statistics on swine flu from Mexico - a country with a chaotic health care system and questionable data gathering ability. The second data source is from the developed world, where health statistics are reliable. Based on initial reports out of Mexico, swine flu was a deadly virus. However, even as of today, there have been no fatalities elsewhere - and that's hard reliable data. When you are exposed to contradictory information from two sources with widely varying credibility, which do you believe? In the case of swine flu, it as if the medical authorities chose to believe Star Magazine over the New York Times.

Moreover, it has since been demonstrated that the initial reports on swine flu from Mexico were pure speculation and are not supported by the facts. Over a week ago, there were already supposed to have been 160 deaths there from swine flu in Mexico. The current count has risen to 19. What? Tests for swine flu were not being done initially and now that they have been only 19 people so far who have tested positive for swine flu have died. Whether or not they died from swine flu is not proven and should be questioned considering that no one outside of Mexico dies of swine flu. These 19 could have died from any number of other illnesses and considering there was an epidemic of virulent pneumonia in Mexico, this would be a strong candidate for the actual cause of death. How are the Mexicans handling this rather embarrassing situation? Just today, in a news release, Mexico's Health Secretary said "11 people were suspected to have died from the virus in the previous 24 hours". Huh? While the glaring headline seems to indicate swine flu deaths are increasing, what was meant was that testing has shown the number of supposed deaths from swine flu jumped from 9 to 20 (including the Mexican toddler that died in Texas). Note to Mexico's Health Secretary, 20 is a much smaller number than 160.

U.S. medical authorities are already backtracking and making the case that their highly irresponsible actions were justified. In appearances on the Sunday talk show circuit, it was stated that a vaccine for swine flu is being prepared and after it was created it would then be decided whether or not to order large amounts of it be produced in the fall. Despite their hemming and hawing, it was quite obvious they realized they had screwed up big time. Don't expect an admission of this and don't expect any one of these bozos to be fired. After all, why should the health of the American people be in the hands of competent people.

NEXT: Banks Get Swine Flu; William Cohan at New York Investing

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Swine Flu Update - Government Scamdemic and the Credit Crisis

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

If you thought the U.S. government's handling of the Credit Crisis was bad (and you should), the handling of the current swine flu outbreak is even worse. Both have similar elements and it is those elements that need to be addressed if the financial system is to be righted, the economy is to be put back on a sustainable track, health policy is to be handled responsibly and anything else is in the U.S. is to run the way it should. Otherwise things are only going to continue to fall apart and possibly just blow up spectacularly one day.

We are living in a time where there seems to have been a complete suspension of the use of common sense and basic logic among the powers that be. You see this in the Credit Crisis, where it was believed that people who had no jobs and no history of paying their bills, even if they had a job, were considered good prospects for home mortgages. Somehow, there was surprise when large numbers of these mortgages defaulted. Government programs to extend home ownership to the poor (why should someone not own something just because they can't afford it) were at the root of the Credit Crisis and this helped support unlimited Wall Street greed in trying to make money off of these programs. The government is still trying to prop up Wall Street with your taxpayer money in its various bail out programs even though most of this mortgage debt is and always will be worthless.

The same suspension of common sense has taken place with the current swine flu outbreak. A genetic analysis of the virus released yesterday indicates that it doesn't have any elements of the 1918 virus that caused that virus be so dangerous (plus that virus was an avian flu and not a swine flu as was thought to be the case for decades, a rather major point that seems to have been ignored by the medical authorities). Instead of spending tens of thousands of dollars for this study, simple observation of the people with confirmed cases of the disease was all that was necessary. Outside of Mexico, there have been ZERO deaths so far (the one case supposedly in the United States was a resident of Mexico City who had been brought to the U.S. and he had other significant health problems). Anecdotal reports outside of Mexico indicate that many of the people who have had swine flu didn't even bother going to the doctor because they weren't that sick. Most people with swine flu have recovered quickly. If basic logic wasn't enough, you would think having the scientific confirmation that swine flu isn't deadly would be an adequate reason to stop the government's panic reaction to the situation. You would of course be wrong.

From the top all the way down, the government's desire to spend your tax dollars ($1.5 billion has been committed) to save you from a non-existent menace goes on unabated. President Obama himself in his radio address Saturday stated, "This is a new strain of the flu virus, and because we haven't developed an immunity to it, it has more potential to cause us harm. Unlike the various strains of animal flu that have emerged in the past, it's a flu that is spreading from human to human." The ability to pack so much ignorance in so few words is truly a gift (I previously thought George Bush was the master of this art). Flu arises from animals and becomes epidemic when person to person transmission is possible, so this is exactly what has happened in all past flu epidemics. The idea we have no developed immunity to the swine flu is not supported by the mildness of the cases, nor for that matter has there been any random testing to find out if people test positive for swine flu, but didn't become ill (this was indeed found to be the case in the 1976 outbreak).

Neither common sense, nor scientific evidence seems to have phased Dr. Steve Waterman, the head of a team from the Centers for Disease Control and Prevention in Mexico. Even after getting the genetic analysis stating the swine flu virus wasn't deadly, Dr. Waterman warned that more deaths were to come. Dr. Waterman stated his main goal of his CDC team in Mexico (other than to spend the unlimited government funding they have) is to find out HOW swine flu kills. He should be asking IF it kills, not how. Anyone with a wit of intelligence (it is quite possible that no high ranking medical official is in that category) should be immediately suspicious that no one has died of swine flu outside of Mexico. Many days ago, the official Mexican figures were 2498 swine flu cases and 160 deaths. As of right now, viral typing (the only way to accurately know if someone has swine flu, since there are many other diseases with similar symptoms) shows only 397 confirmed swine flu cases in Mexico with 16 of those people having died. There are no medical histories for those people (most of whom seem to be urban and rural poor with limited access to health care), so it is impossible to determine if they died from swine flu or some other disease. There is by no means out of the question, especially since there was an outbreak of virulent pneumonia this winter in Mexico prior to the outbreak of swine flu. To say that Mexican health statistics are questionable and their health care system is a mess would be an understatement to say the least. Yet, they are being given credence while the more reliable evidence from the developed world is being ignored.

As of today (Saturday, May 2), there are 161 confirmed cases of swine flu in the U.S. New York leads the way with 50 cases. Few new cases seem to be appearing in New York even though the head of the city's Health and Human Services irresponsibly tried to panic the public earlier in the week by warning there were already hundreds of cases (so where are they?). More than 430 schools are closed in the U.S. affecting about 245,000 children in 18 states. Has the U.S. Secretary of Education said this is ridiculous and there is no justification for this. Not at all. Even after the scientific study indicating swine flu is not deadly was available, new guidelines were released to keep schools closed 14 days instead of the shorter times that had been planned. How else could we prepare today's students for future government service other than to keep them totally ignorant and uneducated?

Like the boy who cried wolf, the government is playing a dangerous game with swine flu. When a truly serious crisis arises, it is likely to be ignored in the future. Of course, that would assume that the goverment would actually realize a serious crisis existed. It didn't with the Credit Crisis and it still isn't reacting properly to fix it. Don't assume things are likely to be any better in the health arena.

NEXT: Pandemic of Government Stupidity Over Swine Flu Sweeps Globe

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Market At Key Resistance; Scamdemic Update

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

While it looks like Chrysler declaring bankruptcy weighed on the market yesterday, the selling from the intraday highs has a technical explanation. During the day, the Nasdaq reached 1753, almost hitting its 200-day moving average of 1756. This is always an important resistance point in any bear market rally. The Dow itself traded as high as 8307, a price where there is significant chart resistance. While some selling should be expected soon because the market usually can't just break through strong resistance immediately, I think the Nasdaq will manage to break above its 200-day after awhile and the current rally will last until the Dow and S&P 500 reach theirs. As of today, the Dow's 200-day is at 9077 and the S&P 500's is at 964 (the S&P's high yesterday was 889). All the 200-day's are falling, so you need to check where they are every now and then.

One thing that has not made the market go down, to its credit, is the mainstream media misinformation campaign about the current swine flu outbreak. While any rational assessment indicates that this is much ado about nothing and this version of flu is probably the least serious that ever existed, health care officials from WHO, the U.S. Health and Human Services, the CDC and the New York Health Department have done everything possible to fan the flames of hysteria and engender panic among the global populace. The media has been a more than willing accomplice in this endeavor. Moreover, this is not the first time this has happened. There was also a major swine flu scare in 1976 created by the U.S. government. That epidemic never materialized.

Having much experience deconstructing investing news for its intent to mislead the reader, it was easy to see immediately that the supposed dire situation with the current swine flu outbreak was all a bunch of hype. Let's examine the actual facts of what is taking place:

1. No one outside of Mexico has died from this disease. The one case of a death reported in the U.S. was for a toddler who was a resident of Mexico City and was brought to the U.S. Furthermore, he had other significant underlying health problems that the medical authorities refuse to reveal. Did he die from those instead of the flu? Quite possibly.
2. As for the supposed deaths in Mexico from swine flu, which is the basis for the pandemic panic, the evidence doesn't support media reporting. Almost from the beginning, the media reported 160 'suspected' deaths (sometimes the word suspected got left out). The figures as of this morning indicate that only 300 cases of swine flu have been confirmed by viral typing in Mexico (less than half of suspected cases turned out to be swine flu). Of these, only 7 people have died. What other medical conditions these seven had that might have contributed to their deaths is unknown and probably will remain so.
3. The danger of contagion seems to be minimal as well. Mexican health workers have so far found only 2 cases of family members of suspected and actual swine flu sufferers who have tested positive for type A influenza (this doesn't mean they have swine flu, but they could).
4. As of yesterday, the CDC had confirmed only 109 cases of swine flu in the U.S. The number of cases plateaued fairly quickly. The average sufferer has had relatively mild symptoms for a case of the flu and has recovered quickly.
5. The U.S. government has committed $1.5 billion of taxpayer money to handle this 'dire' emergency. So someone's getting rich off of it.
6. Based on the actual evidence (not supposition) so far, it looks like you are more likely to be hit by a bus than to get swine flu. Even if you got swine flu, it seems much less risky that the usual varieties of flu that we are exposed to on a regular basis.

While a certain percentage of the public has panicked over swine flu, most people have ignored the hysteria the government officials and the mainstream media are trying to foment. The credibility of both continue to sink - as they should. Perhaps the public is more worried about the gross mishandling of the economy by the powers that be and refuses to be distracted. Unlike swine flu, that's a problem that's not going to go away.

NEXT: Swine Flu Update - Government Scamdemic and the Credit Crisis

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Markets Rise Despite Swine Flu Scamdemic

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

U.S. stock indices were all up over 2% yesterday despite the increasing hysteria about a swine flu pandemic. The market was clearly not buying that story, nor should you (more below). The markets were giddy over comments coming from the Fed meeting yesterday. The Fed said the rate of the economy's decline had slowed considerably. It further stated that it would consider additional funding for its programs if necessary. Expect the printing presses to be running full time well into the future with bail outs needed in the insurance industry, commercial real estate and for state and local governments. And don't forget that we will be bailing out Mexico too, probably sooner than later thinks to the recently totally unjustified brouhaha over swine flu.

Rarely if ever have I seen more irresponsibility on the part of the medical authorities and media than in the handling of the current swine flu outbreak. Coverage seems much worse than during the outbreak in 1976, when 200 people were sick with swine flu and one person supposedly died from it. That swine flu outbreak started at an U.S. army base at Fort Dix, New Jersey. The first person to have been identified with swine flu, was the only recorded fatality (it is not clear from the available information that other causes of death could be ruled out). Four other army recruits had to be hospitalized. However, it turns out that 500 other soldiers at the base tested positive for swine flu, but didn't even become sick. Somehow, the U.S. government used this data to justify spending $135 million on a large-scale immunization program, which had to be halted once it was realized that people were dieing and being horribly crippled - from the vaccine! No swine flu epidemic ever materialized.

The facts of today's swine flu outbreak also tell a very different story than the one you are hearing from the media. The glaring front page headline in a major newspaper yesterday, "Swine Flu, Why You Should Worry" is typical of what the public has seen and heard and which have caused needless panic throughout the world. In reality, NOT ONE PERSON outside of Mexico has died from swine flu (how many have died inside Mexico may also have been grossly exaggerated). But what about the reports of the first American death, even mentioned in this blog yesterday? Well, it turns out the unfortunate toddler who died after two weeks in a Houston hospital came from Mexico. His parents claim he only became sick once they crossed the border and arrived in Brownsville, Texas. The toddler also had other significant health problems, which the medical authorities refuse to reveal. Without knowing what these were, it is impossible to say if he actually died from another medical condition or swine flu.

It needs to be kept in mind that the symptoms of swine flu are identical to other types of flu and similar to many other illnesses as well. Swine flu can only be identified by viral typing, something the Mexicans didn't have the ability to do during the beginning of the outbreak. They had to send samples to the United States. As of April 26th, only 18 cases of swine flu had been confirmed in Mexico by viral typing, yet the media reported 160 people dead from swine flu there (how did they know this?). Not only is it quite possible many of these people actually died from something else, it is the logical conclusion if you consider that there aren't any deaths elsewhere. As for the viral typing that has been done in the United States on suspected cases, a large majority of the tests have come back negative for flu. Of the few that were positive, twice as many indicated already known forms of the disease and not swine flu.

By every measure so far, the current version of swine flu seems to be the mildest form of influenza that has ever existed. No deaths in the U.S. versus 36,000 a year from other flu related illnesses and 7 hospitalizations versus the usual 114,000 annual number (thats 0.006%). Yet, that's not how the medical authorities have reacted. They have done everything possible to fan the flames of panic among a naive and gullible public (and increase their budgets - the federal government has already promised $1.5 billion). The New York City Health Commissioner, Thomas Frieden, stated that there were many hundreds of school children in the city with suspected cases of swine flu (that word suspected got buried in the coverage). Health and Human Services Secretary, Kathleen Sebelius, warned that the child who died in Houston would not be the first death in the U.S. form swine flu. Perhaps she's planning an airlift of the seriously ill from Mexico? You got to find some way to spend that $1.5 billion.

NEXT: Market at Key Resistance; Scamdemic Update

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

The Stupidity Pandemic; U.S GDP Tanks

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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The handling and coverage of the current swine flu outbreak has lots of lessons for investing. While the word pandemic is constantly being used by medical authorities for the spread of the flu, the only pandemic that seems to exist is the stupidity in handling and reporting the problem. No realistic concept of probability is being utilized in the amount of attention being paid to this incident. The same problem causes bad investing decisions. Meanwhile, the U.S. GDP figures were released this morning and the 6.1% decline was much worse than analysts had expected.

In my experience, doctors generally have a poor sense of probability and they also tend to be bad investors. The complete lack of context and statements from the medical establishment about the swine flu outbreak vividly illustrate this. Flu of some sort is omnipresent in the U.S and it is a major cause of mortality with an average of 36,000 flu related deaths annually in the 1990s. The very young, the old and the immune compromised are particularly at risk. By any statistical measure, the numbers for the recently discovered swine flu are insignificant. It has only gotten any attention at all because a new strain has been identified. Until an infant death was reported today in Texas, the mortality of this flu outside of Mexico was zero and it would be reasonable to conclude that this new flu is much less risky than the ordinary strains we have to deal with every winter. The U.S. medical establishment's record of handling of swine flu in the past is also rather tarnished to say the least. A vaccine to prevent it in 1976 (the disease never really showed up despite dire warnings of impending peril - there were only 200 cases and one death) killed and crippled far more people than those who got the disease. It was thought at the time that the deadly 1918-1919 flu pandemic was swine flu. It was not, it was a type of avian flu.

Probability always needs to be taken into account when deciding what action to take. Worrying about risks that are minimal are a waste of time. People make the same mistake when investing. Their view of risk in the market tends to be highest at the bottom when this risk of losing money is actually minimal and lowest at the top when the risk of losing money is the greatest. Successful investors look for opportunities where the probability of winning is over 50% (if it is under 50% you are gambling and not investing). The higher your chances of winning are above the 50% level, the better. Over time, you will ultimately make money with this strategy, just as gamblers ultimately lose because they deal with probabilities of less than 50%.

The GDP report this morning was dismal to say the least. Analysts had expected a drop of 4.9% and the number came in at 6.1%. The drop in Q4 2008 was 6.3%. This is the first time since the deep recession of 1974-1975 that GDP has declined three quarters in a row. Highlights from the report: Exports collapsed 30 percent, the biggest decline since 1969, the decline reduced GDP by a record 4.06%; Investment by businesses tumbled a record 37.9 percent in the first quarter, while residential investment dived 38 percent; Business inventories plummeted by a record $103.7 billion in the first quarter and this lowered GDP by 2.79%. Consumer spending supposedly rose by 2.2% from the very depressed levels at the end of last year. I am skeptical of this however, but then again I am skeptical of many things - and for good reason.

NEXT: Markets Rise Depsite Swine Flu Scamdemic

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21


This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Markets Catch Swine Flu

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

Our Video Related to this Blog:

The only pandemic that you need to worry about right now is that global markets are being infected by swine flu hysteria. The Asia markets sold off last night, Taiwan and Hong Kong for the second day in a row with both down 1.9%. The Nikkei dropped 2.7% and South Korea's Kopsi was off 3%. As I write this, major European markets are down between 2.1% and 2.8% and S&P futures are down 1.8%. Oil if falling from the above the 50 level again (this has become a recurrent pattern as of late). Most amazingly, gold is down about $20 in the futures market, even though the price of gold should go up during a crisis (is this telling us something about the Fed meeting taking place this week?).

The media's handling of the swine flu news is incredibly irresponsible and outrageous (keep this in mind when reading financial news which is not handled that much differently). You would think that another Medieval Black Plague was about to strike. Just as in investing reporting the facts get buried amid the hype and the news deviates significantly from reality. So far, it doesn't look like there are any deaths outside of Mexico. While flu has been found in 40 people in the U.S. who had traveled to Mexico, the cases seem relatively mild and this seems to be true in other countries as well. The disease seems to be one thing in Mexico, but quite another outside of Mexico. This is a huge inconsistency that doesn't make sense, so there is obviously more to this story than is being reported, or perhaps it would be more accurate to say, less to the story.

So far the most damaged stock groups from the Swine flu news are airlines and hotels. AMR, UAUA, and LCC were all down in the double digits yesterday. They are still not buys however since they were already overextended on the upside when they began selling off. They would have to have about 4 serious days of selling to make them interesting for other than day trading purposes. Anti-viral biotechs were the big winners, most going up well into the double digits. Expect them to come right back down once the crisis blows over. At that point they might be longer term buys. If you want to take a look: BCRX, BTAHY/BTAHF, GNBT, HEB, NVAX, PPHM, and VICL. Only very experienced traders should play with these stocks.

Wall Street reaction to the swine flu is as would be expected. Hearing the word swine, the usual suspects have answered the call. One market analyst is out on the net with a statement that the market could drop 15% (if this turns out to be as bad as SARS that is - it won't be, the two aren't comparable at all). One oil analyst has come out with a prediction that oil will go back to $33 a barrel because air travel is likely to have a huge drop. My guess is this is all going to be much ado about nothing. Even though the swine flu may disappear, don't assume the swine on Wall Street will have done the same. You always need to worry about them.

NEXT: The Stupidity Pandemic; U.S. GDP Tanks

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.