A report from Goldman Sachs openly admitted that curing patients is not a "sustainable business model" for drug companies.
The post Goldman Sachs Report Warns Pharma Companies That Curing Disease Is Bad For Business appeared first on The Free Thought Project.
One of the most reviled companies in the United States recently gave Americans yet another reason to distrust their power: A recent Goldman Sachs report reveals the company questioning whether or not curing chronic illness is compatible with a sustainable business model.
In an internal report viewed by CNBC about the potential of the biotech industry and gene therapy titled “The Genome Revolution,” analysts asked: “Is curing patients a sustainable business model?”
“The potential to deliver ‘one shot cures’ is one of the most attractive aspects of gene therapy, genetically-engineered cell therapy and gene editing,” wrote analyst Salveen Richter. “However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies,” analyst Richter wrote in the April 10 report.
“While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.“
Richter cited a Hepatitis C drug manufactured by Gilead Sciences that achieved a 90% cure rate. As CNBC noted:
“The company’s U.S. sales for these hepatitis C treatments peaked at $12.5 billion in 2015, but have been falling ever since. Goldman estimates the U.S. sales for these treatments will be less than $4 billion this year, according to a table in the report.”
In light of the reduced profits as a result of the success of the drug, Richter wrote:
“GILD is a case in point, where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients. In the case of infectious diseases such as hepatitis C, curing existing patients also decreases the number of carriers able to transmit the virus to new patients, thus the incident pool also declines … Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise.”
Indeed, cancer is a highly profitable disease. In 2015, the world spent $107 billion on cancer drugs, and according to 2016 projections, that number was expected to grow to $150 by 2020. Further, Gilead Sciences, which Richter singled out as a company losing profits due to cures, was still the second-most profitable pharmaceutical/biotech company in the world in 2017, earning over $12 billion in net income.
Richter, who did not respond to CNBC’s request for comment, offered several ideas to cope with the ‘problem’ of healing patients. He suggested targeting large markets, such as those suffering from hemophilia, because “Hemophilia is a $9-10bn WW market (hemophilia A, B), growing at ~6-7% annually.” in addition, he advised clients to target disorders with high incidences, such as spinal dystrophy, as well as focus on “[c]onstant innovation and portfolio expansion.”
Additionally, Ars Technica reported, the analysis “hints that, as such cures come to fruition, they could open up more investment opportunities in treatments for ‘disease of aging.’”
Goldman Sachs confirmed the authenticity of the report to Ars Technica but declined to comment on its contents.
The post Goldman Sachs Analyst: Curing Patients Not a Sustainable Medical Business Model appeared first on The Sleuth Journal.
(ANTIMEDIA) — One of the most reviled companies in the United States recently gave Americans yet another reason to distrust their power: A recent Goldman Sachs report reveals the company questioning whether or not curing chronic illness is compatible with a sustainable business model. In an internal report viewed by CNBC about the potential of the biotech industry and gene […]
Everybody can plainly see that Trump’s campaign promises to drain the swamp of Goldman Sachs is absolute malarkey. If you can’t, you may be stuck in the denial phase of promises of change that Obama supporters years ago believed was coming to no avail.
Not only has the current POTUS breached his promises, what we have – arguably – is a White House cabinet stuffed to the cream filling oozing with Goldman Sachs personnel.
The thing is, Goldman Sachs is guilty of ripping off America, and still has criminal conspiracies obstructing justice on a grand scale, as my series on Wall Street frauds is pointing out (here – here – here).
Back in November 2016, Politico pointed out that Steve Mnuchin, Steve Bannon (now resigned), Anthony Scaramucci and Gary Cohn are all Goldman Sachs alumni.
In March 2017, the Congressional news website – The Hill– pointed out Trump had nominated two other Goldman Sachs alum, James Donovan, and Dina Powell.
Also transpiring in March 2017 was a nomination that eToys whistleblower Laser Haas sued to block; which is haunting our nation.
Though you may have heard about Trump nominating Jay Clayton to be top Commissioner of the SEC, what you didn’t hear about is the fact that the Washington, D.C. Clerk of Court illegally blocked eToys whistleblower Laser Haas’s lawsuit seeking a TRO (here) to block Jay Clayton, due to his being directly linked to 3 criminal co-conspirators.
It is well known that Jay Clayton was a partner at Sullivan & Cromwell law firm, which represents Goldman Sachs in New York; and that Mr. Clayton’s wife (Gretchen) is a partner at Goldman Sachs Mergers & Acquisition division.
A lesser-known fact, as pointed out by the New York Times, is the detail that Jay Clayton was invested in Bain Capital.
Here’s the friction of all these Goldman Sachs facts. As reported by this reporter, in the Wall Street fraud ongoing series, back in 1997 Mitt Romney, Bain Capital and Thomas Lee Partners were aided by Goldman Sachs, to get involved with “The Learning Company.”
As I reported, another Goldman Sachs law firm (MNAT) worked the Delaware merger of The Learning Company with Mattel, which ultimately resulted in a catastrophic loss of $4 billion dollars for Mattel investors.
There appears to have been no investigation or prosecution of the public company cooked books fraud; and that seems to be the result of another Wall Street revolving door with the federal systems of justice (DOJ.)
Recently, this reporter did a lengthy report on the dynamics of Delaware federal prosecutor Colm F. Connolly.
Connolly, as reported, clerked for 3rd Circuit Judge Walter K. Stapleton (who just so happens to have been a partner of MNAT).
Colm then became an Assistant United States Attorney in 1992 – and he remained there until 1999 – where Connolly switched sides to become a partner of MNAT.
Also, in 1999, Goldman Sachs took eToys public, and there appears to be a conflict of interest issue where eToys.com stock price went above $75; but Goldman Sachs split all the money above $20 per share – with handpicks (see NYT March 2013 article “Rigging the I.P.O. Game”).
Whilst Colm Connolly was a partner of the MNAT law firm, MNAT conspired to rip off court-approved clients of Laser Haas CLI entity and eToys.
Furtively, MNAT was harming Laser and eToys for the benefit of MNAT’s secret clients/partners of Mattel, Goldman Sachs, Bain Capital, Paul Traub, Barry Gold, Michael Glazer and Colm Connolly.
Laser was the 2001 court-appointed fiduciary of eToys, who stopped MNAT & Paul Traub’s schemes to sell eToys billion dollar public company for $5.4 million to Bain Capital/KB (with Michael Glazer as CEO of KB).
When Laser ‘s efforts forced the eToys case bids up, into the tens of millions of dollars, the bad faith parties offered Laser a million dollar bribe to shut up and stop whistleblowing, and a chance to become a roaming manager for Bain Capital.
The bribe was turned down By Laser and reported to the Delaware Department of Justice in mid-2001.
Apparently, Goldman Sachs always has the ability to get its associated parties “planted” into key government positions, hich as this series has demonstrated time and time again is a little more than just a coincidence.
Upon Laser turning down and reporting the bribe, Colm Connolly was then returned to the Delaware Department of Justice; this time as top dog, to be The United States Attorney in Delaware (where Colm presided over KB, Fingerhut, MNAT, Paul Traub, Goldman Sachs, Bain Capital, Learning/Mattel and eToys billions of dollars in fraud cases).
It wasn’t until 2007 that Laser learned the fact Colm Connolly was a partner of MNAT, which is germane due to the fact that Colm Connolly, via his Assistant U.S. Attorney, Ellen Slights, continued to refuse to investigate MNAT and its partners/clients.
On December 7, 2007, Laser reported (here) the facts of Colm Connolly’s bad faith to the Los Angeles United States Attorney office, where the Public Corruption Task Force was housed.
Instead of addressing Colm Connolly’s betrayal of the public’s trust, GW Bush’s flying buddy, Tom O’Brien, walked into his weekly staff meeting, berating federal prosecutors, as he shut down the Public Corruption special unit.
Making matters extensively heinous and more egregious, O’Brien had the unmitigated gall to threaten career federal prosecutors to keep their mouths shut – or else (see L.A. Times March 2008 article “Shake-up tools federal prosecutors”).
In other words, Goldman Sachs, even before Donald Trump handed Sachs the keys to the kingdom, was able to obstruct justice in almost every way conceivable.
Now that Goldman Sachs has gotten away with obstructing justice for the better part of 20 years, including retaliating against whistleblower Laser Haas, whilst benefiting from racketeering partnership with Bain Capital, Goldman Sachs sees an even bigger chance with Mitt Romney running for Senate (that everybody knows means a run in 2020) and a renomination of Colm Connolly for the federal bench.
On top of all that, Jay Clayton feels so secure in his Goldman Sachs obstruction of justice position that Clayton is now proposing a new paradigm of blocking investors from suing Wall Street (see Newsmax January 2018 article “Trump’s SEC mulls big gift” to Wall Street).
Meanwhile, Clayton seeks to play “cryptocurrency cop” wanting to enforce SEC regulations on everyday American investors in a volatile market that is redistributing wealth to normal citizens through financial technology as the recent cryptocurrency hearing on Congress displayed – an obvious contradiction of Clayton’s oath of office. In one case he wants to enforce the law; in the other, he wants to deregulate existing laws enabling fraud for his buddies on Wall St.
Why are you, Mr. Clayton, changing laws to benefit a few; and seeking to deprive investors of their legal right to redress grievances? Why have you yet to appoint an independent investigator into the eToys cases? As for you Mr. President Trump, it is clear that you are going out of the way to assure Goldman Sachs and its partner Bain Capital continue to get away with their Wall Street frauds. Don’t you have enough issues with obstruction of justice already?
If all that isn’t enough, we now have Mick Mulvaney, who is on record stating he hates the Consumer Financial Protection Bureau (CFPB), in charge of the agency tasked with protecting consumers. However, he is not as the Equifax case demonstrates. Mr. Mulvaney, care to elaborate why it’s okay for you to stymie investigations and have conflicts of interest in favor of payday lenders?
Trump is compounding his Goldman Sachs carnage by renominating corrupt federal prosecutor, Colm F. Connolly, to become a Delaware Federal District Court Judge, where Colm will be 1 of only 4 judges to review MNAT, Bain Capital, and Goldman Sachs-related cases.
As this investigative journalist recently reported about Colm Connolly, there is clear evidence that Colm Connolly’s Bar Card should be yanked, and – quite possibly – Connolly should be tried in a court and sent to jail.
After Colm’s partner, MNAT, threw Laser out of eToys, MNAT, in 2002, nominated Tom Petters Ponzi “control” partner and schemer, Paul Traub, to sue Goldman Sachs (who was represented by Sullivan & Cromwell) for eToys stock fraud.
Goldman Sachs sued Goldman Sachs, and eToys lost again.
Furthermore, with whistleblower Laser Haas out of the way and MNAT partner Colm Connolly “planted” back into the Department of Justice to assure no investigations or prosecutions would transpire against Paul Traub, Goldman Sachs or Bain Capital, MNAT was able to reduce the sales of eToys to Bain Capital/ KB.
The thing is, MNAT is the court-approved law firm to represent eToys, which means MNAT betrayed its court-approved client for the sake of its secret – more lucrative clients – of Goldman Sachs & Bain Capital.
Too many times, federal agents and even agencies have threatened whistleblower Laser Haas, instead of doing their job of arresting and prosecuting Wall Street frauds.
Just last week this reporter wrote an article (here) on the FBI and Delaware Assistant United States Attorney Ellen Slights using the FBI to threaten Laser Haas after eToys shareholder Robert Alber woke up dead and Laser reported it.
Thousands have lost billions, and many have died! (Some of these people have been named while others have remained anonymous for safety reasons.)
To sum everything up…
Laser blew the whistle on eToys, in 2001. Around that time, MNAT became a partner in the crimes of Mattel/Learning, Fingerhut, KB and eToys frauds.
Colm Connolly was an assistant federal prosecutor who became a partner of the MNAT law firm in 1999; and then Colm returned to being a federal prosecutor on August 2, 2001.
Connolly’s return to the DOJ arguably was to make sure of no investigation or prosecutions of MNAT and its secret clients of Goldman Sachs, Bain Capital (and Paul Roy Traub), who to reiterate was the control of the Tom Petters Ponzi yet was never jailed or investigated for his involvement in other previous schemes.
Many cases were looted resultant of the corruption to aid and abet the numerous racketeering acts of MNAT, Paul Traub, Sullivan Cromwell/Goldman Sachs partnership with Bain Capital schemes and artifices to defraud.
Colm Connolly and Jay Clayton are still obstructing justice by their refusing to recuse themselves and their consummate failures to come clean.
Trump, Sessions, the FBI, Jay Clayton/SEC and Delaware Assistant United States Attorney Ellen Slights were sued on March 22nd, 2017 by Laser Haas, where those parties were alerted to the case specifics.
It is inexplicable and intolerable that Trump’s Administration watchdog agencies are remaining in abject silence concerning the Goldman Sachs & Bain Capital Wall Street fraud cases; because Laser’s most recent lawsuit is almost a year old now.
Given the undeniable evidence, such as Colm Connolly’s résumé (here) being proof that Colm was a partner of MNAT; and the FBI contacts with Laser being irrefutable; then it is a compounding dynamic that Trump has nominated Colm Connolly for the Delaware Federal Bench.
Who gave the order for the Washington D.C. Clerk of Court to lose Laser’s March 22, 2017, lawsuit against Jay Clayton – until May 24, 2017 – which was three weeks after Jay Clayton was confirmed?
As is plain to see, Trump is letting racketeers take over our federal systems of justice, while he spends more vacation golf days than the last 3 presidents combined.
Now Donald the Great (wrecker of things) wants to beat his chest louder than Kim Jong-un of North Korea, with a military parade, at great expense upon all of us. Instead of the FBI threatening whistleblowers and Trump’s Administration aiding and abetting Goldman Sachs obstruction of justice, shouldn’t t there be some semblance of justice?
Things have gotten so out of control that this reporter has to do a 2nd article on Colm Connolly’s unfitness for the federal bench, and how Trump has gone beyond insane in the judicial nomination of Goldman Sachs cronies and corrupts.
I’m leaving you with this picture of the case docket concerning Laser suing Trump, Sessions, the FBI, Jay Clayton, the SEC and Ellen Slights. It shows that everything is contrary to law, being upside down and completely backwards. And that is the point – that “they” (all of Trump’s Administration) – simply don’t care how often the law is broken..
But we ….do!
Aaron Kesel writes for Activist Post. Support us at Patreon. Follow us on Facebook, Twitter, Steemit, and BitChute. Ready for solutions? Subscribe to our premium newsletter Counter Markets.
Now that the massive new tax bill has passed, I thought I"d do a little experiment with a spreadsheet to see how a hypothetical Silicon Valley, California earner might be affected. I was sure his tax bill would be higher, but I am surprised at how much higher.I wouldn"t be surprised if some people decided not to stay in their homes since their tax bite is so substantial.
I will preface this by saying I"m not a tax expert, but I"ve got a pretty good understanding of taxes, and I put together a deliberately simplistic spreadsheet for this experiment. And while it may be simplistic, it still makes a powerful point, and the tiny amount of rounding error for an actual tax form won"t change the conclusion.
In this examination, I make the following assumptions:
So here is the spreadsheet. I want to stress this is extremely simplified (hey, almost a tax return on a postcard!) but here we go:
In the left column, which is "pre-reform", this person has state income tax and property tax totaling $98,000, which he can used to offset income for the purposes of calculating federal income tax. In the right column, he is limited to $10,000. So suddenly he"s got an extra $88,000 in income which is taxed that wasn"t taxed before.
He"s already limited to deducting only the first $1 million of his mortgage, but even that drops down to $750,000 (we"re assuming his home purchase was after 12/15/2017, when the law changes).
So, in the end, his federal tax bill is $29,400 higher than it was. That isn"t small. That"s a nice new car. Or a year"s tuition at a private school. And it sure as hell isn"t tax "relief."
Now some of you who live in places with lower (or no) state income taxes or inexpensive real estate may be thinking, "Awww, fuck "em, those rich Californians." But this isn"t some scumbug Goldman Sachs managing director who is making tens of millions of dollars.
I also don"t have a personal ax to grind here. I bought my house so long ago, so cheaply, and I owe so little on it, that none of this applies to me personally. However, I think hardly any of those affected have any CLUE what is about to hit them. There is an enormous tidal wave heading toward huge masses of professionals in states like California, Washington, and New York that are about to have the rug pulled out from under their feet.
But, hey, what am I complaining about, with reassurances like this coming from the White House:
Oh, and since I"m in the Silicon Valley.......
Our poor hypothetical taxpayer has one more indignity to suffer: between (1) rising interest rates (2) the loss of deductibility in state income taxes (3) the reduction of deductibility in mortgage interest (4) the loss of deductibility in property taxes..............his house is going to sink in value as it dawns on people how badly they"ve been screwed. So on top of massively higher expenditures to pay federal taxes (after all, SOMEONE has to pay for Bob Corker"s tax cuts!), he"s making payments on a diminishing asset.
Congratulations, America. You"re not even sure what"s hit you yet.
This graphic shows every token sale that successfully raised at least $100k, from the beginning of 2014 through the end of last month, November 2017. The bar chart at the bottom displays the total dollar amount raised in each month (details below).
It seems like this should be an easy question to answer. After all, blockchains are open data layers that contain a complete record of every transaction ever made. However, we"ve found the answer to this question to be surprisingly elusive.
We surveyed the web for data on token sales and turned up over 100 ICO listing sites. Estimates on the total dollar amount that has been raised via ICOs to date range from about $3.5 billion to $4.5 billion.
Why such a big discrepancy?
As far as we can tell, all of these estimates rely strictly on reported figures -- either by the ICO issuer itself or by another third party. There is nothing wrong with this approach. Many data providers in the financial world collect their information this way. However, why rely strictly on reported figures when the actual transactions are available directly from the blockchain?
We decided to estimate the size of the ICO market ourselves by going directly to the source.
The figures in this post are based on our own deep dive into the Ethereum and Bitcoin blockchains. We searched for every token, crowdsale, and multisig wallet we could find. We then identified the corresponding owners and added up the total amount of contributed funds -- taken either from the blockchain itself or as reported by the fundraiser.
In total, we estimate about $6.4 billion has been raised via ICOs to date - materially larger than what is being reported elsewhere.
Perhaps more surprising than the fundraising total is the trend over time. The ICO market is not dying down, as many have reported. It"s still growing.
This chart is a labeled version of the one at the top of the post. It shows the ICO fundraising amounts by month.
Contrary to the commonly heard narrative that the ICO party is coming to an end, ICO fundraising in November was only slightly off its high point the month before.
The current run rate of over $1.3bn per month surpasses traditional early stage fundraising by a multiple. Angel and seed-stage VC investments were running at less than $300 million per month as of July (Goldman Sachs via CNBC).
The trend is even more stark when you look at the total count of ICOs that closed each month (minimum raise of $100k).
By this measure, the token sale market is not only still going strong. It"s accelerating!
November set a new record for number of closed token sales with 148, an increase of 36 compared to the month before.
We view this metric, the number of token sales, as a better gauge of market activity than the fundraising total. The total dollar amount raised is not only susceptible to fluctuations in crypto exchange rates, it may also be driven by just a handful of outliers, rather than the true underlying trend. For example, just two ICOs (Tezos and EOS, which raised $236m and $200m respectively) account for nearly half of July’s total fundraising.
The number of ICOs completed each month shows a much clearer trend, and one that shows no sign of slowing down.
To play around with the graphic yourself, click here to view the interactive bubble chart.
Goldman Sachs" Sumana Manoghar, Hugo Scott-Gall, and Navreen Sandhu wax lyrical in their introduction to the 100 most interesting charts of 2017...
In this very special edition, straight from our hearts, We pro?le 100 of our best and most compelling charts. They tell the story of a changing world; and below it starts. But for now we’ll quickly run you through the major parts.
We begin with rising capex: Who is spending to defend? Is disruption overrated? Who else can Amazon upend? The potential in India? Can China’s overcapacity mend? Are people eating healthier? How do millennials spend?
We explore each of these themes and tell you how they link. We have some fun charts in here too. And surprises. Wink wink. We hope they join the thematic dots as you see them in sync, But most of all we hope that these charts make you think.
There are quotes, stats, and a crossword also in here, Plus a thematic poster to spread the holiday cheer. Let us know what you think and if anything is unclear, We’ll be back soon with more. Until then, Happy New Year.
The over-arching theme appears to be that of disruption... and survival.
Source: Goldman Sachs
In the run-up to the recent agreement on phase I of Brexit, there was mixed news on the extent to which jobs in the City of London would be relocated to other European hubs, primarily Frankfurt. On one hand, we discussed the meeting between US Commerce Secretary, Wilbur Ross, and executives of JPM, Goldman, HSBC and other banks at Wilton’s restaurant during his trip to London in early November. The banks warned that they were close to a “point of no return” on moving jobs.
A group of large financial institutions with big London operations, led by Wall Street’s pre-eminent banks, have told the US commerce secretary that Britain’s unstable government and slow progress in Brexit planning may force them to start moving thousands of jobs out of City in the near future. The warnings came on Friday during a closed-door meeting between executives from the banks, which included JPMorgan Chase, Goldman Sachs and HSBC, and Wilbur Ross during the US commerce secretary’s visit to London, according to people briefed on the discussions.
A week earlier, we reported the head of Swiss bank, UBS, saying that the possibility that a fifth of its 5,000-strong UK workforce would be shifted was now unlikely to materialise following some “regulatory and political clarification about what we need to do”.
We can now, thanks to a survey by the Financial Times, get a better idea of the likely London exodus by March 2019 after the newspaper reviewed public statements by fifteen of the UK’s biggest financial institutions and conducted interviews with more than a dozen executives about Brexit plans. According to the newspaper, the number is…
The UK’s biggest international banks are set to move fewer than 4,600 jobs from London in preparation for Brexit — just 6 per cent of their total workforce in the financial centre — according to Financial Times research.
The FT analysis contrasts with consultants’ original claims that tens of thousands of jobs could move from London after Brexit — including an EY study this week that claimed 10,500 could leave on “day one”.
Some bankers say the lower estimates emerged as they thought through how many jobs and operations would need to move to the EU if the UK loses access to the bloc’s single market. “Every city wants thousands of people, but what are they going to do?” said one senior executive at a large US institution, adding that the thousands of people sitting in his London office “cover clients” who will mostly be remaining in the UK.
Two banks in particular, Deutsche Bank (not surprisingly) and JPMorgan Chase, had stated that several thousand jobs could move, although the FT estimates that the number is likely to be only several hundred. It’s the same with Goldman, despite Lloyds Blankfein’s famous tweet about spending “a lot more time” in Frankfurt.
In the case of Deutsche Bank, where Sylvie Matherat, head of regulation, publicly said up to 4,000 jobs could move, the FT estimates that just 350 jobs may leave by April 2019. The figure amounts to 5 per cent of Deutsche’s London headcount, a proportion broadly in line with other big banks. At JPMorgan, where chief executive Jamie Dimon warned before the Brexit vote of up to 4,000 London job losses, the number leaving before April 2019 is set to be closer to 700. Goldman Sachs, which has taken a new office in Frankfurt that could accommodate 1,000 people, expects to move fewer than 500 from London. HSBC is still planning to move “up to 1000 people”, although its chief financial officer recently said the figure could fall.
So the initial London exodus by March 2019 will be fairly modest and the banks have the prized transition period of two years. However, some banks are leaving the door open for further relocations in the aftermath of Brexit. According to Rob Rooney, CEO of Morgan Stanley International the real Brexit story will only be apparent “three to five years out”. As the FT explains.
Several banks say they are planning to move relatively few people in the immediate aftermath of Brexit because it will take time for their EU operations to build up. They expect to have very small balance sheets when the EU entities begin handling client business on April 1, 2019, and to be able to run some of the risk and support functions for those small EU entities from London.
Next year, banks are likely to begin “repapering” some clients to their new EU entities. The FT noted that one bank EMEA CEO said that he expected the ECB to push for more “market risk to be run onshore”.
However, a key question will be, where do the clients want to do business? We could be wrong, but our guess is that the majority will opt for the status quo if at all possible. The EU has already inflicted the nightmare of MiFID II on them.
One day after Stanley Druckenmiller confessional to CNBC that as a result of central planning and markets that make no sense, the legendary hedge fund manager had a "terrible" year, and his "first down year in currencies ever" (he also said many not very nice things about bitcoin), it was Jeffrey Gundlach"s turn to confess some of his more controversial views. And so, the man who two years ago correctly predicted the Trump presidency, first discussed his best investment idea for the new year. To those who listened to his latest DoubleLine investor presentation last week, the answer will hardly be a surprise: namely commodities, because they"re "historically, exactly where you want it to be a buy."
"I think investors should add commodities to their portfolios," Gundlach says on CNBC"s Halftime Report.
Gundlach said commodities are just as cheap relative to stocks as they were at historical turning points, while the macroeconomic backdrop also supports the case for commodities; he was referring to the following chart which he highlighted last week.
Echoing his presentation from last week, Gundlach said that once "you go into these massive cycles... the repetition is almost eerie. And so if you look at that chart the value in commodities is, historically, exactly where you want it to be a buy."
Investors should add commodities to their portfolios. There is a really remarkable relationship between a market cap or the total return of the s&p 500 and the total return something like the Goldman Sachs commodities index. The cyclicality is really repettiive.
Gundlach also noted that commodities are just as cheap relative to stocks as they were at turning points in previous cycles that began in the 1970s and 1990s. The S&P Goldman Sachs Commodity Index is up 5% this year, versus the S&P 500"s 19% gain.
There is also a fundamental case for investing in commodities, Gundlach said. He pointed out that global economic activity is increasing, a tax cut could boost growth and the European Central Bank is implementing "absurd" stimulus policies in the euro zone.
Jeffrey Gundlach: Investors should add commodities to their portfolios from CNBC.
In addition to his favorite trade, Gundlach touched upon several other topics including:
What drives the dollar:
"Short-term fed moves are not what drives the dollar. It correlates much more to what the bond market thinks vis-à-vis the fed say 18 months forward. So if you actually rook at the bond market pricing for 2019 now, there’s a pretty big discrepancy between the bond market and the fed, so that’s going to be really interesting in driving the dollar, and this time i think the bond market is going to be right."
Why the markets are so calm:
"I think it’s because of central bank pegging of rates and quantitative easing going on full bore in europe and in japan. One of the charts that i love to reference is the nearly linear rise in central bank balance sheet holdings ever since 2011, where the Fed stopped quantitative easing back three years ago, and japan and the ecb just took over the slack, and it’s just a linear rise."
Jeffrey Gundlach: This has been a great year for investors from CNBC.
On ECB president Mario Draghi:
"That’s going to slow things down a little bit, but the real worry from the central bank activity would be forward about a year. Because Mr. Draghi has said astonishingly that they’re going to continue 30 billion euros per month of quantitative easing at least until September and then he threw in, just to put a cherry on top of the cake of stimulus, he said, and negative rates well past the end of quantitative easing. Which means – sounds to me you’ll have negative rates as long has Mr. Draghi is around which is a little under two years."
On tax cuts and bonds:
"If there is a net tax cut, it has to be bond unfriendly. we already have growing bond supply. we’ve been liiving in a world for the last three years thanks to quantitative easing of negative net bond supply, really, from sovereign bonds in the developing world. and that’s gonna flip because the fed is now letting bonds roll off, the budget deficit is increasing, a tax cut would increase the deficit further, and to the extent that a tax cut might be stimulative to the economy, that’s bond unfriendly, because bonds don’t like economic growth and also it’s more bonds, expanding the deficit, so even more supply."
On tax hikes and risk:
"If i"m correct and i’m going to receive a seven-point bump in my tax rate, which is actually about a 15% tax increase, i have a feeling that i’m probably going to be less able and willing to buy risky assets or buy all the other things that are bubbling up these days, and maybe that side of the narrative will start showing up."
Jeffrey Gundlach: Tax plan could have unintended consequences from CNBC.
On stimulating the economy:
"While we’re not probably going to get 3% real for the year, we’ve had it for two quarters in a row. and gdp now at the atlanta fed has been bouncing around but it’s around 3% for the third quarter. when is the last time we had something like 3% growth for three quarters in a row? it’s a long time. why would you be stimulating the economy?"
Finally on bitcoin:
For at least half a decade now (How The Fed"s Visible Hand Is Forcing Corporate Cash Mismanagement) we have warned about how the Fed’s flawed approach to monetary policy incentivizes corporations to fund share buybacks with massive amounts of debt...
…While the corporate sector has spent record sums on share buybacks...
Capex has experienced an unprecedented decline...
Of course, some Democrats have argued that the Trump tax plan will perpetuate essentially the same incentives as corporate tax rates are slashed and money brought back from overseas is spent on still more buybacks, instead of creating jobs and capital expenditures, like the Republicans argue it will be.
The flimsiness of the GOP’s argument was exposed a few weeks ago during a memorable gaffe involving NEC Chief (and former No. 2 at Goldman Sachs) Gary Cohn, one of two officials managing the tax bill on behalf of the White House – the other being Treasury Secretary Steven Mnuchin, also a former Goldmanite.
During an event for the Wall Street Journal"s CEO Council, an editor at The Wall Street Journal asked the room: "If the tax reform bill goes through, do you plan to increase investment - your company"s investment, capital investment?"
He asked for a show of hands.
Alas, as the camera revealed, virtually nobody raised their hand.
Responding to this "unexpected" lack of enthusiasm to invest in growth, Cohn had one question: "Why aren"t the other hands up?
While Cohn’s dismay at the lack of enthusiasm for his tax plan was obvious and embarrassing (the clip was in heavy rotation on CNBC for much of the next day), the fact that corporations will spend the windfall created by the tax bill isn’t necessarily a bad thing, according to JP Morgan Chase CEO Jamie Dimon.
Of course it wouldn’t be “a bad thing” – for Jamie.
When it comes to the rest of us…well…maybe not so much.
Dimon, who was speaking at a conference in Ann Arbor, Michigan hosted by Axios, according to CNBC.
According to Dimon’s logic, repatriations enabled by the tax plan could swiftly lead to more than $1 trillion being brought back from overseas. It doesn’t matter where that money goes, the point is there will be more capital sloshing around the domestic economy…and that will eventually manifest itself in the form of capex, job creation and higher wages…
"You need a competitive tax system ... companies will retain more capital and start to use it over time," Dimon said Wednesday in response to a moderator question at the Axios Smarter Faster Revolution event in Ann Arbor, Michigan.
"Some will raise wages. Some will buy companies. Some may do dividends and buybacks. Don"t act like that is a bad thing. That is their money. Think of it as a QE4. That money gets recirculated in the American system."
Dimon said tax reform "simply needs to be done," and should have happened 15 years ago. And while the benefits aren’t “going to be immediate”, they will accelerate growth “cumulatively over time."
JPMorgan"s Jamie Dimon: Tax reform bill will result in more jobs from CNBC.
After the bill passes "probably a trillion dollars will come back from overseas," he added. "Cumulatively over time that will accelerate growth in the American economy." That effect will resemble something like QE4, though we’re not sure that’s the best comparison...
The real question is: Will the tax bill somehow prevent the Federal Reserve from needing to launch QE4 before the end of Trump’s first term. If you believe a recent Treasury Department analysis of the Senate tax plan released earlier this week.
That plan calcuated that the tax cuts would bolster US economic growth to an average rate of 2.9% real growth over the next 10 years...
...which would make the current economic expansion the longest in modern history...
...But then again, if you believe that, then we have some condos for you to buy.
