June 2017 Newsletter: 4th Year Anniversary Edition


Well yes our investment newsletter has outperformed the stock market as measured by the S&P 500 by 6.15 times or or 190% more appreciation from June 2013 to today. Based on comparisons with the 50 top investment newsletters (as tracked by Hulbert) NBR Investor PRO is the #1 performing newsletter in the last year, 2 years and since 2013. 

So yea, we are very proud of what we have accomplished for you our loyal subscribers.

Perhaps the aspect of this service we are most proud of is that #1 out of 94 positions we have recommended we have only closed out 6 LOSING positions. An 88% winner batting average is unheard of unless you are a flash trader doing millisecond trades. The other part we are proud of is that our biggest winners have come from doubling down on great growth stocks during the normal 6-9 month 10%+ corrections. AMD, MU, Nvidia, Newtek and Apple are all great examples of taken advantage of the power of transformational change and the short term stupidity of bouts of fear based selling. 

#3 Is our NBTI Pro Macro Market Index has called the macro economy 100% right since June 2013. Having this proprietary index that gives us clarity on the expansion or contraction of the US economy has given us courage to buy from the herd when they get scared. #4 Clearly we made a great call on getting out of our very profitable MLPs and Biotech stocks when the macro fundamentals changed...sometimes the most money you make in the market is simply changing horses. 

In short, we have been dead right on the US expansion, dead right on the fastest appreciating sectors of positive transformational change, and courageous enough in the scary sell-offs to step in a double down on our highest conviction sectors and leaders. 

The Numbers TELL the Story

S&P 500 Annual Total Return Historical Data

Data for this Date Range:

Dec. 31, 2016 .     11.96%

Dec. 31, 2015 .     1.38%

Dec. 31, 2014 .     13.69%

Dec. 31, 2013 .     32.39%

2017 To-Date: 9.87

Total S&P 500 Return (including dividends) June 2013 to Date: 36.9% or 8.2% Annual ROI

Total NBTI PRO (including dividends) June 2013 to Date: 227% or 50.4% Annual ROI

Total NBTI PRO Outperformance of S&P 500 June 2013 to Date: 615% or 6.5X

It ain't braggin if it IS true!

How Did we Do This?

2013 — 31%

2014 — 36%

2015 — 41%

2016 — 78%

2017 — 42%

Total Portfolio Appreciation: 227% percent

Since June 2013, $100,000 invested in ALL our positions (and sold when we advised selling + dividends received) is now worth $327,000 (less any capital gains and taxes). We have many subscribers who tell me they have made small fortunes on our biggest winners...that is AWESOME!

We promised you to double your portfolio very 2.57 years or a 28% CAGR with our NBTI Pro Market index forecast and our transformational sectors stock picking. Well as of today we have seriously outperformed…so sorry!

227% appreciation/dividends in 4.5 years is 50.4% annual rate of return…(why did I EVER close my hedge fund? )

Here are the latest numbers for 2016-2017 when we added a whole new group of subscribers (not including new positions added in June 2017). In the last 18 months we have averaged 60% annualized returns...so in essence in the last 18 months have been outperforming our 50% annual average. 

NBT Investor PRO 2016 & 2017 Portfolio Returns 6/21/17


Following our macroeconomic forecasting and investing in transformational change (and of course taking PROFITS all along the way) has been our "secret" to outperforming the overall market 6-to-1 since June 2013.

And Boy  I LOVE it when the financial columnists lake Jason Zweig in the WSJ writes a column entitled "Put a Fork in Stock Pickers! 

Key Point: It has been a blast executing our NBT Investing strategy and stock picking formula since 2013. What I am most proud of is when I get an email or message from a subscriber who says "Toby...just have to tell you the profits I made in Nvidia or AMD or Micron or Newtek or OLED  or options in Apple or others have really given my portfolio a HUGE boost in value."

If you have a story to share, please send it to Tsmith@nbtgroupinc.com or text me at 301 412-8622 and share it!

NOTE:  Will be soon moving NBTI PRO to a much bigger audience and platform soon...make sure your subscription is up to date! And now is a great time to lock in $97 a year with a 2 YEAR subscription! Look for an email offering an amazing deal on NBTI PRO Investor. 

Back to Making 6X the Market Returns!

So....what are the stories we should care about for the rest of the year as currently long stock market investors in a 2% ish expanding business cycle (as you know big part of our NBT Investor Pro system is being long stocks as long as economic expansion is trending higher on 60-day moving average and short when we are headed to recession.)

It's political risk ...there is not a chance in Hell of any material legislation passed that will make a difference in the macroeconomy in 2017. The August break for Congress is in 18 "legislating days." The Trump Doctrine is nothing more than tweets and executive orders for 2017...and that is fine!

Not the U.S. economy…it's firmly in 2% ish GDP for the year for ALL the reasons we have talked about for …I don’t know…8 years?

Our latest NBTI Pro Macro Market index is higher than last month at 17.7 reading. NO chance of a recession in the next 3-6 months. Our index is confirmed by the Atlanta Fed model that has been spot-on in the last 9 months as they have improved their model.

Atlanta Fed Latest forecast for Q2: 2.9 percent — June 16, 2017

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 2.9 percent on June 16, down from 3.2 percent on June 14. The forecast for second-quarter real residential investment growth decreased from 1.8 percent to 0.4 percent after this morning's housing starts release from the U.S. Census Bureau. The forecast of the contribution of net exports to second-quarter growth declined from -0.23 percentage points to -0.34 percentage points after yesterday's Import/Export Price Index release from the U.S. Bureau of Labor Statistics.

The next GDPNow update is Monday, June 26. Please see the "Release Dates" tab below for a full list of upcoming releases.


LOOK...the USA is stuck in a 2% ish GDP growth rate because we are stuck in a 2%ish GDP fundamentals world. 

IF we wanted to achieve 3% GDP for instance we would 1)  increase the workforce about 1% or 15 million and if we wanted 4% we would 2) increase employment 1% by building infrastructure that might improve our labor productivity by .5%--1% and 3) bring back the $3 trillion in cash overseas and incentavise massive investment in robotics for advanced manufacturing productivity gains.

But we aren't, are we? Therefore, 2% ish GDP growth  is what we get because of the fundamental constraints we have in our society. Repeat after me: the measurement of real GDP for any city, county, state or country (real meaning after inflation) is a simple function of:

How many more or less of its citizens and immigrants are working full or part-time aka total  labor force total hours worked and the average earnings per worker

  1. How much in $dollars does an hour of average labor actual produce aka the rate of labor productivity in manufacturing and services
  2. How many more or less people are residing in the measured area year-over-year
  3. How many (more or less) of its citizens are receiving pension/retirement/welfare i.e. fix payment entitlements and have left the labor force.
  4. How much does government at all levels spend + Federal Government borrow and add to the economy via transfer payments above all revenues collected and spent?

It’s like the bears AND the Fed just don’t get economic reality in 2017: We have a 2% ish GDP and a long term bull market because of weakening long term macroeconomic fundamentals embedded in our $18 trillion economy. 

Demographics: we are stuck in a “goldilocks” not too hot or too cold 2% ish GDP economy. 16,000 Americans turn 65 and 70 every day, and about 10,000 Millennials turn 21 every day. The Boomers are working into late 60's so we add about 1% to GDP from demographics and 1% from increased productivity. 1+1=2. We don't improve productivity like we used to because we are a service economy and its' hard to improve human based service output. 

  1. Life Expectancy Bias to Top 20%: With life expectancy growing to 89 for the top 20% of income earners and reducing to 76 for the bottom 20% of working class, we are slowing expanding our consumer population and its skewing slightly higher in post 65 income (in reality the lower income classes are dying much earlier than the top 10-20%). Discretionay spending and wealth accumulation is 90% to the top 20%. The top 1% of wealth owners in America have more wealth than the bottom 50%...let that sink in. 
  2. Supply and Demand for Equities: 55% LESS Listed Exchange Stocks to Buy:  there are 55% LESS stocks to own on exchanges to today than 2001—and there is 40% more CASH that needs to go somewhere everyday. With more demand for equities and less stocks, the top 3000 exchange traded stocks by market cap are the only game in town (forget the OTC listed stocks...in market cap they are relatively nothing. )
  3. Passive Index Investing Controls Retail Investor Funds vs. Active Mutual Funds: ETF’s funds..mostly large S&P Index funds that invest automatically mostly by market cap weighting, have to put money to work by market cap to work every day. 
  4. ZIRP & NIRP from #2-3 Central Banks: Zero and negative interest rates in other big capital markets drives 5-10-20-30 year money to the US Capital markets especially when the dollar is trending UP in value (the get double kick from bonds improving in value and their interest earned is dollar value more valuable)
  5. Everything about 2017 in DIS-inflationary from Amazon to cable cord-cutting to food price wars and $40 oil. More on that in a second...but you HAVE to look at our app based technology economy as HIGHLY deflationary. Low inflation means low long term interest rates...period. 

The Bears Just Don’t Get It - And they are losing their ASS in this market

The bear’s heads are exploding on fire: how is it stocks tend to rally while other measures of economic health are sounding bearish alarms (see above for the answers).

Yes bond prices and stock values have been moving mostly in the same direction — a relatively strange phenomenon. And yes Treasury prices, which move inversely to yields, tend to climb when investors are at their most cautious, fretting about growth and mounting risk, while equities rally on economic optimism.

But government-bond yields have been stubbornly low despite a Federal Reserve that has stridently championed higher rates.Is this a mystery? NO-- See above for the answer. On Wednesday, the 10-year Treasury note was at 2.156%, compared with 2.223% on Dec. 17, 2015, the day after the Federal Reserve hiked interest rates for the first time in nearly 10 years, and starting its first of four moves since to normalize ultralow yields. Still, rates remain lower despite the Fed’s decision last week to lift its key rates to a range between 1% and 1.25%.

Moreover, the premium between short-dated and long-dated bonds have narrowed, typically signaling a usually bearish outlook for the U.S. economy, despite the Fed’s more sanguine view. On Wednesday, the spread between the five-year Treasury note and the 30-year Treasury bond held at its narrowest since November 2007 at 95.6 basis points, according to WSJ Market Data Group.

How can this be? Well #1 in  November 2007 40% of the world’s sovereign bond markets were NOT at basically ZIRP or NIRP (zero to negative interest rates). Money seeks the place where it gets the best risk adjusted returns...especially bond money. If 40% of available bonds pay you nothing or are guaranteed to LOSE you money, you take your safe money elsewhere. THAT place is the U.S. bond market. More demand in bonds lowers yields and raises bond prices. 

Does an Inverted Yield Curve means recession on the way? Not so fast. US bond yields are driven by the yield from the competition…Bunds and Yen and Eurobonds. In past “inverted yield curves” in the U.S. (i.e. short term 2 year is higher than 10 year bonds) the rest of the world had MUCH higher/normal bond yields…mostly higher than U.S.

Today it’s the reverse. 10 Year German Bund? -.4% return. Euro...same. Japan   zero return. 

So dear friends…as I shared with you in the first NBT Investor Pro Newsletter in June 2013 and I will share again…we are in a STRUCTURALLY lower growth world economy with impossible demographics to outrun (less children and longer lifespans in developed countries).

Investors looking the GROW their wealth owning equities have NO CHOICE but to invest in SECULAR (i.e., not biz cycle related) REAL 3-5 year 15-20%+ CAGR. And that kind of secular growth ONLY comes the incredible driver of growth in the world: Micro and macroeconomic transformational change. Service economies that have lower productivity. 

Where does REAL growth come from in a low growth world. Well the 15%+ cumulative annual rates of end user demand growth WE invest in comes from new things. From vastly improved things. From replacement cycles of old things. Or when broken companies fix themselves and return secular growth via market share gains (See AMD and Micron!!!).

To get rich investing in transformational growth, we also have to have our money behind companies that earn >15% after tax profit margins so that secular unit growth turns into secular cash flow and profit growth (the one exception to that rule is new retail category inventors or killers—they earn lower margins but explode in value due to high multiples awarded for 15-20% secular top line growth. See Tesla or Chipotle or LuLu Lemon or in the old days Best Buy or Home Depot.)

To earn 15%+ after tax margins on gross revenues requires a 40-60% gross margin...and only only companies with highly valuable and protected intellectual property can achieve this magic. Trading in commodity goods and services...sorry no margins. Who holds the most valuable IP in today's world? The industries and companies that sell high margin technologies and IP directly to their end markets. The rise of the public cloud, wired and wireless 100gb broadband and e-commerce everything and hydrofracking technology has made that what which was previously impossible VERY possible. 

Key Point: If you ask me what our "secret" is to our astonishing 50% annual returns, reread the last few paragraphs. 

PS: So what was behind the "10-day Tech Wreck?

Well #1 that tech stock meltdown/great rotation did not last long. WE got some good entry points on new and existing positions… like one of our subscribers texted me “Geez Toby…I got into Impinj for the first time at $40 on the pullback…now it's $55 in a few weeks? Investing is NOT that easy!”

And yes the mega tech stocks was a VERY crowded trade. When it comes to quick  beat-down in the stock market,  all shares are not created equal. Indeed, just five names account for nearly 75 percent of the drop in the Nasdaq Composite Index, which had fallen a whopping  4.1 percent since June 7. YES mega tech stocks .


This selloff was “way overdue given the extreme out-performance and positioning in technology shares,” Morgan Stanley analyst Michael Wilson wrote in a note to clients Oh really. I have a much better answer: to me this was simple: the robots got scared on heavy selling volume and the sell logarithms kicked in on Friday June 6 and when the index hit the magic 50-day averages they kicked in again to buy.


From a technical perspective the Nasdaq 100 index has been a 20-day moving average index that corrects to the 50-day. The quant/algo robots know this...and they bought the 50-day. Christ EVERYONE bought the 50-day moving average--it has not lost money in 8 years. Understand that today the marginal short term buyer of stocks are robot/algorithmic based hedge funds who are buying momentum and selling momentum reversals and then buying the same stocks that keep support on their trend lines and 50-day moving averages. 

We have been a 20-day moving average market since the 2016 election.  The robots took the market down to 50-day and their algorithms have about 6 years of data to support “buy the highest beta/volatility  stocks at support.”

So they did. With the average valuation of OUR technology stocks 20% BELOW the overall S&P 500, and the 2% economy in no danger, we ARE a 50-day buyer too.

But I DO want to take some profits and remove some dead wood here. 

SELL Impinj (PI)  They reached our price target of $55 and I am now hardcore on selling when targets are hit so soon. The Amazon/Whole Foods deal is going to take years to make a difference in RFID chips to PI…but the crash of the rest of US and world retail to e-commerce is not helping either. IF news changes or it goes back to 50-day I'd swing again with long term options.


Let’s take our 85% profit and move on. 

The TechWreck DID give us some great entry/add points for Micron (MU), AMD, OLED and most of our positions.  Hope you had opportunity to buy/add to existing or new positions.  Our AMD January $12 call option I recommended on May 11 <$1.50 (we got at $1.25) is now worth $4.50 and we are NOT cashing in those profits!!! Like I said when tripled down on AMD in our May Alert--$18 AMD $50 MU and $150 OLED. We are doing another valuation of Nvdia...if you own KEEP it. 

SELL AutoLiv (ALV)  We are just not getting the catalysts I thought we would from the Takata bankruptcy and auto production has now peaked. Its been in a trading range for 3 years...my bet was with its safety and autonomous driving technology it would break out to $150. It hasn't broken $116..we have .better opportunities 


Ambarella: HOLD AMBA The valuation is fine, the GoPro business is over for at least the Hero 6. The IP for their autonomous driving chips is very valuable as our huge win on Mobileye chips proved at $15 billion market cap. 

The stock is completely washed out here and IF we get another tech melt-up it should move with it. If it doesn't we will sell...if it DOES move we will sell too.


What DOES Worry Me? The Fed Living in the 1980's

The price inflation the Fed is convinced  is “just around the corner” because their inflation model from 1980 aka the Phillips Curve  says when unemployment rates drop below 5% we have to have incipient wage  inflation. Well sport fan, the Fed has been dead wrong about inflration and will be wrong again. 

Fed Governor Neil Kashkari (I love that last name!) said recently “It's true: economic mean reversion is the religion of the Fed. 8 YEARS of missing our inflation  targets calls for a new approach. How can a group of really smart people keep making the EXACT same mistake over and over and over and over again?”

According to Dallas Fed Chief Robert Kaplan, "muted" 10-year yields suggest investors expect “sluggish growth.” Speaking at the Commonwealth Club in San Francisco, Kaplan went on to say, "I want to take that into account" in thinking about rates, although he also would like to see data confirm weak inflation is "transitory." 

A benign tone from Kashkari, Evans and now Kaplan suggests a growing level of concern among Fed officials following an "unjustified" rate hike at last week's June FOMC meeting. According to Bloomberg, markets are pricing in a third rate hike this year with just 40% odds and dropping fast.

I agree and can say without doubt Sept raise if off the table. 

Look the  reality of using 1980 econometric model in 2017 is like using weathervane instead of radar to predict hurricanes. Bonds rallied sharply as oil prices fell, but it’s not just oil: Inflation-protected Treasury yields also fell. That should tell the Federal Reserve that it hasn’t yet exorcised the specter of deflation.

Fed Chair Janet Yellen unsettled markets last week with the claim that the Fed’s hugely-discredited inflation forecast really was correct, even though the Consumer Price Index has been flat for three months in a row  (for the first time since the 2008-2009 crisis). The problem, Yellen said was a set of “idiosyncratic” price changes that all coincidentally moved down rather than up.

Yellen’s assertion violates common sense, not to say arithmetic. The drop in the oil price has all sorts of idiosyncratic features (shale drilling, Libyan oil output). But the plunge in inflation expectations as gauged by the difference between ordinary 5-year Treasury notes and inflation-protected TIPS amounts to a full half-percentage point since the beginning of March. And it tracks the most important traded price in the commodity universe. Yellen said that inflation expectation signals from the Treasury market were “unreliable” — compared to the Fed’s model.

Really? 1980’s circa The Phillips Curve trade-off between inflation and employment aka mean reversion isn’t working in 2017  because

  1. US companies have figured out ways to eliminate higher-cost employment. The hottest sector in the venture capital universe is now business services that replace corporate white-collar personnel with computers, for everything from automated customer service systems to management of patent portfolios. Although wages are rising for workers within specific job categories, a lot of those job categories are being eliminated in the drive for greater efficiency. The rise in employment has come overwhelmingly in the lowest-wage sectors, holding average wage growth down.
  2. Amazon’s  and other consumer product disrupters are a relentless margin grab (as Bezos says “Your margin is my opportunity”). Price disruptors are reaching into almost every line item of consumer prices ex-credit and tuition

Look...when the Fed rattles its saber, bond yields are supposed to go up, not down. Today’s bond market rally shows that the Fed is not in the real world, and that’s a significant risk in and of itself.

Let's Not Forget the Disinflation from $40 Oil Either

And oh yea…we have oil in a bear market (down 20%+ from its recent high) and the dollar has increased to where it was before the election!  IN order to get a sense of what they tend to look like in aggregate, the average bear market in ANYTHING traded sees a decline of 33.93% (median: 31.31%) over a period of 114 calendar days (median: 81). While the current bear market is already longer than average, in order to become average in terms of its decline, crude would have to trade down towards $37 per barrel, or another 14% from current levels.

But let's look at the bigger picture. In  2016, the new Saudi prince-in-waiting implemented Vision 2030, a plan to restructure the economy away from its dependence on oil exports. It states: “Diversifying our economy is vital for its sustainability.” Here's an idea: rather  than propping up the price, maybe OPEC should sell as much of their oil as they can at lower prices to slow down the pace of technological innovation that may eventually put them out of business. That’s so obvious that a smart young man like Mohammed Bin Salman probably gets it.

The question now is where does the oil bear market will lead U.S. energy companies to shut down production if drilling becomes uneconomic at these lower prices. A 6/19 WSJarticle said many shale producers had lowered their production costs so that they could be profitable when oil fetched $50 to $60 a barrel, and a handful could even turn a profit if the price fell to $40. Meanwhile Libya has gone from zero to 850,000 BOD production and magically is on its way to 1.25 million a day of their worldwide sellable light sweet crude. Even Iraq is moving up production…who knows next is Venezuela?

Key Point: IF we don't bounce above $43 support, I’d day $35-$37 is next support for WTI crude oil.American's largest gasoline pipeline the Colonial announced today the LOWEST demand for gasoline (From Texas to the East Coast) in 8 years. With the marginal barrel of oil now break even at $40 and lower in many Texas pay zones in the Permian and some in North Dakota (where the new pipeline is bringing $25 Canadian sour crude to market now).

$2 gasoline will hit the U.S. in the middle of its biggest demand season. What does THAT tell you about the forward price of crude oil?

It SHOULD at the margin improve gasoline demand right? Let's see. But when the 2017 price hedges run out for most shale producers...THEN we should see some daily production come offline. But  remember this: There are over 5500 shale oil wells sitting unfracked in America: that is 5.5 MILLION barrels a day of production sitting idle (these wells drop off about 70% in a year but last for decades). That production puts a ceiling on crude oil (barring war in the Middle East) for the next few years at least. 

Where Do We Go From Here?

As I said, with the average p/e for our portfolio stocks BELOW the 18 P/e for the overall S&P 500…and our stocks top lines and bottom lines growing 2x-3x FASTER than the overall S7P 500 index’s market top and bottom line, I’m not worried about valuations either

But some worry we are in a bubble like 1999/2000 all over again for the S&P 500 Information Technology sector?  I'd say YES for the private tech companies like Uber, AirBnB and a lot of the "Unicorns" over $5 billion market caps.

But NOT for the public tech companies.  Consider the following: 


(1) First vs third place. During the bull market from October 11, 1990 through March 24, 2000, the sector soared 1,697.2%, well ahead of the 417.0% gain in the S&P 500 and all the other sectors. During the current bull market, it is in third place with a gain of 379.8% through last Friday. 

(2) Market-cap and earnings shares. At the tail end of the bull market of the 1990s, the S&P 500 IT sector’s share of the overall index’s market capitalization rose to a record 32.9% during March 2000. However, its earnings share peaked at only 17.6% during September 2000. This time, during May, the sector’s market-cap share rose to a cyclical high of 22.9%, while its earnings share, at a cyclical high of 22.0%, was much more supportive of the sector’s market-cap share. 

Key Point: As a rule of thumb, I get nervous when a sector’s shares of either or both rise close to 33%. I’m not nervous yet about IT. 

(3) No contest on valuation basis. During the second half of the 1990s through the early 2000s, the forward P/E of the Tech sector soared relative to the broad index. The former peaked at a record 48.3 during March 2000. That same month, the forward P/E of the S&P 500 was 22.6. Both then proceeded to trend lower through 2008, when they finally converged. During the current bull market, the Tech sector’s forward P/E hasn’t diverged much at all from that of the overall index. Last month, the former was 18.1, while the latter was 17.3. 

(4) Less irrational exuberance about long-term growth. I regularly monitor LTEG for the S&P 500 and its 11 sectors and 100+ industries via my friend Ed Yardeni's work. LTEG is analysts’ consensus long-term earnings growth expectations over the next five years at an annual rate. It soared to a record high of 18.7% during August 2000 for the S&P 500, up from 11.5% at the start of 1995. Keep in mind that the historical trend growth in the S&P 500 during economic expansions tends to be around 7%! The ascent in this growth expectation trend for the S&P 500 during the second half of the 1990s was led by an even more wildly irrational rerating of expected LTEG for the Tech sector from 16.6% at the start of 1995 to a record high of 28.7% during October 2000. 

Since those peaks, both LTEG's have come back down closer to the Planet Earth. During April, they were 12.3% for the S&P 500 and 12.7% for the IT sector. Those are still more optimistic than what is likely to be delivered, but at least they are back to the rationally exuberant normal bias of analysts. 


(5) Less air in this bubble so far. All of the above suggests that the Tech sector is trading much closer to realistic expectations for fundamentals than during the bubble of the 1990s. The S&P 500 IT stock index nearly exceeded its March 27, 2000 high for the first time just last week on June 8. The sector’s forward earnings rose to a record high at the start of June, exceeding the 2000 peak by 168.6%. 

(6) Fat margins. The sector has the highest forward profit margins among the S&P 500 sectors. It has been at a record high around 20% since late last year, up from a cyclical low of around 12% at the start of 2009.

MY KEY POINT: Thus the biggest risk to the stock market is now shifting from the political risk of failure to pass any significant Trumponomics legislation (spoiler alert: its NOT going to happen in 2017) to the Fed being wrong about incipient inflation roaring back into the U.S. economy from the age old Phillips Curve model and hurting the expansion with more Fed funds rate increases.

I am Serious About Getting Back into BioPharma!

Biotech stocks (NASDAQ:IBB) were bullish this week, surging another 4.1% and extending this week's sector gain to 8% as sentiment emerges that the Trump Administration's attempt to rein in drug prices might not be as harmful as originally feared.The sentiment got a boost from a NY Times report which cited a draft of an executive order on drug pricing that appears to focus on easing regulatory hurdles for the industry and "largely leaves the drug industry unscathed."

The draft "is a far cry from what candidate Trump said on the campaign trail. "I don't see anything there that addresses the drug companies getting away with murder, and it appears that is because pharma has captured the process," Patients for Affordable Drugs founder David Mitchell told the Times.

Well that news, and the Senate AHCA proposal, and some great news out of the annual American Oncology conference on some very exciting phase 2 results got the shorts to cover their biotech bets big time. Stay tuned!

So Now Cryptocurrency "Minings" Has Created a HUGE retail shortage of AMD and Nvidia GPU Cards and Micron 3D memory? Really?

Thank cryptocurrency miners for the latest round of bullishness, says Pacific Crest Securities analyst Michael McConnell. They’re buying up Nvidia and AMD graphics cards in an attempt to unlock the code to digital coins like ether and bitcoin. “The sharp increase in demand from cryptocurrency miners has rapidly depleted excess channel inventory” for Nvidia and AMD graphics cards, the analyst wrote in a note to clients Tuesday. “Surging demand from cryptocurrency miners in China and Eastern Europe since early May” will boost quarterly unit sales by as much as 20 percent, the analyst predicted, a sharp turnaround from his prior forecast that saw at least a 10 percent contraction in sales.

McConnell joins a growing list of tech analysts and ME considering the impact on chip sales from computer scientists mining for digital currencies. Earlier this month, Bank of America Corp. analyst Vivek Arya raised Nvidia’s price target to a Street-high of $185, citing the use of the semiconductor company’s graphics processing units (GPUs) for mining as part of his thesis. GPUs aren’t powerful enough yet for the complexity of mining bitcoin, but Nvidia and AMD are reportedly working on GPUs specifically for this.

For advocates of bitcoin and the other cryptocurrencies surging in value, the gold is in the shares of the companies that produce the computer processors and chips used to create the digital currencies in the process that’s become known as mining.

Quick Primer: Digital coins can only be created by using computers to solve complex mathematical problems. That process is called "mining"...dont ask why...it's ironic. The KEY point is mining difficulty increases as more of the problems get solved, prompting the miners to buy even more powerful hardware. With digital coin prices soaring, demand for the components is surging as miners are able to recoup their initial investment quicker.

How quick? A complete mining rig, which is made up of graphics cards, a processor, power supply, memory, cabling and a fan, costs between $2,400 to $3,800 on Amazon.com. The Antminer S9, which is estimated to mine 0.29 bitcoin per month retails for $2,795, which means you can break even in about four months with bitcoin at $2,700, (without taking into account electricity costs).  Miners typically buy complete rigs or build them themselves...MINE is in an Iceland data center!!!

Guess Who Makes the Key Parts for Cryptocurrency Mining?

Our faves AMD, Nvidia and Micron of course!  But the new GPU demand is insane. GPUs listed in Nvidia’s website for mining rigs cost as much as $1,200. IF you can find them. Go to your local Best Buy and ask to see their supply of GPUs...they will tell you "Sorry sold out!"

The rig-mining market can grow to about $1.3 billion, and with GPUs making up approximately 2/3 of coin mining costs, the demand for GPUs can increase to $875 million, according to a RBC Capital Markets report on June 6. If Nvidia gets half of that, it represents a 10 percent increase on its GPU sales, RBC analyst Mitch Steves said in an interview. The company currently has about 75 percent of the GPU market, according to a Jon Peddie Research report.

The complexity of mining bitcoin has increased to the point that GPUs aren’t powerful enough, and miners are mostly using application-specific integrated circuits, or ASICs, which Nvidia and competitor Advanced Micro Devices don’t make. Tech news website Digitimes 

- Toby

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