David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Email of the day on blockchain and healthcare

    Thanks for sharing this article and I look forward to reading your comments after attending the healthcare-focused conference in San Diego. 

    Regarding blockchain, I was surprised by this statement in the article quoted:
    ...' an elegant but costly technology in search of real world relevance beyond the initial application of digital cash exchange.'

    I am deeply involved in the hi-tech healthcare sector in the UK. Blockchain is beginning to impact the sector. By chance, the CEO of a startup in Cambridge UK sent this information to me today:
    "At ***** we are developing a platform for storing and sharing genomic data based on Blockchain technology. Our platform exploits the power of a distributed ledger enabling the secure storing of genomic data and also, thanks to a series of smart contracts, enables sharing of specific parts of a genome with doctors, family members and researchers around the world without compromising the entire genomic information and therefore respecting the privacy of the owner."

    I gave a presentation last October at a Big Data in Healthcare conference in Luxembourg at which I made the case that the scale of data requirements in healthcare will exceed all other sectors. Security of that data will be essential and I believe blockchain may be an essential piece of the puzzle.


    I posted a comment under your article about blockchain. In it I mentioned a presentation I gave in October 2015 at a conference on Big Data in Healthcare. It was about the best conference I ever attended. I have attached the slides I presented. If you want to share these with subscribers please feel free to do so. They make the case for the scale of healthcare data on-line being absolutely massive.  With the inevitable security implications, blockchain may become very important in the healthcare sector and startups here in the UK are beginning to focus on the opportunity as I mentioned in my comment.

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    A Wave of Tech Consolidation Will Drive the Next Leg of the Bull Market

    Even if you can’t quite squeeze the prospectus into a 140 characters, it is now clear that Twitter is up for sale, with Disney and Google touted as possible buyers. There are rumours swirling of a possible take-over of Netflix. A mega-deal between Amazon and e-Bay has been reported as under discussion, and at least one of the fast-growing music streaming services, led by Spotify, could well be the next company on the block.

    The booming tech sector is gearing up for a wave of consolidation, as some companies discover they don’t really have a business model, others find that they don’t have the cash to compete in a ferociously competitive market, and some of the emerging Chinese giants wade into the market.

    That matters – and not just because it will consolidate the hold of the big companies that already dominate the internet. It will drive the next stage of what it already turning into an epic bull market. Indeed, if frenzy of M&A deals breaks out, it could easily mark its top.

    The screaming hoards of Corbynistas, Cyber-Nats, and swivel-eyed Ukippers that make up daily life on that relaxed and tolerant forum for genteel discussion known as Twitter may soon find they are hammering out messages for a different corporate overlord. After a terrible year on the stock-market, and with is founder Jack Dorsey seemingly unable to turn it around, it is now up for sale.

    Alphabet, the new name for Google, is said to have turned it down but may yet change its mind. Disney, slightly implausibly, is said to be in the running, even if Walt will be turning in his grave at some of the language used on the site. Salesforce.com is said to be interested as well, along with Microsoft. We will probably find out who the buyer is in the next month.

    But that is far from the only mega-deal on the rumour mill. On Wall Street, shares in Netflix have been rising on talk that the company might be a target, with Apple touted as a suitor, as well as, again, Disney (although someone will have to delicately explain to Walt’s ghost what ‘Netflix’n’Chill’ actually means).

    If it not looking at Netflix for a way to spend some of its massive $230 billion cashpile, Apple is also said to be eyeing up the music streaming service Tidal, although more realistically it might prefer to buy the far more successful Deezer or best of all Spotify. Given that Amazon never likes to be left out of anything, it has been lined up as a potential buyer of e-Bay, even if any deal might run into monopoly issues given that both dominate online marketplaces.

    In truth, that is just a taster of the likely wave of bids and deals up ahead. The booming tech industry is seeing a spate of takeovers – and will power the next leg of what is turning into a major bull market. Why? There are three reasons.

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    Emails of the day 1 & 2

    More on Merkel Brexit Warning:

    It is likely the EU "hard talk" versus UK "hard Brexit" gamesmanship will hurt the EU more than the UK or at least be neutral. First, EU exporters outnumber UK exporters and will lose out if the UK retaliates via tariffs (German car exporters must already be angry about the competitive devaluation of the GBP, a gift to Philip Hammond and the UK). Second, it makes the UK's negotiating position much easier. When you have little to lose, tougher counterparty positions having been taken, you can focus on areas where you are strong or your adversary weak and be more aggressive in your demands for areas you are likely to lose, knowing they will be watered down or dismissed. Third, a PR disaster, other counties with EU reservations or facing referendums -Holland, Hungary, E Europeans etc- will see the ganging up on the UK as a potential thorn in their own side when they are looking for reassurance from the EU, fortifying the centrifugal political forces already operating in the EU. Fourth, it will accelerate the post Article 50 end game, since the UK may react to EU intransigence by curtailing or terminating negotiations if it knows that the EU is not going to give way (the EU has now declared its hand; this is seldom a good idea in negotiations). The default position is WTO tariffs for the UK anyway. If your adversary does not care about losses when you engage him, he is a much more dangerous adversary; this is the position that the EU is creating for itself with reference to the UK.


    It will be very interesting to see how international non-EU businesses that have invested in the UK as the best country to manufacture inside the EU will now react to Brexit. I think it will be a long and slow process because they have fixed investments that cannot be shifted easily or quickly.

    Unfortunately, politics has dominated over economics and finance in the building of the EU and I fear that this will continue to be the case.

    That is why I think that the EU will continue to stagnate.

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    Free to Frack, Now We Are Cooking With Gas

    Here is the opening of Juliet Samuel’s article on this important development for the UK, published by The Telegraph:

    Free to frack at last. The Government has cleared the logjam stopping the development of Britain’s first shale gas reserves and Cuadrilla Resources, the company at the centre of it all, can finally rev up the drills.

    The intervention of Sajid Javid, Secretary of State for Communities and Local Government, opens the door to an industry that will generate jobs, cheaper household bills, energy security and lower carbon emissions. It has taken far too long to get to this point, but now that we have, there must be no more delays. 

     It has been a staggering six years since Cuadrilla first began work on the Lancashire site it wants to drill. In that time, shale gas extraction has gone from being a marginal industry to the United States’ biggest source of energy, making the country self-sufficient for the first time in decades. While this mini-industrial revolution was taking place across the pond, Britain was obsessing over planning documents, legal appeals and face-painted, drumming protesters in kilts.

    The birth of a shale gas industry could be a huge bonus for Britain at a time of rising economic uncertainty. Investors are watching nervously to assess the effects of Brexit and Theresa May has lurched leftwards to deploy a stream of anti-business rhetoric. So it matters more than ever that the Government means it when it claims Britain is open for business. This first permission granted to Cuadrilla is a decent start.

    The direct economic benefits of fracking are obvious. Cuadrilla’s work alone could create several thousand jobs, many of them in the North, and it has several rivals trying to develop their own sites in the region. The development of the US’s gas industry also led to a rapid revival of the country’s declining manufacturing industry. Companies that had for years been shifting their operations to Mexico and Asia started setting up factories in the Gulf to take advantage of bargain energy prices.

    Full-scale production in Britain is still some years away, but when it comes on-stream, the whole country will benefit. We are heavily reliant on gas for heat and power. Household electricity bills have risen 14pc since Cuadrilla started work in Lancashire, even as prices have plunged abroad. MPs harangue energy companies constantly about why Britain pays such high bills. If they were serious about cutting costs, they would look to their own obstructive policies.

    Of course, we do not know quite how much gas can be recovered from the rocks under Lancashire, because Cuadrilla has not been allowed to find out. But the estimates so far suggest it is an enormous amount and easily enough to provide a massive boost for Britain’s energy security without the eye-watering costs of a project like Hinkley Point C.

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    Remarks at the 40th Annual Central Banking Seminar

    This transcript of a speech by Ray Dalio of Bridgewater Capital to the New York Fed may be of interest to subscribers. Here is a section:

    As a result of this confluence of conditions, we are now seeing most central bankers pushing interest rates down to make them extremely unattractive for savers and we are seeing them monetizing debt and buying riskier assets to make debt and other liabilities less burdensome and to stimulate their economies. Rarely do we investors get a market that we know is over-valued and that approaches such clearly defined limits as the bond market now. That is because there is a limit as to how negative bond yields can go. Their expected returns relative to their risks are especially bad. If interest rates rise just a little bit more than is discounted in the curve it will have a big negative effect on bonds and all asset prices, as they are all very sensitive to the discount rate used to calculate the present value of their future cash flows. That is because with interest rates having declined, the effective durations of all assets have lengthened, so they are more price-sensitive. For example, it would only take a 100 basis point rise in Treasury bond yields to trigger the worst price decline in bonds since the 1981 bond market crash. And since those interest rates are embedded in the pricing of all investment assets, that would send them all much lower.

    At the same time, as bonds become a very bad deal and central banks try to push more money into the market and yields go even lower and price risks increase further, savers might decide to go elsewhere. At existing rates of central bank buying—which I believe will be required for the foreseeable future—central banks are going to start to hit the limits of their existing constraints. Those limits were put into place because they originally thought that they were prudent but they are going to have to go buy other things. Right now, a number of the riskier assets look attractive in relationship to bonds and cash, but not cheap in relationship to their risks. If this continues, holding non-financial storeholds of wealth like gold could become more attractive than holding long duration fiat currency flows with negative yields (which is what bonds are), especially if currency volatility picks up.

    Concerning what policies will likely be required of central bankers given the reduced effectiveness of interest rate cuts and quantitative easing, and assuming that political limitations on fiscal policies and structural reforms remain stringent, it appears to me that there will have to be greater purchases of riskier assets and more direct placements of purchasing power in the hands of spenders, especially as the previously described squeeze intensifies.


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    Email of the day 'plucky' trades

    I admire your plucky gold and silver long trades opened just below the downtrend line from the 2011 high and your recently increasing those positions as the knife dropped....with the higher than 2011 "Spec" interest screaming alarm signals to stale PM Bulls! Do you have a "stop" in mind when you open your trades? This from Sharps Pixley website today 

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    Follow Your Nose

    Thanks to a subscriber for this interesting report from Deutsche Bank. Here is a section:

    Key Themes to Drive Industry Shift
    Minimally Invasive Treatment is Large and Underpenetrated: Balloon sinus dilation (BSD) is a minimally invasive alternative to functional endoscopic sinus surgery (FESS). The procedure was introduced in 2005, but remains underpenetrated (we estimate 20% today). We view penetration increasing to 26% in 2021 lead primarily by continued economic and clinical data.

    From the Operating Room to the Physician’s Office: We believe an increasing number of chronic sinusitis procedures will shift from the operating room to the physician’s office setting moving forward. This shift provides benefits to all: patients, physicians, and payors.

    DB Survey Supports View of Market Growth and Penetration
    We conducted a survey of 30 US based, board certified otolaryngologists. We asked our survey respondents to comment on volume expectations, procedure settings, and market share trends. Our results indicate increased volume across procedure types, a move toward office based procedures, and further penetration of minimally invasive treatment options.

    Opportunities for Technologies that Lower Costs and Improve Outcomes
    New technologies that further enable minimally invasive procedures and the shift to physician’s office based care are also garnering more attention. Medical supplies and devices companies have taken note with recent launches of more compact navigation systems, steroid eluting stents, and more compact surgical tools and technologies.


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