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Market Pulse: Mid-Year Update

Note: This update is longer than usual but I felt a comprehensive review was necessary. The Federal Reserve panicked last week and spooked investors into…

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Note: This update is longer than usual but I felt a comprehensive review was necessary.

The Federal Reserve panicked last week and spooked investors into the worst week for stocks since the onset of COVID in March 2020. The S&P 500 is now firmly in bear market territory but that is a fraction of the pain in stocks and other risky assets. Stocks are now down 10 of the last 11 weeks but the pain was concentrated in the last two weeks. 5 of the last 8 trading days have seen 90% of the stocks in the S&P 500 down on the day and there are only 11 stocks in the index up over the last month. Unprecedented is an overused word but not in this case. Last week was also the second week in a row that saw all the major asset classes down on the week. And energy stocks led the way down, getting the correction I talked about last week a lot sooner than even I expected. Crude oil and natural gas were both down hard last week (10.5% and 21.5% respectively) and some other economically sensitive commodities were also down last week (copper, palladium, platinum).

But back to the Fed panic. The Fed has, since the Bernanke years, practiced what it calls forward guidance. This basically consists of telling the market what they are going to do before they do it. They always add the caveat that it depends on incoming data but it takes a lot to change their course once it is set. The Fed had prepared the market for a 50 basis point hike at last week’s meeting with Powell explicitly saying that 75 basis points was off the table. And I think there were – and are – very good reasons for that. The end of the Fed/Treasury MMT/helicopter drop experiment pretty much ensures that inflation will moderate over the coming months regardless of what the Fed does. But the market reaction to the CPI report apparently spooked the Fed and they leaked a story to the WSJ early last week that put 75 basis points back on the table. Actually it more than did that since merely leaking the possibility was tantamount to signaling that course. And on Wednesday they did exactly that and I’m sure felt pretty good about themselves as stocks managed to finish the day higher.

Unfortunately, the celebration of the Fed’s “courage” lasted less than a day and the declines resumed. The Fed thought they could allay investors fears about inflation by raising 75 basis points but instead all they did was raise other fears, now of the Fed doing too much rather than too little. The 10 year Treasury was trading right around 3% but jumped to almost 3.5% by the time of the FOMC meeting. Rates did fall back the rest of the week and closed around 3.24% but the damage was already done. Mortgage rates jumped to nearly 6.25% at one point last week and the housing market is downshifting rapidly. As I said last week, a cooling of the housing market is necessary but slamming on the brakes of an economy is generally not a good idea, as I thought we learned during the COVID fiasco. If rates come back down – and with the economic data continuing to weaken that seems likely – we may avoid a collapse in the housing market but it will be a close call – we need to get some good news on inflation soon.

We seem to have reached the indiscriminate selling part of the bear market. We have maintained a defensive equity posture and a cash cushion (10-15%) dating back to last year and that continues to be the case. But, to take one example of babies and bath water, the Select Dividend ETF (DVY, we own) fell from a nearly 8% gain YTD on June 7th to a 6% loss by last Friday. I suppose it is somewhat interest rate sensitive with 26% in utilities but the fundamentals didn’t really change much, if any, over that two week period. The index now trades for 12.5 times earnings but it wasn’t expensive before the selloff. The S&P 500 value index (IVE, we own) had similar performance, falling from a 3% loss to a 14% loss over the same time frame. The largest holding in the index is Berkshire Hathaway which went from +5% to -10%. I suppose if you’re going to bail on Berkshire Hathaway, you can justify selling just about anything.

Our portfolios are still outperforming on the year but losses have now reached double digits (depending on timing, risk tolerance, etc.; the 60/40 stock/bond portfolio is down 19%) and I am reviewing all of our indicators to see if there is more we should do. It has been a challenging year to say the least but we have continued to follow our process. But losing less than everyone else, while admirable, it not our goal. We aim to make money every year – even knowing that is likely an unattainable ideal in the long run – and we still have half a year to go. I think it would be helpful to review where we are and how we got here.

Interest Rates/Fixed Income

We came into this year expecting the economy to slow. That wasn’t exactly a courageous bet since the growth rate last year was goosed by Biden’s American Recovery Act and an accommodative Fed; neither of those items seemed likely to repeat. Biden’s legislative agenda died in West Virginia. The Fed should have started their tightening last year and everyone knew that except perhaps the folks who run the Fed. Of course, we don’t give the Fed so much credit around here but everybody else does and that is what matters to markets, at least in the short term. So, slowing economy and tightening Fed was the outlook at the beginning of the year. But we faced a bit of a dilemma because it was also obvious (at least to me) that interest rates were going to rise. Our normal response to slowing growth would be to extend the duration of our bond portfolio and if it reached recession proportions, actually reduce risk assets and add more bonds. But if rates are rising that plan is off the table.

We entered the year anticipating higher rates with about 50% of our bond portfolio in short duration bonds (1-3 years) and 50% in intermediate (3-7 years). We shifted our portfolio to a longer duration profile when the 10 year Treasury hit 3%. I believe that was the right choice even though rates have moved modestly higher since but all bond durations are down on the year. We now have 75% intermediate, 12.5% short term and 12.5% long term (7-10 years). Have rates peaked? The fact that bond yields fell after the Fed hike gets me closer to a yes but I’m not there yet. I continue to think there will be a major opportunity to buy long duration bonds sometime this year. Note: We don’t own TLT but included it for reference in the below chart. Being wrong on duration this year has been painful and the wronger you were, the more it felt just like owning stocks. This is why it takes extraordinary conditions for us to buy the very long end.

Commodities and Gold

Rising rates also affected our commodity and gold exposure. We expected real rates to rise and in the past that has not been a positive environment for commodities. 10 year TIPS rates are up from -1.04% at the beginning of the year to 0.67% Friday. That 171 basis point rise is about the same as the nominal 10 year (176 basis points) but is arguably much more important. Positive real rates are actually a positive sign for quality long term growth but it will have to rise more and stay that way for it to really impact the economy. And, in general, what is good for growth is bad for gold.

Our response to rising real rates was to keep our commodity and gold exposure at half our strategic weight. In 2013 the last time real rates rose from negative to positive, gold fell 25% and the GSCI index of general commodities fell 6%. We have positive returns from both this year and a full position would have been more beneficial but we couldn’t justify it based on past experience. We did allow the positions to gain within the context of the portfolio but have more recently been trimming them back to the target (half strategic weight). If real rates start to fall again we will revisit our allocation.

Equities

We also came to the conclusion last year that the S&P 500, and especially the growth part of that index, was essentially uninvestable. From meme stocks to SPACs to technology stocks to crypto, speculative fever gripped investors last year to a degree I hadn’t seen since the turn of the century dot com boom and bust. I knew there would be a comeuppance but when was a question I couldn’t answer. By the fourth quarter though we had eliminated our S&P 500 exposure in favor of more defensive positions in Dividend stocks and US and International value stocks. We had and have no exposure to the S&P 500 growth index or NASDAQ index. By the way, we have never recommended any crypto investments and despite the ongoing crash, are not likely to soon. I am treating this like every other speculative boom I’ve seen in my career which is to wait for the bust and sift through the survivors to see if I can find a pony (if you don’t know that joke send me an email). But I don’t think the crypto comeuppance is done yet.

Similar results were seen in small cap stocks where dividend and value indexes outperformed the growth index:

Our allocations to small cap are generally pretty small but we are currently smaller at 75% of our strategic allocation. Strong dollar environments tend to favor small caps over large but with a slowing domestic economy I didn’t want to make an oversized bet on that. In this case, small cap and large cap returns have been quite similar (-25.4% and -22.4% respectively).

Real Estate

Real estate (REITs) has performed in line with large cap stocks this year. For most of the year we have maintained an allocation that is 50% of our strategic allocation. We raised that to 75% when we extended the duration of our bond portfolio. REITs are rate sensitive and performance should improve if rates come back down. REITs also perform well in inflationary environments and that might argue for a full allocation. However, truly inflationary environments are marked by a weak dollar which isn’t true today. Interest rates are probably the more important driver of REIT returns going forward.

International Equities

One of the strangest outcomes in this year of strange outcomes, is the outperformance of international equities over US. This is wholly unexpected in a strong dollar environment but even EM equities are outperforming the US this year. We own a small position in Japan and despite the plunge in the Yen (-14.7% YTD), the Japan ETF has managed to slightly outperform the S&P 500. With commodity prices on the upswing, Latin American stocks have led, still positive on the year. That, despite the continuing political swing to the left (Colombia joined the trend yesterday) that may continue in Brazil later this year. Two things come to mind here that investors should take to heart. First of all, the economy is not the market and the market is not the economy. Everyone knows about China’s ongoing economic difficulties and yet its stocks have done better than the US this year. Second, don’t let your politics dictate your investment choices. The leftward swing in LA politics is probably not a long term positive but it hasn’t stopped those markets from outperforming.

Outlook

Economy

I have maintained for some time now that once the COVID distortions in the economy are gone, the US economy would settle back to its previous growth trend around 2%/year. That is based merely on the observation that GDP grew 2.1%/year for the decade prior to COVID and we did nothing during COVID to change that trajectory. Economic growth can be boiled down to just two things: productivity growth and workforce growth. Either workers become more productive and output grows or you add more labor and output grows. Did we do anything to enhance productivity during COVID? Well, there were changes due to COVID – work from home, etc. – but whether those things turn out to be positive for productivity is still an open question. As for workforce growth, the number of total employees has risen but is still below the pre-COVID high:

As a percentage of the population we are still a full 1% below the pre-COVID level:

Productivity rebounded out of the COVID economic low but fell sharply in Q1 ’22 as we added workers and GDP contracted.

With Q2 GDP also looking weak, those numbers probably won’t improve soon. If we are headed for a deep recession, you can count on companies to cut workers but that is hardly the best way to improve productivity. Productivity growth is really about investment in the real economy though and there we do have some potential positives. First is that real rates have turned positive and that is generally associated with higher investment and productivity growth. Second is that core capital goods orders have finally broken out of a 20 year stagnation and are still climbing:

But investments take time to pay off so any productivity gains from this investment will take some time to show up in the real economy. And that assumes it isn’t peaking now.

So, with low productivity growth and weak workforce growth, I just don’t think it is realistic to expect something other than what prevailed prior to COVID. If anything, since we added a lot of government debt during the pandemic, we might even assume growth will be somewhat less than the pre-COVID trend. On the other hand I think that is mitigated by the fact that a lot of the government debt added was merely a shift from household balance sheets to the government’s balance sheet. The savings rate has fallen this year but that doesn’t mean, contrary to a lot of commentary out there, that people are spending the huge pile of savings they accumulated during COVID (flow vs stock). I’m sure that is true for lower income Americans and, with prices rising, probably for some middle class as well. But in aggregate, the accumulated savings hasn’t been depleted and that may act as a cushion for any economic slowdown.

Last year’s 5.7% GDP growth rate was not sustainable, fed as it was from Biden’s spending plan and an accommodative Fed. Growth had to slow this year and it is. What is remarkable so far though is how little evidence we have of that. Real retail sales have been running well above trend and should come down but they remain elevated:

If retail sales are going to fall back to trend – and I think that makes sense – the question is how. Will it be a rapid drop or gradual? More importantly, how will this affect overall consumption? Will a rise in services spending offset some of the – potential – drop in goods spending? Will it be sufficient to keep overall real consumption growing on trend?

On the investment side of the economy, can non-residential investment rise enough to offset a drop in residential?

There are plenty of indicators that confirm the recent slowdown but slowdown isn’t recession. I’m sure the odds of recession have risen, especially with the spike in interest rates and the impact on housing but any forecast that goes past the next couple of months is speculative at best. We could be in recession by the end of the year but you sure can’t make that call right now. Futures markets still point to mid-2023 for the peak in rates although that has moved forward by a quarter.

Example: The ISM surveys have come off their highs but are still well above levels associated with recession. And neither of these is a primary input to our portfolio process because they produce too many false signals. Readings under 50 happen fairly frequently and don’t lead to recession. It takes a reading under 45 to confirm recession and it has usually started by then. A reading in the upper 50s isn’t anywhere close to recession. It could fall fast but we shouldn’t assume that.

The regional Fed manufacturing surveys also show the slowdown. Like the ISM, these surveys often turn negative without a recession. A negative reading just means things are slowing. We don’t use this as a primary indicator either because of the high number of false signals:

One indicator we are watching very closely is credit spreads which have recently widened. It is concerning but as you can see there have been numerous higher readings that weren’t associated with recession. Making a big portfolio change based on a spurious reading is exactly what gets investors in trouble. If you sell on a false signal, how do you get back in? This is the one indicator that worries me the most though because risk aversion can have a powerful impact on the economy. Recessions can become self-fulfilling prophecies and economic sentiment is very, very negative at present.

I don’t know how this slowdown will be resolved. There is very little data available right now that points to recession at all much less something catastrophic like 2008. Yes, credit spreads could keep getting wider, the ISM surveys could get worse, the regional Fed surveys could deteriorate and retail sales could fall off a cliff while consumers also pull back on travel and other services spending. But we don’t make big portfolio changes based on extrapolating a present trend to its worst case scenario. We came into this year with our portfolios defensively positioned and we still are. To get even more defensive would require evidence that the economy is doing something more than just slowing from an unsustainable growth rate.

Markets

Market sentiment is at extremes in almost all asset classes. It is profoundly negative about stocks and real estate and, despite a selloff last week, still profoundly positive for commodities. I suspect we are at or near turning points for both but that doesn’t mean either trend is over. The S&P 500 could easily rise by 15 to 20% from these levels and still be in a downtrend (below the 200 day moving average). Commodities could do the opposite and still be in an uptrend. That’s how far away from the long term trends we are right now.

One measure of sentiment I track is the percentage of stocks in an index that are trading above their 200 day moving average. A low reading would be 20 or less and an extreme reading would be 10 or less. Non-recession corrections tend to bottom above 10 and bear market recessions below. There are extreme situations like 2002 and 2008 when the percentage hit single digits and stayed low for months. In 2002 the % of stocks in the S&P 500 above their 200 day MA first hit single digits in July with the index at 775.68. It rallied and hit a high of 965 in August (24.5% rally), fell and made a new low in October (768.63), rallied again to 954.28 (24.2% rally) in December and retested the low a final time in March of 2003 (788.90). Point being that just because it hits that low doesn’t mean you are off to the races. The bottom can take a while. In 2008, the % fell into single digits in October and the market bottomed at 839.8, rallied to over 1007 (19.9% rally) in November but didn’t make its final low until March 2009 at a low 20% below the October low. The history with the same metric applied to NASDAQ is similar. Where are we today?

If this is not a recession or a very mild one, then I’d say we’re very close to making a bottom. If it is a recession, we probably have more time to spend near the lows although new lows are far from a guarantee – a lot of bad news has been priced in already.

I would also point out that the very long term trend of the S&P 500 is still up even after this large selloff. The only times we’ve been more oversold was in 2002 and 2008 and in both of those cases the index traded below its 50 month moving average (which it did briefly in 2020 but didn’t close a month down there). If this isn’t another 50% bear market – and those are rare despite us having had two in the last 20 years – then the bottom is probably here or very close.

Bonds are in a similar situation, very oversold and due for a rally. The trend is obviously down since the early 2020 peak:

For bonds to rally, we need rates to fall and that will only come with better inflation news and/or weaker economic data. A helpful market based indicator is the copper/gold ratio which correlates well with the 10 year Treasury yield. The 3,6,9 and 12 month rates of change on the copper/gold ratio are now negative and if this continues to weaken, the 10 year Treasury yield will likely follow:

A 6 to 8% rally in IEI and an 8 to 10% rally in IEF (we own both) seems quite reasonable. I’m looking for a little more confirmation but I expect to extend the duration of our bond portfolio again soon. Whether it is a short term or long term move I don’t know yet; that will be determined by the nature of the economic slowdown.

A rally in bonds – a fall in rates – should also be positive for REITS and the dividend stocks (26% utilities).

The bigger question is what a fall in rates would do to commodities, gold and the dollar. It will be important to see how real rates react relative to nominal rates and how inflation expectations change. Ideally, we’d see a fall in nominal bond yields and steady real rates resulting in a fall in inflation expectations. But ideal may be too much to ask and if real rates start to fall in the context of an economic slowdown, gold should outperform general commodities. As for the dollar, its course is more likely to be determined by what is going on outside the US but in general, a slowdown here relative to the rest of the world would be negative for the buck.

The course of the dollar will largely determine if and how we might change our equity allocations. Right now, we have some international value exposure but the rest is defensive US equity. If the economy cools but doesn’t fall apart, we may need to shift to more offense and valuations would point to increased mid or small cap exposure. The S&P 500 and its growth piece are still expensive, if a lot cheaper than they were, but I would be reluctant to make any long term commitments to those areas unless we believe earnings will accelerate sharply (which we don’t at present). International stocks are still cheaper than the US and it really doesn’t matter what part of the world you look at. EAFE is 12 times earnings, Asia ex-Japan is 14 times, Japan is 12 times and global stocks are 15 times. The value versions of those are even cheaper.

Shifting to more international exposure though would require that the dollar get in a downtrend and right now it is still sitting near its recent highs.

For now, we are not making any big moves because we don’t have sufficient evidence to do so. We remain defensive because the economy is slowing but we also think inflation is peaking (example: Philly Fed manufacturing prices paid component is down 20% over the last 3 months). We are likely to soon extend the duration of our bond portfolio again to take advantage of what we think could be a significant rally in bonds. I would expect too that better inflation data and softer economic data should put the Fed on a less aggressive path. But Powell seems uniquely clueless in the recent string of lousy Fed Chairmen so who knows? If the market starts to price out some of the currently expected rate hikes, I would also expect a positive response from stocks. Whether that is a temporary reprieve, the calm before the recession storm or a new bull market I can’t say yet.


The rising dollar, rising rate environment continues although the ascent of both slowed at the end of last week. Which means nothing of course; it was just a couple of days. The trend for both is still solidly up and both could pull back considerably and still be considered as such. A first downside target for the 10 year yield is about 2.94%, second down to the May low at 2.71% and a third at 2.25%. For the dollar, first downside target would be 102.6, second @ 98. Anything below that would end the intermediate uptrend.

 

Obviously, there was no place to hide last week but that isn’t even interesting. What is, is that growth stocks outperformed value for the week and since late May. It isn’t enough yet to change the trend but it is potentially a positive sign if the things that were hit hardest are starting to do relatively better. China was again an outperformer but still down on the week.

Energy stocks got clobbered last week, and are now down over 20% from their recent highs. Crude appears to have broken its short term uptrend last week. A return to the intermediate term trend line would take it down to about $88. If you get that drop in crude, XLE is going lower. A guesstimate would be another 15% down from here. Utilities were the second worst performer, on the back of higher rates I suppose. If bonds rally I’m pretty sure utilities and REITs will too.

 

It is a very uncertain time for markets and the economy. Of course, it always is; uncertainty is the norm because none of us can predict the future. We have acted defensively this year and that has been the right call but I think we need to be thinking about offense now. Stocks and bonds are both extraordinarily oversold and sentiment is as negative as I’ve ever seen it. In some ways it feels more negative than 2008 but the economic condition today is a lot healthier than then. Investors seem to want to price in the worst case scenario when we don’t even have evidence yet of anything other than an economic slowdown. It may turn into something worse but, if the past is any guide, there will be some monster rallies along the way even if that is true. If you don’t feel good about where you are now, use one of those rallies to lighten up. We didn’t go straight down in 2008 and I doubt we will now. Right in the heart of that mess, in November of 2008, the S&P rallied 20%. Yes, it was short term and we went on to make new lows but anyone who wanted to sell some got a chance to do so in a rally rather than selling on the lows.

I don’t know where or when this bear market will end. No one does. Will it be a down 50% like 2002 and 2008? Or are we almost at the bottom? There are certainly a lot of similarities between today and the 2000-2002 bear market with crypto taking the role of the dot com stocks. Is Tether the Enron of crypto? Maybe. Are NFTs the Beanie Babies of that earlier time? Could be. Is the crash in crypto affecting the stock market? With so many “hedge” funds out there chasing those returns, my guess is yes. But crypto is down to about $800 billion in total market cap so whatever impact there is should fade from here. But, yes, I can see some parallels between those two periods. On the other hand, comparisons to 2008 just seem a tad overwrought. I don’t see a banking crisis in our future.

I’ve said recently that investors ought to be at least thinking about doing some buying and I stand by that. There are definitely bargains out there and everyone else is scared to death. Last week I quoted Warren Buffett’s maxim to be greedy when others are fearful. Well, they got more fearful last week based on nothing more than a useless interest rate moving up by 0.25% more than previously thought necessary. Is an interest rate a quarter point higher really going to push us into something as bad as 2008? I have my doubts. Maybe it’s time to get braver.

Joe Calhoun

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Steps to building a more patient-centric industry

Lack of access, strict regulations, and demanding schedules have made it extremely difficult for patients to participate in
The post Steps to building…

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Lack of access, strict regulations, and demanding schedules have made it extremely difficult for patients to participate in clinical trials. A 2018 NIH survey found that patients felt clinical trial participation to be inconvenient and burdensome, and nearly half (49.0%) said it disrupted their daily routine. In 2021, a CISCRIP Perceptions and Insights Study reported more disruption to daily routines compared to previous years, citing length of visits, travel, and diagnostic tests as top burdens.

To ease this burden, the life sciences industry has been searching for ways to make clinical trials more accessible for patients and to drive participation numbers, increase participant diversity, and improve overall patient experience. For many patients, this change starts with choice.

A recent survey of clinical trial professionals found that more than two-thirds of respondents (61%) believe giving patients choice will have a positive impact on clinical research, and well over half (58%) said that their organisations plan to give patients the option to choose how they participate in clinical trials moving forward. Some examples of these choices can include video visits, phone visits, and remote monitoring.

As the industry focuses on creating a more holistic, inclusive patient experience, here are key steps to consider in order to help bridge the gap between clinical research and the patient experience.

Build a base in the community

According to the FDA’s 2020 Drug Trials Snapshot Report, only 8% of clinical trial participants are Black or African American, as compared to nearly 14% of the US population. The fact is, many minorities never learn about vital clinical trials in play, or that they’re eligible to participate. Subsequently, they are excluded, creating an evident gap in participants, and subsequently needed data on how treatments respond across different demographics of people.

Creating a broader, more inclusive patient experience starts with building a network of advocates who can help organisers meet patients where they are located and educate them about the availability and value of the trials. Initially, there needs to be a more proactive and sustained nationwide outreach effort to raise clinical trial awareness within minority communities.

It’s also important to partner with trusted people within minority communities, such as religious and government leaders that have the credibility needed to share clinical trial information to counter scepticism. If sponsors can partner with patient-advocacy groups to inform design, recruitment, follow-up, and even data collection (particularly for patient-reported outcomes), it will help to keep patients engaged longer and potentially derive higher quality data sets that can lead to better patient outcomes over the long run.

Embrace technology to expand reach

Technology – especially related to automation and the cloud – can help create a more flexible clinical trial model, thereby making it easier for patients to participate. Digital tools used in decentralised trials, remote enrolment tools, consent forms, wearables, and remote devices, as well as data capture, can help to expand overall access to clinical trials. For example, with remote monitoring, doctors and trial administrators can analyse all the data coming in and, if there’s a problem, they can act more quickly and respond back to the patient through a mobile device such as a smartphone.

Cloud platforms can open two-way communication channels for patients, doctors, and trial administrators to talk and share data, essentially in real-time. Some early examples of these capabilities were part of the US Centers for Disease Control and Prevention’s (CDC) v-safe program, developed by Oracle, which is used to track the effects of the COVID-19 vaccines through voluntary, scheduled survey prompts, and to remind people about boosters. Today, capabilities like this are being extended so that trial data from wearable devices and home-monitoring systems can be communicated directly to trial sites.

A new solution

One significant roadblock to clinical trial inclusion of minority groups has been location and transportation. Many potential participants lack transportation to and from clinical sites, and some trials are only held in large city hospitals, instead of smaller community hospitals that participants can sometimes access more easily. Thanks to decentralised trials and technology that collects data remotely, people from anywhere can participate.

One approach the industry has been exploring is to utilise community retail pharmacies as a central location for people to learn about and participate in clinical trials. By collaborating with pharmacy retailers, sponsors will have more opportunities for patient recruitment because they can offer patients the convenience and comfort of visiting familiar community sites.

For example, CVS and Walgreens have instituted flexible clinical trial models that combine patient insights, technology capabilities, and in-person and virtual-care options to engage broader and more diverse communities. The result is a much more expansive pool of participants and potentially much better information about populations where the drug is effective, and other populations where it might not be effective.

Keep it simple

There’s a notion that because the healthcare and life sciences industries are very complex, the systems that support them have to be equally complex. In fact, the opposite is true. Easier-to-use systems will increase participation rates, and we will have better outcomes as a result. With so many technology advancements at its disposal, the industry must find a way to bridge the divide between patient experience and clinical research. The patient journey must be a positive one, so that they will encourage others to participate.

Imagine, clinical research as an accessible care option to anyone. Technology has given us the opportunity to make this goal a reality. But as an industry, we must innovate to bring new experiences to market and improve the clinical research ecosystem for patients, healthcare professionals, sponsors, and regulators.

About the author

Katherine (Kathy) Vandebelt is global head of clinical innovation at Oracle Health Sciences. With over thirty years of experience in clinical research working in different geographies and across various TA, Kathy has worked with various organisations to advance their clinical operations and business processes to a better operating model. She believes patients are the most important constituent in clinical development and provide the necessary information to assess the safety and efficacy of new medicines. She strives to introduce new experiences and make the clinical research ecosystem better for patients, healthcare professionals, sponsors, and regulators using the power of technology.

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Meta ‘powering through’ with Metaverse plans despite doubts — Zuckerberg

Billions of dollars have been poured into Meta’s virtual world with little return on investment, but CEO Mark Zuckerberg says he is holding fast.

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Billions of dollars have been poured into Meta’s virtual world with little return on investment, but CEO Mark Zuckerberg says he is holding fast.

Meta CEO Mark Zuckerberg is still hopeful about the company’s Metaverse plans regardless of the billions of dollars it’s sucking up from the company, claiming “someone has to build that.”

Appearing remotely for an interview at the Nov. 30 DealBook Summit in New York, Zuckerberg was asked his thoughts on whether the tech giants’ Metaverse play was still viable given its cost and the doubts cast over the platform, answering:

“I think things look very different on a ten-year time horizon than the zone that we're in for the next few years [...] I'm still completely optimistic about all the things that we've been optimistic about.”

He added part of “seeing things through” in the longer term was “powering through” the doubts held about its ambitions.

Meta's latest earnings, released on Oct. 26, revealed the largest-ever quarterly loss in its metaverse-building arm Reality Labs dating back to the fourth quarter of 2020. Zuckerberg’s virtual reality has cost $9.44 billion in 2022, closing in on the over $10 billion in losses recorded for 2021.

On the earnings call at the time Zuckerberg was unfazed by the cost, calling its metaverse the “next computing platform.” He doubled down on this claim at DealBook:

“We're not going to be here in the 2030s communicating and using computing devices that are exactly the same as what we have today, and someone has to build that and invest in it and believe in it.”

However, Zuckerberg admitted that the plans have come at a cost, Meta had to lay off 11,000 employees on Nov. 9 and the CEO said it had “planned out massive investments,” including into hardware to support its metaverse.

He said the company “thought that the economy and the business were going to go in in a certain direction” based on positive indicators relating to e-commerce businesses during the height of the COVID-19 pandemic in 2021. “Obviously it hasn't turned out that way,” Zuckerberg added.

“Our kind of operational focus over the next few years is going to be on efficiency and discipline and rigor and kind of just operating in a much tighter environment.”

Despite the apparent focus from Meta to build its metaverse, Zuckerberg claimed 80% of company investments are funneled into its flagship social media platforms and will continue that way “for quite some time.”

Investments in Reality Labs are “less than 20%” at least “until the Metaverse becomes a larger thing” he said.

Related: The metaverse is happening without Meta's permission

Of the 20% invested in Reality Labs, Zuckerberg said 40% of it goes toward its Virtual Reality (VR) headsets with the other “half or more” building what he considers “the long-term most important form factor [...] Normal-looking glasses that can put holograms in the world.”

Zuck takes bite at Apple

Zuckerberg also took a few jabs at its peer tech company Apple regarding its restrictive App Store policies, the likes of which have placed restrictions on crypto exchanges and nonfungible token (NFT) marketplaces, saying:

“I do think Apple has sort of singled themselves out as the only company that is trying to control unilaterally what apps get on a device and I don't think that's a sustainable or good place to be.”

He pointed to other computing platforms such as Windows and Android which are not as restrictive and even allow other app markets and sideloading — the use of third-party software or apps.

He added its been Meta’s commitment to allow sideloading with its existing VR units and upcoming Augmented Reality (AR) units and hoped the future Metaverse platforms were also open in such a manner.

“I do think it is it is problematic for one company to be able to control what kind of app experiences get on the device.”

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Nifty News: Porsche 911 NFTs, BMW files Web3 trademarks, Baby Shark’s NFT game and more…

BMW and Porsche have both recently ramped up their own Web3 plays, while Baby Shark is dipping into the blockchain gaming sector, but just for kids.

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BMW and Porsche have both recently ramped up their own Web3 plays, while Baby Shark is dipping into the blockchain gaming sector, but just for kids.

Porsche to launch 7,500 NFTs for use in a ‘virtual world’

German luxury car manufacturer Porsche has suggested it will be significantly ramping up its Web3 efforts after unveiling an upcoming NFT project consisting of 7,500 customizable tokenized vehicles.

In a Nov. 29 announcement, Porsche stated that the NFTs will be launched in January, and users will be able to customize various aspects of the cars in relation to performance and appearance.

The NFT art itself is being designed by designer and 3D artist Patrick Vogel, with all pieces revolving around the famous Porsche 911 model.

Notably these virtual assets will be designed in Epic Games’ Unreal Engine 5, suggesting that gaming integrations are afoot.

NFT car designs: Porsche

The company gave a sneak peek into the project at the Art Basel conference in Miami on Nov. 30. While specific details have not been mentioned, the company noted that owners will be able to use the cars in the “virtual world,” most likely meaning some sort of Metaverse.

More broadly, Porsche suggested that it is looking to significantly ramp up its exposure to Web3 moving forward, with the announcement noting that:

“Digital art is just one aspect of Porsche’s Web3 strategy. The sports car manufacturer is working to integrate the potential of blockchain technology into existing and future processes and solutions.”

Porsche previously had a hand in launching soccer-themed NFT collectibles in June 2021 as part of a project called Fanzone, but now appears to be taking the tokenization of its cars more seriously.

BMW to get Web3 trademarks

Speaking of German luxury car manufacturers, BMW has reportedly applied to trademark its logo in relation to a host of Web3 products and services.

The move was highlighted by USPTO licensed trademark attorney Mike Kondoudis, who frequently shares news regarding Web3 trademark applications in the U.S. from major companies.

BMW outlined intentions for its logo to span across collectibles such as virtual clothing, footwear, headwear and vehicles, while also indicating plans for downloadable virtual goods such as online environments and games.

Baby Shark’s Web3 arc

Content from Pinkfong’s massively popular children’s song/music video Baby Shark is set to be tokenized as part of a family-focused blockchain game.

Pinkfong reportedly penned a licensing agreement with Toekenz Collectibles to create and issue Baby Shark characters in a child safe digital environment.

Baby Shark NFT partnership: Toekenz

Toekenz Collectibles is an NFT platform targeted at children aged 12 and under, and the focus of the game is to educate kids aged five to nine “about the trading economy of digital collectibles.”

The kids will also be able to customize the NFT art to their own liking, and even participate in a Tokenz DAO where they “can exercise democratic decision-making.”

This is not Pinkfong’s first dip into NFTs, Cointelegraph previously reported that the South Korea-based company launched a series of limited editions Baby Shark NFTs in December last year.

Related: Two Bored Apes sell for $1M each: Nifty Newsletter, Nov. 23–29

Deadmau5 rolling out music metaverse

A Web3 startup co-founded by popular crypto-friendly DJ Deadmau5 (Joel Zimmerman) is gearing up for the launch of a music and gaming focused Metaverse platform.

Announced at the Art Basel event on Nov. 29, the start-up known as Pixelynx stated that the Polygon-based platform will launch this week, and kick things off with an Augmented Reality (AR) scavenger hunt set on Miami Beach.

The firm’s CEO and co-founder Inder Phull described the AR scavenger hunt as a “Rock Band meets Pokémon Go experience,” in which virtual gaming features are merged with real locations on maps via smart devices.

Users who hold Deadmau5’s Droplet NFTs will gain early access to Pixelynx’s metaverse with the platform aiming to provide a host of virtual experiences for fans of particular musicians and artists.

More Nifty News

NFTs depicting the ongoing protests in China against the country’s tough zero-tolerance COVID-19 policy have found their way to the NFT marketplace OpenSea at the tail end of November.

On Nov. 30, decentralized exchange (DEX) Uniswap announced that users can now trade NFTs on its native protocol. The function will initially feature NFT collections for sale on platforms including OpenSea, X2Y2, LooksRare, Sudoswap, Larva Labs, X2Y2, Foundation, NFT20, and NFTX.

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