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My Run-In With Paul Krugman, Again!

“The Inflation Reduction Act was our last chance to escape catastrophe.” — Paul Krugman at the World Knowledge Forum, in Seoul, Korea Paul Krugman…

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“The Inflation Reduction Act was our last chance to escape catastrophe.” — Paul Krugman at the World Knowledge Forum, in Seoul, Korea

Paul Krugman got top billing, along with Ray Dalio and John Bolton, at the annual World Knowledge Forum, the Korean version of the World Economic Summit in Davos, Switzerland. He spoke twice to packed audiences.

Last week, I mentioned that Krugman’s New York Times column, “Misery Takes a Holiday,” was wrong as soon as the ink dried. He was convinced that price inflation, as measured by the Consumer Price Index, has gotten “drastically better over the past three months.”

Then the CPI came out at 8.3% in August, and the market tanked. Misery’s holiday was cut short! Not surprisingly, a week later, the Fed raised interest rates again.

I met up with Krugman in Seoul and asked him if he had received much flack about the column. “Very little, actually,” he told me. I reviewed the 333 comments in the Times, and most of them were negative and cynical, with statements like “ill timed,” “aged like milk” and “Krugman’s next piece: I was wrong: About Everything. Over and over again.”

Nobody likes to admit they’re wrong, but Krugman has written quite a few mea culpas lately.

Krugman on Climate Change and Inflation

The Nobel-Prize-winning economist was also asked about global warming. All the top speakers, including former politicians David Cameron (of the United Kingdom) and François Hollande (France), were alarmists.

Krugman was no exception. He was asked about Biden’s latest victory in Congress, “The Inflation Reduction Act.” Krugman rightly noted that the bill had nothing to do with inflation but was “our last chance to escape catastrophe.”

Like Davos, the speakers at the World Knowledge Forum were convinced that “climate change” was the number one worry — ahead of out-of-control government spending, rising inflation, nuclear war, inequality and even the never-ending COVID-19 pandemic. They fell over themselves predicting their countries would be “net neutral” of carbon emissions in 20 years.

The loss of freedom was given short shrift.

The Mask-Hysteria in Asia

What surprised me the most coming to Korea was that EVERYONE wore masks both indoors and outdoors. Ditto for China and Japan. They continue to live in fear. I had to take a COVID-19 test at the airport, where people stood in line for two hours.

What a contrast to the rest of the world.  Europeans have largely abandoned the practice, and even in the United States, President Biden announced last week that the pandemic was “over.”  He added, “If you notice, no-one’s wearing masks. Everybody seems to be in pretty good shape… I think it’s changing.”

I asked my host when South Koreans would stop wearing masks. “Maybe in six months,” was the reply.

Korea: The Impossible Nation

One thing Paul Krugman and I agreed on was the Korean economic miracle.  In one generation, South Korea went from a Third World country to a First World country and from a military dictatorship to a model of democracy. Along with Taiwan, Singapore and Hong Kong, it is one of the “Four Tigers.”

Through hard work, thrift, education, entrepreneurship and American military support, South Korea overcame all obstacles, including the constant threat of nuclear annihilation. It is ranked #1 in the world in many categories: longest working hours, most educated and largest shipbuilder, among other categories.

Of course, they are also number one in plastic surgery, lowest birth rate, an aging population and teenage suicides!

So not all is well in this land of impossibles.

The Korean Challenge Today

I was part of a session with Ed Feulner, founder of the Heritage Foundation, and Yaron Brook, chairman of the Ayn Rand Institute.  Jeffrey Kim, a Korean economist, moderated our panel on “Challenges of the Market Economy and Liberal Democracy.”

Jeffrey Kim, moderator of panel with Mark Skousen, Ed Feulner, and Yaron Brook.

Ed Feulner has taken a special interest in South Korea, having visited the country 140 times! He noted that South Korea now has a higher ranking (#19) in the Heritage Foundation’s Economic Freedom Index than the United States (#21). What a surprise.

South Korea has been incredibly successful and has overcome overwhelming obstacles — fear of nuclear attack, natural disasters, poverty, foreign oppression, Marxist ideology and a pandemic.

To counter the threats of a rogue North Korea and the Chinese Communists, John Bolton, the former national security advisor to President Trump, told the audience that South Korea needed to form an alliance like NATO with Japan, Taiwan, Singapore and other Asian democracies. There’s also talk that South Korea will adopt nuclear weapons.

Economically, the South Koreans need to cut taxes (the income rate is now 45%), open their borders to more immigrants, have more children and develop a better balance between work and play.

EconoPower Here We Come

Will the latest generation be as good as the greatest generation of yesteryear?

It’s possible if they adopt the policies recommended in my book, “EconoPower: How a New Generation of Economists is Transforming the World.”

A Korean publisher paid an unbelievable $100,000 to translate my book into Korean:

The original edition in English was published in 2008 by Wiley & Sons. You can order the book as a hardback, paperback or audiobook on Amazon for as little as $6 plus shipping and handling, or a $20 autographed version at www.skousenbooks.com.

John Mackey, the co-founder of Whole Foods Market, says, “Imagine, economists solving the world’s problems! Skousen’s breakthrough book bring us up to date on this fascinating development. Visionary economists are showing us creative ways to reduce world poverty, eliminate traffic jams, solve the health care crisis, save more and invest better, make business and labor more productive, improve education, cut crime, and even reduce tensions and establish peace in war-torn regions of the world. Read this book and discover a new brand of economics!”

Upcoming Conferences:

New Orleans Investment Conference, Oct. 12-15, Hilton Hotel. Join me along with Jim Rickards, Jon Najarian, Rick Rule, Jim Grant, Doug Casey, Brien Lundin, Robert Prechter, the Aden Sisters and Adrian Day. Be sure to mention you are a Skousen Cafe subscriber. Sign up here.

Join me at the Orlando MoneyShow, Oct. 30-Nov. 1, Omni Hotel Champions Gate, Florida. Other guests include: Steve Forbes, Ed Yardeni, Bob Carlson, Bryan Perry, Bruce Johnstone, Terry Savage and Keith Fitz-Gerald. For more information, go to Skousen.MoneyShow.com and use the code 057734 for special subscriber pricing.

IMPORTANT ANNOUNCEMENT: We are having our first Eagle Virtual Trading Event on Thursday, September 29.  If you haven’t signed up for this yet, there’s still time. Just click here now to sign up for free. Believe me, you won’t want to miss this LIVE online event — as we bring together all five of Eagle’s investment experts at the same time (plus one special guest speaker) to reveal our 6 Ways to Create 4th Quarter Fortunes.  Reserve your seat now by clicking here.

Good investing, AEIOU,

Mark Skousen

You Nailed It!

Look to the Heavens and Live!

“The heavens declare the glory of God, and the sky above proclaims his handiwork.” — Psalms 19:1

We often get caught up in the daily routine of work that we fail to see the beauty of our surroundings and our place in the universe.

Whenever I come to Hawaii, I can’t help but look into the Heavens. The stars and the planets are so brilliant, and there’s nothing like it.

One morning, I got up at 5 a.m., when it was still dark, and walked about the BYU-Hawaii campus in Laie, and saw a half moon in the sky sandwiched between Orion and the Pleiades.

There is also a bright star in the sky, which may be Sirius, or perhaps Venus. And I’m still searching for Cassiopedia!

Have you been following the incredible photographs taken from the new James Webb Telescope? If not, you can find them here (webbtelescope.org)

Image credit to NASA, ESA, CSA, STScI, Webb ERO Production Team

I thank my brother Royal, a brilliant professor of linguistics, for instilling in me an interest in astronomy and star gazing as a young man.

The post My Run-In With Paul Krugman, Again! appeared first on Stock Investor.

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The investment case for copper miners – elevated prices are firmly supported by supply bottlenecks

A combination of the Covid pandemic disrupting production and supply chains across the globe and Russia’s invasion of Ukraine almost a year…
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A combination of the Covid pandemic disrupting production and supply chains across the globe and Russia’s invasion of Ukraine almost a year ago has led to significant volatility in commodity prices in recent years. Copper prices have been no exception, shooting up 127.66% from a low of $2.17 in mid-March 2020 to an all time record high of $4.94 on February 28 2022.

They subsequently dropped almost 35% between that high and a recent low last July before climbing over 30% against since. It’s been a rollercoaster couple of years for copper, which is used for everything from electronics to equipment manufacturing, building construction, infrastructure and transport.

Copper prices – 10 year chart

Source: MacroTrends

Why are copper prices rising as the economy slows?

Ordinarily, a backdrop of the highest inflation levels in decades, rapidly rising interest rates, geopolitical challenges and a Covid hangover degrading near-term global growth prospects would be expected to weigh on the price of copper and other industrial commodities. But over the past 3 months the price of copper has risen by over 20% as the world economy has deteriorated and demand outlook dwindled.

The recent surge in the price of copper is partly the result of a softer dollar and the end of China’s zero-Covid policy leading to market optimism demand for the metal and other industrial commodities will rise again. However, it’s mainly down to a supply squeeze that has in large part been due to temporary factors such as weather conditions and labour challenges reducing the output of currently active mines.

But while those issues will abate, supply tightness appears baked in for copper for several years to come as a result of underinvestment in new mines and extending current projects. There have been very few significant new copper deposit discoveries in recent years and that is expected to lead to a disconnect between supply and forecast demand over the next several years.

Electric vehicles and renewable energy infrastructure should see demand for copper rise significantly over coming years. Cyclical industries like construction should also bounce back as the global economy recovers from its current downturn, recovering to at least previous levels, on top of new demand resulting from electrification.

Based on current mining output and known new discoveries and miner pipelines, the evidence suggests copper supply will remain tight for years into the future. With that in mind, which copper miners could be worth a closer look from investors?

Antofagasta

Antofagasta

One of the world’s biggest copper miners, FTSE 100 constituent Antofagasta’s activities are mainly concentrated in Chile. While it also produces gold and silver like most copper miners (the metals are typically found in close proximity to each other), Antofagasta’s valuation is most influenced by copper prices and tracks them relatively closely.

The miner is also expected to increase its copper output over the next several years so will be even more tied to the metal’s price trends than now. Antofagasta published a Q4 production update earlier this month, revealing that it exceeded its revised full-year target of producing 646,200 tonnes of copper. It aims to produce between 670,000-710,000 tonnes in the current year, despite rising global inflation that has increased input costs. The net cash costs per pound, however, are expected to stay similar to last year’s.

If the company goes ahead with a proposed second concentrator at its Centinela operation, its annual production could reach 900,000 tonnes by 2026. In the first half of last year the miner had a net-debt-to-equity ratio of 5% and operating profits 64 times higher than net interest costs. The means the company is in the financial position to expand production as part of its five-year plan and absorb potential disruptions or delays to capital investments.

But after a 53% rise in the Antofagasta share price over the past six months, does it still represent the kind of value that should tempt investors to take a closer look? The Telegraph’s Questor investment column thinks it does based on the miner’s long term prospects and a price-to-earnings ratio of just 15 that offers a good safety margin with the FTSE 100 close to its all time high.

BHP Group

BHP Group

Headquartered in Australia with a dual listing in London BHP is one of the world’s biggest miners and was last year the second largest copper producer behind the Chilean state-owned miner Codelco. It’s not as pure a play on copper prices as Antofagasta because it also produces larges quantities of iron ore, nickel, coking and energy goal and gold amongst its metals and minerals portfolio.

But copper prices are very important to BHP and it is investing in increasing its output. Its dominant market position and the volume of its output means it will benefit if prices do hit record levels in 2023 as some analysts predict. However, with share price gains of 25% in the past 6 months and a potential hit to iron ore demand if the global economy struggles for a period, upside at the current valuation is questionable.

Southern Copper

Southern Copper

NYSE-listed Southern Copper is another relatively pure play on copper, though it does also produce smallish quantities of other metals and minerals. Its mines are located across Central and South America, in Mexico, Peru, Argentina, Ecuador and Chile.

The companies gross profits have have rising in recent years from $3.79 billion in 2019 to $7.15 billion in 2021. That’s expected to have dropped for 2022 when full year accounts are released but due to investment in expanding existing projects which should allow it to increase production, and profits, in the long term.

Basically, if the copper price stays strong over the next several years, Southern Copper could prove a wise investment. But it is very closely tied to copper prices so vulnerable to any negative turn the market for the commodity might take.

Investors convinced of the prospects for copper prices in the medium to long term might also consider copper ETFs, which build in some diversity across miners. The biggest is the U.S.-traded Global X Copper Miners ETF.

The post The investment case for copper miners – elevated prices are firmly supported by supply bottlenecks first appeared on Trading and Investment News.

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Growing Number Of Doctors Say They Won’t Get COVID-19 Booster Shots

Growing Number Of Doctors Say They Won’t Get COVID-19 Booster Shots

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A…

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Growing Number Of Doctors Say They Won’t Get COVID-19 Booster Shots

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A growing number of doctors say that they will not get COVID-19 vaccine boosters, citing a lack of clinical trial evidence.

I have taken my last COVID vaccine without RCT level evidence it will reduce my risk of severe disease,” Dr. Todd Lee, an infectious disease expert at McGill University, wrote on Twitter.

A vial of the Pfizer-BioNTech COVID-19 vaccine is seen in a file photograph. (Justin Sullivan/Getty Images)

Lee was pointing to the lack of randomized clinical trial (RCT) results for the updated boosters, which were cleared in the United States and Canada in the fall of 2022 primarily based on data from experiments with mice.

Lee, who has received three vaccine doses, noted that he was infected with the Omicron virus variant—the vaccines provide little protection against infection—and described himself as a healthy male in his 40s.

Dr. Vinay Prasad, a professor of epidemiology and biostatics at the University of California, San Francisco, also said he wouldn’t take any additional shots until clinical trial data become available.

“I took at least 1 dose against my will. It was unethical and scientifically bankrupt,” he said.

Allison Krug, an epidemiologist who co-authored a study that found teenage boys were more likely to suffer heart inflammation after COVID-19 vaccination than COVID-19 infection, recounted explaining to her doctor why she was refusing a booster and said her doctor agreed with her position.

She called on people to “join the movement to demand appropriate evidence,” pointing to a blog post from Prasad.

“Pay close attention to note this isn’t anti-vaccine sentiment. This is ‘provide [hard] evidence of benefit to justify ongoing use’ which is very different. It is only fair for a 30 billion dollar a year product given to hundreds of millions,” Lee said.

Dr. Mark Silverberg, who founded the Toronto Immune and Digestive Health Institute; Kevin Bass, a medical student; and Dr. Tracy Høeg, an epidemiologist at the University of California, San Francisco, joined Lee and Prasad in stating their opposition to more boosters, at least for now.

Høeg said she did not need clinical trials to know she’s not getting any boosters after receiving a two-dose primary series, adding that she took the second dose “against my will.”

I also had an adverse reaction to dose 1 moderna and, if I could do it again, I would not have had any covid vaccines,” she said on Twitter. “I was glad my parents in their 70s could get covid vaccinated but have yet to see non-confounded data to advise them about the bivalent booster. I would have liked to see an RCT for the bivalent for people their age and for adults with health conditions that put them at risk.”

The U.S. Food and Drug Administration (FDA) granted emergency use authorization to updated boosters, or bivalent shots, from Pfizer and Moderna in August 2022 despite there being no human data.

Observational data suggests the boosters provide little protection against infection and solid shielding against severe illness, at least initially.

Five months after the authorization was granted, no clinical trial data has been made available for the bivalents, which target the Wuhan strain as well as the BA.4 and BA.5 subvariants of Omicron. Moderna presented efficacy estimates for a different bivalent, which has never been used in the United States, during a recent meeting. The company estimated the booster increased protection against infection by just 10 percent.

The FDA is preparing to order all Pfizer and Moderna COVID-19 vaccines be replaced with the bivalents. The U.S. Centers for Disease Control and Prevention, which issues recommendations on vaccines, continues advising virtually all Americans to get a primary series and multiple boosters.

Professor Calls for Halt to Messenger RNA Vaccines

A professor, meanwhile, became the latest to call for a halt to the Pfizer and Moderna vaccines, which are both based on messenger RNA technology.

At this point in time, all COVID mRNA vaccination program[s] should stop immediately,” Retsef Levi, a professor of operations management at the Massachusetts Institute of Technology, said in a video statement. “They should stop because they completely failed to fulfill any of their advertised promise[s] regarding efficacy. And more importantly, they should stop because of the mounting and indisputable evidence that they cause unprecedented level of harm, including the death of young people and children.”

Levi was referring to post-vaccination heart inflammation, or myocarditis. The condition is one of the few that authorities have acknowledged is caused by the messenger RNA vaccines.

Read more here...

Tyler Durden Thu, 02/02/2023 - 19:10

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Apple Pares Much Of Drop During Earnings Call

Apple Pares Much Of Drop During Earnings Call

Update 6:00pm:  Apple has staged a remarkable reversal after hours, and erased almost the entire…

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Apple Pares Much Of Drop During Earnings Call

Update 6:00pm:  Apple has staged a remarkable reversal after hours, and erased almost the entire loss after the company said that it expects a 5% impact from FX rates in Q2, and also expects iPhone revenue growth to accelerate in Q2. CEO Tim Cook was also asked whether the move to higher ASPs for the iPhone is sustainable in light of the sharp decline in sales, and whether this will continue in a worsening economy. Cook said the 14 Pro and 14 Pro Max did extremely well until the supply-chain constraints. He says this is definitely a “strong Pro cycle” and credits the new features in the device. He says he’s happy that Apple is now shipping to the demand.

Tim Cook also said that AI is critical to Apple and mentions features like crash-and-fall detection and the use of AI in features like EKG on the Apple Watch. He says AI will effect everything the company does, including all products and services.

Apple is quite bullish on India and other emerging markets, with CEO Tim Cook saying the company will soon open its first retail stores in India. He also said Apple saw marked improvement in China in December (versus November) after another round of Covid re-openings.

As Bloomberg notes, the company also stuck to a line that revenue and sales of individual product categories would have been higher if not for supply-chain constraints and issues stemming from the macroeconomic environment.

* * *

With both Amazon and Google sliding after reporting disappointing earnings and mixed guidance, it was all up to the world's biggest company, AAPL, to provide some hail mary for the tech earnings season which for better or worse is concentrated in a one hour stretch this afternoon. Alas, it was not meant to be and after missing on the top and bottom line, AAPL has joined the parade of selling and tumbled after hours due to numbers which the market was clearly not impressed with.

  • EPS $1.88 vs. $2.10 y/y, missing estimate $1.94
  • Gross margin $50.33 billion, -7.2% y/y, missing estimate $52.03 billion
  • Revenue $117.15 billion, -5.5% y/y, missing estimate $121.14 billion
    • Products revenue $96.39 billion, -7.7% y/y, missing estimate $98.98 billion
    • IPhone revenue $65.78 billion, -8.2% y/y, missing estimate $68.3 billion
    • Mac revenue $7.74 billion, -29% y/y, missing estimate $9.72 billion
    • IPad revenue $9.40 billion, +30% y/y, beating estimate $7.78 billion
    • Wearables, home and accessories $13.48 billion, -8.3% y/y, missing estimate $15.32 billion
    • Service revenue $20.77 billion, +6.4% y/y, beating estimate $20.47 billion
    • Greater China rev. $23.91 billion, -7.3% y/y, beating estimate $21.8 billion
  • Cash and cash equivalents $20.54 billion, -45% y/y, estimate $29.91 billion

And here is AAPL's diluted EPS in context: needless to say, could have been better.

Commenting on the quarter, Tim Cook said that “during the December quarter, we achieved a major milestone and are excited to report that we now have more than 2 billion active devices as part of our growing installed base.”

CFO Luca Maester chimed in: “our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop. We continued to invest in our long-term growth plans, generated over $24 billion in operating cash flow, and returned over $29 billion to our shareholders during the quarter. The strength of our ecosystem, unmatched customer loyalty, and record sales spurred our active installed base of devices to a new all-time high. This quarter capped another record-breaking year for Apple, with revenue growing over $28 billion and operating cash flow up $18 billion versus last year.”

Going back to the results, Apple missed consensus revenue in most product categories, with the exception of iPads, to wit:

  • IPhone revenue $65.78 billion, missing estimate $68.3 billion
  • Mac revenue $7.74 billion, missing estimate $9.72 billion
  • Wearables, home and accessories $13.48 billion, missing estimate $15.32 billion
  • IPad revenue $9.40 billion, beating estimate $7.78 billion

Of note: Apple recorded its first decline in iPhone revenue since the third quarter of 2020; yet in context, the 8% drop was still less than the 20% decrease reported by Samsung. Other major smartphone providers that have yet to report are expecting to see double-digit losses. Ironically, Apple may have fared comparatively well on smartphone revenue.

The silver lining: service revenue $20.77 billion, +6.4% y/y, beating estimates of $20.47 billion...

... and rose 6.5% Y/Y, an improvement from last quarter's 5.0%

One other place where investors were pleasantly surprised was China sales, which at $23.91 billion, beat the estimate of $21.8 billion by more than $2 billion.

None of that changes the fact that AAPL's sales by region were uniformly negative across the board.

And another potential problem: AAPL's gross cash continues to slide, dropping to $165 billion, the lowest since June 2014...

... while cash net of debt rebounded modestly from $49 billion to $54 billion, just above a 12 year low with the company having spent hundreds of billions on stock buybacks. Let's hope that Apple doesn't actually need to use that cash.

Commenting on the results, Bloomberg writes that the results show that Apple hasn’t been able to dodge the tech slowdown afflicting many of its competitors. Demand for smartphones and computers has slumped in the past year, and Covid-19 restrictions in China added to Apple’s woes during the holiday sales period. Timing was another issue: The company didn’t launch new Macs and HomePods until recent weeks, missing the end of the first quarter.

In response to these disappointing earnings, the stock predictably slumped as much as 4% before recouping some losses, although even with the drop it is back to where it was... yesterday.

Tyler Durden Thu, 02/02/2023 - 18:05

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