January 2024

Deepfakes: A Looming Threat to Investor Confidence?

In the age of hyper-connectivity and digital manipulation, the lines between reality and fabrication are blurring. Deepfakes, AI-generated videos or audio that can convincingly mimic real people, have emerged as a powerful tool for misinformation and disinformation. While their potential for entertainment and satire is undeniable, the implications of deepfakes in the financial sector are deeply concerning. This article delves into the potential impact of deepfakes on investor decision-making, exploring the risks and mitigation strategies for a future increasingly reliant on digital information.

How Deepfakes Can Manipulate the Market

Deepfakes can be weaponized to manipulate financial markets in several ways:

Fabricated executive statements: Imagine a deepfake video of a CEO announcing a disastrous financial quarter, causing panic selling and a plummeting stock price. Such scenarios, while hypothetical, highlight the potential for malicious actors to sow discord and profit from market volatility.
Pump-and-dump schemes: Deepfakes of positive news or celebrity endorsements could be used to artificially inflate the price of a stock, allowing perpetrators to sell their holdings at a profit before the inevitable crash.
Erosion of trust: The proliferation of deepfakes could erode investor confidence in the authenticity of information, leading to increased skepticism and paralysis in the face of even genuine news.

These are just a few examples, and the potential for creative manipulation is likely to expand as deepfake technology evolves.

The Challenges of Detection and Verification

Distinguishing deepfakes from real footage is becoming increasingly difficult. Even sophisticated algorithms can struggle to detect subtle manipulations, especially when emotions and body language are involved. This poses a significant challenge for investors who rely on accurate information to make informed decisions.

Protecting Investors in the Deepfake Era

Several measures can be taken to mitigate the risks of deepfakes in the financial sector:

Media literacy: Educating investors about deepfakes and how to identify them is crucial. Encouraging critical thinking and source verification can help individuals make informed decisions.
Regulation and enforcement: Regulatory bodies need to develop robust frameworks to address the misuse of deepfakes in financial markets. This could involve stricter disclosure requirements for companies and holding individuals accountable for spreading misinformation.
Technological advancements: Investing in technology that can better detect and authenticate deepfakes is essential. This includes the development of more sophisticated AI algorithms and the adoption of cryptographic verification methods.

The Road Ahead

The rise of deepfakes presents a significant challenge for the financial sector. However, by acknowledging the risks, promoting media literacy, and investing in protective measures, we can build a more resilient and trustworthy financial ecosystem. As technology evolves, so must our ability to adapt and safeguard the integrity of the markets.

Conclusion

Deepfakes are a double-edged sword. While they offer exciting possibilities for creative expression and communication, their potential for misuse in the financial sector cannot be ignored. By raising awareness, implementing safeguards, and fostering a culture of critical thinking, we can ensure that investors have the tools and resources they need to navigate the increasingly complex digital landscape with confidence.

It is important to note that the field of deepfakes is still evolving, and the full extent of their impact on the financial sector remains to be seen. However, by taking proactive steps today, we can help to ensure a future where technology empowers, rather than undermines, investor confidence and market stability.

In addition to the points mentioned above, it is also worth considering the following:

The role of social media in spreading deepfakes: Social media platforms need to take greater responsibility for curbing the spread of misinformation, including deepfakes. This could involve stricter content moderation policies and the development of fact-checking tools.
The importance of financial education: Financial education should equip individuals with the knowledge and skills they need to make informed investment decisions, regardless of the challenges posed by deepfakes and other forms of misinformation.

By working together, we can create a financial system that is resilient to the threats posed by deepfakes and other emerging technologies. Let us embrace the opportunities that technology presents while remaining vigilant against its potential pitfalls.

January 31, 2024

Tech Letter

Mad Hedge Technology Letter
January 31, 2024
Fiat Lux

Featured Trade:

(FOLLOW THE CELL TOWERS IN TECH)
(CCI)

Follow The Cell Towers In Tech

Tech Letter

I will explain to everyone why the digital revolution is becoming supercharged in a blink of an eye.

Market valuations reflect the state of expected future cash flows in a company.

Under this assumption, some could argue that most big tech companies with staying power are almost a good buy at any price.

No brainers would include a list of Microsoft, Amazon, Apple, and Netflix.

The global health scare and the carnage associated with it have brought forward revenue and expertise from the tech industry and infused the global economy with more cash.

When you mix that with the Fed playing nice, it sets up conditions for heavy buying in an industry that is going to be king of the global economy anyway.

Tech has been rampant in the first month of 2024 and the brief selloffs we get are only because we are running too hot too fast.

Doing business as we know it has been fast forwarded by 15 years.

The change took place in a blistering 4 weeks.

The clearest signal of who is really calling the shots in the equity market is looking at which companies are dragging it up.

Technology is shouldering the responsibility of the equity market by outperforming the broader market with many software companies’ share price higher than before the crisis.

For every Amazon or Microsoft, there is also a Macy’s or JC Pennys showing that this is really a stock pickers market.

We have not only learned that tech companies are critical to our functioning as a society, but that large tech companies will be even more central than ever before.

We are setting up for the Golden Age of tech who are earmarked to capture even more of the broader equity market.

I do agree that currently, the network effect is working in overdrive like a positive force multiplier. The US economy is riding high again, and this cannot be emphasized enough with the US economy printing growth quarter after quarter.

Digital revenue streams will effectively be pumped into every nook and crevice of the digital economy because of current modifications to the business environment.

Tech is destroying literally every sub-sector as we speak.

Take a look at commercial real estate and hotel operators; they have had to fight against the triple whammy of office sharing WeWork, short-term hotel platform Airbnb, and the coronavirus - a lethal three-part cocktail of malicious forces to the “traditional” model.

Any deep-pocketed investors should be cherry-picking every quality cell tower play possible because they are one of various supercharged sub-sectors of tech.

Obviously, there are other no brainers like semiconductor chips and certain software companies.

Any long-term investor with a pulse should buy Crown Castle International Corp. (REIT) (CCI) on any and all dips.

They are the largest owner of cell towers owning over 40,000 in the U.S. and the data will flow through these towers juicing the wider economy.

January 31, 2024

Jacque's Post

(THE RISE OF BIOTECHNOLOGY WILL BE A GAME CHANGER FOR THE HEALTHCARE INDUSTRY)

January 31, 2024

Hello everyone,

I’m going to dive into the Healthcare Industry today. It may have done poorly in the last couple of years, but analysts are bullish on it right now. By 2050 biotechnology and artificial intelligence will lead to advances in genetic engineering that could lead to an era of personalized medicine, facilitating customized treatments based on each person’s genetic makeup. No more one-size-fits-all medical care. So, it’s an area that deserves our attention.

I believe healthcare investors may be able to climb the wall of worry in 2024.

Citibank, among others, expects the Federal Reserve to ease its restrictive monetary policies over time. Growth stocks such as those in tech and biotech usually benefit from rate cuts.

Stocks dialed into the trends of longevity and innovation saw a downturn in 2023. This gives us opportunities now.

Analysts have cited biotech, in particular, as one of a few areas to watch.

I have been looking for biotech stocks that did well last year and that analysts are still positive about.

These stocks were up more than 20% in 2023.

They have a potential upside to the average price target of more than 40%.

They have a buy rating of more than 70%.

And seven or more analysts have covered the stocks.

Humacyte (HUMA)

Marinus Pharmaceuticals (MRNS)

Olema Pharmaceuticals (OLMA) is involved in developing therapies for women’s cancers, particularly in breast cancer. The company is looking to partner for its Phase 3 studies and it’s anticipated that shares could react once such a relationship is announced in the near to mid-term.

Ovid Pharmaceuticals (OVID)

These stocks have all been given more than 100% upside.

Biomea Fusion (BMEA) has been given more than a 200% upside to the average price target and a 75% rating from analysts. (Citi gave it more than 800% upside last November, as the bank remarked that its treatment therapies had “potential advantages” over others.

Another three stocks here drew 100% buy ratings from analysts: Ardelyx (ARDX), Cabaletta Bio (CABA), and Rocket Pharmaceuticals (RCKT). Of these, RCKT got the highest potential upside of 81.4%

Here is a brief description of just a few of these stocks that I like:

Biomea Fusion (BMEA) (Stock price: $17.74)

A biopharmaceutical company focused on the discovery and creation of novel covalent small molecules to treat patients with genetically defined cancers. Their mission is to create therapies that cure patients of their diseases. Thomas Butler co-founded Biomea Fusion in August 2017. He is CEO and a member of the Board of Directors. Analysts’ ratings put the company near the top of the Biotech industry. The name biomea derives from the Greek word bios meaning “life” and the Latin word mea meaning “my”.

Humacyte (HUMA)(Stock Price: $3.19)

This company is involved in the manufacture of human acellular matrix products for vascular and non-vascular applications. It offers its products to the cardiovascular, cosmetic, soft tissue reconstruction, neurosurgical, and orthopedic markets. The company was founded by Laura E. Niklason and Juliana L. Blum on October 13, 2004, and is headquartered in Durham, NC.

On average, Wall Street analysts predict that HUMA’s share price could potentially reach $7.75 by Dec 27, 2024. The average HUMA stock price prediction forecasts a potential upside of 170.98% from the current share price of $2.91.

Ovid Therapeutics (OVID) (Stock Price: $3.93) is a New York-based biopharmaceutical company working towards providing treatments for rare neurological disorders. In other words, the company is looking to end epilepsy and seizures through the scope of science. The company is in the process of developing potentially small-molecule medicines that seek to drastically improve the lives of those affected by rare disorders with seizure symptoms. Jeremy Levin, D. Phil, MB BChir, is the chairman and chief executive officer of Ovid Therapeutics Inc.

Rocket Therapeutics (RCKT) (Stock Price: $28.96) life mission is to develop gene therapies to cure patients with life-threatening diseases. The company has launched a multi-platform pipeline of treatments that directly target the genetic mutation in the affected cells for rare life-threatening disorders.

Biotech ETFs:

iShares Biotechnology ETF (IBB) or the SPDR S&P 500 Biotech ETF (XBI)

These ETFs hold a basket of shares, including those I have briefly described above. If you would like to invest in the biotechnology area, you can average in with small parcels in single stocks or purchase shares in an ETF for the long term. Biotechnology is an area that will lead to discoveries, development, and the manufacture of new therapies that can cure our modern-day diseases.

Daily chart IBB

Weekly chart IBB

Daily chart XBI

Weekly chart XBI

Cheers,

Jacquie

SQQQ Trade Alert - January 31, 2024

Jacque's Post

Hello everyone,

Now, I know many of you are on tenterhooks about earnings this week in the tech sector and how the Fed statement will influence the market and of course, we can’t forget the jobs report.

So, to calm any nerves about the market, I want to suggest you invest in a hedge, which will act like insurance on technology shares you own. In other words, if we have a disappointing tech earnings landscape and the market fizzles out, you will be protected.

The stock I am suggesting you purchase is the SQQQ. It’s a 3X inverse ETF of the daily performance of the Nasdaq 100 Index. So, this ETF rallies when the Nasdaq falls. This will be a short-term hold just in case the Nasdaq falls this week. Please note that if the Nasdaq continues to rally this stock will go against you. It’s about buying umbrellas while it’s relatively sunny.

It’s up to you whether you purchase insurance and how many shares you buy.

Cheers,

Jacquie

Daily SQQQ chart

Weekly SQQQ chart

January 31, 2024

Diary, Newsletter, Summary

Global Market Comments
January 31, 2024
Fiat Lux

Featured Trade:

(TEN REASONS WHY STOCKS CAN’T SELL OFF BIG TIME),
(SPY)

Ten Reasons Why Stocks Can’t Sell Off Big Time

Diary, Newsletter

While driving back from Lake Tahoe last weekend, I received a call from a dear friend who was in a very foul mood.

Following the advice of another newsletter that I won’t mention, he bailed out of all his stocks after the November 8 election.

After all, wasn’t the Dow Average headed straight to 3,000?

Despite the Federal Reserve now on a rate-rising path, here we are with the major stock indexes just short of all-time highs.

Why the hell are stocks still going up?

I paused for a moment as a kid driving a souped-up Honda weaved into my lane of Interstate 80, cutting me off. Then I gave my friend my response, which I summarize below:

1) While the next move in interest rates will certainly be down, they may take a while to get started. They are not going to move the needle on corporate P&Ls because at least half of US companies are net creditors to the financial system, including all the big tech ones. We are reentering a deflationary world.

At least, that’s what my friend Janet tells me.

2) The biggest leaders in the market are cheap, with NVIDIA (NVDA) and Meta (META) sporting price earnings multiples under 20X with a 60% earnings growth.

3) There is nothing else to buy. Complain all you want, but US equities are still one of the world’s highest-yielding securities, with a 1.4% dividend.

4) Oil prices are low, and the windfall cost savings are only just being felt around the world. Conversion to electrics and hybrids is happening faster than expected and much of the grid is moving away from oil to alternatives.

5) While the weak euro (FXE) ate into large multinational earnings, we are at the end of the move. The cure for a weak euro is a weak euro. The worst may be behind for US importers.

6) What follows a collapse in European economic growth? A European recovery, powered by a weak currency.

7) What follows a Chinese economic collapse? A recovery there too, as hyper-accelerating stimulus feeds into the main economy. Chinese stocks are now among the world’s cheapest with most having single-digit multiples.

8) Technology and AI everywhere are accelerating at an immeasurable pace, causing profits to do likewise. You see this in the AI 5 stocks, where blockbuster earnings reports are becoming as reliable as free upgrades.

Biotech has been on a tear as well where AI and big data are creating a new Golden Age.

8) US companies are still massive buyers of their stock, with some $1 trillion worth in 2023. Ditto for this year. This has created a free put option for investors for the most aggressive companies, like Apple (AAPL), which bought $83 billion worth of its own stock in 2023, followed by Google (GOOGL), Meta (META), Microsoft (MSFT), and Exxon (XOM), the top five repurchasers.

They are jacking up dividend payouts at a frenetic pace as well, and are expected to return more than $430 billion in payouts this year.

9) Ignore this at your peril, but there is a global synchronized economic recovery going on that has been in the works for some years. Nearly a decade of central bank monetary stimulus and government fiscal stimulus is still out there.

Q1 earnings reports start in earnest in a few weeks, and the phrase “better than expectations” is about to become well-worn. Expect (SPY) earnings per share to reach new all-time highs, hardly short seller bait.

10) Ditto for the banks, which were dragged down by falling interest rates for most of the last decade. Reverse that trade this year, and you have another major impetus to drive stock indexes higher.

My friend was somewhat setback, dazzled, and befuddled by my out-of-consensus comments. He asked me if I could think of anything that might trigger a new bear market or at least a major correction.

The traditional causes of recessions, oil prices, and interest rate spikes, are now in the rearview mirror. There are only two things that could pee on our parade: a return of inflation and another pandemic. Watch those prices!

With that, I told my friend I had to hang up, as another kid driving a souped-up Shelby Cobra GT 500, obviously stolen, was weaving back and forth in front of me requiring my attention.

Where is a cop when you need them?

Stolen?

Trade Alert - (CRWD) January 30, 2024 - BUY

Tech Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

January 30, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
January 30, 2024
Fiat Lux

Featured Trade:

(BRAIN GAINS)

(BIIB), (ESALY) (LLY), (REGN), (ALNY), (MRK), (AMGN), (PFE), (BMY)

Brain Gains

Biotech Letter

Let's talk about a golden opportunity knocking at our doors – the booming market of Alzheimer's disease treatments in biopharma. We're not just talking about a small uptick here. With a slew of new meds on the horizon, this market is gearing up for some serious growth, and you might want to grab a piece of this pie.

The dominant name on our radar is Biogen (BIIB), ticking at $260 per share with a market cap that's flirting with $39 billion.

Now, with a solid $10 billion in sales and trading at a nifty 16 times its 2024 estimated earnings, Biogen's got some serious mojo. I've been eyeing it since last year, but boy, have things changed since then.

A critical game-changer was Chris Viehbacher, the new CEO since November 2022. He's already played a couple of aces – slicing $800 million in costs (which, by the way, could pump up earnings by $5 a share by 2025) and wrapping up the acquisition of Reata Pharmaceuticals in September 2023.

This new addition to Biogen’s portfolio has a hot ticket item, Skyclarys, for treating Friedreich’s ataxia. It's a rare find, but it could add a cool $5 per share in earnings in a few years.

But the most exciting name in Biogen’s arsenal is Leqembi, the company’s Alzheimer’s treatment. They're splitting the pot with Eisai (ESALY), and this drug is a little like turning back the clock on cognitive decline – think a two-year rewind button.

The big bucks talk here: we're eyeballing $2 billion in revenue by 2028 and maybe a whopping $4 billion by 2033. And hey, there might even be more where that came from.

Let's chew on a few things here. Biogen has the potential to snag a 60% market share against Eli Lilly’s (LLY) donanemab – the only worthy opponent in the market so far. And given Leqembi's safety creds, this might be playing it safe.

Aside from Eli Lilly, there’s Roche (RHHBY), with candidates in Phase 2 and Phase 1 trials, but they're not quite hitting the jackpot yet. As for other competitors in the space like Regeneron (REGN) and Alnylam (ALNY)? Well, they're cooking up something different in Phase 1, but it's a bit early to call.

Meanwhile, Biogen's got another trick – a home-use version of Leqembi coming this fall. And get this: doctors are buzzing about nipping Alzheimer’s in the bud, way before it crashes the party. Imagine getting a jab of Leqembi as part of your routine check-up when you're only 50. If this works, then we could be kissing Alzheimer’s goodbye by 2040.

For the longest time, Biogen was like that one-hit wonder with its multiple sclerosis treatments. But now, they're swinging for the fences with the largest unmet health need out there. If Leqembi hits it big, and I mean really big, we could be talking about sales far beyond that $4 billion mark by 2033.

But let's not get ahead of ourselves. The big pharma world is about to hit a few speed bumps with a wave of patent cliffs from 2025 to 2029. That’s a headache for the likes of Merck (MRK), Amgen (AMGN), Pfizer (PFE), and Bristol Myers Squibb (BMY).

Biogen, though, is sitting pretty with two growth products and a pipeline that’s got pizzazz. Plus, they're a hot catch for any big pharma looking for a dance partner without stepping on regulatory toes.

As we roll into the next decade, keep your eyes peeled for investment opportunities popping up like daisies. And don't feel like you've got to jump on the first bandwagon that rolls by. This market's just stretching its legs, and today's champs might just be tomorrow's old news.

So, what's the smart play here? Spread your bets across a few horses in the Alzheimer's race, and make sure they're not one-trick ponies.

Eli Lilly, for instance, is more than just an Alzheimer's bet – they're making waves in diabetes and soon, obesity treatments. Biogen, despite its Alzheimer's experience, is a bit of a gamble, especially after its first drug's rocky start.

Remember, investing in Alzheimer's treatments now is like catching the early wave – it's riskier, sure, but the potential for a big payoff is there. This is an emerging market, and it's revving up for an exciting ride. I suggest you add these names to your watchlist.