Author Archive for ilene

Let’s say you’re not optimistic about the next four years…

 

Let’s say you’re not optimistic about the next four years…

Courtesy of 

The President-elect of the United States is outraging some of our largest strategic partners before even assuming office, feuding with sketch comedy shows and literally accusing people of crimes on Twitter in the early hours of the morning.

He’s disparaging the media on a daily basis. He’s said more complimentary things about Russia than he has about our allies over the last half-century from NATO. He’s conducting unprepared phone calls with Pakistan and Taiwan – the avowed enemies of India and China respectively – and inexplicably inviting his daughter to sit in on meetings with world leaders.

This sort of thing might be making you nervous. That’s understandable. Most smart people I talk too – including Trump supporters – have their fingers crossed that he will grow into the role he’s won for himself and stop doing embarrassing shit. He might. Lots of 70 year olds turn on a dime and make wholesale personality shifts. Okay, just kidding, but I’m trying to be optimistic.

Let’s say you’re not optimistic about the next four years. Well, my friend, Bloomberg has a feature just for you: The Pessimist’s Guide to 2017. It’s a compendium of scenarios in which things go very wrong in multiple categories. It’s probably too pessimistic, but I think that’s the point of the exercise.

I’m not as worried about the trade stuff and the wall stuff as some of you, mostly because I don’t believe any of it will actually be pursued. I do worry about the potential for geopolitical mishaps that lead to armed conflict. I don’t think the undisciplined and uninformed bluster and bravado of a “business genius” is what typically makes the world safe, forgive me for feeling this way.

The Bloomberg Guide talks about things like North Korea testing long range missiles that can hold a nuclear device, about ISIS radicalizing central Asia, about Saudi Arabia and Japan developing their own military defenses further upon feeling abandoned, about Putin feeling emboldened, etc. Let’s assume you think any or all of these are legitimate concerns. Here’s one investment that might make sense…


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Time Magazine Promotes Illegal Nonsense: Don’t Pay Taxes (If You Didn’t Vote for Trump)

Courtesy of Mish.

There’s fake news. There’s also non-news. Then there is idiotic advice that borders on being illegal (if not outright illegal).

Time Magazine is a sponsor of the latter.

In an opinion piece on Time Magazine, writer Mark Weston, author of The Runner-Up Presidency, says 65 Million Americans Should Threaten to Not Pay Taxes.

Quite frankly, that is pure bullsh*t. Time Magazine knows it, yet willingly promotes it under the guise of “ideas”.

Here are a few snips, before I blast Time Magazine and the author.

Until democracy is restored

The approximately 65 million Democrats who voted for Hillary Clinton should pledge that in the future if a Republican wins the presidency with fewer votes than a Democrat for the third time in our era, we won’t pay taxes to the federal government. No taxation without representation!

Is signing a pledge to not pay taxes legal? Yes, if no overt act of conspiracy is involved, and the pledge itself is hypothetical. No one knows when or if it would be carried out.

How would the pledge work? First, an online group such as MoveOn.org, Change.org or both, should circulate a petition. The pledge is not just a powerful protest; it is also effortless, requiring no legal or financial sacrifice at all for years, possibly decades.

Second, the pledge should only apply to federal taxes. We would still pay state, local, sales and property taxes. This is a protest against our 229-year-old system of electoral votes, not against taxation in general.

Third, if a Republican wins the election without winning the popular vote again, we should still pay what we owe in federal taxes—just not to the IRS. Instead, people would compute their federal taxes, file a Form 1040 and write a check to a national escrow account, preferably in a well-established Canadian or British bank that is beyond the reach of the U.S. Justice Department, because whoever opens this account probably will be in violation of U.S. law. In the check’s memo line, people should write, “Funds to be transferred to the IRS as soon as America resumes being a democracy.”

Filing Pledge Not Illegal

Filing a pledge to not pay taxes may not be illegal, but not paying taxes is illegal.

Political Charlatan, Mark Weston, like Peter Schiff’s father, promotes things that


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US Factory Orders Rise 2.7 Percent, Details Not Exactly Inspiring

Courtesy of Mish.

US factory orders rose 2.7% exactly matching the Econoday Consensus.

As with the trade deficit, economists got this number correct because of the advance report. Thus, this rise will not impact GDP estimates.

Diving into the Census Bureau report on Manufacturers’ Shipments, Inventories, and Orders, we see new orders for manufactured goods in October increased $12.5 billion or 2.7 percent to $469.4 billion.

The details are not all that inspiring.

Manufacturers’ Shipments and New Orders

new-orders-2016-12a

Details Reveal Weakness

Orders are up 2.7% but core capital goods orders, a sign of future expansion are only up 0.2%. For the year, core capital goods orders are down 4.0%.

Consumer goods, both durable and non-durable are down year-over-year. Autos fueled durable goods, and that divergence will not last forever.


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Uncle Ricky, could you read us a bedtime story? Please?

 

Uncle Ricky, could you read us a bedtime story? Please?

Courtesy of 

[Yesterday] morning, the US stock market reacted to PM Renzi’s lost Italian referendum with a gigantic IDGAF, the Dow printing a new all-time high within minutes of the open. Hell, even the euro gained on the news – which is hilarious if you’re in the camp that says the odds of a Euro Zone break-up increase with every populist victory at the polls.

I call this phenomenon “crisis fatigue”. If everything is a crisis, then nothing is. BTW, Italy has now had 63 “new governments” since WWII so IDGAF is perhaps the most appropriate of responses, historically speaking.

Here’s a highly prescient tweet from Barbarian Capital I want to share with you:

 

 

Some smart people are telling the story that the market reacted positively to the news because “a euro without Italy and its debt burdens is actually a stronger currency / economic union.” Perhaps they’ll feel the same when Le Pen sweeps through France like a hurricane. Is a euro without France stronger? How about without the Netherlands? Should Germany leave to really make it rock-solid?

Another story being told is that the Italian referendum’s ‘no’ vote was extremely well-telegraphed and that, on its own, it doesn’t mean an exit from Europe – all it means is a caretaker government through 2018 where very little gets done or changed.

One more story – US stocks are now the safety trade again for global fund flows, so that chaotic happenings elsewhere serve to make the S&P 500 more desirable for those pulling money out of geopolitcal harm’s way. This is probably the most absurd one.

I would just say to be careful with narratives. Like sentiment – or Greek mythology for that matter – they are always ad hoc, and designed to explain the inexplicable.

Besides, a price reversal later this week (or later today!) will invalidate any…
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Sugar Pills

 

Sugar Pills

Courtesy of 

I know I’m doing a lot of stuff about the alleged “Trump Rally” lately but I have good reasons: First of all, it’s the most dominant story in the market by far, now that the Fed is basically PGing a rate hike.

And second, it’s absolutely absurd and people are running around acting like maniacs, which I love. You guys know I love that.

Anyway, my friend Nick Colas, Chief Strategist at Convergex, a global brokerage firm in New York, put something out about how Americans are more susceptible to “the placebo effect” than patients anywhere else around the world. When you tell them they’re taking a drug, they are more prone to believe that it’s working and actually show improvement. Especially with psychiatric drugs although the effect is not limited to those.

American investors are the same people as American drug trial candidates, more or less, so it should be no surprise that they’re acting as though we already got a trillion in infrastructure spending, tax cuts, lap dances and whatever else might be coming.

It’s a sugar pill. The medication isn’t in our system yet but we believe it’s working already. You should see some of the sell-side research hitting my box. Anyway, here’s Nick:

The real magic of the current domestic stock market rally is that it pretends to forecast (with remarkable precision, it must be said) a set of legislative outcomes in 2017. You know the list: lower corporate and personal taxes, less regulation, more infrastructure spending.  All this may come to pass, for after all President Elect Trump has the notional backing of a Republican Congress, and therefore the GOP essentially “Owns” the U.S. economy for the next 2 years.  But even the most bullish assessment of this scenario must admit that it seemed very unlikely just a month ago.  And yet investors have no problem bidding up risk assets like they just KNOW how the world will look in a year.

It is at times like these that I consider the Placebo Effect from the world of medicine.  That’s the one where patients and research subjects report beneficial effects from a substance


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Merkel’s Burka Ban, Reelection Ploy Hypocrisy

Courtesy of Mish.

In a hypocritical reelection ploy, German chancellor Angela Merkel seeks to Ban Full Facial Veil.

German Chancellor Angela Merkel called for the prohibition in some situations of the full facial veil, toughening her rhetoric toward Muslim immigrants as she sought to shore up her party’s conservative flank at its annual convention on Tuesday.

“We show our face in interpersonal communication,” Ms. Merkel told delegates of her Christian Democratic Union party to some of the strongest applause of her more than hourlong speech. “Because of this, the full veil is unacceptable for us. It should be banned wherever legally possible.”

Ms. Merkel also said that German law superseded Islamic law, or Shariah, in a nod to criticism that her policy of accepting refugees had undermined the rule of law in the country. Some 890,000 asylum seekers arrived in Germany last year, largely from Muslim countries, as Ms. Merkel refused to close the country’s borders to refugees.

“Some blame the liberal, constitutional state for all of this and fight against its values,” Ms. Merkel said. To defend liberal society, she said, politicians had to show that “hard work will still pay off, today and in the future.”

Hypocrisy and Meaningless Statements

While praising liberal values on one hand, Merkel presumably seeks a “burka ban” on the other.

But not so fast. One must pay close attention to her every word. The key words were “wherever legally possible”.

She knows full well such a ban may not be legally possible. And why should it be?

Shouldn’t people be allowed to wear what they want, save language that incites riots, asks for someone to be killed, promotes violence, etc?

Merkel hopes to pick up votes from anti-immigration party AfD supporters, by tossing them meaningless platitudes.

Mike “Mish” Shedlock

Original article here.





Trump Tweets “Cancel Order!” Boeing Airforce One “Costs Out of Control”

Courtesy of Mish.

Donald Trump fired a shot at Boeing today. Citing cost overruns, he wants to cancel the air force order of “Airforce One”, the specialized plane that jets the president.

Here’s the Tweet.

Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!

— Donald J. Trump (@realDonaldTrump) December 6, 2016

air-force-one

Boeing is the latest company to come under Trump’s scrutiny as noted by the Wall Street Journal in Trump Says U.S. Should ‘Cancel Order’ for New Air Force One, Citing Costs.

“The contractors are really bemused,” said Loren Thompson at the Lexington Institute, a think tank part-funded by Boeing and other defense companies.

Boeing is the second-largest Pentagon contractor after Lockheed Martin Corp.—which is building the fleet of new helicopters that will serve as Marine One—and makes fighter jets, surveillance planes, bombs and other systems that generated sales of almost $19 billion from the Pentagon last year, a fifth of its total revenues.

Chicago-based Boeing hasn’t secured deals to build the planes that would replace the current aircraft used as Air Force One, which have been in flight since the administration of George H.W. Bush.

The two heavily modified 747-200 planes used by the president are due to reach the end of their planned 30-year life in 2017. This can be extended a few more years, and the Air Force has said in budget documents it wanted to have the first new jet in place by 2023 or 2024.

The $4 billion price tag Mr. Trump referenced for the cost of the new aircraft couldn’t be immediately confirmed.

The Air Force earmarked $1.65 billion between 2015 and 2019 to develop two replacement jets, and said it may acquire up to three. However, it hasn’t detailed the expected cost or delivery dates for building the planes as talks continue with Boeing, the White House and the Secret Service.

“I think it’s ridiculous,” Mr. Trump said of the planned Air Force One deal in brief remarks in the lobby of Trump Tower in New York City. “I think Boeing is doing a little bit of a number. We want Boeing to make a lot of money but not that much


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Trade Deficit Widens, Exports Decline 1.8%, Imports Rise 1.3%: Two Piece Puzzle

Courtesy of Mish.

The Census Bureau report on International Trade shows a widening trade deficit.

Exports decline 1.8%. Imports rise 1.3%.

trade-balance-2016-12a

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $42.6 billion in October, up $6.4 billion from $36.2 billion in September, revised. October exports were $186.4 billion, $3.4 billion less than September exports. October imports were $229.0 billion, $3.0 billion more than September imports.

The October increase in the goods and services deficit reflected an increase in the goods deficit of $6.3 billion to $63.4 billion and a decrease in the services surplus of $0.1 billion to $20.8 billion.

Year-to-date, the goods and services deficit decreased $8.8 billion, or 2.1 percent, from the same period in 2015. Exports decreased $58.7 billion or 3.1 percent. Imports decreased $67.5 billion or 2.9 percent.

How Will This Affect GDP Estimates?

The answer is “not at all”. That may seem surprising because imports subtract from GDP while exports add.

The reason this will not affect estimates much is the report was in-line with the advance report and the numbers were pretty much known.

Economist Panel Almost Gets Number Right

The panel of Bloomberg Econoday economists got the number almost correct.

The Econoday consensus estimate was a deficit of $42.0 billion vs. an actual deficit of $42.6 billion.


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The Variable-Rate World Stares Into The Abyss – Again

Courtesy of John Rubino.

Back in 2013 interest rates in the US and elsewhere started to rise, and the results were scary to put it mildly. Here’s an excerpt from a column that appeared here in July of that year:

Interest rates soared again last week. This weekend a lot of people are running a lot of numbers and getting some terrifying results.

It seems that the past few years of falling interest rates have lulled a big part of the global economy into financing with variable-rate debt. So when interest rates go up, there’s a world-wide reset in interest costs that, best case, amounts to a tax increase on individuals and businesses and, worst-case, threatens to blow up the whole system.

The most familiar but least worrisome part of this story is the adjustable rate mortgage, or ARM, which is basically a teaser-rate home loan that rises over time towards the prevailing 30-year fixed rate. The latter rate jumped from 3.5% to 4.5% in just the past month, which means ARM resets are now aiming at a higher target. For ARM holders, the resulting higher monthly mortgage payment is exactly like a pay cut or tax increase, leaving less around at the end of the month for new cars, vacations, etc. So discretionary spending drops and, other things being equal, the economy slows down.

Another victim is the long-term bond. Retail investors poured about $1 trillion into bond funds between 2009 and 2012, in part because bonds had been going up pretty much forever, and in part because investors were scared and bonds were sold by credulous financial planners as safe.

For a while it worked. Bond prices soared as long-term rates kept falling, which helped both individuals and pension funds rebuild capital lost during 2009’s debacle. But since the beginning of this year US bond funds have seen $60 billion depart, while bonds themselves have fallen hard (though, okay, not nearly as hard as gold). The price of US 20-year Treasuries, for instance, is down by almost 15% since April.

In other words, the “safe” part of individual and institutional portfolios is tanking. Here again, this is like a big pay cut which makes the holders


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Boeing Responds To Trump

Courtesy of ZeroHedge. View original post here.

Update: Boeing has issued a statement following President-Elect Trump's tweet.

“We look forward to working with the US Air Force on subsequent phases of the program allowing us to deliver the best plane for the president at the best value for the American taxpayer,”  Boeing spokesman Todd Blecher says in e-mail.

“We are currently under contract for $170 million to help determine the capabilities of this complex military aircraft that serves the unique requirements of the President of the United States,” Blecher says

As a reminder, on Tuesday morning Trump called on Twitter for the cancellation of a Boeing contract to supply the Air Force One aircraft that has carried the American president around the world for decades, citing “out of control” costs. “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!” the president-elect tweeted on Tuesday.

Boeing is building two new versions of the 747 jumbo jet to replace the current fleet of aircraft, which have been in operation for more than three decades. Boeing declined to comment on the tweet. The contract is seen as vital to keeping open the production line of the 747, which first entered service in 1970.

The Trump campaign did not immediately respond to requests for explanation. But Mr Trump told reporters on Tuesday that the cost of the contract was “ridiculous.” “I think Boeing is doing a little bit of a number. We want Boeing to make money but not that much money.”

*  *  *

Previously:

Politico reported that The Pentagon is looking to replace its aging fleet of Boeing 747-200 aircraft, which will reach the planned 30-year service life in 2017. Officials have said the next Air Force One jets are estimated to begin operations in fiscal 2023. The Air Force expects the planes to have the range to fly between continents and comparable interiors to the current 747, whose features include work and sleeping quarters for the president and first family.

But it seems President-Elect Trump has other ideas, and it now seems that "aerospace is


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Zero Hedge

Trump About To Preside Over New Global Financial Crisis: "Not His Fault, Merely His Misfortune"

Courtesy of ZeroHedge. View original post here.

Submitted by Mac Slavo via SHTFPlan.com,

While the world celebrates the political demise of the wicked witch of the west and braces for a Trump-style president, the real crisis is coming, in the form of a financial avalanche...



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ValueWalk

Can Donald Trump Resolve The Pakistan-India Kashmir Issue?

By Polina Tikhonova. Originally published at ValueWalk.

Donald Trump has a unique chance to resolve the longstanding Pakistan-India Kashmir issue. The U.S. President-elect’s recent phone call with Pakistan Prime Minister Nawaz Sharif indicates one thing: his growing interest in South Asia.

Image source: Wikimedia Commons

The phone call and its supposedly sugary sweet language (at least according to the Pakistani PM’s office) took the global media-sphere by storm. It’s still unclear whether or not Pakistan sugarcoated Trump’s language during the call, but nevertheless, Washington confirmed that the phone call...



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Phil's Favorites

Let's say you're not optimistic about the next four years...

 

Let’s say you’re not optimistic about the next four years…

Courtesy of 

The President-elect of the United States is outraging some of our largest strategic partners before even assuming office, feuding with sketch comedy shows and literally accusing people of crimes on Twitter in the early hours of the morning.

He’s disparaging the media on a daily basis. He’s said more complimentary things about Russia than he has about our allies over the last half-century from NATO. He’s conducting unprepared phone calls with Pakistan and Taiwan – the avowed enemies of India and China respectively –...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Oil falls on output cut skepticism, OPEC and Russia output rise (Reuters)

Oil prices on Tuesday ended lower for the first time since OPEC agreed on Nov. 30 to cut output, as data showing record high production in the producer group fed skepticism that it would be able to reduce supplies.

Brazil’s Reform Plan in Disarray After Senate Chief Removed (Bloomberg)

Brazil’s economic reform plan was thrown into disarray after a Supreme Court justice removed Senate chief Renan Calheiros just days before the upper house was scheduled to vote on a crucial spending cap bill. ...



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Chart School

Russell 2000 in Take Profit Territory

Courtesy of Declan.

The Russell 2000 pushes again into the 10% zone of historic high prices (1,388 would be enough for the 5% zone last seen in February 2011). Back in 2011 the index rallied for another couple of months before it lost 30% from its high.  The next few weeks would be a good opportunity to take some money off the table to use on the next swing low.


On the Daily chart the 'sell' trigger in MACD reversed with a new 'buy' trigger.

...

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Kimble Charting Solutions

Interest rates only done this two times in 35-years!

Courtesy of Chris Kimble.

Interest rates have shot up since this past July. Have they “stretched too far too fast?” 

One way to measure if an asset has made a rare/extreme short-term move, is too see how far above or below its 200 day moving average, it is.

Below looks at the yield on the 10-year note, going back to the early 1980’s.

CLICK ON CHART TO ENLARGE

The sharp rally in yields over the past 5 months, has the yield on the 10-year note now 29% above it...



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Promotions

Phil's Stock World's Las Vegas Conference!

 

Come join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017.            

Beginning Time:  8:00 am Sunday morning

Location: Caesar's Palace in Las Vegas

Notes

Caesar's has tentatively offered us rooms for $189 on Saturday night and $129 for Sunday night. However, we have to sign the contract ASAP. We need at least 10 people to pay me via Paypal or we may lose the best rate for the rooms. (Once we are guaranteed ten attendees, I will put up instructions to call the hotel for individual rooms.)

The more people who sign up,...



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Members' Corner

Once In A Lifetime?

Courtesy of Nattering Naybob.

Summary
Discussion, critique and analysis of the potential impacts on equity, bond, commodity, capital and asset markets regarding the following:
  • Dec 4th Italian Constitutional Referendum
  • Referendum Result; Market Reaction
  • Political Reaction; Opposition Party Reaction
Last Time Out
Since the end of World War II, 71 years have passed during which, the "perfect" balance has resulted in 63 different Italian governments, or more often than most change shoes.  Instead of being a real second legislative check, that balance is seemingly a weapon of mass distraction and instrument of political vetoes whi...

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OpTrader

Swing trading portfolio - week of December 5th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Largest US Bitcoin Exchange Is "Extremely Concerned" With IRS Crackdown Targeting Its Users

Courtesy of ZeroHedge. View original post here.

Last Thursday we reported that in a startling development seeking to breach the privacy veil of users of America's largest bitcoin exchange, the IRS filed court papers seeking a judicial order to serve a so-called “John Doe” summons on the San Francisco-based Bitcoin platform Coinbase.

The government’s request is part of a bitcoin tax-evasion probe, and se...



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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...



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Biotech

Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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