From the desk of Chris Temple – Editor/Publisher

Wednesday morning, May 3, 2023

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Good morning, Michael,

Late yesterday, my friend Michael Fox posted our latest deep dive interview; it’s located RIGHT HERE.

This time around we took a lap through The New FAANGs; and especially discussed the reasons why investors remain fairly clueless in selling some of these sectors/companies recently over fears of a looming recession, etc.

On Friday, Mike and I will be getting together again with a post-mortem on today’s Fed meeting. Yesterday’s declines for most everything (save for gold and Treasury bond prices pretty much) notwithstanding, markets have largely remained priced for 1. Today’s 25 bp hike being the final one and 2. The Fed reversing course not many months hence.

There’s a chance they are correct on the first notion, though that’s not guaranteed. And my guess is that the Fed takes a rhetorical step in that direction, but keeps its options open and doesn’t guarantee that this hike today is the last one.

And as you will hear (among other things) when that next discussion is posted this weekend, the second of those above notions IS quite wrong.

Be on the lookout for that.

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Last year’s eking out of a modest portfolio gain amid the broad market losses was courtesy to a great extent of our occasional directional trades in the broad market. That helped compensate for weakness in some individual stocks/sectors. Most of those trades–as at the present time–were geared toward declining equity markets.

So far in 2023, we have not been as fortunate, yet, as the broad markets have rallied due to that above-referenced Pollyanna-like attitude concerning the Fed; and in refusing to take myriad other challenges seriously.

Today’s Fed meeting will go some ways toward injecting some renewed reality, methinks. What really needs to be understood by investors, I.M.O., is that–far from panicking over such things–the Fed for the most part welcomes the recent stresses in banks, etc. I’ve explained WHY a few times in the recent past.

Also, ADP payrolls just out as I am writing this demonstrate–as do wage levels, which remain stronger than the Fed would like–a labor market that is FAR from where the Fed wants things to be. We’ll get added clues on that Friday, of course, once April’s jobs report is out.

All told, I see the case as quite strong for the old “Sell in May and go away” saw. The latest attempt to break out of the double top has been rejected; and as worries of “higher for longer” resurface and more, I think the many false hopes that have punctuated 2023’s bear market rally will shrivel. And before too long we may well augment our bearish bets.

My concerns also involve wars getting “hotter.” Save for a few brave independent news sources–Russia itself–and now Democrat Party presidential candidate Robert F. Kennedy, Jr.–the Establishment media is silent on the fact that the proxy war with Russia has already gone nuclear. The U.K. supplying depleted uranium weapons/ammo to Ukraine is a horrid escalation. And it underscores how little regard the hypocritical “good guys” of “The West” and N.A.T.O. have for both human life and the environment.

Of course, The Biden Administration already revealed its environmental concerns separately in the context of the war via its blowing up of the Nord Stream pipelines.

Elsewhere, it appears more and more that we’re heading for a hotter conflict with China sooner rather than later (READ THIS sobering assessment out this week from billionaire investor Ray Dalio).

In both cases, it must be understood that the powers some call “The Deep State,” “The Military-Industrial Complex” and such plan and profit in many ways from these conflicts. Part of the “profit,” of course, is that external enemies take the focus away from the real ones in and behind our own government.

Further still–as in 2001, when the attacks on the World Trade Center and Pentagon instantly shifted blame for the bear market and recession back then FROM those who caused them (chiefly the Fed) to “the terrorists”–hotter conflicts to come will do the same. We’ve already seen this messaging, of course: last Summer’s record-high gas prices, for instance, were all Vlad the Bad’s fault (though as you noticed the “Putin price hike” sales pitch didn’t age well.)

MAKE NO MISTAKE: The scripts have already been written and plans already laid for blaming shortages, economic weakness and market declines to come on “the Bad guys” in Russia…China…the new BRICs wannabes…anyone and everyone but who is at the core of it all.

Anyhow, enough for injecting these things into the start of your day. Where our portfolio mix is specifically concerned, be on the watch for possible net-bearish changes if we get what I expect out of Powell and Company this afternoon.

Now on to a happier subject…

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As you know by now, the voting for Sernova’s new board thankfully turned out well.

As you can read at the company’s NEWS PAGE Sernova’s three new board members are Brett Whalen, Dr. Steve Sangha and Bertram von Plettenberg. Long-time Board Chairman Frank Holler is gone as is former Director Jeffrey Bacha. As you perhaps saw in last Friday’s trading, SVA shares jumped a fair bit initially on this news before fluttering back down a bit this week so far.

Hopefully in the days ahead, we’ll get more of a sense of the collective new energy with the company. And perhaps an indication of bigger and better things to finally come is courtesy of the news (at that same page now) this morning of a new “preclinical research collaboration” with Astra Zeneca.

In the coming days I hope to be visiting more with the company on this and other related news; and importantly get my head around some “competing” regimens out there on the Type one diabetes front. I’ll also be visiting in the next couple weeks or so with one of the researchers who has been working with Sernova; as I have more “meat” to add to the story I’ll share it.

As I said recently in my comments ahead of the company’s board meeting last week, I’ve always viewed this as a “cup half full” story despite a lot of the mismanagement and lethargy now in the rear view mirror. With others, I am encouraged anew here; and am reiterating Sernova as a “BUY.”

All the best,

Chris Temple

Editor/Publisher

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