Weekend Edition
The Best of The S&A Digest
April 26, 2008
Everyone knows markets hate uncertainty. Nowhere is that borne out more than in biotech. Consider Basilea, a Swiss drugmaker focused on antibacterial and antifungal remedies. The company's lead drug, ceftobiprole, is a promising treatment for complicated skin infections. But last month, the FDA issued the company and its Big Pharma partner, Johnson & Johnson, an approvable letter – the regulator's notorious maybe-yes/maybe-no ruling.
Without pausing to see if the company can satisfy the agency's concerns, investors dumped the stock. It fell from 187.40 Swiss francs to 148.50 on the day of the ruling. It closed yesterday around 150.
But these dramatic, emotional reactions give us excellent opportunities to profit. Our own Dr. George Huang has developed a proprietary method for trading these approvable letters. It's a strategy that offers huge upside and very limited downside.
The FDA will issue 55 more rulings in 2008, and we have exact dates for all of them. The next one happens on Tuesday. Dr. George Huang has written a primer explaining his system, and we're offering the primer and his new trading service at a big discount that ends this Monday. To learn more about Dr. Huang's S&A FDA Report, click here...
Oil trades for more than $117 per barrel, and for the first time China, India, Russia, and the Middle East will consume more crude than the U.S.
The International Energy Agency estimates the emerging markets will consume 20.67 million barrels a day this year, a 4.4% increase. Meanwhile, U.S. consumption will fall 2% to 20.38 million barrels a day. We doubt oil prices are going anywhere but up.
Look at the chart below (courtesy of U.S. Global Investors) showing international oil consumption per capita. Every country's oil consumption exploded following the industrialization of that country... except China. China has not even begun to whet its oil appetite. Wildcatter T. Boone Pickens thinks we'll see $125 oil, but according to this chart, it could go much higher.
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Oil consumption per capita, 1900 to present
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Ali al-Naimi, Saudi's oil minister said, "Limited capacity along the entire supply chain is the real source of current global supply tightness and represents the greatest threat to ensuring adequate energy to fuel future economic growth." Al-Naimi says the world needs more infrastructure investment to find new oil wells. Saudi Arabia is the third major oil-producing nation to warn of shortages. This month, a Russian oil executive announced his country's oil production has peaked, and Nigeria claimed its output may fall by one-third due to under-investment.
One thing is for sure: Americans are going to see their standard of living fall dramatically as prices for energy continue to rise. And no amount of solar-panel rebates is going to change this harsh fact.
Alberta, Canada, is one area with sufficient energy supplies. Alberta has a patch of land the size of Florida containing more oil than all of the Middle Eastern countries combined. The oil is mixed with dirt, and harder to process. But with oil at $120, it is worth trying to sort the dirt from the oil.
Canadians will invest $22.2 billion over three years on Alberta infrastructure. Most of this investment will relate to natural gas, which is becoming the most important fuel source in the region. Matt Badiali noticed the Alberta trend early and has several recommendations in his S&A Oil Report portfolio with operations in the region. But he recently discovered a little-known Canadian oil patch that may prove to be even more profitable for investors who get in now. To learn more, click here...
Regards,
Porter Stansberry and Dan Ferris
