Market Lab Report / Dr. K's Crypto-Corner
by Dr. Chris Kacher
The (R)Evolution Will Not Be Centralized™
1 in 4 Americans...
Initial jobless claims came in at nearly 3 million, above expectations, or a total of 36.5 million since the crisis began. To put this into perspective, this represents one in four Americans. A chart going back to 1967 shows tiny little jobless claim jumps due to recession. The jobless jump in 2008 was the largest since 1967 even though it fell short of 1 million, that is, until the corona crisis hit which makes all other jobless jumps look minuscule by comparison. Powell''s proclamation that the economy is in uncharted territory with significant downside risks frayed nerves though was tempered by him saying that further stimulus may be necessary. Second and third order effects remain at the ready which would create gap down openings in the major averages. Such would be tempered by near limitless liquidity so would likely offer buying opportunities.
In examining top performing tech stocks, one concern that has been voiced is the debate on whether 5G is hazardous to our health, beyond the psychological invasion of our privacy. Such prohibitions of 5G could hamper growth of companies that plan to use it in their products such as AAPL. Hazards come down to the actual risk vs. perceived risk. The press often exaggerates actual risk which then becomes perceived risk. Driving or being driven in a car carries one of the greatest risks yet our actions suggest otherwise. Meanwhile, mainstream media paints certain risks as serious or even dire such as airline disasters, shark attacks, terrorism, nuclear power plants or kidnappings, so many may have mistaken such extremely low risk events as far worse than reality dictates.
This may be the case with COVID-19, though we will soon know with certainty. Elon Musk himself said of his more than 7,000 employees in China in an interview he gave on May 7, 2020, there were no fatalities. COVID-19 appears to be highly contagious so controlled populations quickly reach herd immunity. Two examples, one of a prison in the U.S. and another a U.S.S. crew showed most contracted COVID-19 but most were also asymptomatic. The average age of death from true COVID-19 deaths, as opposed to ones where COVID-19 has been attached onto a patient who was going to die from other conditions anyway, appears to be the same as the average age of death from all other factors combined. In other words, the fatality rate of COVID-19 may be no greater than the flu. It has been suggested that the average age of people who die from COVID is older than the average age of people who die.
Nevertheless, even if something holds little to no truth, it does not mean governments won't pass legislation and subsidies since they depend on votes so side with the masses. Such legislation often benefits participating companies that find alternatives or possible workarounds to the controversial issues of nuclear power, global warming, and 5G.
With 5G, the concern is that some of the wavelengths, in particular the millimeter waves are hazardous to one's health. But the reality is that they, along with visible light, are non-ionizing, meaning they don’t break molecular bonds. Yes, they are higher frequency than traditional broadcast frequencies, but they're still below the frequency of visible light and far below ionizing radiation such as shortwave ultraviolet light, x-rays, and gamma rays.
Then there's the concern that overexposure to non-ionizing radiation has negative side effects. A paper published in 2005 by the engineering professional organization IEEE’s International Committee on Electromagnetic Safety reviewing more than 1,300 peer-reviewed studies on the biological effects of wavelengths found "no adverse health effects that were not thermally related."
So if there were small thermal risks, the FCC and other regulators set limits on how much energy wireless devices can emit to protect against heat-related effects. Robert DeMott, a toxicologist specializing in risk assessment, said, "The normal consensus is that you don't need to worry about a temperature increase of less than one degree Celsius because our bodies change by one degree Celsius in and of their own activities all the time, even at a cellular level."In other words, 5G introduces no new hazards that other technologies including 4G have not already introduced. The fear comes when a body of influence such as the World Health Organization's International Agency for Research on Cancer makes a vague assessment without proof. Back in 2011, they classified mobile phones as "possibly carcinogenic". What they did not mention is that the organization selected that designation, which also applied to coffee and pickled vegetables, after a 2010 study failed to determine whether mobile phones posed a cancer risk. A fact sheet on the WHO website dating back to 2002 was more sober, stating, "In the area of biological effects and medical applications of non-ionizing radiation approximately 25,000 articles have been published over the past 30 years. Based on a recent in-depth review of the scientific literature, the WHO concluded that current evidence does not confirm the existence of any health consequences from exposure to low level electromagnetic fields. However, some gaps in knowledge about biological effects exist and need further research."
So the WHO was soft peddling so no one can hold them accountable. In today's legal climate of lawsuits, it's safer to say there could be a risk even if that risk is impracticably small. But then mainstream media gets wind of it and exaggerates the reality. The article gets picked up by other media and the net result is fear being downloaded into the masses of readers who then pressure legislators to pass laws in the name of health and safety.
The bottom line is many things that we commonly use today have a tiny chance of being carcinogenic, but the risks are minuscule relative to other things that are part of our daily lives which pose far greater risks. As concerns the mobile phone cancer scare, according to statistics published by the National Cancer Institute, the rate of brain cancer in the US actually went down from 1992 to the present day even as mobile phone use has skyrocketed.
Companies such as AAPL whose evolution includes the use of 5G will hopefully prevail against bad science which typically gets politicized. AAPL is closer to all-time highs than the NASDAQ Composite, but then other companies that will benefit from this technology include FB, AMZN, and MSFT that are also outpacing the major averages.
Companies to Benefit from Post-COVID Environment
A number of companies we have discussed have moved higher (read our prior reports and listen to prior webinars such as OKTA, LVGO, and DXCM) due to their focus on a post-COVID world.
Companies that will continue to benefit from the post-COVID environment including WFH companies such as TEAM which pulled back to its 10-dma on Wednesday so was buyable then. TEAM provides a software-based platform that helps businesses collaborate.
Zscaler (ZS) will benefit from heightened security measures as it provides a massive, global cloud security platform. It pulled back to its 10-dma on Thursday so was buyable then.
Of course, as always, buy on constructive pullbacks and always gauge the health of the general markets as sometimes caution is warranted so being in cash or short the market is the better choice, especially for traders with shorter term time horizons. For those who use our 7-week rule for longer term holds, should a nasty second or third order effect hit the markets, you dont have to wait for a violation of the 50-dma to sell.