Category: Uncategorized

Why Global Gold Demand Could Stay High

Posted on by phoffman@channelchek.com

Central Banks Gobbled Up More Gold Last Year Than In Any Year Since 1967

The price of gold stopped just short of hitting $1,960 an ounce last Thursday, its highest level since April 2022, before plunging below $1,900 on Friday following a stronger-than-expected U.S. jobs report, indicating that the current rate hike cycle may be far from over.

I don’t believe that this takes away from the fact that gold posted its best start to the year since 2015. The yellow metal rose 5.72% in January, compared to 8.39% in the same month eight years ago.

This article was republished with permission from Frank Talk, a CEO Blog by Frank Holmes
of U.S. Global Investors (GROW).
Find more of Frank’s articles here – Originally published February 8, 2023.

I also maintain my bullishness for gold and gold mining stocks in 2023. Gold was one of the very few bright spots in a dismal 2022, ending the year essentially flat, and I expect its performance to remain strong in the year ahead.

Record Retail Demand In 2022

The big headline in the World Gold Council’s (WGC) 2022 review is that total global demand expanded 18% year-over-year, reaching its highest level since 2011.

Central banks were responsible for much of the growth, adding a massive 1,136 metric tons, the largest annual amount since 1967. China began accumulating again in 2022 for the first time in three years, continuing its goal of diversifying away from the dollar.

Meanwhile, retail demand for bars and coins in the U.S. and Europe hit a new annual record last year in response to stubbornly high inflation and the war in Ukraine. Western investors gobbled up 427 tons (approximately 15 million ounces), the most since 2011.

Investors To Shift From Physical Bullion To Gold-Backed ETFs In 2023?

Where I see the opportunity is with gold-backed ETFs and gold mining stocks, both of which didn’t see the same level of demand as the bullion market last year. Investors withdrew some 110 tons from physical gold ETFs, the second straight year of declines, though at a slower pace compared to 2021. Even when the gold price began to climb in November, investors didn’t seem to respond as they have in past rallies.   

The WGC suggests that demand for ETFs that hold physical gold will “take the baton” from bars and coins this year. That remains to be seen, but I always recommend that investors diversify, with 5% of their portfolio in bullion, gold jewelry and gold-backed ETFs.

Another 5% can be allocated to high-quality gold mining stocks, mutual funds and ETFs. We prefer companies that have demonstrated strong momentum in revenue, free cash flow and high-growth margins on a per-share basis.

$1 Trillion Investment In The Energy Transition, On Par With Fossil Fuels

If I had to select another metal to watch this year (and beyond), it would be copper. The red metal, we believe, will be one of the greatest beneficiaries of the global low-carbon energy transition that’s taking place. As we seek to electrify everything, from power generation to transportation, copper is the one material that’s used every step of the way.

What’s more, investment in the transition is accelerating. Last year, more than $1 trillion was plowed into new technologies such as renewable energy, energy storage, carbon capture and storage, electrified transport and more.

Not only is this a new annual record amount, but, for the first time ever, it matches what we invested in fossil fuels, according to Bloomberg New Energy Finance (NEF).    

China was the top investor, responsible for $546 billion, or nearly half of the total amount. The U.S. was a distant second at $141 billion, though the Inflation Reduction Act (IRA), signed into law in August 2022, has yet to be fully deployed.

Copper’s Supply-Demand Imbalance

At the same time that copper demand is growing due to the energy transition, the global supply pipeline is thinning due to shrinking exploration budgets and a dramatic slowdown in the number of new deposits.

Take a look at the chart above, courtesy of S&P Global. Copper exploration budgets have not managed to generate a meaningful increase in major new discoveries. According to S&P Global, most of the copper that’s produced every year comes from assets that were discovered in the 1990s.

It may be a good time to consider getting exposure with a high-quality copper miner such as Ivanhoe Mines or a broad-based commodities fund that gives you access to copper exploration and production.

Wage Inflation, Labor Shortages, and Who Stopped Working

Posted on by phoffman@channelchek.com
Image Credit: Mr. Blue MauMau (Flickr)

Is the Mismatch in Workers and Open Jobs Proving to Be Transitory?

Inflation has been the most bearish word for the stock and bond markets over the past year or more. Shortly after many of the supply chain issues cleared up, and the cargo ships were no longer stacked up outside of major ports, attracting scarce workers with higher pay became a growing cause of inflationary pressure. At the end of November 2022, Federal Reserve Chair Jerome Powell stated that “job openings exceed available workers by about 4 million.” That number has now grown to 4.7 million after the continued strengthening of the market for qualified labor.

This mismatch, depicted in the Fed Data below, between available positions and workers to fill them, developed a more inflationary trend. The graph depicts the mismatch of labor supply and demand and the extent that it has worsened.

When the civilian labor force is greater than employment plus job openings, the economy has an immediate capacity to fill open positions. Currently, the employment level plus job openings are at 170.5 million, while the total labor force is at 165.8 million. Thus the 4.7 million quoted earlier. There are a whopping 4.7 million more jobs available compared to people available to fill them.

The civilian labor force, the amount of people working or looking for a job, is shown below in red; the current employment level plus the number of job openings is shown in blue.

.

Source: St. Louis Federal Reserve

Labor Participation Hesitancy

The pandemic has been emphasized as a cause of this not-very-transitory labor shortage, but the trends in labor demand and labor supply in the graph above indicate that demand was already outpacing supply as the US entered 2018. This was two years before the novel coronavirus hit US shores. Back then the mismatch was about one million workers fewer than jobs available before the economic disruption.

As the US began to move toward business-as-usual, news and market analysts offered many explanations for the labor shortage. These included childcare problems, health concerns, minimum wage pushback, and even a wave of new retirees.

The visual below shows the change experienced in the labor force participation rate (LFPR) for specific age groups: 20 to 24 years old, 25 to 54 years old, and 55+ years old. By subtracting the most recent LFPR from that of January 2020 we get the percentage-point change in labor force participation relative to the month just before the pandemic began impacting businesses.

When the pandemic hit, the sharpest decline in the LFPR was for workers between the ages of 20 and 24. Their LFPR decreased from 73% to 64.4% in 4 months before increasing again. However, at the end of 2022, the LFPR for 20- to 24-year-olds still hadn’t fully recovered and remained 1.7 percentage points below its January 2020 value.

This overall pattern is similar but less extreme for the other age groups. Although no age group fully recovered by the end of 2022, the 25-54 group was closest, at 0.7 percentage points below its January 2002 level. There’s been speculation older workers retired early (and permanently) during the pandemic, and the 55+ group remained 1.4 percentage points below its January 2020 level as of December 2022, with no sign of further recovery.

Source: St. Louis Federal Reserve

Take Away

The mechanisms that cause inflation are widely understood. If there is a shortage of goods because of the supply chain, sellers can ask more for the product. If the cost of producing goods or providing services increase, perhaps because of the cost of labor, the seller may try to pass those higher costs along. On the demand-pull side, if there is an abundance of currency, this increases demand for goods and services and is also inflationary.

While the Fed has been waging a fight against rising prices by removing liquidity and ratcheting up the cost of money (interest rates), the number of open jobs compared to the number of workers available to fill them has widened.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.federalreserve.gov/newsevents/speech/powell20221130a.htm

https://www.bls.gov/news.release/empsit.nr0.htm

https://fred.stlouisfed.org/searchresults/?st=unemployment%20rate&isTst=1

How is the Economy Really Doing (Just the Facts)?

Posted on by phoffman@channelchek.com
Image Credit: USA Facts

Do the Most Current Economic Measurements Suggest a Trend Toward Recession or Growth?

How is the US Economy Doing?

  • US GDP increased 2.1% in 2022 after increasing 5.9% in 2021.
  • Year-over-year inflation, the rate at which consumer prices increase, was 6.5% in December 2022.
  • The Federal Reserve raised interest rates seven times in 2022 and again on February 1, 2023 to curb inflation, increasing the target rate from near zero to 4.5-4.75%.
  • When accounting for inflation, workers’ average hourly earnings were down 1.7% in December 2022 compared to a year prior.
  • The ratio of unemployed people to job openings remained at or near record lows throughout 2022.
  • The unemployment rate was 4.0% at the beginning of 2022 and ended the year at 3.5%.
  • The labor force participation rate remains almost one percentage point below February 2020.
  • From January to November 2022, the US imported $889.9 billion more in goods and services than it exported. This is 7% higher than the trade deficit in 2021 for the same months.

US GDP increased 2.1% in 2022 after increasing 5.9% in 2021

Gross domestic product (GDP) fell in the first half of 2022 but grew in the second half. GDP reached $25.5 trillion in 2022.

US GDP

Year-over-year inflation, the rate at which consumer prices increase, was 6.5% in December 2022

That’s down from June 2022’s rate of 9.1%, the largest 12-month increase in 40 years. Inflation grew at the beginning of the year partly due to rising food and energy prices, while housing costs contributed throughout 2022.

CPI-U

The Federal Reserve raised interest rates seven times in 2022 and again on February 1, 2023 to curb inflation, increasing the target rate from near zero to 4.5-4.75%

Rate increases make it more expensive for banks to borrow from each other. Banks pass these costs on to consumers through increased interest rates. Read more about how the Federal Reserve tries to control inflation here.

Fed Funds Rate

When accounting for inflation, workers’ average hourly earnings were down 1.7% in December 2022 compared to a year prior

Inflation-adjusted average hourly earnings fell in all industries except information and leisure and hospitality, where earnings were flat.

Hourly Earnings

The ratio of unemployed people to job openings remained at or near record lows throughout 2022

In a typical month from March 2018 and February 2020, there were between 0.8 and 0.9 unemployed people per job opening. But after more than quadrupling in April 2020 at the onset of the pandemic, the ratio fell and settled from December 2021 to December 2022 to between 0.5 and 0.6 unemployed people per job opening, the lowest since data first became available in 2000.

Unemploymed Ratio

The unemployment rate was 4.0% at the beginning of 2022 and ended the year at 3.5%

It decreased most for Black and Asian people, 1.2 and 1.1 percentage points, respectively. Black people still have unemployment rates higher than the rest of the nation.

Categorized Unemployment Rate

The labor force participation rate remains almost one percentage point below February 2020

An additional 2.5 million workers would need to be in the labor force for the participation rate to reach its pre-pandemic level.

From January to November 2022, the US imported $889.9 billion more in goods and services than it exported. This is 7% higher than the trade deficit in 2021 for the same months

During this time, the goods trade deficit reached $1.1 trillion. Complete 2022 data is expected on February 7, 2023.

Trade Balance

This content was republished from USAFacts. USAFacts is a not-for-profit, nonpartisan civic initiative making government data easy for all Americans to access and understand. It provides accessible analysis on US spending and outcomes in order to ground public debates in facts.

Why Sports Leagues Now Welcome (and Even Pursue) Gambling

Posted on by phoffman@channelchek.com
Image Credit: (DraftKings)

How Legalized Sports Betting has Transformed the Fan Experience

A couple of days before Christmas, I went to see the NHL’s Nashville Predators play on their home ice against the defending Stanley Cup champion Colorado Avalanche.

Amid all the silliness of a modern pro sports experience – the home team skating out of a giant saber-toothed tiger head, the mistletoe kiss cam, a small rock band playing seasonal hits between periods – there was a steady stream of advertising for DraftKings, a company known as a sportsbook that takes bets on athletic events and pays out winnings.

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It represents the research-based findings and thoughts of John Affleck, Knight Chair in Sports Journalism and Society, Penn State.

Its name flashed prominently on the Jumbotron above center ice as starting lineups were announced. Its logo appeared again when crews scurried out to clean the ice during timeouts. Not only was “DraftKings Sportsbook” on the yellow jackets worn by the people shoveling up the ice shavings, it was also on the carts they used to collect the ice.

This all came a few days after the Predators announced a multiyear partnership with another sportsbook, BetMGM, that will include not only signage at their home venue, Bridgestone Arena, but also a BetMGM restaurant and bar.

If I had cared to that evening, I could have gone onto the sports betting app on my smartphone and placed a wager on the game. Tennessee is one of 33 states plus the District of Columbia where sports betting is legal. On Jan. 31, 2023, Massachusetts became the latest state to legalize the practice.

The point of depicting the whole scene is simply this: In the nearly five years since the Supreme Court allowed states to legalize sports betting, a whole industry has sprouted up that, for tens of millions of fans around the country, is now just part of the show.

Betting’s seamless integration into American sports – impossible to ignore even among fans who aren’t wagering – represents a remarkable shift for an activity that was banned in much of the country only a few years ago.

A New Sports World

Let’s look at the numbers for a start.

Since May 2018, when the U.S. Supreme Court overturned a law that limited sports betting to four states including Nevada, US$180.2 billion has been legally wagered on sports, according to the American Gaming Association’s research arm. That has generated $13.7 billion in revenue for the sportsbooks, according to figures provided to me by the AGA, the industry’s research and lobby group.

Before the NFL kicked off last September, the AGA reported that 18% of American adults – more than 46 million people – planned to make a bet this season. Most of that was likely to be bet through legal channels, as opposed to so-called corner bookies, or illegal operatives.

So, who’s betting on sports? In an interview, David Forman, the AGA’s vice president for research, told me that compared with traditional gamblers – those who might play slots, for instance – “sports bettors are a different demographic. They’re younger, they’re more male, they’re also higher income.”

They’re people like Christian Santosuosso, a 26-year-old creative marketing professional living in Brooklyn, New York. Santosuosso didn’t bet on games until it became legal. Now he and his buddies will pool their money on an NFL Sunday to spice up both the interest in a game and the conversation in the room.

“It’s entertainment,” he told me in a phone interview. He explained that even a tough gambling loss can be amusing or funny, a way to look back on the mistakes your team made that ended up affecting whether you won the bet. But he added that he has a limit on how much he’ll bet.

Coverage and Conversation

Shortly after Supreme Court ruling in 2018, I wrote a piece for The Conversation asking if the media would start to produce content aimed at bettors.

The answer has been an unequivocal “yes” – and it seems to have helped change the way sports betting is talked about.

As I write this, if I look at the front page of ESPN.com, I see that the University of Georgia is a 13.5-point favorite over Texas Christian University in the college football national championship. It’s front and center, right next to the kickoff time and the TV network where it’s airing.

But that’s the least of it.

ESPN has broadcast a gaming show since 2019, “Daily Wager.” In September 2022, the sports conglomerate announced an array of new content centered on betting advice and picks. And SportsCenter anchor Scott Van Pelt is famous for his “Bad Beats” segment, in which Van Pelt typically highlights how a team on the winning side of the point spread falls apart at the last second in a crazy way.

Meanwhile, a cottage industry of betting tip channels has emerged on YouTube – if you type “#sportsbetting” into YouTube’s search bar, you’ll find thousands of them.

Another example of how things have changed: On Jan. 2, 2023, the University of Utah’s football team had the ball first and goal with 43 seconds left, down 21 points to Penn State in the Rose Bowl. The game was essentially over. However, the commentators noted that a touchdown would mean a lot to some people.

Who? Why? The announcers didn’t elaborate, but the implication was obvious: Those who had bet the over – wagering that together the two teams would score more than 54 points – had a lot riding on that touchdown. So, in a sense, did ESPN. In a blowout, fans of both teams are likely to tune out. But when there’s money riding on something like the over, eyes stay glued to the screen.

Utah ended up scoring on third down with 25 seconds remaining. Final score: Penn State 35, Utah 21.

The Danger and the Ceiling

I’ve been editing sports articles since the early 1990s and have run the sports journalism program at Penn State since 2013. I have noticed how my students now routinely talk about the point spread – the expected margin of victory – and even the over-under, a wager on the total number of points scored.

That just did not happen so often when I first got to State College, nor in the newsroom before that.

Sports leagues were once vehemently opposed to gambling. And while they’re still concerned about keeping players from betting, many leagues – particularly the NFL – have made a complete U-turn since legalization.

There are multiple reasons for this change of heart. While the concern used to be about losing the integrity of the game to a betting scandal, now sports leagues can argue that legal betting allows for better monitoring of potential cheating. If heavy betting happens on one team, or if there’s sudden shift in betting patterns, it’s all visible to the sportsbooks and might indicate nefarious activity.

There’s also significant fan interest in legal wagering – 56% of Americans adults, and nearly 7 in 10 men, recently told Pew that they’ve read at least a little about how widespread legal sports betting has become.

And, of course, there is big money from a new sponsorship group – the sportsbooks – that helped drive overall NFL sponsorship revenue to a record $1.8 billion in the 2021 season.

The danger, of course, is gambling addiction.

And while the AGA is quick to note that its member companies pledge to give information about problem gambling to their customers, legalization has undoubtedly provided easier and more secure access to sports betting.

Keith Whyte, executive director of the National Council on Problem Gambling, said in a telephone interview that research by his group had found that roughly 25% of American adults bet on sports, somewhat more than the AGA’s estimate. That percentage has jumped from roughly 15% before the Supreme Court ruling, per the NCPG.

While that’s a big increase, it also suggests that perhaps there is a ceiling coming up – in other words, when all the states that will do so legalize sports betting, wagering still won’t be done by many more people than now, Whyte speculated.

“I think it’s changing the market in a lot of ways,” Whyte said, “but my guess is it’s mainly to increase the intensity – and associated risk of problem gambling – among fans that were already engaged fans.”

Will February Follow Through On January’s Gains

Posted on by phoffman@channelchek.com
Image Credit: Ben Welsh (Flickr)

January’s Stock Market Performance Bodes Well for the Rest of 2023

The stock market has put in a solid January in terms of overall performance. Following month after negative month last year, this is a welcome relief for those with money in the market which is beginning to look welcoming to those that have been on the sidelines. While the Fed is still looming with perhaps another 50-75 basis points in rate hikes left to implement over the coming months, the market has been resilient and has already made up for some of last year’s lost ground.

Source: Koyfin

For the month (with an hour left before market close on January 31), the Nasdaq 100 is up over 10.8% for the month. Over 10%  would be a good year historically, of course averaging in last year, it is still solidly underperforming market averages. The small-cap Russell 2000 index is also above 10%. Small-caps have underperformed larger cap stocks over several years and are seen to have more attractive valuations now than large caps as well as other fundamental strengths. These include a higher domestic US customer base in the face of a strong dollar, fewer borrowings that would be more costly with the increased rate environment, and an overall expectation that the major indexes will revert to their mean performance spreads which the small-cap indexes have been lagging. The S&P 500, the most quoted stock index is up over 6% in January, and the Dow 30 Industrials are up almost 2.4%.

Rate Increases

The stock and bond markets hope for a solid sign that the FOMCs rate increases will cease. The reduced fear of an ongoing tightening cycle will calm the nervousness that comes from knowing that higher rates hurt the consumer, increases unemployment, reduces spending and therefore hurts earnings which are most closely tied to stock valuations.

January Historically

January rallies, on their own, statistically have been a good omen for the 11 months ahead.  When the S&P 500 posts a gain for the first month of the year, it goes on to rise another 8.6%, on average for the rest of the year according to statistics dating back to 1929.  In more than 75% of these January rally years, the markets further gained during the year.

Other statistics indicate a bright year to come for the market as well. Using the S&P 500, it rallied for the final five trading days of last year and the first two of 2023, it gained for first five trading days of the new year, and rallied through January. When all three of these have occurred in the past, after a bear market (20%+ decline), the index’s average gain for the rest of the year is 13.9%. In fact it posted positive returns in almost all of the 17 post-bear market years that were ushered in with similar gains.

Follow Through

Beyond history, there is a reason for the follow-through years. January rallies are signs of confidence, they indicate that self-directed investors and professional money managers are buying stocks at the lower prices. It suggests they have a strong enough belief that conditions that caused the bear market have or will soon reverse.  

And this is quite possibly where the markets are at today. The lower valuations seem attractive, this is especially true of the overly beaten down Nasdaq 100 stocks and the small-caps that had been trailing in returns since before the pandemic.

Federal Reserve Chair Powell is looking to make money more expensive in order to slow an economy that is still exhibiting inflationary pressures. He is not, however, looking to crush the stock market. Fed governors seem to be concerned that the bond market prices haven’t declined to match their tightening efforts, but a healthy stock market helps the Fed by giving it latitude to act. Powell will take the podium post FOMC meetings eight times this year.

Each time his intention will be to usher in a long term healthy economy, with reasonable growth, low inflation, and jobs levels that are in line with consumer confidence.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.ndr.com/news

https://tdameritradenetwork.com/video/how-to-read-the-technicals-before-the-market-changes

https://www.marketwatch.com/story/last-years-stock-market-volatility-has-carried-over-into-january

https://www.barrons.com/articles/stocks-january-gains-what-it-means-51675185839?mod=hp_LATEST

Game of Chicken With the US Economy Getting Under Way

Posted on by phoffman@channelchek.com
Image Credit: US Embassy, South Africa (Flickr)

US Debt Default Could Trigger Dollar’s Collapse – and Severely Erode America’s Political and Economic Might

Republicans, who regained control of the House of Representatives in November 2022, are threatening to not allow an increase in the debt limit unless spending cuts are agreed to. In so doing, there is a risk of the U.S. government could move into default.

Brinkmanship over the debt ceiling has become a regular ritual – it happened under the Clinton administration in 1995, then again with Barack Obama as president in 2011, and more recently in 2021.

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It represents the research-based findings and thoughts of, Michael Humphries, Deputy Chair of Business Administration, Touro University

As an economist, I know that defaulting on the national debt would have real-life consequences. Even the threat of pushing the U.S. into default has an economic impact. In August 2021, the mere prospect of a potential default led to an unprecedented downgrade of the the nation’s credit rating, hurting America’s financial prestige as well as countless individuals, including retirees.

And that was caused by the mere specter of default. An actual default would be far more damaging.

Dollar’s Collapse

Possibly the most serious consequence would be the collapse of the U.S. dollar and its replacement as global trade’s “unit of account.” That essentially means that it is widely used in global finance and trade.

Day to day, most Americans are likely unaware of the economic and political power that goes with being the world’s unit of account. Currently, more than half of world trade – from oil and gold to cars and smartphones – is in U.S. dollars, with the euro accounting for around 30% and all other currencies making up the balance.

As a result of this dominance, the U.S. is the only country on the planet that can pay its foreign debt in its own currency. This gives both the U.S. government and American companies tremendous leeway in international trade and finance.

No matter how much debt the U.S. government owes foreign investors, it can simply print the money needed to pay them back – although for economic reasons, it may not be wise to do so. Other countries must buy either the dollar or the euro to pay their foreign debt. And the only way for them to do so is to either to export more than they import or borrow more dollars or euros on the international market.

The U.S. is free from such constraints and can run up large trade deficits – that is, import more than it exports – for decades without the same consequences.

For American companies, the dominance of the dollar means they’re not as subject to the exchange rate risk as are their foreign competitors. Exchange rate risk refers to how changes in the relative value of currencies may affect a company’s profitability.

Since international trade is generally denominated in dollars, U.S. businesses can buy and sell in their own currency, something their foreign competitors cannot do as easily. As simple as this sounds, it gives American companies a tremendous competitive advantage.

If Republicans push the U.S. into default, the dollar would likely lose its position as the international unit of account, forcing the government and companies to pay their international bills in another currency.

Loss of Political Power Too

Since most foreign trade is denominated in the dollar, trade must go through an American bank at some point. This is one important way dollar dominance gives the U.S. tremendous political power, especially to punish economic rivals and unfriendly governments.

For example, when former President Donald Trump imposed economic sanctions on Iran, he denied the country access to American banks and to the dollar. He also imposed secondary sanctions, which means that non-American companies trading with Iran were also sanctioned. Given a choice of access to the dollar or trading with Iran, most of the world economies chose access to the dollar and complied with the sanctions. As a result, Iran entered a deep recession, and its currency plummeted about 30%.

President Joe Biden did something similar against Russia in response to its invasion of Ukraine. Limiting Russia’s access to the dollar has helped push the country into a recession that’s bordering on a depression.

No other country today could unilaterally impose this level of economic pain on another country. And all an American president currently needs is a pen.

Rivals Rewarded

Another consequence of the dollar’s collapse would be enhancing the position of the U.S.‘s top rival for global influence: China.

While the euro would likely replace the dollar as the world’s primary unit of account, the Chinese yuan would move into second place.

If the yuan were to become a significant international unit of account, this would enhance China’s international position both economically and politically. As it is, China has been working with the other BRIC countries – Brazil, Russia and India – to accept the yuan as a unit of account. With the other three already resentful of U.S. economic and political dominance, a U.S. default would support that effort.

They may not be alone: Recently, Saudi Arabia suggested it was open to trading some of its oil in currencies other than the dollar – something that would change long-standing policy.

Severe Consequences

Beyond the impact on the dollar and the economic and political clout of the U.S., a default would be profoundly felt in many other ways and by countless people.

In the U.S., tens of millions of Americans and thousands of companies that depend on government support could suffer, and the economy would most likely sink into recession – or worse, given the U.S. is already expected to soon suffer a downturn. In addition, retirees could see the worth of their pensions dwindle.

The truth is, we really don’t know what will happen or how bad it will get. The scale of the damage caused by a U.S. default is hard to calculate in advance because it has never happened before.

But there’s one thing we can be certain of. If there is a default, the U.S. and Americans will suffer tremendously.

How Does the Moderna Cancer Vaccine Work?

Posted on by phoffman@channelchek.com
Moderna is testing an mRNA vaccine in combination with pembrolizumab to treat melanoma (The Conversation)

Moderna’s Experimental Cancer Vaccine Treats But Doesn’t Prevent Melanoma – a Biochemist Explains How it Works

Media outlets have reported the encouraging findings of clinical trials for a new experimental vaccine developed by the biotech company Moderna to treat an aggressive type of skin cancer called melanoma.

Although this is potentially very good news, it occurred to me that the headlines may be unintentionally misleading. The vaccines most people are familiar with prevent disease, whereas this experimental new skin cancer vaccine treats only patients who are already sick. Why is it called a vaccine if it does not prevent cancer?

This article was republished with permission from The Conversation, a news site dedicated to sharing ideas from academic experts. It represents the research-based findings and thoughts of Mark R. O’Brian, Professor and Chair of Biochemistry, Jacobs School of Medicine and Biomedical Sciences, University at Buffalo.

I am a biochemist and molecular biologist studying the roles that microbes play in health and disease. I also teach cancer genetics to medical students and am interested in how the public understands science. While preventive and therapeutic vaccines are administered for different health care goals, they both train the immune system to recognize and fight off a specific disease agent that causes illness.

Melanoma is an aggressive form of skin cancer

How Do Preventive Vaccines Work?

Most vaccines are administered to healthy people before they get sick to prevent illnesses caused by viruses or bacteria. These include vaccines that prevent polio, measles, COVID-19 and many other diseases. Researchers have also developed vaccines to prevent some types of cancers that are caused by such viruses as the human papillomaviruses and Epstein-Barr virus.

Your immune system recognizes objects such as certain microbes and allergens that do not belong in your body and initiates a series of cellular events to attack and destroy them. Thus, a virus or bacterium that enters the body is recognized as something foreign and triggers an immune response to fight off the microbial invader. This results in a cellular memory that will elicit an even faster immune response the next time the same microbe intrudes.

The problem is that sometimes the initial infection causes serious illness before the immune system can mount a response against it. While you may be better protected against a second infection, you have suffered the potentially damaging consequences of the first one.

This is where preventive vaccines come in. By introducing a harmless version or a portion of the microbe to the immune system, the body can learn to mount an effective response against it without causing the disease.

For example, the Gardasil-9 vaccine protects against the human papillomavirus, or HPV, which causes cervical cancer. It contains protein components found in the virus that cannot cause disease but do elicit an immune response that protects against future HPV infection, thereby preventing cervical cancer.

How Does the Moderna Cancer Vaccine Work?

Unlike cervical cancer, skin melanoma isn’t caused by a viral infection, according the latest evidence. Nor does Moderna’s experimental vaccine prevent cancer as Gardasil-9 does.

The Moderna vaccine trains the immune system to fight off an invader in the same way preventive vaccines most people are familiar with do. However, in this case the invader is a tumor, a rogue version of normal cells that harbors abnormal proteins that the immune system can recognize as foreign and attack.

What are these abnormal proteins and where do they come from?

All cells are made up of proteins and other biological molecules such as carbohydrates, lipids and nucleic acids. Cancer is caused by mutations in regions of genetic material, or DNA, that encode instructions on what proteins to make. Mutated genes result in abnormal proteins called neoantigens that the body recognizes as foreign. That can trigger an immune response to fight off a nascent tumor. However, sometimes the immune response fails to subdue the cancer cells, either because the immune system is unable to mount a strong enough response or the cancer cells have found a way to circumvent the immune system’s defenses.

Moderna’s experimental melanoma vaccine contains genetic information that encodes for portions of the neoantigens in the tumor. This genetic information is in the form of mRNA, which is the same form used in the Moderna and Pfizer-BioNtech COVID-19 vaccines. Importantly, the vaccine cannot cause cancer, because it encodes for only small, nonfunctional parts of the protein. When the genetic information is translated into those protein pieces in the body, they trigger the immune system to mount an attack against the tumor. Ideally, this immune response will cause the tumor to shrink and disappear.

Notably, the Moderna melanoma vaccine is tailor-made for each patient. Each tumor is unique, and so the vaccine needs to be unique as well. To customize vaccines, researchers first biopsy the patient’s tumor to determine what neoantigens are present. The vaccine manufacturer then designs specific mRNA molecules that encode those neoantigens. When this custom mRNA vaccine is administered, the body translates the genetic material into proteins specific to the patient’s tumor, resulting in an immune response against the tumor.

Combining Vaccination with Immunotherapy

Vaccines are a form of immunotherapy, because they treat diseases by harnessing the immune system. However, other immunotherapy cancer drugs are not vaccines because, while they also stimulate the immune system, they do not target specific neoantigens.

In fact, the Moderna vaccine is co-administered with the immunotherapy drug pembrolizumab, which is marketed as Keytruda. Why are two drugs needed?

Certain immune cells called T-cells have molecular accelerator and brake components that serve as checkpoints to ensure they are revved up only in the presence of a foreign invader such as a tumor. However, sometimes tumor cells find a way to keep the T-cell brakes on and suppress the immune response. In these cases, the Moderna vaccine correctly identifies the tumor, but T-cells cannot respond to it.

Pembrolizumab, however, can bind directly to a brake component on the T-cell, inactivating the brake system and allowing the immune cells to attack the tumor.

Not a Preventive Cancer Vaccine

So why can’t the Moderna vaccine be administered to healthy people to prevent melanoma before it arises?

Cancers are highly variable from person to person. Each melanoma harbors a different neoantigen profile that cannot be predicted in advance. Therefore, a vaccine cannot be developed in advance of the illness.

The experimental mRNA melanoma vaccine, currently still in early-phase clinical trials, is an example of the new frontier of personalized medicine. By understanding the molecular basis of diseases, researchers can explore how their underlying causes vary among people, and offer personalized therapeutic options against those diseases.

Release – Comstock Awarded Doe Grant for Breakthrough Cellulosic Fuels Process

Posted on by aweinsoff@channelchek.com

Research News and Market Data on LODE

Technology Unlocks Massive New Feedstock Model to Rapidly Neutralize America’s Transportation Emissions

VIRGINIA CITY, NEVADA, JANUARY 26, 2023 – Comstock Inc. (NYSE: LODE) (“Comstock” and the “Company”) today announced the award by the U.S. Department of Energy (“DOE”) of Comstock’s $2,000,000 grant application to build a pre-pilot scale system to demonstrate one of Comstock’s unique new pathways to produce renewable diesel, sustainable aviation fuel, gasoline, and marine fuel from forestry residues and other forms of lignocellulosic biomass at dramatically improved yield, efficiency and cost in comparison to known methods.

Comstock’s technologies efficiently crack wood into a purified Cellulosic Sugar and a unique “Bioleum” hydrocarbon mixture with about 75% of the energy content of fossil crude. Together, the two streams provide the basis for an entirely new renewable fuel feedstock model with best-in-class conversion yields, efficiencies, and costs.

Cellulosic Sugar and Bioleum can be used in multiple renewable fuel production pathways, however, the DOE’s grant award is based on a unique new pathway involving fermentation of Cellulosic Sugar into lipids, reacting the lipids with Bioleum to produce a single homogenous feedstock, and converting the homogenous feedstock into drop-in renewable fuels at extraordinary yields exceeding 80 gallons per dry ton of feedstock on a gasoline gallon equivalent basis (“GGE”).

Comstock has assembled a world-class team of collaborators, including Haldor Topsoe Holding A/S, Marathon Petroleum Company LP, Novozymes A/S, Xylome Corporation, RenFuel K2B AB, Emerging Fuels Technology Inc., the University of Nevada Reno, the University of Minnesota Duluth’s Natural Resources Research Institute, and the State University of New York’s College of Environmental Science and Forestry.

“Comstock is enabling an extremely valuable new “soil to oil” ecosystem based on the sustainable growth and monetization of a massive, widely available, highly scalable, and rapidly replenishable new feedstock source for renewable fuels,” said Corrado De Gasperis, Comstock’s Executive Chairman and Chief Executive Officer. “That ecosystem will leverage existing infrastructure to neutralize mobility emissions, create thousands of high-quality jobs, invigorate America’s rural communities, and advance the Biden Administration’s 2050 objectives.”  

“This is a remarkable opportunity to work with an extraordinary team of collaborators to demonstrate that the U.S. can sustain an immensely profitable new net zero balance between the Earth’s living systems and mobility emissions,” De Gasperis continued, “We are grateful for the DOE’s recognition of our technology and the strong support of renewable fuels from our Nevada representatives U.S. Senators Catherine Cortez Masto and Jacky Rosen and U.S. Congressman Mark Amodei.”

“Nevada is a hotspot for clean energy, and the federal funding I secured will help bring another innovative biofuel producer online in northern Nevada,” said Senator Cortez Masto. “I’ll continue to work to support Nevada’s position as a leader in clean-energy industries that are creating good-paying jobs and growing our state’s economy.”

“As a renewable energy source, biofuels are a critical part of our efforts to grow and strengthen our clean energy economy,” said Senator Rosen. “I’m proud to have helped secure this funding to incentivize more biofuel manufacturing in our state, which will help lower prices, improve our environment, and create more jobs in northern Nevada.”

“Congrats to Comstock and their team. Nice to see their hard work rewarded,” said Congressman Amodei.

About Comstock Inc.

Comstock (NYSE: LODE) innovates technologies that contribute to decarbonization and circularity by efficiently converting under-utilized natural resources into renewable energy products that contribute to balancing global uses and emissions of carbon. To learn more, please visit www.comstock.inc.

Forward-Looking Statements

This press release and any related calls or discussions may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, are forward-looking statements. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “would,” “potential” and similar expressions identify forward-looking statements but are not the exclusive means of doing so. Forward-looking statements include statements about matters such as: future industry market conditions; future explorations or acquisitions; future changes in our exploration activities; future prices and sales of, and demand for, our products; land entitlements and uses; permits; production capacity and operations; operating and overhead costs; future capital expenditures and their impact on us; operational and management changes (including changes in the Board of Directors); changes in business strategies, planning and tactics; future employment and contributions of personnel, including consultants; future land sales; investments, acquisitions, joint ventures, strategic alliances, business combinations, operational, tax, financial and restructuring initiatives, including the nature, timing and accounting for restructuring charges, derivative assets and liabilities and the impact thereof; contingencies; litigation, administrative or arbitration proceedings; environmental compliance and changes in the regulatory environment; offerings, limitations on sales or offering of equity or debt securities, including asset sales and associated costs; and future working capital, costs, revenues, business opportunities, debt levels, cash flows, margins, taxes, earnings and growth. These statements are based on assumptions and assessments made by our management considering their experience and their perception of historical and current trends, current conditions, possible future developments, and other factors they believe to be appropriate. Forward-looking statements are not guarantees, representations or warranties and are subject to risks and uncertainties, many of which are unforeseeable and beyond our control and could cause actual results, developments, and business decisions to differ materially from those contemplated by such forward-looking statements. Some of those risks and uncertainties include the risk factors set forth in our filings with the SEC and the following: adverse effects of climate changes or natural disasters; adverse effects of global or regional pandemic disease spread or other crises; global economic and capital market uncertainties; the speculative nature of gold or mineral exploration, mercury remediation and lithium, nickel and cobalt recycling, including risks of diminishing quantities or grades of qualified resources; operational or technical difficulties in connection with exploration or mercury remediation, metal recycling, processing or mining activities; costs, hazards and uncertainties associated with precious metal based activities, including environmentally friendly and economically enhancing clean mining and processing technologies, precious metal exploration, resource development, economic feasibility assessment and cash generating mineral production; costs, hazards and uncertainties associated with mercury remediation, metal recycling, processing or mining activities; contests over our title to properties; potential dilution to our stockholders from our stock issuances, recapitalization and balance sheet restructuring activities; potential inability to comply with applicable government regulations or law; adoption of or changes in legislation or regulations adversely affecting our businesses; permitting constraints or delays; ability to achieve the benefits of business opportunities that may be presented to, or pursued by, us, including those involving battery technology, mercury remediation technology and efficacy, quantum computing and advanced materials development, and development of cellulosic technology in bio-fuels and related carbon-based material production; ability to successfully identify, finance, complete and integrate acquisitions, joint ventures, strategic alliances, business combinations, asset sales, and investments that we may be party to in the future; changes in the United States or other monetary or fiscal policies or regulations; interruptions in our production capabilities due to capital constraints; equipment failures; fluctuation of prices for gold or certain other commodities (such as silver, zinc, lithium, nickel, cobalt, cyanide, water, diesel, gasoline and alternative fuels and electricity); changes in generally accepted accounting principles; adverse effects of war, mass shooting, terrorism and geopolitical events; potential inability to implement our business strategies; potential inability to grow revenues; potential inability to attract and retain key personnel; interruptions in delivery of critical supplies, equipment and raw materials due to credit or other limitations imposed by vendors; assertion of claims, lawsuits and proceedings against us; potential inability to satisfy debt and lease obligations; potential inability to maintain an effective system of internal controls over financial reporting; potential inability or failure to timely file periodic reports with the Securities and Exchange Commission; potential inability to list our securities on any securities exchange or market or maintain the listing of our securities; and work stoppages or other labor difficulties. Occurrence of such events or circumstances could have a material adverse effect on our business, financial condition, results of operations or cash flows, or the market price of our securities. All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Except as may be required by securities or other law, we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.

Neither this press release nor any related calls or discussions constitutes an offer to sell, the solicitation of an offer to buy or a recommendation with respect to any securities of the Company, the fund, or any other issuer.

Comstock Cellulosic Fuels business development contact information:

David Winsness
President, Comstock Fuels
Tel (775) 847-3040
dwinsness@comstockinc.com		Chad Michael Black
Director, Business Development
Tel (775) 847-3060
cmblack@comstockinc.com
Contact information:    
Comstock Inc.
P.O. Box 1118
Virginia City, NV 89440
www.comstockinc.com		Corrado De Gasperis
Executive Chairman & CEO
Tel (775) 847-4755
degasperis@comstockinc.com		Zach Spencer
Director of External Relations
Tel (775) 847-5272 Ext.151
questions@comstockinc.com

Causes of Paused or  Halted Trading in Company Stocks

Posted on by phoffman@channelchek.com
Image credit: Alex Proimos (Flickr)

Discovering Why Trading is Halted on One of Your Stocks

Fair and orderly trading is an admirable goal of any system of exchange. As part of this ideal, exchanges, the SEC, and brokers can temporarily halt trading in stocks. The impact of news, or tripped circuit breakers designed to decelerate snowballing reactions (both human and programmed reactions), are the most common reasons to halt trading. There have also been events when a computer glitch, either feeding into an exchange or into the exchange’s systems, has triggered a pause or a halt. A total of 77 stocks were reportedly halted after the opening on the NYSE (January 24). They were all labeled “LULD,” this code is used to indicate it was a volatility trading pause. But officials at the NYSE say they’re still looking into it.

Reasons to Halt Trading

Companies listed on a U.S. stock exchange are responsible for notifying the listing exchange about any announcements or corporate developments that might affect trading in its stock. These often include:

  • Changes related to the financial health of the company
  • Changes in key management individuals
  • Major corporate transactions like restructurings or mergers
  • Significant positive or negative information about its products
  • Legal or regulatory developments that affect the company’s ability to conduct business
  • A circuit breaker has been reached due to volatility

Stock Halt Codes

Each day the exchanges list stocks as they are paused or halted and include a code to indicate the reason. The codes help market participants understand for how long it may be halted and for what general reason. It’s a good idea to be familiar with the codes shown below.

LUDP or LULD: Volatility trading pause (high volatility risk for investors).

T1: News pending (halted to give investors of all varieties ample time to evaluate).

H10: This is not enacted by the exchange but instead by the SEC (could be any number of regulatory reasons).

Image: Two of the many stocks halted on January 24, 2023 (NYSE Website)

The reason for the recent multiple stock pauses was available immediately on the NYSE website. Many of the stocks showed they were opening down substantially; the exchange says they are looking into this further.  

There are also times when a circuit breaker stops trading across the market exchange. This is not the reason for the multiple pauses experienced in January, but also worth mentioning. There are three levels of halt based on size of the markets (S&P 500) move.

Level 1: 15-minute halt due to a 7% decrease from the S&P 500’s previous close

Level 2: 15-minute halt due to a 13% decrease from the S&P 500’s previous close

Level 3: Day-long halt due to a 20% decrease from the S&P 500’s previous close

Take Away

When the market opens and it is not business as usual, a lot of frustration can be saved by knowing market rules and finding resources to get a fast answer. While other traders wait for their favorite news service to report on it, going directly to the NYSE website to, in this case, get a listing of affected stocks and why, can put you ahead of those that are waiting for CNBC or another news outlet. Nasdaq also will post paused or halted stocks and use the same codes as above to indicate why.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.forexfactory.com/news/1201898-nyse-trading-open-sees-unusual-number-of-halted

https://www.zerohedge.com/markets/market-goes-haywire-dozens-nyse-trading-halts-open-after-technical-glitch

https://www.finra.org/investors/investing/investment-products/stocks/trading-halts-delays-suspensions

https://www.bloomberg.com/news/articles/2023-01-24/nyse-sees-unusual-number-of-trading-halts-at-open-of-trading-ldacqfyp?srnd=premium

https://www.nyse.com/trade-halt-current

Are Naked Shorts Depressing Your Investment Portfolio?

Posted on by phoffman@channelchek.com
Image Replicated from Twitter (1/23/2023)

Small-Cap Companies are Punching Back on Naked Shorts in Growing Numbers

The hashtag #NakedShorts has been trending on Twitter for over a week. To save Channelchek readers any embarrassment that may occur from Googling this term, especially at work, below are specifics on this market jargon. Also included below are specifics on why this has been trending and how it may impact self-directed retail traders and even small publicly traded companies that have the potential to be impacted by an illegal practice that apparently is not uncommon.

What are Naked Shorts?

Naked short selling of stocks is the illegal practice of short-selling shares that have not been allocated and verified to exist. Most shorting of stock occurs only after the trader borrows the security or determines that it can be borrowed before they sell it short (without owning). So naked shorting refers to short pressure on a stock that may actually be larger than the tradable shares in the market. This can place downward pressure on shares as they are sold, at times in excess of their existence.

Despite being made illegal after the 2008–09 financial crisis, naked shorting continues in practice because of loopholes in rules and discrepancies between physical and electronic trading systems.

Small Caps Revenge

Empowered by the activities of Gamestop (GME) and others, a growing number of small-cap companies are devising plans to go after naked short sellers.  This could help their companies trade at a fairer value rather than be artificially depressed by illegal trading practices.

Companies involved in heightening integrity in the markets for their stock are companies like Verb Technology Co. Inc. (VERB), a provider of interactive video-based sales apps with operations in Newport, California, and Lehi, Utah. Verb said this week it was joining education company Genius Group Ltd. (GNS), e-scooter and e-bike maker Helbiz (HLBZ), and Creatd Inc. (CRTD) designed for creators in coming up with measures to ensure “greater integrity in the capital markets” as Verb Chief Executive Rory J. Cutai said in a statement.

The move gained impetus last week as Genius Group said it had appointed a former F.B.I. director to lead a task force investigating alleged illegal trading in its stock, first disclosed a few weeks ago. Genius CEO believes there has been a measurable cost to the company. “We want this to stop,” he said. “They’re taking value away from our shareholders. They’re predators. They’re doing something illegal, and we want it to stop, whether that means getting regulators to enforce existing regulations or put new ones in place,” he said.

Legality of Naked Short Selling

In regular (legal) short trading, an investor borrows shares from someone else and pays an interest rate or “rebate rate.” They then sell them in anticipation of the stock price falling. The trade is a winner if the price falls and the seller buys them back at a lower price (netting out rebate rate) to close out the open short sale.

In naked short selling, investors don’t borrow the stock. They skip right to selling unowned with a promise to deliver them at a later date. If that promise is not fulfilled, it’s a failure to deliver.

Recently, companies such as AMC have paid a special dividend to determine, and frankly hurt, those short sellers that have not abided by the rules by first borrowing the security it sold.

Image: Elon Musk has been very vocal, Tesla is a company that hedge fund managers have routinely shorted (Twitter)

What Some Companies are Doing

Last week Helbiz said it was going to punch back at naked short positions. Creatd CEO Jeremy Frommer, meanwhile, is behind Ceobloc, a website that aims to end the practice of naked short selling. “Illegal naked short selling is the biggest risk to the health of today’s public markets” is how the site introduces its mission.

Genius just set guidance for 2023, saying it expects revenue of $48 million to $52 million, up 37% from its 2022 pro forma guidance. Last Thursday, the stock rose a record 290% in volume of about 270 million shares traded. That crushed the daily average of about 634,000. The CEO says this is another indicator of wrongdoing, given that the company’s float is just 10.9 million shares. “Clearly, that’s far more shares than we created,” the founder, Roger Hamilton points out.

Take Away

It is unclear what the task force of the small-cap companies intends to do. Companies like AMC Theaters (AMC) waged war by declaring a dividend that was a different class of stock. Shareholders would have to verify their ownership of a registered share in order to receive the dividend. This went a long way to verify what is in the float that is legitimate and that which is not.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.marketwatch.com/story/small-cap-companies-are-going-after-naked-short-sellers-in-growing-numbers-its-the-biggest-risk-to-the-health-of-todays-public-markets-11674480805?mod=newsviewer_click

https://www.investopedia.com/terms/n/nakedshorting.asp

Release – Direct Digital Holdings Appoints Misty Locke, Former Global Chief Marketing Officer for Dentsu Media, to Board of Directors

Posted on by aweinsoff@channelchek.com

Research News and Market Data on DRCT

January 18, 2023 8:00am EST

Brings More than 20 Years of Deep Advertising Industry Insights and Expertise to the Company

HOUSTON, Jan. 18, 2023 /PRNewswire/ — Direct Digital Holdings, Inc. (Nasdaq: DRCT) (“Direct Digital Holdings” or the “Company”), a leading advertising and marketing technology platform operating through its companies Colossus Media, LLC (“Colossus SSP”), Huddled Masses LLC (“Huddled Masses”) and Orange142, LLC (“Orange142”), today announced advertising industry pioneer Misty Locke is joining its Board of Directors. Locke, an award-winning marketer, brings more than 20 years of experience in digital, performance and brand marketing. Her appointment was effective January 16, 2023.

Locke joins the Direct Digital Holdings Board of Directors following a successful tenure as Chief Marketing Officer for industry leader Dentsu Media. Prior to that, Locke served in several senior executive positions for iProspect, including President of iProspect Americas, Global Chief Client Officer and Global Chief Marketing Officer. Locke transformed iProspect, a company that she helped grow through a merger in 2008 with her company, Range Online Media, from an SEO brand into the largest and most innovative digital media and performance agency in the world scaled across more than 90 markets with more than 8,000 media and performance specialists.

In her career, Locke has worked with some of the world’s most iconic brands, including General Motors, Adidas, NIKE, The GAP Brands, Microsoft, Estée Lauder Companies, Accor Hotels, Burberry, Heineken and Kering. She also received the e-Microsoft Bing “Lifetime Achievement” award, for her contribution to the digital advertising industry, and Fast Company listed her on its list of “25 Top Women Business Builders.”

“Direct Digital Holdings is very pleased to welcome Misty to our Board of Directors,” said Mark D. Walker, Direct Digital Holdings Co-Founder, Chairman and Chief Executive Officer. “Misty brings a tremendous amount of industry insight and expertise to our company and will be a valuable asset for the senior leadership team and our strategic decision-making. Direct Digital Holdings is a pioneering force in the programmatic ad industry, and with Misty’s contributions, along with the dynamic leadership and breadth of experience offered by my fellow directors Tonie Leatherberry, Keith Smith and Richard Cohen, I am pleased with our fortified Board of Directors. Such bench strength will enable Direct Digital Holdings to continue to lead with a dynamic and inclusive approach, come up with innovative solutions for brands of all sizes and use advanced technology solutions for our tailored digital strategies.”

“Direct Digital Holdings has seen strong and resilient growth in a time where the industry overall is facing significant disruption and headwinds,” added Locke. “I look forward to supporting the company’s continued expansion and joining a pioneering team delivering leading digital advertising solutions for clients and especially those in multicultural communities.”

Her appointment to the Direct Digital Holdings Board of Directors comes less than a year after the Company listed on the Nasdaq Stock Market. She joins other outside board members, including Ms. Leatherberry and Mr. Cohen.

Locke graduated from the University of Texas at Austin with a Bachelor’s Degree in Corporate Communications.

Forward Looking Statements

This press release may contain forward-looking statements within the meaning of federal securities laws, including the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and which are subject to certain risks, trends and uncertainties.

As used below, “we,” “us,” and “our” refer to Direct Digital Holdings. We use words such as “could,” “would,” “may,” “might,” “will,” “expect,” “likely,” “believe,” “continue,” “anticipate,” “estimate,” “intend,” “plan,” “project” and other similar expressions to identify forward-looking statements, but not all forward-looking statements include these words. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements.

All of our forward-looking statements involve estimates and uncertainties that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Our forward-looking statements are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance expressed in or implied by the forward-looking statements, including, but not limited to: our dependence on the overall demand for advertising, which could be influenced by economic downturns; any slow-down or unanticipated development in the market for programmatic advertising campaigns; the effects of health epidemics, such as the ongoing global COVID-19 pandemic; operational and performance issues with our platform, whether real or perceived, including a failure to respond to technological changes or to upgrade our technology systems; any significant inadvertent disclosure or breach of confidential and/or personal information we hold, or of the security of our or our customers’, suppliers’ or other partners’ computer systems; any unavailability or non-performance of the non-proprietary technology, software, products and services that we use; unfavorable publicity and negative public perception about our industry, particularly concerns regarding data privacy and security relating to our industry’s technology and practices, and any perceived failure to comply with laws and industry self-regulation; restrictions on the use of third-party “cookies,” mobile device IDs or other tracking technologies, which could diminish our platform’s effectiveness; any inability to compete in our intensely competitive market; any significant fluctuations caused by our high customer concentration; any violation of legal and regulatory requirements or any misconduct by our employees, subcontractors, agents or business partners; any strain on our resources, diversion of our management’s attention or impact on our ability to attract and retain qualified board members as a result of being a public company; our dependence, as a holding company, of receiving distributions from Direct Digital Holdings, LLC to pay our taxes, expenses and dividends; and other factors and assumptions discussed in the “Risk Factors,” “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and other sections of our filings with the SEC that we make from time to time. Should one or more of these risks or uncertainties materialize or should any of these assumptions prove to be incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement contained in this release to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

About Direct Digital Holdings

Direct Digital Holdings (Nasdaq: DRCT), owner of operating companies Colossus SSP, Huddled Masses, and Orange 142, brings state-of-the-art sell- and buy-side advertising platforms together under one umbrella company. Direct Digital Holdings’ sell-side platform, Colossus SSP, offers advertisers of all sizes extensive reach within general market and multicultural media properties. The company’s subsidiaries Huddled Masses and Orange142 deliver significant ROI for middle market advertisers by providing data-optimized programmatic solutions at scale for businesses in sectors that range from energy to healthcare to travel to financial services. Direct Digital Holdings’ sell- and buy-side solutions manage approximately 90,000 clients monthly, generating over 100 billion impressions per month across display, CTV, in-app and other media channels. Direct Digital Holdings is the ninth black-owned company to go public in the U.S and was named a top minority-owned business by The Houston Business Journal.

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/direct-digital-holdings-appoints-misty-locke-former-global-chief-marketing-officer-for-dentsu-media-to-board-of-directors-301724253.html

SOURCE Direct Digital Holdings

Released January 18, 2023

Understanding the Debt Ceiling Enough to Survive this Week

Posted on by phoffman@channelchek.com
Image Credit: Jeremy (Flickr)

Why America Has a Debt Ceiling: Five Questions Answered

The Treasury Department on Jan. 13, 2023, said it expects the U.S. to hit the current debt limit of $31.38 trillion on Jan. 19. After that, the government would take “extraordinary measures” – which could extend the deadline until May or June – to avoid default. A default, even a risk of default would drive bond prices (interest rates) much higher than they currently are.

Is the debt ceiling still a good idea?

Economist Steve Pressman is a professor at The New School in Manhattan, below he explains the debt ceiling is and why we have it – and then shares his opinion on its usefulness.

What is the Debt Ceiling?

Like the rest of us, governments must borrow when they spend more money than they receive. They do so by issuing bonds, which are IOUs that promise to repay the money in the future and make regular interest payments. Government debt is the total sum of all this borrowed money.

The debt ceiling, which Congress established a century ago, is the maximum amount the government can borrow. It’s a limit on the national debt.

What’s the National Debt?

On Jan. 10, 2023, U.S. government debt was $30.92 trillion, about 22% more than the value of all goods and services that will be produced in the U.S. economy this year.

Around one-quarter of this money the government actually owes itself. The Social Security Administration has accumulated a surplus and invests the extra money, currently $2.8 trillion, in government bonds. And the Federal Reserve holds $5.5 trillion in U.S. Treasurys.

The rest is public debt. As of October 2022, foreign countries, companies and individuals owned $7.2 trillion of U.S. government debt. Japan and China are the largest holders, with around $1 trillion each. The rest is owed to U.S. citizens and businesses, as well as state and local governments.

Source: FRED/Datawrapper

Why is There a Borrowing Limit

Before 1917, Congress would authorize the government to borrow a fixed sum of money for a specified term. When loans were repaid, the government could not borrow again without asking Congress for approval.

The Second Liberty Bond Act of 1917, which created the debt ceiling, changed this. It allowed a continual rollover of debt without congressional approval.

Congress enacted this measure to let then-President Woodrow Wilson spend the money he deemed necessary to fight World War I without waiting for often-absent lawmakers to act. Congress, however, did not want to write the president a blank check, so it limited borrowing to $11.5 billion and required legislation for any increase.

The debt ceiling has been increased dozens of times since then and suspended on several occasions. The last change occurred in December 2021, when it was raised to $31.38 trillion.

Source: Congressional Research Service/Datawrapper

What Happens When the US Hits the Ceiling?

Currently, the U.S. Treasury has under $400 billion cash on hand, and the U.S. government expects to borrow around $100 billion each month this year.

When the U.S. nears its debt limit, the Treasury secretary – currently Janet Yellen – can use “extraordinary measures” to conserve cash, which she indicated would begin on Jan. 19. One such measure is temporarily not funding retirement programs for government employees. The expectation will be that once the ceiling is raised, the government would make up the difference. But this will buy only a small amount of time.

If the debt ceiling isn’t raised before the Treasury Department exhausts its options, decisions will have to be made about who gets paid with daily tax revenues. Further borrowing will not be possible. Government employees or contractors may not be paid in full. Loans to small businesses or college students may stop.

When the government can’t pay all its bills, it is technically in default. Policymakers, economists and Wall Street are concerned about a calamitous financial and economic crisis. Many fear that a government default would have dire economic consequences – soaring interest rates, financial markets in panic and maybe an economic depression.

Under normal circumstances, once markets start panicking, Congress and the president usually act. This is what happened in 2013 when Republicans sought to use the debt ceiling to defund the Affordable Care Act.

But we no longer live in normal political times. The major political parties are more polarized than ever, and the concessions McCarthy gave Republicans may make it impossible to get a deal on the debt ceiling.

Is There a Better Way?

One possible solution is a legal loophole allowing the U.S. Treasury to mint platinum coins of any denomination. If the U.S. Treasury were to mint a $1 trillion coin and deposit it into its bank account at the Federal Reserve, the money could be used to pay for government programs or repay government bondholders. This could even be justified by appealing to Section 4 of the 14th Amendment to the U.S. Constitution: “The validity of the public debt of the United States … shall not be questioned.”

Few countries even have a debt ceiling. Other governments operate effectively without it. America could too. A debt ceiling is dysfunctional and periodically puts the U.S. economy in jeopardy because of political grandstanding.

The best solution would be to scrap the debt ceiling altogether. Congress already approved the spending and the tax laws that require more debt. Why should it also have to approve the additional borrowing?

It should be remembered that the original debt ceiling was put in place because Congress couldn’t meet quickly and approve needed spending to fight a war. In 1917 cross-country travel was by rail, requiring days to get to Washington. This made some sense then. Today, when Congress can vote online from home, this is no longer the case.

A Dirty Challenge for Autonomous Vehicle Designers

Posted on by phoffman@channelchek.com
Image Credit: Christine Daniloff (MIT)

Computers that Power Self-Driving Cars Could be a Huge Driver of Global Carbon Emissions

Adam Zewe | MIT News Office

In the future, the energy needed to run the powerful computers on board a global fleet of autonomous vehicles could generate as many greenhouse gas emissions as all the data centers in the world today.

That is one key finding of a new study from MIT researchers that explored the potential energy consumption and related carbon emissions if autonomous vehicles are widely adopted.

The data centers that house the physical computing infrastructure used for running applications are widely known for their large carbon footprint: They currently account for about 0.3 percent of global greenhouse gas emissions, or about as much carbon as the country of Argentina produces annually, according to the International Energy Agency. Realizing that less attention has been paid to the potential footprint of autonomous vehicles, MIT researchers built a statistical model to study the problem. They determined that 1 billion autonomous vehicles, each driving for one hour per day with a computer consuming 840 watts, would consume enough energy to generate about the same amount of emissions as data centers currently do.

The researchers also found that in over 90 percent of modeled scenarios, to keep autonomous vehicle emissions from zooming past current data center emissions, each vehicle must use less than 1.2 kilowatts of power for computing, which would require more efficient hardware. In one scenario — where 95 percent of the global fleet of vehicles is autonomous in 2050, computational workloads double every three years, and the world continues to decarbonize at the current rate — they found that hardware efficiency would need to double faster than every 1.1 years to keep emissions under those levels.

“If we just keep the business-as-usual trends in decarbonization and the current rate of hardware efficiency improvements, it doesn’t seem like it is going to be enough to constrain the emissions from computing onboard autonomous vehicles. This has the potential to become an enormous problem. But if we get ahead of it, we could design more efficient autonomous vehicles that have a smaller carbon footprint from the start,” says first author Soumya Sudhakar, a graduate student in aeronautics and astronautics.

Sudhakar wrote the paper with her co-advisors Vivienne Sze, associate professor in the Department of Electrical Engineering and Computer Science (EECS) and a member of the Research Laboratory of Electronics (RLE); and Sertac Karaman, associate professor of aeronautics and astronautics and director of the Laboratory for Information and Decision Systems (LIDS). The research appears today in the January-February issue of IEEE Micro.

Modeling Emissions

The researchers built a framework to explore the operational emissions from computers on board a global fleet of electric vehicles that are fully autonomous, meaning they don’t require a backup human driver.

The model is a function of the number of vehicles in the global fleet, the power of each computer on each vehicle, the hours driven by each vehicle, and the carbon intensity of the electricity powering each computer.

“On its own, that looks like a deceptively simple equation. But each of those variables contains a lot of uncertainty because we are considering an emerging application that is not here yet,” Sudhakar says.

For instance, some research suggests that the amount of time driven in autonomous vehicles might increase because people can multitask while driving, and the young and the elderly could drive more. But other research suggests that time spent driving might decrease because algorithms could find optimal routes that get people to their destinations faster.

In addition to considering these uncertainties, the researchers also needed to model advanced computing hardware and software that didn’t exist yet.

To accomplish that, they modeled the workload of a popular algorithm for autonomous vehicles, known as a multitask deep neural network, because it can perform many tasks at once. They explored how much energy this deep neural network would consume if it were processing many high-resolution inputs from many cameras with high frame rates simultaneously.

When they used the probabilistic model to explore different scenarios, Sudhakar was surprised by how quickly the algorithms’ workload added up.

For example, if an autonomous vehicle has 10 deep neural networks processing images from 10 cameras, and that vehicle drives for one hour a day, it will make 21.6 million inferences each day. One billion vehicles would make 21.6 quadrillion inferences. To put that into perspective, all of Facebook’s data centers worldwide make a few trillion inferences each day (1 quadrillion is 1,000 trillion).

“After seeing the results, this makes a lot of sense, but it is not something that is on a lot of people’s radar. These vehicles could actually be using a ton of computer power. They have a 360-degree view of the world, so while we have two eyes, they may have 20 eyes, looking all over the place and trying to understand all the things that are happening at the same time,” Karaman says.

Autonomous vehicles would be used for moving goods, as well as people, so there could be a massive amount of computing power distributed along global supply chains, he says. And their model only considers computing — it doesn’t take into account the energy consumed by vehicle sensors or the emissions generated during manufacturing.

Keeping Emissions in Check

To keep emissions from spiraling out of control, the researchers found that each autonomous vehicle needs to consume less than 1.2 kilowatts of energy for computing. For that to be possible, computing hardware must become more efficient at a significantly faster pace, doubling in efficiency about every 1.1 years.

One way to boost that efficiency could be to use more specialized hardware, which is designed to run specific driving algorithms. Because researchers know the navigation and perception tasks required for autonomous driving, it could be easier to design specialized hardware for those tasks, Sudhakar says. But vehicles tend to have 10- or 20-year lifespans, so one challenge in developing specialized hardware would be to “future-proof” it so it can run new algorithms.

In the future, researchers could also make the algorithms more efficient, so they would need less computing power. However, this is also challenging because trading off some accuracy for more efficiency could hamper vehicle safety.

Now that they have demonstrated this framework, the researchers want to continue exploring hardware efficiency and algorithm improvements. In addition, they say their model can be enhanced by characterizing embodied carbon from autonomous vehicles — the carbon emissions generated when a car is manufactured — and emissions from a vehicle’s sensors.

While there are still many scenarios to explore, the researchers hope that this work sheds light on a potential problem people may not have considered.

“We are hoping that people will think of emissions and carbon efficiency as important metrics to consider in their designs. The energy consumption of an autonomous vehicle is really critical, not just for extending the battery life, but also for sustainability,” says Sze.

Reprinted with permission of MIT News” (http://news.mit.edu/)