How Does the Moderna Cancer Vaccine Work?

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

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

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?

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

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

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.

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.

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

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/)

Release – Salem Media Group Announces the Promotion of Andy Massingill

Research News and Market Data on SALM

January 12, 2023 3:30pm EST

IRVING, Texas–(BUSINESS WIRE)– Salem Media Group, Inc. (NASDAQ: SALM) announced today the promotion of Andy Massingill to the position of Senior Director of Digital Sales. Jon Latzer, Vice President/General Manager of Salem Surround said, “Over the past three years, Andy has led his team to unprecedented revenue heights. His leadership across the Western Region played a significant factor in Salem’s overall revenue growth. In addition to Andy’s leadership for the Western Region, Andy will work closely with Chris Gould, Senior Vice President National Programming and Ministry Relations and all our National Ministry partners to better leverage our digital assets, generating more time with our quality audience while delivering outstanding results,” Latzer said.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230112005786/en/

Andy Massingill (Photo: Business Wire)

“The last three years have been an incredible journey with Salem and the Western Region. I’m proud of our work, the work we will continue to do, and the relationships established across the board. I am very excited to work with Chris and our National Ministry partners who are at the core fabric of what Salem stands for,” said Massingill.

ABOUT SALEM MEDIA GROUP:

Salem Media Group is America’s leading multimedia company specializing in Christian and conservative content, with media properties comprising radio, digital media and book and newsletter publishing. Each day Salem serves a loyal and dedicated audience of listeners and readers numbering in the millions nationally. With its unique programming focus, Salem provides compelling content, fresh commentary and relevant information from some of the most respected figures across the Christian and conservative media landscape. Learn more about Salem Media Group, Inc. at www.salemmedia.comFacebook and Twitter.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230112005786/en/

Evan D. Masyr
Executive Vice President and Chief Financial Officer
(805) 384-4512
evan@salemmedia.com

Source: Salem Media Group, Inc.

Released January 12, 2023

Organs-On-A-Chip Minimize Late-Stage Drug Development Failures

Image: Lung-on-a-Chip,  National Center for Advancing Translational Sciences (Flickr)

Organ-On-A-Chip Models Allow Researchers to Conduct Studies Closer to Real-Life Conditions – and Possibly Grease the Drug Development Pipeline

Bringing a new drug to market costs billions of dollars and can take over a decade. These high monetary and time investments are both strong contributors to today’s skyrocketing health care costs and significant obstacles to delivering new therapies to patients. One big reason behind these barriers is the lab models researchers use to develop drugs in the first place.

Preclinical trials, or studies that test a drug’s efficacy and toxicity before it enters clinical trials in people, are mainly conducted on cell cultures and animals. Both are limited by their poor ability to mimic the conditions of the human body. Cell cultures in a petri dish are unable to replicate every aspect of tissue function, such as how cells interact in the body or the dynamics of living organs. And animals are not humans – even small genetic differences between species can be amplified to major physiological differences.

Fewer than 8% of successful animal studies for cancer therapies make it to human clinical trials. Because animal models often fail to predict drug effects in human clinical trials, these late-stage failures can significantly drive up both costs and patient health risks.

To address this translation problem, researchers have been developing a promising model that can more closely mimic the human body – organ-on-a-chip.

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 Chengpeng Chen, Assistant Professor of Chemistry and Biochemistry, University of Maryland, Baltimore County

As an analytical chemist, I have been working to develop organ and tissue models that avoid the simplicity of common cell cultures and the discrepancies of animal models. I believe that, with further development, organs-on-chips can help researchers study diseases and test drugs in conditions that are closer to real life.

What are Organs-On-Chips?

In the late 1990s, researchers figured out a way to layer elastic polymers to control and examine fluids at a microscopic level. This launched the field of microfluidics, which for the biomedical sciences involves the use of devices that can mimic the dynamic flow of fluids in the body, such as blood.

Advances in microfluidics have provided researchers a platform to culture cells that function more closely to how they would in the human body, specifically with organs-on-chips. The “chip” refers to the microfluidic device that encases the cells. They’re commonly made using the same technology as computer chips.

Not only do organs-on-chips mimic blood flow in the body, these platforms have microchambers that allow researchers to integrate multiple types of cells to mimic the diverse range of cell types normally present in an organ. The fluid flow connects these multiple cell types, allowing researchers to study how they interact with each other.

This technology can overcome the limitations of both static cell cultures and animal studies in several ways. First, the presence of fluid flowing in the model allows it to mimic both what a cell experiences in the body, such as how it receives nutrients and removes wastes, and how a drug will move in the blood and interact with multiple types of cells. The ability to control fluid flow also enables researchers to fine-tune the optimal dosing for a particular drug.

The lung-on-a-chip model, for instance, is able to integrate both the mechanical and physical qualities of a living human lung. It’s able to mimic the dilation and contraction, or inhalation and exhalation, of the lung and simulate the interface between the lung and air. The ability to replicate these qualities allows researchers to better study lung impairment across different factors.

Bringing Organs-On-Chips to Scale

While organ-on-a-chip pushes the boundaries of early-stage pharmaceutical research, the technology has not been widely integrated into drug development pipelines. I believe that a core obstacle for wide adoption of such chips is its high complexity and low practicality.

Current organ-on-a-chip models are difficult for the average scientist to use. Also, because most models are single-use and allow only one input, which limits what researchers can study at a given time, they are both expensive and time- and labor-intensive to implement. The high investments required to use these models might dampen enthusiasm to adopt them. After all, researchers often use the least complex models available for preclinical studies to reduce time and cost.

This chip mimics the blood-brain barrier. The blue dye marks where brain cells would go, and the red dye marks the route of blood flow. Vanderbilt University/Flickr

Lowering the technical bar to make and use organs-on-chips is critical to allowing the entire research community to take full advantage of their benefits. But this does not necessarily require simplifying the models. My lab, for example, has designed various “plug-and-play” tissue chips that are standardized and modular, allowing researchers to readily assemble premade parts to run their experiments.

The advent of 3D printing has also significantly facilitated the development of organ-on-a-chip, allowing researchers to directly manufacture entire tissue and organ models on chips. 3D printing is ideal for fast prototyping and design-sharing between users and also makes it easy for mass production of standardized materials.

I believe that organs-on-chips hold the potential to enable breakthroughs in drug discovery and allow researchers to better understand how organs function in health and disease. Increasing this technology’s accessibility could help take the model out of development in the lab and let it make its mark on the biomedical industry.

Oil Producers Had a Great Year; They Could Repeat in 2023

Image Credit: Mike Mozart (Flickr)

Can Oil Companies Continue Their Outperformance?

If you predicted that oil prices would go up last year, you were correct. If you predicted they’d go down, you were also correct. I dare say that even with insight as to what was to come, many analysts would have had the timing completely reversed from what actually happened. Why? What caused the volatility? And most importantly, what can we learn from this to help us in 2023 and beyond? After all, in 2022, oil company Exxon increased in market value more than any other company in the S&P 500. It became the eighth largest with a 74.3% increase in share price, up from the 27th largest a year ago. In contrast, WTI Crude closed near its low for the year, the dynamics involved are certainly worth investor exploration.

Background

Twelve months ago, according to the Energy Information Administration (EIA) the price of West Texas Intermediate (WTI) crude oil was considered high at $75.99/bbl. WTI closed the year less than 6% higher at $80.47/bbl. But this is not indicative of the wild surprises in between. There are two events that had a major impact during those twelve months.

Russia’s late February invasion of its neighbor helped crude prices to shoot up above $120/bbl. Oil has only visited that level once before (2008). Very few could have expected this event, so the expectations leading up to the early months of 2022 were, at worst moderate price declines to moderate increases. Those expecting some price increases pointed to the ongoing supply shortfall related to the pandemic response. This is the period that surprised traders with oil on the way up. Then as it became evident the war would be prolonged and Europe and other regions would take steps to move away from Russia’s output, expectations were for further price increases. What was not anticipated was a massive release of oil from the U.S. Strategic Petroleum Reserves. Along with releases from reserves in other parts of the world, oil prices sank. But, fear of the European winter, lack of support from OPEC+, and anticipation of price caps on Russian oil creating a loss of supply had many talking about upward pressure by year-end. It has not materialized.

The Crude World Order (OPIC?)

What’s changed the expected results related to oil prices and even producer prices? First off, there was a level of unity never-before-experienced and organization among petroleum-importing countries among consuming nations. The pushback and, to some degree taking charge, by nations that are net consumers began in late Spring 2022 when 31 members of the International Energy Agency (IEA) decided to all release oil from reserves to quench demand and impact prices.

The Paris-based IEA promotes what it believes are beneficial energy situations for consumers. It had taken the lead on emergency measures before, but never with this much unity or on this scale.  The amount of reserves sold into the oil market amounts to less than 1%, but it is estimated to have shaved $20 or more off per barrel oil prices in the spring and summer. Brent crude, the international oil benchmark, hit its peak settlement value of $127.98 per barrel in March but had fallen below $100 by July. Recently it has been trading near $80.

Certainly, the drawdown on reserves which borrowed from the future will need to be replenished. Pulling from reserves is unsustainable and therefore limits bargaining power. Nations have pledged to return their reserves to a level deemed in line with national security (the U.S. has a 50-day reserve supply), but the timing is uncertain.

What is positive for consumers is the IEA has learned to stand firm and work together.

Why are Oil Company Stocks Outperformers?

Crude is roughly the same price now as it was at the beginning of last year. Yet, factors including conservation efforts and China Covid policies have caused limited demand growth. And despite favorable economics currently, energy companies have been slow to drill new wells. U.S. rig count, as reported by Baker Hughes, crept up to 779 rigs by the end of the year. This compares to a peak level of 1,600 in 2014.

So why, as mentioned earlier, are oil companies performing as tech companies did in 2021?

On the surface, one might think energy company stock prices would be weakening, but this isn’t the case there are other factors at play. Michael Heim, Senior Energy Analyst, at Noble Capital Markets, explains in his newly released Q4 2022 Energy Industry Report, “Operating cash flow has soared over the last two years, but capital expenditures have barely increased. The result has been a large increase in dividend payments, share repurchases, and debt reduction.” Heim’s report further explains that while capital expenditures lagged well behind, it is inaccurate to conclude that oil production has not increased. The Noble Capital Markets analyst explains, “…current production levels are above that during peak drilling periods in 2014. The implication is that drilling has become more productive. While drilling advances such as the use of horizontal drill and fracking in shale deposits may be old hat, it is worth noting that drillers have been refining drilling techniques for individual drilling locations.” Drillers are improving techniques, improving efficiencies and maximizing production per dollar spent. Heim also attributes some of the efficiencies to well recompletions, which he explains are less expensive to put in service.

Read the Noble Capital Markets Energy industry report here.

Take Away

The S&P index that tracks the Energy sector gained 53.8% last year. If you had had a crystal ball that told you about the events that would transpire, such as the European war, and oil returning to its starting place, it’s a rare investor that would expect the drillers/producers to increase over 50%. While all situations have their own circumstances, understanding why price action happened can provide greater preparedness to face the markets each year.

Sign-up for no-cost Channelchek and receive research reports, articles, and even video interviews with company executives in your inbox each morning. Sign-up here.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.iea.org/

https://oilprice.com/Energy/Energy-General/The-Fall-Of-Tesla-And-The-Rise-of-Exxon-Amid-The-Energy-Crisis.html

https://oilprice.com/Energy/Energy-General/The-Fall-Of-Tesla-And-The-Rise-of-Exxon-Amid-The-Energy-Crisis.html

https://www.forbes.com/sites/rrapier/2022/12/31/the-year-in-energy-prices/?sh=59b071fa5314

https://www.eia.gov/petroleum/weekly/

https://www.channelchek.com/news-channel/energy-industry-report-energy-stocks-resume-their-upward-trend-is-80-oil-the-new-norm

Michael Burry Expects Huge Swings in 2023

Image: Michael Burry on the Set of “The Big Short” (Twitter, @michaeljburry)

Washington’s Economic Playbook According to Michael Burry

One benefit to Elon Musk purchasing Twitter and ridding the platform of many of the auto posts on well-followed accounts is that the well-followed Michael Burry is no longer deleting his tweets the same day as posted. Burry, who began the new year tweeting with a very clear economic roadmap, said less than a month ago that he trusts Elon. As far as the hedge fund manager’s 2023 economic roadmap, his expectations show that he is critical of all those in Washington that have a hand on the economic steering wheel and continue to resist oversteering.

Source: Twitter (@michaeljburry)

While it can be frustrating for someone like Burry or any investor to forecast missteps by those that most impact the economy, especially if the official entities continue to repeat their behaviors, there is some consolation in the idea that patient investors can use these repeated actions to enhance their account’s performance.

Burry’s New Year’s Message

In 50 words, Dr. Burry, the investor made famous by Christian Bale’s portrayal of him in the 2015 movie The Big Short, said that he expects that inflation for this part of the interest rate, or market cycle, has already passed its high. In fact, he expects that it will be unmistakable, as the year progresses, that the US has fallen into a recession. A recession that can’t be denied or redefined because it will be that deep.

With this economic weakness, the hedge fund manager expects that we will not only see lower CPI readings but by the second half of this year, inflation may even turn negative – deflationary readings.

Burry then goes on to say that this will cause stimulus from both the fed and fiscal policy. This stimulus will be overdone if keeping inflation at bay is the goal. He expects we will have an inflationary period that may outdo the one we are coming off., Burry tweeted. “Fed will cut and government will stimulate. And we will have another inflation spike.”

Source: Twitter (@michaeljburry)

Take Away

If you ask ten experts what will happen over the next 12 months, you will get ten or more conflicting projections. The Scion Asset Management CIO is often correct on what will eventually occur but just as often as he is right, he is far off on the timing. The scenarios that seem obvious to him have in the past played out a lot slower in the economy and marketplace.

His first tweet in 2023 said that he expects more of the same from the folks in Washington, including the Federal Reserve and the US Treasury. The fed is now pushing hard on the economic brake pedal, which will could cause activity to reach recessionary levels. He expects that this will be followed by a panic move to the gas pedal that will create shortages, increased demand, and consumer price increases.

If he is correct, this means different things to investors with different time horizons. But it appears that Burry expects the tightening cycle to end soon.

Paul Hoffman

Managing Editor, Channelchek

Source

Burry New Year’s tweet

https://nypost.com/2022/12/09/michael-burry-deletes-twitter-account-despite-declaring-elon-musk-has-his-trust/

Investor Opportunities that May Occur Early in 2023

Image Source: Jernej Furman

Will Stocks Snap Back After Tax-Loss Selling?

Offsetting portfolio capital gains by taking losses is permitted by the IRS. Within the tax guidelines, this generally occurs during the last month of the year as individuals and financial advisors strive to minimize money owed to the IRS. The stocks sold, naturally, are underperformers.  This activity has a tendency to set the stage for a late December rally or a January rebound. This is especially true of the sectors or asset classes that were most sold. This is because portfolio managers often wish to keep a similar allocation, which translates to them then waiting 30 days or more before buying something that may be viewed as substantially similar.

With the major indexes like the S&P 500, Nasdaq 100, and Small Cap S&P 600 all down double digits this year, there are stocks that are doing far worse than index averages – just as there are stocks doing far better. Of course, if you own an ETF, you have to treat it like it is one stock and cannot offset a good underlying individual company sold with an underperforming company. In this way, holders of individual company shares can benefit more because they will have more options. And may even find it easier to qualify for the additional $3,000 tax benefit the IRS allows. 

Source: Koyfin

Why Might January Reverse December’s Slide

What happens after the 30-day period? Some investors try to get in, or back in, early with the notion that the most beaten-down stocks from 30 days earlier, could quickly bounce back hard for a time. This would all begin to occur following what could be perceived as the tax loss selling dip, (aged 30 days). The so-called Santa Rally is somewhat attributed to this, but that rally has not occurred during December 2022. The chart above shows a very weak December. So the buying may be postponed until early next year.

Without substantial buying this December, the first month or two of 2023 may bring buying as investors replace holdings for allocation purposes, plus any additional purchases used to bring the beaten-down sectors’ portfolio weightings up to whatever fits the investors’ strategy.  

DoubleLine founder Jeffrey Gundlach told CNBC on Wednesday that risk assets will likely rally in January once retail investors finish tax-loss selling. Strategists at Evercore wrote on Nov. 30 that they were “buyers of stocks whose 2022 tax loss selling pressure will soon abate.”

Take Away

The main drivers of market moves next year are likely economic concerns such as inflation, recession, and monetary policy. But the potential for the most beaten down sectors this year, those that underperformed in December, may represent opportunity. The opportunity may not be long-lived, but for those involved in the markets, it is worth understanding why it may be occurring.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.cnbc.com/pro/follow-the-pros/

https://www.reuters.com/markets/us/tax-loss-selling-battered-us-stocks-could-spur-january-snap-back-2022-12-08/

https://www.investopedia.com/terms/t/tax-loss-carryforward.asp#:~:text=What%20Is%20a%20Tax%20Loss,reduce%20any%20future%20tax%20payments.

Investment Entry and Allocation Thoughts for 2023

Image Credit: Elena Penkova (Flickr)

As the Bear Market Melts Down, Where Will the Grass Be Greenest?

Bear Markets and snowmen have one thing in common; they don’t last forever.

The entry point into an investment can have a huge impact on performance. Exits tend to be more critical when the stock has shown that it is not performing as planned. While this kind of exit may result in a loss, it allows the investor to preserve capital, liquid assets they can deploy if another good entry presents itself. The major stock market indices for 2022 are down 20% and more. Has this sell-off provided for performance-producing entry points in some stocks? Let’s look where we are as the countdown to 2023 has already begun.

About this Bear Market

Bear markets end – they always have. Pinpointing an exact bottom is not possible, so trying to be the first in for that great entry point may include a few false starts and some unhoped-for exits. The current slide in the stock market started around January 1, 2022. This was because some doubted whether inflation was transient at the time; by March, most understood the Fed was concerned that price increases were pervasive.

Fed Chair Powell, along with many Fed Presidents, began speaking hawkishly to not unduly surprise and unsettle markets as the central bank unwound the liquidity used in response to the novel coronavirus. What followed was unprecedented. Overnight lending rates went from an effective 0.08% to an effective 4.33% during the course of the year. This is more than 52 times the base lending rate at the start of the year. With these increases, no wonder the bear market continued.

Where Are We Now?

Expectations of overnight rate hikes in 2023 are for another 0.50%-0.75% increase leaving the target at, or just north of, 5%. This increase in the cost of money is small (.17 times) compared to the massive (52 times) rocking the markets in 2022. 

So rate hikes are expected to be much lower as a percentage of current rates next year. And after the last FOMC meeting, markets have seemingly repriced lower with this expectation. If all goes as it is thought it will, the market is already priced for the worst. This is a bullish sign.

Source: Koyfin

Put another way; most believe that with Fed funds beginning 2022 around zero, we’re likely much closer to the end of the Fed Funds tightening than to the beginning.

Inflation (CPI) for December won’t be reported until January 12, 2023. The latest CPI numbers show YoY up 7.1% in November, a slowing from 7.7% in October, which tapered from 8.2% the month before. The November reading of 7.1% taken by itself is a long way away from the Fed’s 2% target. But the trend in the CPI and PCE deflator also suggest the Fed is likely to monitor previous hikes to see if they will have the desired impact.

The Fed Has Been Transparent

The Fed lowered rates in line with what they promised during the pandemic. Then after some transient talk, they raised rates as they expressed they would in 2022. Following the December FOMC meeting, they suggested they were not at the end, but the voting members’ expectations for where they will settle is an average of 5.40%. The forward-looking stock market, if they believe the Fed will again do as promised, should recognize this is a much lower increase. It is perhaps near the time to begin to build on positions. This could be the entry point many investors have been waiting for.

Small Cap Phenomenon

The chart below shows how much small cap stocks outperformed during the 12- months following the pandemic plunge. While small cap outperformance has been experienced during the past century of stocks’ post-sell-off periods, one only has to look back to the pandemic plunge to remember that it was small-caps (depicted below as IWM) that had been beaten down the most and by far outran the other major indices for the next year from the low of 2021.

Source: Koyfin

Could this small cap phenomenon occur again after markets reach the bottom? Data demonstrates that small cap stocks tend to lead following a period of economic dislocation. One reason is US small caps have more of their business within the states and as a bonus, do well with a rising dollar. Current conditions suggest exploring smaller stocks. They have outperformed large caps following nearly every bear market of the last century. And today, the dollar has risen above its six-month high and is trending higher. While past movement comparisons don’t always include all the crosscurrents of the future, a strong argument could be made that a turnaround is near and small caps may again be the leaders by a wide margin.

Some Disclosure

Channelchek, the investment information platform you’re now reding has small cap stocks as its primary focus. The deep platform provides data on over 6000 stocks, with quality research updated regularly on many of them. Channelchek also provides videos and articles that may inspire informed stock selection. Stock selection, rather than just plowing investment dollars into an indexed ETF, may be preferable as indexed ETFs include sectors and stocks that may not be worthy of your portfolio.

Diversification across asset classes, sectors, and market capitalizations is considered prudent for long-term portfolios; individual allocations can be built on depending on where we are in the business and interest rate cycle. This includes an allocation to small cap equities, which perhaps should be expanded if the Fed is near the end of its tightening cycle. It could always be reduced later if the economy is deep into a growth cycle.

Take Away

Although we do not have a crystal ball to know exactly when the best entry point in any company stock is, if a century’s worth of data is any guide, the period following the end of a market downturn has been a good time to increase exposure to the small cap sector.

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Paul Hoffman

Managing Editor, Channelchek

Sources

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

https://www.newyorklifeinvestments.com/insights/investing-in-small-caps-following-a-market-downturn

https://tradingeconomics.com/united-states/interest-rate