A Change in Direction: H-1B Visas

The WSJ has an interesting report on H-1B visas, they seem to little used now as compared to say three years ago. There is a principle inherent in human transactions which simply stated is: if there are obstacles then humans will find highly adaptive means and methods to work around those obstacles to achieve their goals. Simply stated in the H-1B case the goals was becoming prosperous, NOT living in the US, and as the US became more difficult and the ability to become prosperous became equally viable say back in India or China, well, so be it, get the free education here and then go back and create the value there. The law of unintended consequences.

Namely the US is now funding via its taxes the graduate education of many foreign nationals, why, because US students go to business or law, never a guarantee of success, but not engineering, why because the see less opportunity. This is a canary in the coal mine moment! Is Washington or the Universities listening, no, frankly they are in collusion just to build up schools, the result, we are funding our own demise.

As the WSJ states:

"It's baffling that H-1Bs aren't picking up if the economy is stronger," said Steve Miller, a Seattle attorney who prepares petitions for employers in high tech, retail and other sectors.

For years, the H-1B program was a mainstay for software companies, architecture firms and other businesses that seek foreign nationals to fill certain jobs. Demand for the visas by companies outstripped supply, and companies such as Microsoft Corp. lobbied the U.S. government to raise the cap on the number of visas.

 No, it is not baffling, it is obvious. You can achieve your goal now in India and China and you can do so off the taxpayers of the US! As the WSJ states:

Nutan Kunduri, a software engineer who stayed in the U.S. on an H-1B visa after completing her studies, said she decided to accept a job offer in India less than a year into working in Silicon Valley.

"Ten years back, I had this 'nothing will change in our country' attitude," she said. A recent visit to India made her realize that "for an IT professional like me, India is the place to be, with its booming tech industry."

Abhinav Tripati, a software engineer with a U.S. company in Boston, also plans to return to India, where salaries are slightly lower but the cost of living is significantly cheaper. "I see my friends back home enjoying most of the comforts of Western life," he said, with the added bonus of being close to friends and aging parents. "We can't often bring our parents to the U.S., as it's getting difficult to obtain visas for them," he said.

 Yes, India is booming as is China. They look at the US and its economy and they become terrified. Why stay here? Get educated here and then go back. This is a major policy issue which we shall see hit our economy in another ten years.

Employment: Still a Mixed Bag

The unemployment went up to 9.0% from 8.9 and we suspect then it may be higher after further analysis. The unemployment based upon our January 2008 baseline is 12.2% and there seems to be a decline there albeit slow and low!

The above shows the details but we see some slight improvement but frankly nothing to cheer about. Employment losses are themselves the main cause of a deficit, other than the usual factors of excess Government spending.

The key question is what will stimulate economic growth, the problem is that we have decreased demand, increased productivity and outsourcing of those elements which we can get results off shore. None of these will change short term. Thus deficit changes will be painful with Government expenditure cuts, DoD included.

Fat, Insulin, Diabetes and Cancer

We have discussed the issues of obesity, the impact of the inflammatory response with excess fat and the resultant impact on Type 2 Diabetes and even cancer. Science has an article today which states:

Inflammasomes are multiprotein complexes that are activated by the innate immune system in response to pathogens and endogenous “danger signals” through the actions of caspase-1; this activation culminates in the production of the proinflammatory cytokines IL-1β and IL-18. 

Because a high-fat diet and increased free fatty acids have been linked to type 2 diabetes, Wen and colleagues asked whether free fatty acids could activate the inflammasome and mediate metabolic changes. The authors demonstrated that palmitate, as part of a high-fat diet, triggered inflammasome activation in macrophages through the generation of reactive oxygen species (ROS), resulting in increased secretion of IL-1β and IL-18.

In vivo, high-fat diet led to inflammasome activation and impaired insulin signaling with increased insulin resistance in wild-type mice, whereas similarly fed mice deficient for inflammasome genes Nlrp3 or Pycard were protected from these effects. Most surprisingly, palmitate treatment in macrophages reduced 5′ adenosine monophosphate-activated protein kinase (AMPK) activity and autophagy, the cellular process that facilitates the turnover of damaged proteins and organelles, with a concomitant increase in mitochondrial ROS. 

Pharmacological activation of AMPK in palmitate-treated macrophages rescued these defects, indicating a previously unknown role for fatty acid in the upstream regulation of autophagy and mitochondrial ROS through AMPK signaling. 

Just what we have been arguing for a few years. Work continues.

Interesting Poster on Cancer Stem Cell

Nature has an interesting poster on the cancer stem cell, CSC. The poster states:

The concept of the cancer stem cell (CSC) has taken off rapidly over the past 10 years. CSCs are cells with properties that are similar to those described for tissue stem cells: self-renewal and asymmetric division resulting in the generation of daughter cells destined to differentiate, enabling the regeneration of a tissue. Initial research into the properties of CSCs was based on identifying and verifying markers of this subset of cancer cells. However, most studies have now moved on to understanding the biology of CSCs and the cancers in which they maintain tumour growth, as well as how and why they are able to serially generate a tumour. It is thought that a key element regulating the biology of stem cells is  their niche — cells and extracellular matrix that support self-renewal and survival. As we begin to  understand the pathways that are crucial for the properties of CSCs, including signals provided by the niche, we will hopefully be able to effectively target this cell population. Linked to the identification of CSCs is the cell of origin. These are cells that when mutated are able to give rise to a tumour.  Although these cells may share properties with CSCs, in most cases it is not yet clear whether these cells are one and the same. This poster highlights some of the recent findings regarding the biology of CSCs and the identification of cell types from which cancers can arise. 

As regards to prostate cancer they state:

In the normal prostate, epithelial cells with tissue-regenerating capacity that are Sca1+, CD49fhi, TROP2hi, CD44+, CD133+ and CD117+ (mouse) or CD133+, CD44+, CD49fhi and TROP2+ (human) seem to reside in the basal layer of the prostate. However, studies in mice indicate the existence of luminal cells with progenitor characteristics that can regenerate the prostate after androgen withdrawal. As castration resistance is also a property of basal stem cells in the prostate, it suggests a complex cellular hierarchy. Studies in mice indicate that prostate tumours can arise after transformation of basal stem cells and luminal progenitor cells. A subset of cells that are CD133+, a2b1 + and CD44+ and have basal cell characteristics have been shown to be tumorigenic, but whether these cells can serially propagate tumours in mice has yet to be verified.

Again and interesting experiment can be performed:

1. Take biopsies from N men with HGPIN diagnosed on initial biopsies. Perform sampling from say 20 cores.

2. Wait 9 months, and rebiopsy, again with near saturation cores, 20+ .. There are three possible outcomes:

a. HGPIN remains
b. PCa has been determined
c. HGPIN regresses and only benign cells are left

3. The question is why did (c) above happen? What percent of the HGPIN have regressed? If the percent of HGPIN that have regressed equals the probability of having actually excised the cancer stem cell or cells, we can calculate this, then by chance we have removed the CSC from the HGPIN and this would affirm its existence by inference.

Now a similar article appears in Science which speaks to colon cancer and the cancer stem cell theory:

In normal colon tissue, intestinal stem cells (ISCs) that reside at the base of mucosal wells, named crypts, expand through mitosis and move upward toward the crypt tip. The cells then undergo cell cycle arrest and terminal differentiation, finally becoming the mucosal epithelium of the colon. In the recent study, the investigators identified in mouse ISCs a gene signature that was specifically marked by high expression of the ephrin type-B receptor 2 gene(Ephb2), which encodes a receptor tyrosine kinase, the leucine-rich repeat–containing G protein–coupled receptor 5 gene (Lgr5), which encodes a G-coupled protein receptor of unknown function, and ~50 other genes. This gene signature also defined a specific population of stem-like cells at the base of colorectal tumor structures in mice that were morphologically similar to normal mouse intestinal crypts. The authors then similarly inspected tumor samples from 340 colorectal patients and discovered a 10-fold increase in the relative risk of recurrence in patients whose tumors displayed high expression of the human counterparts of the mouse ISC genes, relative to patients whose tumors showed low expression of these genes. 

To test whether the mouse colorectal tumor cells with the ISC gene signature were cancer stem cells, the investigators isolated the cells and introduced them into an immunodeficient mouse model. The stem-like cancer cells demonstrated both a tumor-initiating capacity and self-renewal capability in vivo. These findings pinpoint potential markers that may allow a clinician to predict a patient’s future with respect to recurrence. These differentially expressed genes also may give rise to therapeutic targets that quell cancer stem cells. 

What is clear is that the CSC is becoming a viable model for understanding cancer at another level.

Happy May Day: The Spring Kind

Happy May Day, spring flowers, sun, the end of winter. Not the other kind. Enjoy.

Inflation: A Look at the Baseline Portfolio

In December 2008 we assembled a Baseline Portfolio of stocks which we used to track market sentiment and inflation anticipations. The market all too often reflects anticipated moves. In view of the fact that interest rates are artificially low, and that we now believe that inflation is in the wings if not already starting, and that the other leading indicators show a 10% or plus inflation, we felt it worth a return to the Baseline.

Recall that the Baseline was assembled to reflect the following:

1. A 5.5% dividend payout which in December 2008 was a reasonable limited risk return.

2. The elements were broadly reflective of major elements of the economy.

3. None of the elements were considered as trendy.

4. We would take the position and do nothing thereafter while the current Administration was in place.

The first results are above. We see an annualized return of 30%. That is before any dividends. Why that return, are these companies doing so well, and the answer is not really. Perhaps in an environment anticipating zero inflation we would see say 8-10%. The added amount we believe reflects inflation. Current and anticipated. We argue that there is about a 10% contribution from current inflation plus an added 10% from anticipated.

The above is the same data but showing the return slightly differently. Note the flat return on an on going forward basis.

The above shows the daily returns. The problem we see here is the sudden increase, that we believe is anticipated high inflation rates. People are streaming in for protection.

This analysis thus anticipates a 10% inflation on a going forward basis.