David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Email of the day on tobacco stocks and accelerating trends:

    As you rightly point out defensive stocks tend to outperform towards the end of the cycle, especially those that consistently pay a high dividend. I, like I suspect others in the collective hold BATs shares. Yesterday the price got hammered on a rumour that the FDA is proposing to ban menthol cigarettes. Wonder if you have any thoughts on what has happened ? Any crumbs of comfort to be had ?

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    GE Surges on $4 Billion Plan to Speed Cut to Baker Hughes Stake

    This article by Brendan Case and David Wethe for Bloomberg may be of interest to subscribers. Here is a section:

    “We like seeing GE’s new CEO Larry Culp hasten the pace of the company’s portfolio breakup to generate sale proceeds to de-lever the balance sheet,” Deane Dray, an analyst at RBC Capital Markets, said in a note to clients. “This is consistent with GE’s messaging that it has roughly $60 billion of potential sources of liquidity.”

    Culp took over six weeks ago from John Flannery, who succeeded Immelt in August 2017.

    GE was among Bridgewater’s new buys in the third quarter

    GE advanced 7.8 percent to $8.61 at the close in New York, the biggest gain in more than four months. The shares had tumbled 54 percent this year through Monday, the third-biggest drop on the S&P 500 Index.

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    Biogen CEO Sees Room to Pursue Two Similar Alzheimer's Hopefuls

    This article by Naomi Kresge for Bloomberg may be of interest to subscribers. Here is a section:

    Both compounds target beta amyloid, a protein consistently found in clumps in the brains of people with Alzheimer’s disease. Both are being tested in patients with very early signs of the disease, following a hypothesis that drugs might work best before Alzheimer’s advances. The companies are still talking with regulators about how to proceed, the CEO said.

    Vounatsos, like others researching ways to fight the disease, said it may become necessary to combine different treatments, or give one after the other. “Alzheimer’s disease is so complex that a single silver
    bullet will not solve the complexity of the disease for all patient types during the continuum of the evolution of the disease,” he said.

    Before companies can engineer combinations, they need to find one that works. Biogen won’t disclose when it expects the final-stage study for its potential blockbuster aducanumab to finish, but it enrolled the last patient over the summer. The trial is planned to be about 18 months long.

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    US Equity Strategy

    Thanks to a subscriber for this report from Morgan Stanley which may be of interest. Here is a section:

    The Rolling Bear Market took out the last holdouts - Tech, Discretionary, and Growth Stocks - in October. The Rolling Bear Market has morphed into a Chopping Bear Market and we think the rest of 2018 will be a bumpy ride.

    We prefer Value over Growth; Value outperformed Growth in October’s sell off. We think that was the beginning of a longer lasting leadership change. 

    Third quarter earnings results have been strong; we think this quarter will likely represent a peak in year over year earnings growth. The fourth quarter will get much harder as we lap numbers that received a boost from hurricane and tax reform related spending.

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    Midterm Results Point to a New Divide in Politics: Education

    This article from the Wall Street Journal may be of interest to subscribers. Here is a section:

    When Bill Clinton entered the White House a quarter-century ago, the parties evenly divided the top 30 districts. Republicans since then have gained in working-class and rural areas, and among white voters without bachelor’s degrees.

    The result is an America divided in a new way. “The new cultural divide is education,” says Bill McInturff, a Republican pollster.

    Education helps explain some of Tuesday’s results that might seem like outliers in solid-Republican states.

    In South Carolina, voters last sent a Democrat to Congress from the Charleston, S.C., area in 1979. In Georgia, a Democrat raised $30 million last year to compete in an Atlanta-area district—and lost. On Tuesday, the party carried both seats.

    Both those districts—South Carolina’s 1st and Georgia’s 6th—are in the top half among all House districts for educational attainment. Both also have some of the largest shares of college-educated adults in their states.

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    Microsoft President Warns Of '1984' Facial Recognition Future

    This article by Dan Robitzski for Futurism.com may be of interest to subscribers. Here is a section:

    “For the first time, the world is on the threshold of technology that would give a government the ability to follow anyone anywhere, and everyone everywhere. It could know exactly where you are going, where you have been and where you were yesterday as well. And this has profound potential ramifications for even just the fundamental civil liberties on which democratic societies rely. Before we wake up and find that the year 2024 looks like the book ‘1984,’ let’s figure out what kind of world we want to create, and what are the safeguards and what are the limitations of both companies and governments for the use of this technology.”

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    Pressure Mounts on Theresa May to Abandon Brexit Proposal

    This article by Andrew Atkinson for Bloomberg may be of interest to subscribers. Here is a section:

    Getting any divorce deal through a bitterly divided Parliament was always going to be May’s biggest challenge. But as the various factions who oppose May’s approach step up their warnings, it’s looking even trickier than her whips may have calculated.

    Pro-Brexit Conservative lawmakers joined forces on Sunday with the Northern Irish party that props up May’s minority government. They threatened to reject the deal she’s working on, even if she persuades the Cabinet to approve it in the coming
    days.

    “If the government makes the historic mistake of prioritizing placating the EU over establishing an independent and whole U.K., then regrettably we must vote against the deal,” Steve Baker, a former Conservative minister, and Sammy Wilson, Brexit spokesman for the Democratic Unionist Party, wrote in the Sunday Telegraph.

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