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

    Amgen's Just-Approved Migraine Drug Will Cost $6,900 a Year

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

    “The payers recognize that there is a clear and longstanding unmet need in migraine,” said Tony Hooper, executive vice president of global commercial operations at Amgen, on a call with analysts Friday. Hooper said the company is in talks with pharmacy-benefit managers and insurers and “by and large, they are supportive of our price.”

    Amgen and partner Novartis AG said that they will launch the drug within one week in the U.S. Hooper said that the company expects patients will take the drug if they have tried and failed on other migraine treatments.

    The drug’s lower-than-expected price was met positively by analysts who said they expect it will win broad reimbursement from insurers.

    “Overall, we think their pricing strategy fits well into the current reimbursement environment,” said Michael Yee, an analyst with Jefferies wrote in a note. Yee, who has a “buy”

    rating on Amgen shares, said the lower price “sends a good message.”

    But Baird analyst Brian Skorney said once rival treatments come to market, insurers and drug middlemen may pit drugs against each other to get the lowest possible price.

    “If anything it just makes the eventual lowest net price that much lower once there are several on the market,” wrote Skorney, who rates Amgen shares “neutral.”

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    LSE Reveals London-Shanghai Stock Link, Sees 2018 Start

    This article by Benjamin Robertson and Viren Vaghela for Bloomberg may be of interest. Here is a section:

    The London-Shanghai Stock Connect will allow companies from China to sell global depository receipts in the U.K. and enable London-traded firms to list similar securities in Shanghai, according to an LSE presentation seen by Bloomberg News. Starting later this year, the securities issued by Chinese companies will appear on what LSE calls the Shanghai Board. A spokesman for LSE declined to comment.

    The London link will be yet another step in China’s financial opening, which began in earnest with a stock connect to Hong Kong in 2014. For the LSE, the move will help the exchange offset a possible decline in activity with Russian companies after the step-up of U.S. sanctions.

    “This is a real step in the integration of China’s financial markets,” said Karine Hirn, partner at East Capital Asset Management in Hong Kong. “What’s exciting about this project is that it’s Chinese money going into Western companies.”

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    Washington Policy: Banking Trifecta Set for Next Week

    Thanks to a subscriber for this note from Raymond James which may be of interest. Here is a section:

    Bank regulatory team in place. McWilliams’ confirmation will be the last piece of the puzzle that puts into place President Trump’s bank regulatory team and continues the advance of the administration’s deregulatory agenda. Several deregulatory actions have emerged from the Fed under Vice Chair for Supervision Randal Quarles, and we expect bank regulatory relief actions and proposals to pick up in pace with the confirmation of McWilliams. We are monitoring the expected release of an inter-agency revised Volcker Rule proposal which could come within the next month following the confirmation.

    FHA nomination. The focus with Montgomery’s nomination will be on whether he seeks to limit FHA lending, which could benefit private mortgage insurers. We think he will be incremental in his changes in the near-term and is unlikely to increase FHA premiums. He has held the position previously, serving as a non-controversial head. Overall, he is a likely positive for mortgage credit availability.

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    Global surge in air-conditioning set to stoke electricity demand

    Thanks to a subscriber for this article by Ed Crooks for the Financial Times which may be of interest. Here is a section:

    Over the next 30 years, air-conditioning could increase global demand for electricity by the entire capacity of the US, the EU and Japan combined, unless there are significant improvements in the efficiency of the equipment, the IEA warned.

    In a report released on Tuesday, the agency urged governments to use regulations and incentives to improve the efficiency of air-conditioning units, to avoid a surge in demand that could put strains on energy supplies and increase greenhouse gas emissions.

    Fatih Birol, the IEA's executive director, said: “This is one of the most critical blind spots in international energy policy.”

    Air-conditioning has had an enormous effect on the quality of life in hot regions, but its use is unevenly distributed around the world. About 90 per cent of homes in the US and Japan have air-conditioning, compared with about 7 per cent in Indonesia and 5 per cent in India.

    Electricity used for cooling in the US is almost as great as the entire demand for power in Africa.

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    Email of the day on the high cost of electric vehicle subsidies

    I just returned from a very eye-opening trip to Arizona, visiting Scottsdale (in the Sonoran desert) and the mountains of Northwestern Arizona. We flew into Phoenix and drove a lot. We saw zero Teslas. I'm told there are a few around Phoenix. But with the poor performance of electric vehicles in both cold and hot environments, it probably should not be shocking.

    Going to Arizona from California is like going from lala land, where the majority of people are drinking weird kool-aid, to the real world, where people work for a living, dislike taxes, and are really concerned about the massive influx of Californians who are oddly leaving their dream state.

    Electric car enthusiasts here in CA get the pleasure of paying $0.38/kwh for their electricity, FAR above the advertised $0.12/kwh, thanks to tiered billing and some of the highest real electric rates in the nation. When an electric car is parked in every driveway, neighborhood power distribution systems will be grossly overloaded (recharging typically starts after 6pm and finishes before 8am, compressing the "average" load on power networks). So, these systems will have to be replaced at taxpayer or ratepayer expense, with lower income people getting no benefits but definitely sharing substantially in the costs.

    All this means that one of the highest tax states in the Union will become far higher taxed, both in direct taxes and indirect taxes like state mandated burdens on electricity ratepayers. Meanwhile gas taxes remain some of the highest in the nation, and will only go higher, putting yet more burden on the lower income folks. 

    Meanwhile, the exodus of retirees naturally accelerates.

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    Tencent Gains $18 Billion as Record Profit Eases Margin Fear

    This article by Lulu Yilun Chen for Bloomberg may be of interest to subscribers. Here is a section:

    Revenue from Value Added Services, which includes online games and messaging, rose 34 percent to 46.9 billion yuan. The company has however been leery of barraging its users with ads - on Wednesday, it declared it had raised the maximum number of ads that customers see on WeChat Moments, a function similar to Facebook’s newsfeed, to just two a day from one previously.

    “The results were good even without the one-time gains, but the gains made it even better,” said Bhavtosh Vajpayee, a Hong Kong-based research analyst at Bernstein.

    But overall costs surged 51 percent. Tencent executives have signaled a willingness to sacrifice margins in favor of longer term growth in new businesses, though that would depend on growing and engaging a massive user base now primarily confined to China.

    Profit was also helped by one-time gains of almost 7.6 billion yuan from its investments in arenas like video and news.

    “The reason why analysts had been modeling down was because they did mention about subsidies on payments and also continued investments in content costs,” Citigroup Global Markets’s Head of Pan-Asia Internet Research Alicia Yap told Bloomberg Television. “All these years of investments in digital content, for example music and video, actually started to show some leverage” this quarter.

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    Italy Debt Write-Off Talk Weighs on Bonds as Yields Rise

    This note from Bloomberg may be of interest to subscribers. Here is a section:

    Confirmation that Italy’s putative government is talking about asking the European Central Bank for debt forgiveness is weighing on the nation’s debt. The extra yield investors demand to hold 10-year Italian government bonds instead of German bunds, Europe’s benchmark, widened to the most since January. League lawmaker Armando Siri told La7 television that they are discussing a 250 billion-euro ($300 billion) write-off, confirming an earlier report by the Huffington Post.

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