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

    Dow's Merck Swipes Immuno-Oncology Share From Heavyweight Rivals

    This article from investors.com may be of interest to subscribers. Here is a section:

    Four immuno-oncology drugs from Merck, Bristol-Myers and Roche brought in $464 million in February, declining 4% from $483 million in January, Leerink analyst Seamus Fernandez said, citing data from tracker Symphony Health.

    But February was a shorter month, which could be partly responsible for the decrease, Fernandez said in a research report. Despite the slowdown, Merck's Keytruda sales grew 2% in February vs. the prior month.

    Meanwhile, Bristol-Myers' drugs Opdivo and Yervoy held on to a collective 69% market share, falling 1% vs. January. Merck's Keytruda now has 24% of the market, up from 23% the prior month. Roche's Tecentriq was flat at 7% share.

    Immuno-oncology drugs fight cancer by teaching the body's immune system to identify cancer cells hiding behind specific proteins. Those proteins are called checkpoints.

     

    This section continues in the Subscriber's Area.

    Not So Fast on India Stock Rally as UBS Sees Profit Bar Too High

    This article by Nupur Acharya and Ameya Karve for Bloomberg reiterates an argument more than a few institutional investors have made about India. Here is a section:

    “The markets are trading at all-time-high multiples and are pricing in a lot, or expecting reforms to continue and growth to come back fairly quickly,”  Chhaochharia said. “The risk-reward is definitely not attractive.”

    Skeptics like Chhaochharia are becoming harder to find as foreign and local investors pile into equities and analysts predict further gains. The S&P BSE Sensex will climb to 32,000 by year-end, up 10 percent from current levels, according to a survey of traders and investors by Bloomberg News on March 14, three days after Modi won the state polls. Citibank, which previously forecast the Sensex to reach 30,000 by September, now sees the gauge at 31,500 in December.

    Overseas investors have plowed a net $3 billion into Indian equities in March, the biggest monthly inflow in a year, while mutual funds have been buyers for seven months through February.

    The liquidity-aided euphoria saw a department store chain double in its trading debut on Tuesday, and an exchange-traded fund of state companies on Friday got bids for about four times the target.

     

    This section continues in the Subscriber's Area.

    Email of the day on choosing which instrument to short

    I hope this email finds you and your family well. Unfortunately I'm again not able to attend The Chart Seminar but plan to when it arrives back here in the States. Question, could you please comment on why you got short equity futures using Nasdaq futures instead of a much weaker market like Russell. I usually sell weakness and buy strength. Kind regards

    This section continues in the Subscriber's Area.

    Update for Customers With Bitcoin Stored on Coinbase

    This article from Coinbase arrived in my inbox yesterday and I thought it might be of interest to subscribers. Here is a section:

    We wanted to provide customers notice of how a possible hard fork of the Bitcoin protocol into Bitcoin Core and Bitcoin Unlimited will affect Coinbase accounts.

    The only version of Bitcoin supported on the Coinbase platform today is Bitcoin Core, currently represented by the symbol BTC.

    We may provide support for Bitcoin Unlimited in the future depending on market conditions and stability of the protocol, but we cannot guarantee whether or when such support may be available. Customers who wish to access both blockchains at the time of the hard fork should withdraw their BTC from Coinbase since we cannot guarantee what will happen during the hard fork or when this access may be available.

    If one chain receives an overwhelming majority of support from miners, users, and exchanges, we reserve the right to alter the names of chains or discontinue support for certain chains in the future.

     

    This section continues in the Subscriber's Area.

    Nike Sinks After Sales Slowdown Suggests It's Losing Share

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

    Nike Inc. tumbled the most in 19 months after third-quarter sales missed estimates, renewing concern that the long-dominant athletic brand is losing market share to Adidas AG and Under Armour Inc.

    Revenue rose 5 percent to $8.43 billion, the Beaverton, Oregon-based company said after the market closed on Tuesday. Analysts estimated $8.47 billion, on average.

    Under Armour and a resurgent Adidas have been grabbing market share from Nike, especially in the U.S. That’s led investors to sour on the stock, which had its first annual decline in eight years last year. And last quarter’s results only reinforced Nike’s woes as North American sales rose just 3 percent. Executives on a conference call didn’t provide much reason for optimism, either. Worldwide futures orders, excluding the effects of currency fluctuations, fell 1 percent, the first drop since 2009. Analysts had predicted a 3.4 percent gain.

     

    This section continues in the Subscriber's Area.

    Big Oil Plan to Buy Into the Shale Boom

    American shale with gusto, planning to spend a combined $10 billion this year, up from next to nothing only a few years ago.

    The giants are gaining a foothold in West Texas with such projects as Bongo 76-43, a well which is being drilled 10,000 feet beneath the table-flat, sage-scented desert, and which then extends horizontally for a mile, blasting through rock to capture light crude from the sprawling Permian Basin.

    While the first chapter of the U.S. shale revolution belonged to wildcatters such as Harold Hamm and the late Aubrey McClendon, who parlayed borrowed money into billions, Bongo 76-43 is financed by Shell.

    If the big boys are successful, they’ll scramble the U.S. energy business, boost American oil production, keep prices low, and steal influence from big producers, such as Saudi Arabia. And even with their enviable balance sheets, the majors have been as relentless in transforming shale drilling into a more economical operation as the pioneering wildcatters before them.

    “We’ve turned shale drilling from art into science,” Cindy Taff, Shell’s vice president of unconventional wells, said on a recent visit to Bongo 76-43, about 100 miles (160 kilometers) west of Midland, Texas, capital of the Permian.

    Bongo 76-43, named after an African antelope, is an example of a leaner, faster industry nicknamed “Shale 2.0” after the 2014 oil-price crash. Traditionally, oil companies drilled one well per pad—the flat area they clear to put in the rig. At Bongo 76-43, Shell is drilling five wells in a single pad for the first time, each about 20 feet apart. That saves money otherwise spent moving rigs from site to site. Shell said it’s now able to drill 16 wells with a single rig every year, up from six in 2013.

    With multiple wells on the same pad, a single fracking crew can work several weeks consecutively without having to travel from one pad to other. At Bongo 76-43, Shell is using three times more sand and fluids to break up the shale, a process called fracking, than it did four years ago. The company said it spends about $5.5 million per well today in the Permian, down nearly 60 percent from 2013.

    “We’re literally down to measuring efficiency in minutes, rather than hours or days,” said Bryan Boyles, Bongo 76-43’s manager.

    Exxon, Shell, and Chevron will be able to spend more than independents can for service contracts and prime drilling acreage. But if the majors pursue acquisition deals, as they’ve done before, the wildcatters stand to reap the benefits.

    Exxon invested big in shale in 2010 when it bought XTO Energy Inc. in a deal valued at $41 billion. For years, however, the major companies spent little on shale, instead focusing on their traditional turf: multibillion-dollar engineering marvels in the middle of nowhere that took years to build. The wells that Big Oil drilled were mostly in deep water, where a single hole could cost $100 million, rather than shale wells that can be set up for as little as $5 million each.

    And:

    Chevron said it estimates its shale output will increase as much as 30 percent per year for the next decade, with production expanding to 500,000 barrels a day by 2020, from about 100,000 now. “We can see production above 700,000 barrels a day within a decade,” Chevron Chief Executive Officer John Watson told investors this month.

    Exxon said it plans to spend one-third of its drilling budget this year on shale, with a goal to lift output to nearly 800,000 barrels a day by 2025, up from less than 200,000 barrels now. The company doubled its Permian footprint with a $6.6 billion acquisition of properties from the billionaire Bass family. Darren Woods, Exxon’s new CEO, said shale isn’t “on a discovery mode, it’s in an extraction mode.”

    This section continues in the Subscriber's Area.

    IEA Warn $1.3 Trillion of Oil and Gas Could be Left Stranded

    The International Energy Agency (IEA) has warned oil and gas companies that failing to adapt to the lower carbon energy agenda could lead to over a trillion dollars worth of assets being abandoned by 2050.

    The IEA estimates that a step-change in climate policy away from fossil fuels and towards cleaner sources of energy would leave a total of $1 trillion of oil assets and $300bn in natural gas assets stranded.

    The report, undertaken in partnership with the International Renewable Energy Agency, said the move to reduce global greenhouse gases could hold “significant consequences for the energy industry” if companies fail to adapt their portfolios in the wake of the Paris Agreement.

    Oil majors including BP and Shell are already adjusting the balance of future investment with a bias towards gas rather oil.

    In the past BP’s has focused on oil for 60pc of its portfolio while gas has made by the difference, but last year this ratio flipped in favour of gas. Shell has made moves towards gas production and transport with last year’s £35bn acquisition of BG Group, a leader in producing and shipping cargoes of liquefied natural gas in the global market.

    The agency warned that keeping to the Paris deal would require carbon emissions from the energy sector to peak before 2020 and fall by more than 70pc from today’s levels by 2050.

    This would require the share of fossil fuels used to create energy to halve between 2014 and 2050 while the share of low-carbon sources - such as renewables, nuclear and carbon capture - would more than triple worldwide to make up 70pc of energy demand in 2050.

    This section continues in the Subscriber's Area.

    Europe Likes to Huff and Puff, but It Will Agree a Sensible Brexit Deal in the End

    Here is the opening and another section from this mostly common sense article by Ben Kelly for The Telegraph:

    The triggering of Article 50 is almost upon us and we are hurtling haplessly towards a “hard Brexit”, at least according to many Remainers who still believe that the EU is about to give the UK a two year punishment beating.

    As we lay battered and bruised on the ground, the EU will then - so the narrative of the sweaty palmed cynics goes - refuse to safeguard our trade links and instead grasp us in a death grip and irrationally leap off a cliff, because this would apparently show the world the benefits of EU membership.

    The SNP call it a “hard Tory Brexit” for good measure, pushing the lie that the evil Westminster bogeyman is actively seeking a “hard Brexit”, even though the Government’s clearly stated objective is to negotiate a comprehensive trade agreement. They calculate that the negotiations will fail or be abandoned; leading us towards an economic crash that will ensure the Scots finally cut the cord for the supposed safety of separatism and being a one party state.

    Meanwhile, a hardcore contingent in the Brexiteer camp believes that we should either refuse to negotiate at all or flounce away as soon as we dislike a demand. I’ve argued before on these pages that this would be a needless act of self-harm, automatically putting us behind a bleak wall of tariffs and non-tariff barriers that would cause very real disruption and economic turmoil. The truth is this isn’t really a viable option.

    And:

    The truth is that both sides desperately need to minimise disruption and clear the way towards a reasonable, amicable and mutually beneficial “divorce”. By the end of Article 50 negotiations there will be an agreement upon a transitional arrangement to allow trade continuity and we will have a blueprint of our future relationship. Then, talks will continue until we have concluded a full trade and cooperation agreement which will leave the UK outside the EU but with strong ties and close cooperation.

    This is, of course, the very definition of something being easier said than done. There will be ups and downs and frustrations and protestations, but in the end a mutually beneficial deal will be concluded. Nobody will get everything they want and everyone will boast to their domestic audience about the concessions they won. After all is said and done and all the threats have been issued, this is the necessary political and economic outcome.

    Hang on, why, the Remainers will ask - as they have asked for the last 18 months – will the EU agree to such a thing? ‘Why is it in the EU’s interests to give the UK a good deal?’ The answer is obvious. The principle of Mutually Assured Destruction applies. The UK cannot afford to carry out its bluff about walking away from negotiations; but the EU cannot afford it either.  

     

    This section continues in the Subscriber's Area.