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

    Email of the day on Chinese online retailers and online universities

    Email of the day on the ground experience from the Texas panhandle

    I had the pleasure of spending several days with a friend who is an executive in a drilling company. He indicated that the recovery had brought a boom in drilling, but that customers were demanding the latest high-tech drilling rigs (faster, more efficient, much bigger pumps, able to drill longer laterals). This requires very large capital investments with uncertain payback times. Older, lower tech rigs are left unused, which creates dramatically lower rig utilization rates for drillers. Unfortunately, the past month has seen a bit of a slowdown, with some new tech rigs coming off of pads with no new contract (meaning the rig goes to the yard and sits, and the crew have no jobs). While this may be a short-term issue, it could alternatively be a sickly-looking canary.

    Unlike last year, when vast numbers of pump jacks were idle (indicating the well is not producing at that moment), this year more than 75% of the pump jacks I saw were pumping, and most looked well-maintained. Pump jacks do not normally pump full-time, as they shut down for maintenance, and when their storage tanks are full, etc. A lot of the oil in the area is pumped into tanks and then picked up by trucks. 

    The beef, pork, chicken, and nuclear weapon businesses all appeared to be thriving.

    Probably needless to say, but the Texas Panhandle is about 700 miles from the flooding.

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    Dollar Advances From 2015 Low Before UN Meeting on North Korea

    This article by Michael G. Wilson for Bloomberg may be of interest to subscribers. Here is a section:

    “Markets seem to have headed into the weekend priced for the worst -- a North Korean missile test and maximum financial damage from Irma,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “The dollar seems overdue for a bounce. The dollar should return to 109 to 110 yen early in the week.”

    The dollar is also supported by “decent” U.S. economic data momentum and a deal between President Donald Trump and the Democrats suspending the debt ceiling to December, Callow said.

    Still, traders said some short-term accounts took long-yen positions after the state-run Korean Central News Agency said Monday morning that the U.S. will pay a "due price" if harsher sanctions were imposed on North Korea at an expected United Nations Security Council meeting.

     

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    Email of the day on the deflationary impact of technology

    I have noticed from your recent postings that while you recognize all the great outcomes technology will bring, you also recognize the downside consequences of all the displaced labor. Another effect on labor has been the financialization of our economy. Check out this article (open domain) Thank you for your continued great work!

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    The Equifax Situation Continues to Worsen

    This article by Joel Hruska for ExtremeTech may be of interest to subscribers. Here is a section: 

    First, while Equifax is offering a free year of credit monitoring for anyone who wants it, this isn’t a philanthropic gesture. Equifax owns Trusted ID. Furthermore, the ToS associated with the product states that customers who sign up for the service will be billed for it thereafter unless they call the company to cancel the product. Equifax has stripped out other clauses in its ToS that deal with service billing in the last 48 hours, but it left the clauses about automatically renewing the service for those who do not cancel.

    And let’s be clear: At least some people are going to feel as if they need this kind of monitoring for longer than 12 months. Equifax leaked both social security numbers and birth dates, meaning identity thieves now have everything they need to launch credit-destroying attacks against much of the US population at any point over the next few decades. Neither your social security number or your birth date are going to change, after all. But wait, there’s more!

    Let’s say you want to lock your credit file anyway, even though it’ll only protect you from one-third of potential searches. Equifax requires you to input a 10-digit PIN to request an account unlock. A 10-digit code would typically be difficult to break, if Equifax didn’t auto-generate PIN numbers that corresponded to the date and time you requested the lock. If you locked your credit file on September 10th at 11:45 AM, your PIN number would be 0910171145. That’s September 10 2017, at 11:45 AM. It’s also the kind of security one might expect in a Mel Brooks movie, and it’s a horrifying choice for a company whose own servers were just aggressively penetrated and robbed.

     

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    CAR-T therapies a blue-sky scenario

    Thanks to a subscriber for this report from HSBC focusing on Novartis which may be of interest. Here is a section:

    Kymriah indicated for refractory ALL patients, but other indications are larger. Although Kymriah is only approved in the US to treat the small number of patients with refractory acute lymphoblastic leukaemia (ALL), additional indications such as Diffuse Large B-Cell Lymphoma (DLBCL) represent a significantly larger addressable patient population. Kymriah is the first Chimaeric Antigen Receptor T-cell (CAR-T)-based treatment approved globally. 

    Blue-sky scenario not that much of a stretch…Over 100,000 patients die from leukaemias, lymphomas and myelomas (haematological cancers) annually in the US and Europe. They are largely, by definition, refractory to available treatments. In due course, this patient group, or a proportion of it, could be addressed by CAR-T-based treatments. Further, CAR-T-based treatments could potentially be used earlier in the treatment of cancers and potentially in some solid tumours as well. Note that these figure do not include Japan, China, or elsewhere. 

    …25% of refractory blood cancers, 2.5% of other cancers.  In our blue-sky scenario for CAR-T treatments, an assumption that 25% of refractory blood cancers and 2.5% of other refractory cancers in the US and EU could be treated with CAR-T therapies in due course (although this would require sizeable manufacturing expansion by all CAR-T manufacturers) would yield peak sales of just under USD26bn. If Novartis garnered 50%, it would generate peak sales of just under USD13bn for Kymriah and other CAR-T therapies versus USD3.3bn that we currently forecast (27,000 patients treated versus 7,200 on our current forecast). In our view, this bluesky scenario is not an unrealistic possibility in terms of patient numbers.

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