“Technological progress has merely provided us with more efficient means for going backwards.” – Said English writer and philosopher Aldous Leonard Huxley
Global Market Comments
January 8, 2020
Fiat Lux
Featured Trade:
(WEDNESDAY FEBRUARY 4 SYDNEY STRATEGY LUNCHEON)
(CALIFORNIA GOES WHOLE HOG ON SOLAR),
(FSLR), (SPWR), (TAN)
As of January 1, 2020, it is illegal to build a home in California without solar panels.
Furthermore, dozens of cities have gone as far as banning natural gas appliances like ovens, heaters, and burners.
It is the most ambitious solar initiative anywhere in the world today. Those who invest in backup storage batteries like the Tesla Powerwall, will receive additional cash incentives.
It’s not like solar is new in the Golden State. It boasts over one million homes with installed panels out of a total housing stock of 16 million. It is all part of a grand plan for the state to obtain 100% of its electric power from alternative sources by 2030.
The new measures are expected to add $9,500 to the cost of new home construction. Builders are expected to eat most of it.
However, it will cut utility bills by $19,000 over the 30-year life of a solar system. And that is at today’s prices. California homeowners have already suffered two back-to-back 15% price increases over the past two years. With northern California’s utility PG&E (PGE) in bankruptcy, more stiff price hikes are expected.
You would think that the news would set the share prices of American solar companies, like First Solar (FSLR) and SunPower (SPWR), on fire.
They haven’t.
That's because solar prices are joined at the hip with conventional energy sources.
When oil is cheap, solar share prices die a horrible death. When oil is dear, everybody and his brother wants to pile into everything alternative, be it solar panels, storage batteries, windmills, electric cars, and high mileage hybrid cars like the Prius.
The sole exception has been the Invesco Solar ETF (TAN). It has a globally diversified portfolio that invests in countries with much higher electricity prices than hours, thanks to local regulation and taxes. Only 53% of its investments are in the US, with a hefty 19% in Hong Kong alone, of all places.
The last two years have produced a new reason to go off the grid. Ferocious wildfires in the Golden State that have killed hundreds have led to total statewide blackouts from PG&E whenever wind speeds exceed 40 miles an hour.
Unless you want to keep throwing out all your frozen food every few weeks, the only way to move forward is with a solar-powered battery backup system. It’s just a matter of time before high-end homes can only be sold with 48 hours of backup power. The same logic applies to the hurricane-ravaged east and Gulf coasts. It’s especially an issue today with up to 25% of Bay Area residents working from home.
No juice, no job.
As for me, I am in the process of doubling up my own solar system, taking it up to a gargantuan 23,114 kWh, with three Tesla Powerwalls thrown in for good measure.
But then I have a Tesla P110D Model X that eats up 1,000 kWh a month. All of my appliances are electric except the gas burner because my traditional chef can’t cook without it and the water heater, because I want to have 200 gallons of water at all times in case an earthquake hits. I am turning into my own mini electric power utility, and I am not alone.
I have been encouraged by my experience with my first solar system, which I installed five years ago. It has worked flawlessly, since it has no moving parts. The installer promised me a six-year breakeven against my $500 a month power bill. I covered my cost in four years, thanks to soaring power prices.
And who has the highest electricity prices in the United States? That would be Hawaii, where all fuels have to be imported from great distances. Hawaiians have to pay a massive 66 cents a kilowatt. California only has to pay a peak rate of 55 cents a kilowatt, also among the highest in the country. Drive along Honolulu Interstate H1 today and all you see are solar panels.
Aloha!
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to the six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
January 7, 2020
Fiat Lux
Featured Trade:
(MONDAY FEBRUARY 3 BRISBANE, AUSTRALIA STRATEGY LUNCHEON),
(HOW “HIGH” CAN MARIJUANA STOCKS GO?)
(TLRY), (CGC), (TOKE)
Mad Hedge Biotech & Healthcare Letter
January 7, 2020
Fiat Lux
Featured Trade:
(WHAT’S NEXT IN THE BIOTECH PIPELINE?)
(ITCI), (AIMT), (BIO), (JNJ)
Investing in biotech stocks demands prudence combined with a sprinkling of optimism. This means taking in announcements from companies bragging about potential blockbuster drugs with a grain of salt.
After all, a single misstep towards gaining FDA approval could easily set back any progress, erase any hope of salvaging the discovery, and eventually, send their share prices spiraling down.
On the other hand, choosing a biotech stock that would deliver on its promise means reaping rich dividends in the future.
With all the developments in store though, it’s hard to see why 2020 can’t easily go down as The Year of Biotech. Here are some things that caught my eye.
Christmas came early for Intra-Cellular Therapies (ITCI) as its long-awaited schizophrenia drug, Caplyta, received the green light from the FDA.
Although it has taken a few years for the biotech firm to announce the results of its schizophrenia trials, its investors are confident that Calpyta’s journey from this highly sought approval to marketing will be smooth sailing.
While the number of people suffering from schizophrenia and bipolar disorder is not as many as those facing major depressive disorder, treatments for the former conditions remain lacking. In fact, health specialists have been looking for more convenient options -- one that won’t hinder the daily lives of patients taking it.
This blockbuster drug, pegged as a safer and better alternative to Johnson and Johnson’s (JNJ) Risperidone, is expected to expand Lumateperone’s reach in the mental health market.
Despite earning an early victory, ITCI is already gearing up to tweak Calpyta’s indications and seek bipolar depression approvals as well. At the moment, this schizophrenia drug is estimated to cross $1 billion in sales following its 2020 launch in the market.
Meanwhile, there’s another big market drug that’s projected to make a major launch in 2020. Aimmune Therapeutics’ (AIMT) AR101. Otherwise known Palforzia, this will be the first-ever treatment for peanut allergies.
Although there’s no price tag released yet, a year’s supply of Palforzia is estimated to cost $4,200 per patient.
These pull-apart capsules, which are basically comprised of unmodified peanut flour plus a bunch of inactive ingredients, aim to provide medication for a food allergy that affects one in 13 children today.
The FDA is expected to release its decision on Palforzia sometime in January 2020, so it’ll definitely be a prosperous New Year for its investors.
Another biotech company that’s set to make a splash in a lucrative market is Bluebird Bio (BIO).
At the moment, investors are chomping at the bit for good news concerning the company’s future crown jewel: genetic blood disease treatment Zynteglo.
In 2019, Zynteglo gained approval in the European market. Now, Bluebird is setting its sights to also conquer the US market as one in every 100,000 people is afflicted by this rare condition.
More than that, the only approved therapy for this genetic blood ailment is a blood transfusion done regularly.
Given the rarity of the disease and the efficacy of the treatment, Zynteglo’s price tag will obviously be on the high end.
This therapy is expected to cost roughly $1.8 million in total for every patient. To ease the burden though, Bluebird shared that it’s open to four- and five-year installment plans. That puts every gene therapy infusion at $355,000 per session.
Despite this massive expense, Bluebird actually believes that it’s selling its treatment at a discount of about 15% compared to the actual market value of $2.1 million.
This conviction comes from the fact that the company estimates adding 22 quality-adjusted life years to the lives of every successfully treated patient.
All three biotech stocks could easily skyrocket, especially Bluebird Bio. As for Aimmune Therapeutics, the company is currently financially healthy so it shouldn’t encounter any trouble meeting obligations. Meanwhile, ITCI has been gifting its investors with early Christmas presents since it first released promising results of its schizophrenia study.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to a six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three-day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Mad Hedge Technology Letter
January 6, 2020
Fiat Lux
Featured Trade:
(THE FUTURE IS HERE)
(USHIO)
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