Global Market Comments
June 12, 2024
Fiat Lux
Featured Trade:
(WHAT TO BUY AT MARKET TOPS?),
(CAT), ($COPPER), (FCX), (BHP), (RIO),
(TESTIMONIAL)
Mad Hedge Biotech and Healthcare Letter
June 11, 2024
Fiat Lux
Featured Trade:
(THE CAPITAL CURE)
(ABBV), (MRK), (PFE), (RHHBY), (JNJ), (AZN), (GSK), (MRNA), (BNTX), (CRSP), (NTLA), (BEAM), (TPTX), (ZNTL), (MRTX), (BPMC), (MGNX), (TYRA), (SPRT), (VRTX), (FOLD), (RARE), (CRBU)
Imagine you're the CEO of a major pharmaceutical company. You've got blockbuster drugs that are raking in billions, a cushy corner office, and a corporate jet at your disposal. Life is good.
But then, you look at the calendar and realize that your patents are about to expire. Suddenly, that jet feels more like a crop duster, and your corner office starts to feel like a broom closet.
That's the reality facing Big Pharma right now. These pharma big shots are sweating bullets over losing their golden geese like AbbVie's (ABBV) Humira and Merck's (MRK) Keytruda.
That’s roughly $300 billion in products about to get kicked to the curb.
But these guys didn't get to the top by sitting on their hands. They've got a war chest of $1 trillion, and they're not afraid to use it.
Major pharmaceutical giants like Pfizer (PFE), Roche (RHHBY), Johnson & Johnson (JNJ), AstraZeneca (AZN), and GlaxoSmithKline (GSK) are about to go on the mother of all shopping sprees.
Why the rush? Because they're staring down the barrel of a patent cliff that's going to make the Grand Canyon look like a pothole.
We're talking $198 billion worth of branded drugs going off the patent cliff between 2021 and 2025. That's a gut-wrenching 56% jump from the last five years.
But don't think for a second that they're just going to sit back and watch their profits go up in smoke. No sir, they're on the hunt for the next big thing, and they've got their sights set on some juicy targets – and biotech is at the top of their list.
Leading the biotech charge are mRNA pioneers Moderna (MRNA) and BioNTech (BNTX), each sitting on a gold mine of potential blockbusters taking on everything from flu to cancer vaccines.
Underdogs like CRISPR (CRSP) biotech stars Intellia (NTLA) and Beam Therapeutics (BEAM) are also squarely in Big Pharma's acquisition crosshairs for their cutting-edge work in genetic disease treatments.
But beyond the headliners, don't overlook the sleeper hits that could catalyze the next big boom.
Oncology, in particular, is a prime hunting ground, accounting for 37% of pharma M&A deal value in 2023 as the $392 billion global cancer drug market continues to boom.
Companies like Turning Point Therapeutics (TPTX) and Zentalis Pharmaceuticals (ZNTL), with their promising targeted therapies for various solid tumors, are particularly attractive prospects.
Mirati Therapeutics (MRTX), focused on KRAS inhibitors, and Blueprint Medicines (BPMC), specializing in precision therapies, have also caught the eye of big pharma with their innovative approaches.
Additionally, companies with late-stage assets like MacroGenics (MGNX), Mereo BioPharma (MREO), and Tyra Biosciences (TYRA) could offer promising near-term revenue opportunities for acquiring companies looking to bolster their oncology portfolios.
Close behind are rare disease treatments, snagging 16% of new drug approvals and 9 of the top 100 deals last year in this $262 billion market ripe for more growth.
This lucrative sector has captivated pharma giants, who see potential in companies like Sarepta Therapeutics (SRPT) and Vertex Pharmaceuticals (VRTX), leaders in rare disease therapies with strong financial performance and consistent growth.
Aside from these, smaller biotechs like Amicus Therapeutics (FOLD) and Ultragenyx Pharmaceutical (RARE), focused on developing innovative therapies for a range of rare diseases, are attracting attention for their potential to address unmet medical needs and deliver substantial returns on investment.
But the real wild card everyone wants a piece of is cell and gene therapies. This medical Wild West is projected to explode to $66.8 billion by 2030, with the FDA already greenlighting 6 cutting-edge therapies like next-gen CAR-T treatments from Caribou Biosciences (CRBU) in 2023 alone.
Notably, the buying frenzy is very much already underway. In fact, 2023 saw the biggest biotech M&A spree in a decade, with a staggering $122.2 billion changing hands as the FDA approved 50% more new therapies.
Pharma mega-mergers also hit $135.5 billion as firms raced to reload pipelines.
Interestingly, these deals are only the tip of the iceberg. As Wall Street predicts, with record-smashing deals, sky-high demand, and new approvals surging, "biotech's got plenty of reasons to be cautiously optimistic."
Especially if interest rates finally cooperate, throwing gasoline on the M&A bonfire and making biotech the belle of the ball as soon as late 2024.
So keep your eyes peeled and your powder dry. I suggest you add these innovative biotech names to your watchlist, and you might just discover the next blockbuster drug or breakthrough therapy that could reshape medicine – and deliver explosive returns in the process.
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Global Market Comments
June 11, 2024
Fiat Lux
Featured Trade:
(THE MAD HEDGE DECEMBER 6-8 SUMMIT REPLAYS ARE UP),
(A COW BASED ECONOMICS LESSON)
Listen to all 22 speakers opine on the best strategies, tactics, and instruments to use in these volatile markets. It is a true smorgasbord of investment strategies. Find the best one to suit your own goals.
The product discounts offered last week are still valid. Start, stop, and pause the videos at your leisure. Best of all, access to the videos is FREE. Access them all by clicking here.
We look forward to working with you and the next summit is scheduled for September.
The financial services industry is no stranger to technological advancements, but the integration of artificial intelligence (AI) is poised to be a game-changer. Morgan Stanley, a global leader in financial services, is at the forefront of this AI revolution. CEO Ted Pick recently announced at a conference that the use of AI could save the company's financial advisors between 10 and 15 hours per week, a significant boost to productivity and efficiency. This article delves into the implications of this announcement, exploring how AI is transforming the role of financial advisors, the specific AI tools being implemented at Morgan Stanley, the potential benefits and challenges, and the broader impact on the financial industry.
The Evolving Role of Financial Advisors
Financial advisors have traditionally played a crucial role in guiding clients through complex financial decisions. They offer personalized advice on investments, retirement planning, tax strategies, and estate planning. However, the role of financial advisors has been evolving in recent years due to several factors:
- Technological Advancements: The rise of online trading platforms and robo-advisors has democratized access to financial information and automated investment strategies.
- Changing Client Expectations: Clients are increasingly tech-savvy and expect personalized, on-demand access to financial information and advice.
- Regulatory Changes: The financial industry is subject to evolving regulations that impact how advisors interact with clients and manage their assets.
In this context, AI is emerging as a powerful tool to empower financial advisors. By automating routine tasks, AI frees advisors to focus on higher-value activities such as building relationships with clients, providing strategic advice, and offering customized solutions.
AI Tools at Morgan Stanley
Morgan Stanley has been investing heavily in AI to enhance its financial advisory services. The company has developed a suite of AI-powered tools under the umbrella of AI at Morgan Stanley (AIMS). Some of the key AI tools being implemented include:
- Next Best Action: This AI engine analyzes client data and suggests relevant actions for advisors to take, such as recommending specific investment products or reaching out to clients with personalized insights.
- Virtual Assistant: This AI-powered chatbot interacts with clients, answers their questions, and provides basic financial information.
- Transcription and Note-Taking Tool: This tool automatically transcribes client meetings and enters notes into a database, saving advisors valuable time and ensuring accurate record-keeping.
- Risk Management Tools: AI is used to assess client risk profiles, monitor investment portfolios, and identify potential red flags.
These AI tools are designed to streamline workflows, improve decision-making, and enhance the client experience. By automating routine tasks and providing data-driven insights, AI enables advisors to focus on building deeper relationships with clients and delivering more personalized advice.
Benefits of AI for Financial Advisors
The adoption of AI in financial advisory offers several benefits:
- Increased Efficiency: AI automates repetitive tasks such as data entry, research, and report generation, freeing up advisors to focus on higher-value activities.
- Improved Accuracy: AI-powered tools can analyze vast amounts of data quickly and accurately, reducing the risk of human error in financial analysis and decision-making.
- Enhanced Client Experience: AI-powered chatbots and virtual assistants can provide clients with 24/7 access to information and support, improving engagement and satisfaction.
- Personalized Advice: AI can analyze client data to tailor investment recommendations and financial plans to individual needs and goals.
- Better Risk Management: AI can identify potential risks and opportunities in investment portfolios, helping advisors make more informed decisions.
- Increased Revenue: By enabling advisors to serve more clients and offer more personalized services, AI can contribute to increased revenue generation.
The time savings estimated by Ted Pick, between 10 and 15 hours per week, represent a significant increase in productivity for financial advisors. This additional time can be allocated to building stronger client relationships, conducting deeper research, and developing innovative solutions.
Challenges and Considerations
While the potential benefits of AI are substantial, there are also challenges and considerations associated with its implementation:
- Data Privacy and Security: The use of AI involves collecting and analyzing sensitive client data. Ensuring the privacy and security of this data is paramount.
- Regulatory Compliance: AI tools must be developed and implemented in compliance with relevant financial regulations.
- Bias and Fairness: AI algorithms can inadvertently perpetuate biases present in the data they are trained on. It is essential to ensure that AI tools are fair and unbiased.
- Human-AI Collaboration: The integration of AI requires a reimagining of the roles and responsibilities of financial advisors. It is crucial to foster effective collaboration between humans and AI.
Impact on the Financial Industry
The adoption of AI at Morgan Stanley is reflective of a broader trend in the financial industry. AI is disrupting traditional business models and reshaping the competitive landscape. Financial institutions that embrace AI are likely to gain a significant competitive advantage, while those that resist may struggle to keep up.
The impact of AI on the financial industry is likely to be far-reaching:
- Job Displacement: While AI may create new jobs, it is also likely to displace some existing roles, particularly those that involve repetitive tasks.
- New Skills and Roles: The rise of AI will require financial professionals to develop new skills, such as data analysis, machine learning, and AI ethics.
- Increased Competition: AI will lower barriers to entry for new players in the financial industry, leading to increased competition and innovation.
- Enhanced Customer Experience: AI will enable financial institutions to deliver more personalized, convenient, and efficient services to customers.
The Future of AI in Financial Advisory
The integration of AI in financial advisory is still in its early stages, but it is clear that AI has the potential to revolutionize the industry. As AI technology continues to advance, we can expect to see even more sophisticated AI tools being developed and implemented.
In the future, AI is likely to play an even greater role in financial advisory, including:
- Advanced Financial Planning: AI will be used to create more comprehensive and personalized financial plans that take into account a wider range of factors.
- Predictive Analytics: AI will be used to predict market trends and identify investment opportunities.
- Behavioral Finance: AI will be used to understand client behavior and develop more effective financial strategies.
Conclusion
The use of AI at Morgan Stanley is a testament to the transformative power of technology in the financial services industry. By saving financial advisors valuable time, AI enables them to focus on higher-value activities such as building relationships with clients and providing strategic advice.
While there are challenges and considerations associated with the implementation of AI, the potential benefits are substantial. By embracing AI, financial institutions can enhance efficiency, improve accuracy, and deliver more personalized services to clients. The impact of AI on the financial industry is likely to be significant, and those who adapt to this new reality will be well-positioned for success in the years to come.
Mad Hedge Technology Letter
June 10, 2024
Fiat Lux
Featured Trade:
(OIL, THE US DOLLAR, AND SILICON VALLEY)
($COMPQ)
The dollar, tech stocks, and Saudi Arabian investment are inextricably linked almost like a web of nodes that shouldn’t be messed with.
The Saudis are a financial heavyweight and I would never dismiss their capital flows as it relates to tech stocks.
It is definitely not a drop in a bucket and we should take notice when Saudi Arabia creates a $100 billion fund this year to invest in AI and other technology.
That is just pocket change for one year.
It is in talks with Andreessen Horowitz, the Silicon Valley venture capital firm, and other investors to put an additional $40 billion into A.I. companies.
In March, the government said it would invest $1 billion in a Silicon Valley-inspired start-up accelerator to lure A.I. entrepreneurs to the kingdom.
Saudi wants to invest in tech and to do that they need dollars. Tech and its value are almost always entirely priced using dollars and not any other currency.
So I will address the conspiracy theory that we are about to go completely off the dollar as the global reserve currency.
The behavior of foreign investors suggests that the dollar’s role in global currencies is increasing and not the other way around.
Some even suggest that the Chinese yuan is about to replace the dollar as the world’s most important currency.
I strongly disagree with that opinion.
A place still using capital controls for trillions worth in tech seems like lunacy.
It flat-out does not happen.
Middle East oil-producing nations have other reasons to stick to the dollar.
A crucial one is that most of their currencies are pegged to the greenback, requiring a constant influx of dollars to support the arrangement. Those savings are held in dollar accounts, so Middle East countries have an interest in keeping the dollar strong.
There is not much traction in practical terms of the much-hyped idea of using the yuan to price oil.
American investor Ray Dalio likes to describe America as a weakening power that is succumbing to China. I strongly disagree with that hot take from Dalio. China is in fact faltering at an accelerating pace and its internal problems are piling up like a stray dog locked in a strangers back yard.
If you believe in conspiracy theories, the introduction of a petroyuan, and the ensuing collapse of the petrodollar, would be a first domino, potentially weakening the whole US financial system.
Redraw the global economic map amid a backdrop of crisis and wars.
Astonishing as it is, the narrative is a mirage.
The appetite among OPEC producers to price oil in yuan using a Chinese exchange is basically zero.
Middle Eastern national oil companies closely watch how Beijing tries to manipulate local commodity prices such as iron ore, cotton, coal, or grains every time prices rise above its pain threshold. Having spent 60 years building a formidable cartel, why would Middle East nations cede pricing power to China using a whacked-out currency?
The Saudis need to put their money somewhere and the anointed place has been technology and many times Silicon Valley technology.
They have already invested in many of the most high-profile tech companies in the US and will continue to do that.
Saudi and other foreign money is another reason why this tech market can’t and won’t get sideswiped.
Any dip is viewed as a prime buying opportunity as other industries give way to the freight train that is the AI narrative.
Anyone would be crazy to short the AI trade with unlimited petro-dollars from the Middle East.
Pump the black gold from the ground and dump the profits into volatile tech stocks.
Wait for them to explode to the moon – rinse and repeat.
I am bullish on tech in the short term.
“The man who reads nothing at all is better educated than the man who reads nothing but the newspapers.” – Thomas Jefferson