“The bubble is in the bond market, not the stock market”, said Leon Cooperman, CEO of Omega Advisors, an original investor in my 1990’s hedge fund.
“We need to bring Android and Chrome to every screen that matters for users, which is why we focused on phone, wearables, car, television, laptops, and even your workplace.” – Said CEO of Google Sundar Pichai
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
Mad Hedge Hot Tips
March 15, 2019
Fiat Lux
The Five Most Important Things That Happened Today
(and what to do about them)
1) Quadruple Witching Today, with the expiration of the quarterly options. Watch out for last minute gyrations around key strike prices at the close. You can go from in-the-money to out-of-money in a heartbeat. Billions are at stake.
2) Tesla Releases Model Y SUV, but the cheaper $39,000 version won’t be available until 2021 and the stock dives. We are approaching the make-or-break level for the stock, the bottom of a two-year range. Get ready to buy on the meltdown. This is a ten bagger in a decade. Buy (TSLA). Click here.
3) The SEC Sues Volkswagen, for fraud for selling securities while faking mileage stats for its clean diesel cars. It turns out they weren’t so clean after all. VW has already been taken to the cleaners once on this issue, paying $14.9 billion. Avoid VW. Click here.
4) The US Economy Slowed Sharply in Q1, or so says the Federal Reserve, pointing to a 0.4% decline in manufacturing activity in February. Time to be cautious. Click here.
5) The Ides of March are Today. It did not work out well for Julius Caesar. Will it kill off the stock market too? Watch out for friends bearing knives.
Published today in the Mad Hedge Global Trading Dispatch:
(BUY JOHNSON & JOHNSON ON THE BAD NEWS),
(JNJ), ($INDU), (PFE), (NVS), (AZN)
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
March 15, 2019
Fiat Lux
Featured Trade:
(BUY JOHNSON & JOHNSON ON THE BAD NEWS),
(JNJ), ($INDU), (PFE), (NVS), (AZN)
When one of the 30 Dow Average companies ($INDU) gets into trouble, I sit up and take note, stand to attention and drill down with a magnifying glass.
After all, it may have a major important on an important tradable index, thus opening up an investment opportunity. It also may sound the alarm for a great single stock pick. That is certainly the case with New Brunswick, NJ based Johnson & Johnson, one of the oldest companies traded on the NYSE.
What piqued my interest today was the news that the company lost another talcum power lawsuit, which is alleged by plaintiffs to contain asbestos. This has been among the catalog of urban conspiracies for decades now.
Johnson & Johnson (JNJ) is, in fact, carrying on with their mission to strengthen their pharma sector which has consistently served as their top revenue driver in the past years. While their strong performance in this segment has always been led by their oncology portfolio, with sales of their cancer drugs increasing by 22.1% worldwide in the previous quarter, it looks like more and more products are on their way to becoming JNJ's blockbuster items.
The company estimates to launch more than ten new drugs -- all of which have the potential to be blockbuster products -- by 2021. On top of these, JNJ expects to complete 50 line extensions on their existing products. Both efforts are anticipated to temper the effects of generic drugs that are threatening to hamper the sales of a lot of key products in JNJ's portfolio.
The latest potential blockbuster drug for JNJ is Esketamine which is an anti-depressant aimed at treatment-resistant patients. This was developed by the company’s pharmaceutical arm, Janssen Pharmaceuticals Inc. This new groundbreaking product was approved on March 5 by the FDA and will be marketed as Spravato. It is hailed as the first prescription depression drug developed from ketamine, which is more commonly used as an anesthetic.
Although ketamine has long been tagged as a party drug, aka “Special K”, and is approved as an anesthetic, no company has patented its use. This is where Janssen swooped in and patented the left section of the molecule, called esketamine, and sent their application to FDA. The approval of this drug, which FDA described as a “breakthrough therapy” thus receiving priority review, translates to a potential cash cow for JNJ as it successfully legitimized the application of ketamine as an anti-depression drug.
Aside from depression, FDA is also taking into consideration the applicability of esketamine to patients afflicted with mood disorders such as bipolar disorder. The organization looks at it as a potential solution for reducing suicides as well.
Other drugs projected to rake in massive sales for JNJ pipeline include psoriatic arthritis Tremfya, prostate cancer medication Erleada, and metastatic urothelial cancer treatment Erdafitinib. With the addition of Spravato on the list, sales are expected to reach more than $1 billion.
However, no company is perfect and the same goes for products -- even if they are poised to become blockbuster drugs. A major hindrance for the success of Spravato is cost.
Here's a sample quote for potential patients.
A one-month initial treatment will cost somewhere from $4,000 to $7,000. The exact price will depend on the dosage and if it's availed wholesale. Expenses for follow-up treatments will reach $2,360 to $3,500 a month. All in all, Spravato could become as expensive as an electroconvulsive treatment or even a transcranial magnetic stimulation therapy. Worse, this treatment might have to be shouldered by the patients themselves.
Another deterrent for investors looking into JNJ is the continuing issue concerning the talcum powder lawsuits which claim that the talc items of the company contain asbestos that resulted in ovarian cancer among many of its female users. As of August 2018, a Missouri court has ordered JNJ to pay 22 women a total of $4.7 billion for damages. While the company announced its decision to appeal the ruling, the case has been a huge red flag for investors ever since.
Nonetheless, it appears that JNJ remains a solid stock for a lot of investors.
With an annual revenue of $81.6 billion, (JNJ) is anticipated to stay ahead of its competitors Pfizer (PFE) ($53.4B), Novartis (NVS) ($51B), and AstraZeneca (AZN) ($21.9B). Taking into consideration currency impact, which is expected to negatively affect sales by roughly 1.5%, JNJ's revenues are projected to hit $80.4 to $81.2 billion this year.
While it still has a long way to go, the recent approval of Spravato spelled higher confidence in JNJ's revenue growth this year. The company's purchase of robotic surgical instruments manufacturer Auris Health, for $3.4 billion further strengthened its dominance in the industry.
In the past month alone, its shares rose by 4.55%. Investors are also anticipating more growth until the next earnings report, which is anticipated to show $2.10 earnings per share for the company. This represents a 1.49% year-over-year increase.
A Killer?
“The bubble is in the bond market, not the stock market” said Leon Cooperman, CEO of Omega Advisors, an original investor in my 1990’s hedge fund.
Mad Hedge Hot Tips
March 14, 2019
Fiat Lux
The Five Most Important Things That Happened Today
(and what to do about them)
1) Boeing Hits Bottom, as the US becomes the last country to ban the 737 Max 8. Imagine being 35,000 feet in the air and you find out your plane is grounded for safety reasons, as 6,000 people did yesterday. Buy more (BA) on the dip. The next move is from $360 to $450. Click here.
2) New Homes Sales Down 6.9%, in January, far worse than expected. The report is an unmitigated disaster for the industry. If you’re trying to sell a house now, you’re screwed. Click here.
3) Weekly Jobless Claims Jump, by 6,000 to a seasonally adjusted 229,000. Notice claims aren’t calling anymore. Another sign the tax cut stimulus is shrinking? Click here.
4) The Number of US Millionaires Grew for the 10th Year, to 11.8 million. And some 1.4 million are worth $5 million to $25 million. You’re obviously not working hard enough. Click here.
5) General Electric to Burn $2 billion This Year, but the stock rallies anyway. We may be trying to put in a long term bottom this year. Buy (GE) on the dips. Click here.
Published today in the Mad Hedge Global Trading Dispatch and Mad Hedge Technology Letter:
(LEARN MORE ABOUT ME THAN YOU PROBABLY WANT TO KNOW),
(GOOG), (AMZN), (AMGN)
(AIRBNB’S SECOND THOUGHTS),
(AIRBNB)
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