Comment of the Day
Video commentary for September 28th 2022
A link to today's video commentary.
Some of the topics discussed include: Bank of England wades in to support Gilt market and is interpreted as a risk on move. gold, oil copper, stocks rebound, Dollar pulls back and yields contract. Medium-term it is a monetisation of the debt and is likely to exacerbate inflationary pressures.
Email of the day on the Bank of England's support action
I just read the article below, and am surprised that pension funds take (or are allowed to take) leveraged positions. If the positions are for hedging, then should they not have the full cash to take delivery? Your views would be invaluable.
An interesting chart is attached. The extent of loss on a 40-year UKT issued last year!
It's been a long time since I first started listening to your amazing Daily Commentary. Now it is mandatory for me to hear your comments so that I can put whatever else I hear elsewhere into perspective.
Thank you for your valuable service, and I hope that your readers will have your guiding words for many decades to come.
Eoin Treacy's view - Thank you for this informative email and the chart of the 40-year Gilt. The fact I received this same chart from several sources today is an indication of how momentous it is for a developed country long-dated bond to trade at 20p on the pound. Last year was a great time to issue a 40-year bond so kudos to the Treasury department. The measures announced by the Bank of England to backstop the market were necessary but come at a significant cost.
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Biogen, Eisai Surge as Alzheimer's Drug Shows Promise in Trial
This article for Bloomberg may be of interest to subscribers. Here is a section:
“There is an important cautionary note however: the magnitude of the delay – which was a slowing of decline – was small,” he said. “We can only hope that the benefit is durable and could grow with time. Those long-term properties are unknowable at this time.”
The medicine was originally licensed from Sweden’s BioArctic AB, whose shares more than doubled on the news.
The Alzheimer’s Association welcomed the results, saying they were the most encouraging findings to date from drugs aimed at treating the underlying causes of the disease. Lecanemab has the potential to change the course of the disease and help people in the earliest stages retain their abilities, remain independent and fully participate in daily life, the group said.
Pharmaceutical and biotechnology analysts were equally bullish. “We finally have what we believe to be a clean win in Alzheimer’s disease,” Evan David Seigerman, an analyst at BMO Capital Markets (NYSE:BMO), wrote in a note to clients. “The top-line data are clear to us — lecanemab slows the rate of cognitive decline.”
The trial met every goal that was set, including other measures of mental function and the ability to perform daily activities, the companies said.
Eoin Treacy's view - The biotechnology/pharmaceuticals sector is endlessly productive. It is one of the few where there is genuine potential for new products to meet unmet needs. That means there is clear scope for value creation that can contribute to both better living standards and rising productivity.
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Fertilizer Maker Mosaic Says Some Florida Sites Evacuated
This article for Bloomberg may be of interest to subscribers. Here is a section:
Fertilizer maker Mosaic Co (NYSE:MOS). has evacuated some of its Florida operations as Hurricane Ian prepares to make landfall.
All of our Florida locations have been secured with some “fully evacuated,” Mosaic spokesman Bill Barksdale said Wednesday in an email. The state is home to Mosaic’s phosphate rock assets, where they mine product, and to facilities where they turn that rock into crop fertilizers.
Ian’s current trajectory has it passing near Tampa, through the bulk of Mosaic’s facilities. The facilities are expected to remain closed for at least a week due to the hurricane, a hit that could see third quarter revenue fall by $240 million to $300 million, Bloomberg Intelligence said Wednesday in a note. Ammonia imports from Yara International and CF Industries at Tampa may also slow.
The storm is on a path similar to Hurricane Irma in 2017, when Mosaic lost about 400,000 metric tons of finished phosphate products, according to Bloomberg Intelligence.
Eoin Treacy's view - One of Mosaic’s primary phosphate mines is between Tampa and Orlando. There is clear flooding risk in the region. The defining characteristic of recent hurricanes has been slow movement and elevated rainfall totals. The supply chain for fertilisers is already under stress so this hurricane is unlikely to be good news.
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Speaking Engagements - World Money Show October 2022
I have agreed to speak at The World Money Show in Orlando on October 30th.
The Chart Seminar London November 21st and 22nd 2022
We are living through fast moving markets so the next venue for The Chart Seminar will be November 21st and 22nd this year in London.
In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at sarah@fullertreacymoney.com.
The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.
Eoin's personal portfolio: precious metals loss taken September 23rd 2022
One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary daily until there is a change.
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